TEL : 518-245-4400
                                                              FAX : 518-245-4425
                                                                 www.espey.com



[LETTERHEAD OF ESPEY MFG. & ELECRONICS CORP.]



         SECOND AMENDED AND RESTATED HOWARD PINSLEY AGREEMENT (Revised)
         --------------------------------------------------------------

AGREEMENT dated as of February 20, 2009, by and between Espey Mfg. & Electronics
Corp.,  a New York  corporation  having its  principal  place of business at 233
Ballston  Avenue,  Saratoga  Springs,  New York 12866 (the "Company") and Howard
Pinsley, an individual residing at 5 Longwood Drive, Saratoga Springs, New York,
12866 (the "Employee").

WHEREAS,  the Employee has been a valued employee of the Company for many years,
and is now President and Chief Executive Officer of the Company;

WHEREAS,  the Board of Directors of the Company wish to amend and restate  again
the terms of an  agreement  originally  dated as of May 25, 2006 and amended and
restated  as of August 17,  2007,  providing  for  transitional  services by the
Employee incidental to his succession as Chief Executive Officer of the Company;

NOW, THEREFORE,  in consideration of the mutual promises and covenants set forth
herein, the parties agree as follows:

      1.    RESIGNATION  OR  TERMINATION.  Upon the  Employee's  resignation  or
            termination  as  Chief   Executive   Officer  during  the  Term  (as
            hereinafter defined) of this Agreement,  the Employee shall become a
            non-executive officer of the Company for a period of thirty-six (36)
            months from the date of such resignation or termination.

      2.    COMPENSATION AND DUTIES. In consideration of the Employee's services
      --    -----------------------
            for a period  equivalent  to ten (10)  days a  month,  based  upon a
            regular  work  week of four  (4)  days,  after  his  resignation  or
            termination  as Chief  Executive  Officer,  his agreement to perform
            duties as  reasonably  requested  by the Company and his  compliance
            with paragraph 5 herein, it is agreed as follows:

            (A) The Employee shall receive  $16,000 a month,  and, to the extent
      permissible, all benefits being received at the time of his resignation or
      termination as Chief Executive Officer for a period of three months, after
      the date of resignation or termination.

            (B)  At  the  end  of  the  above  three  months,   the   Employee's
      compensation  will change to $8,666.67 per month for the next  consecutive
      33  months,  and he shall  receive  all  current  benefits  as above.  The
      Employee shall be eligible to participate,  to the extent permissible,  in
      new benefits  should they occur  during this period of time.  For ESOP and
      all other benefit purposes, the Employee shall continue to be treated as a
      full-time  employee  for  the  duration  of the  Agreement  to the  extent
      permissible  and consistent  with the terms of the ESOP and all applicable
      laws.

            (C) It is agreed that the Employee shall be reasonably  available by
      telephone  or  otherwise  to render  advice and  counsel,  but need not be
      physically present at the Company's offices,  unless his physical presence
      is reasonably requested by the Company. Should the employee be required to
      engage in any activity not within the scope of this agreement, he shall be
      reimbursed,  in addition to his  monthly  salary,  at an hourly rate to be
      mutually agreed upon between an authorized  representative  of the Company
      and himself.

            (D)  If the  Employee  dies  either  during  the  Term,  before  his
      resignation or termination as Chief  Executive  Officer,  or during the 36
      month period after his transitional  services become  effective  following
      such resignation or termination, the compensation payments provided for in
      Sections 2 (A) and


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<PAGE>

      (B) will be paid, as scheduled,  to the Employee's estate. In the event of
      the Employee's death, all other benefits shall cease at death.

            (E) The  compensation  and benefits  payable  hereunder shall be the
      Employee's  sole and exclusive  entitlement  following his  resignation or
      termination as Chief Executive Officer.

      3.    EXPENSES.  If the Employee is requested by the Company, at any point
      --    ---------
            while  he is  receiving  payments  under  paragraphs  (A)  or (B) of
            Section 2 of this Agreement,  to return to Saratoga Springs, and the
            Employee is then not in the Saratoga Springs area, the Company shall
            pay the reasonable  transportation costs for the Employee to return.
            The  Employee  shall  not  be  reimbursed  for  any  other  expenses
            hereunder  unless the Employee and the Company so agree with respect
            to a specific expense.

      4.    TERM.  This  Agreement  shall  continue in effect until December 31,
      --    -----
            2009 at which time this Agreement shall  terminate (the "Term").  If
            during the Term,  the  Employee  resigns or is  terminated  as Chief
            Executive  Officer  of the  Company,  then  the  provisions  of this
            Agreement  shall  continue  in  effect  during  the 36 month  period
            following such resignation or termination and as provided in Section
            5 below.

      5.    RESTRICTIVE COVENANT: CONFIDENTIAL INFORMATION.
      --    ----------------------------------------------

            (A) The Employee  agrees that during the Term of this  Agreement and
      for a period  of five (5)  years  thereafter,  he shall  not  directly  or
      indirectly,  on behalf of himself  or on behalf of any other  corporation,
      person or entity  other than the Company,  compete or  interfere  with the
      Company,  render any services to, consult for,  contract with or become an
      employee, officer, director, partner, member, or (except as a five percent
      (5%)  or  less  shareholder  of any  publicly  traded  company)  owner  or
      shareholder  of, any  individual  or entity which engages in the Company's
      business or which otherwise competes with the Company.

            (B) The Employee  recognizes  and  acknowledges  that there has been
      made  available  to  him  confidential   information   concerning  matters
      affecting  or  relating  to the  products,  services  or  business  of the
      Company, its subsidiaries,  or affiliates,  including, but not limited to,
      intellectual property, technology, proprietary information, customer lists
      and  other  financial  information,  contractual  relationships,  past  or
      contemplated  actions,  personnel  matters,  marketing  or sales  data and
      written  or  oral  communications  or  understandings  of any  sort of the
      Company or of any of its customers in either  tangible or intangible  form
      ("Confidential   Information").   The  Employee  further   recognizes  and
      acknowledges that this Confidential  Information as it may exist from time
      to time belongs to the Company and is a valuable, special and unique asset
      of the Company's business. The Employee will not, during or after the Term
      of this Agreement, at any time, directly or indirectly,  divulge, disclose
      or  communicate  any  Confidential   Information  to  any  person,   firm,
      corporations,  association  or other  entity  for any  reason  or  purpose
      whatsoever.

      The  Employee  will  promptly  deliver  to the  Company  all copies of all
      Confidential  Information and all material of any nature  belonging to the
      Company,  and the  Employee  will not take with him any such  Confidential
      Information,   materials  or  reproductions  thereof  or  any  proprietary
      information of the Company in tangible or intangible form.

      6.    MISCELLANEOUS.  Not  withstanding any provision in this Agreement to
      --    -------------
            the contrary,  if during the Term of this  Agreement the Employee is
            terminated  from the Company for good and sufficient  cause then all
            payments and benefits provided herein shall immediately cease unless
            the Employee seeks Arbitration  pursuant to Section 14.  Arbitration
            herein in which case such payments and benefits shall continue until
            the  arbitrator  has made an award or decision.  Good and sufficient
            cause  shall  mean:  (a)  willful  misconduct  with  respect  to the
            reasonable  directions  of the Board;  (b)  conviction of a crime or
            indecent  exposure;  or (c) gross  negligence or  malfeasance in the
            performance of his obligations hereunder.


      7.    SUCCESSOR  AND  ASSIGNS.  This  Agreement  shall be binding upon and
      --    -----------------------
            insure to the benefit of the parties  hereto,  and their  respective
            legal representatives, heirs, successors and assigns.


                                       5
<PAGE>



      8.    NOTICES. Any notices,  consents or information required or requested
      --    -------
            or permitted by this  Agreement  shall be sent to the parties at the
            addresses  shown  above,  unless such  address is changed by written
            notice hereunder.

      9.    SEVERABILITY.  In the event any  provision of this  Agreement or any
      --    ------------
            portion  thereof shall be deemed  invalid or  unenforceable  for any
            reason,  that portion or provision shall be deemed excised from this
            Agreement  and this  Agreement  shall be governed,  interpreted  and
            enforced  in  all  respects  as if  such  invalid  or  unenforceable
            provision were originally omitted from this Agreement.

      10.   WAIVER. The waiver of any party of a breach of any provision of this
      --    ------
            Agreement  shall not operate as or be  construed  as a waiver of any
            subsequent breach.

      11.   GOVERNING LAW. This Agreement  shall be governed by and construed in
      --    -------------
            accordance with the laws of the State of New York.

      12.   HEADINGS.  The  descriptive  headings used in this Agreement are for
      --    --------
            purposes of  convenience  only and do not  constitute a part of this
            Agreement.

      13.   ENTIRE  AGREEMENT.  This Agreement is the entire Agreement among the
      --    -----------------
            parties  regarding the subject  matter  hereof,  and  supersedes any
            prior agreements or discussions.

      14.   ARBITRATION.  Any claim,  controversy  or dispute  arising out of or
      --    -----------
            relating to this Agreement,  or the breach thereof, shall be settled
            by final  and  binding  arbitration  before a single  arbitrator  in
            accordance with the rules of the American  arbitration  Association,
            and judgment upon the award or decision  rendered by the  arbitrator
            may be entered in a Court. Any such arbitration shall be held in New
            York and the parties to this Agreement shall be equally the costs of
            the arbitrator.

      This  AGREEMENT may not be altered or amended  except in writing signed by
      both parties.  In the event of any conflict between this Agreement and the
      terms  of any of the  Company's  employment  policies,  manuals,  or other
      statements  regarding  employment  generally,  now  existing or  hereafter
      promulgated, the terms of the Agreement shall control.

            IN WITNESS  WHEREOF,  the  parties  hereto have duly  executed  this
      Agreement as of the day and year first above written.


                                                ESPEY MFG. & ELECTRONICS CORP.

                                                By:
                                                         -----------------------

                                                Name:      David O'Neil
                                                         -----------------------

                                                Title:     Treasurer
                                                         -----------------------



                                                Employee:
                                                         -----------------------
                                                           Howard Pinsley


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