ESPEY MFG. & ELECTRONICS CORP.

-------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD DECEMBER 7, 2001
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November 12, 2001

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 Hilton Garden Inn, 125
South Broadway, Saratoga Springs, New York, on December 7, 2001, at 9:30 a.m.,
Eastern Standard Time, for the following purposes:

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

2. To ratify the appointment of PricewaterhouseCoopers LLP as the
Company's independent public accountants for the fiscal year ending
June 30, 2002; and

3. To transact such other business as may properly come before the
meeting or any adjournment or postponement thereof.

The Board of Directors has fixed the close of business on October 29, 2001,
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
Secretary

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

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 Hilton Garden Inn, 125 South
Broadway, Saratoga Springs, New York, on December 7, 2001, at 9:30 a.m., Eastern
Standard Time, and at any postponement or adjournment thereof, for the purposes
set forth in the attached Notice of Meeting. It is anticipated that the Notice
of Annual Meeting of Shareholders, this Proxy Statement and the form of proxy
will be mailed on or about November 12, 2001.

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: (i) for the election of Class B directors nominated by the Board of
Directors and (ii) for ratification of the appointment of PricewaterhouseCoopers
LLP as independent public accountants of the Company for the fiscal year ending
June 30, 2002. Any shareholder giving a proxy has the power to revoke it at any
time prior to the voting thereof by voting in person at the Annual Meeting, by
giving written notice to the Secretary prior to the Annual Meeting, or by
signing and delivering a new proxy card bearing a later date.

The Company's only class of voting securities is its Common Stock, par
value $.33-1/3 per share (the "Common Stock"). Each share of Common Stock
outstanding on the record date will be entitled to one vote on all matters. In
accordance with the Company's By-Laws and applicable state law, the election of
directors will be determined by a plurality of the votes cast by the holders of
shares of Common Stock present and entitled to vote thereon, in person or by
proxy, at the Annual Meeting. Shares present which are properly withheld as to
voting with respect to any one or more nominees, and shares present with respect
to which a broker indicates that it does not have authority to vote ("broker
non-vote") will not be counted. Cumulative voting in connection with the
election of directors is not permitted. In accordance with the Company's By-Laws
and applicable state law, the affirmative vote of shares representing a majority
of 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 29, 2001 will be entitled to vote at the meeting.
There were outstanding and entitled to vote on October 29, 2001, 1,029,461
shares of Common Stock.

ELECTION OF DIRECTORS

The Company's Certificate of Incorporation, as amended, provides that the
Board of Directors shall consist of three classes of directors (Class A, Class B
and Class C) with overlapping three-year terms. One class of directors is to be
elected each year for a term extending to the third succeeding Annual Meeting
after such election or until their respective successors are duly elected and
qualify. The terms of the three Class B directors expire at the current Annual
Meeting. The Board of Directors has nominated only two persons to stand for
election as Class B directors. Former Congressman Gerald B.H. Solomon, one of
the Company's Class B directors whose term was to expire at this Annual Meeting,
passed away on October 26, 2001. Due to the proximity of the upcoming Annual
Meeting, the Board of Directors did not have sufficient time to investigate and
select an alternative nominee for Class B director.

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

The names and business experience for the past five years of the two
persons who have been nominated by the Board of Directors to stand for election
as Class B directors at the Annual Meeting and the remaining directors whose
terms are continuing until the 2002 or 2003 Annual Meeting appear below.

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

NOMINEES FOR CLASS B DIRECTORS -- TO SERVE AS DIRECTORS FOR
A THREE YEAR TERM EXPIRING AT THE 2004 ANNUAL MEETING

Period to
Offices and Date
Positions Held Served as
Name Age with Company Principal Occupation or Employment Director
- ---- --- ------------ ---------------------------------- --------

William P. Greene . . . . . 71 -- Prior to his election as Vice 1992
President of Operations on March 1,
1999, he was Vice President of
Finance for ComCierge, LLC, San
Diego, CA, since August 1997. Prior
to that position, he was Vice
President of Operations for Bulk
Materials International Co.,
Newton, CT, from 1993 to July 1997.
From 1991 to 1993, Dr. Greene was
Associate Professor of Finance and
International Business,
Pennsylvania State University in
Kutztown, PA. From 1985 to 1990, he
was Associate Dean of the School of
Business, United States
International University, San
Diego, CA. From 1992 to 1995, he
was Chairman of the Department of
Business, Skidmore College,
Saratoga Springs, NY. Prior to that
he had been employed as an officer
for several financial institutions.
Mr. Greene resigned as an executive
officer effective December 31,
2000.

Seymour Saslow . . . . . 80 -- Senior Vice President since 1992
December 6, 1996. Prior to being
elected to Senior Vice President,
Mr. Saslow served as Vice
President-Engineering since April
3, 1992. Mr. Saslow resigned as an
executive officer effective
December 31, 1999.

CLASS A DIRECTORS -- SERVING FOR A
THREE YEAR TERM EXPIRING AT THE 2003 ANNUAL MEETING

Period to
Offices and Date
Positions Held Served as
Name Age with Company Principal Occupation or Employment Director
- ---- --- ------------ ---------------------------------- --------

Howard Pinsley (1) . . . . 61 President and Chief Howard Pinsley for more than the 1992
Executive Officer past five years has been employed
by the Company on a full-time basis
as Program Director 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.

Alvin O. Sabo . . . . 58 -- Attorney engaged in private 1999
practice of law and Senior Partner
of the law firm of Donohue, Sabo,
Varley & Armstrong, P.C. in Albany,
NY since 1980. Prior to that
position, he was Assistant Attorney
General, State of New York,
Department of Law for eleven years.

Carl Helmetag . . . . 53 -- President and CEO of UVEX Inc. in 1999
Providence, RI. From 1996 to 1999,
he was President and CEO of HEAD
USA Inc. Prior to that position,
Mr. Helmetag was Executive Vice
President and then President at
Dynastar Inc. from 1978 to 1996. He
is an MBA graduate from The Wharton
School of Business, University of
Pennsylvania.

CLASS C DIRECTORS -- SERVING FOR A
THREE YEAR TERM EXPIRING AT THE 2002 ANNUAL MEETING

Period to
Offices and Date
Positions Held Served as
Name Age with Company Principal Occupation or Employment Director
- ---- --- ------------ ---------------------------------- --------

Paul J. Corr . . . . . 57 -- Certified Public Accountant and a 1992
Professor of Business, Skidmore
College, in Saratoga Springs, NY,
since 1981, currently holding the
position of Associate Professor;
Mr. Corr is also a shareholder in
the Latham, New York accounting
firm of Rutnik, Matt & Corr, P.C.

Barry Pinsley (1) . . . . 58 Non-Executive Officer Certified Public Accountant who for 1994
five years acted as a consultant to
the Company prior to his election
as a Vice President- Special
Projects on March 25, 1994. On
December 6, 1997, Mr. Pinsley was
elected to the position of Vice
President-Investor Relations and
Human Resources, from which he
resigned on June 9, 1998. Mr.
Pinsley has been a practicing
Certified Public Accountant in
Saratoga Springs, New York since
1975.

CLASS C DIRECTORS -- SERVING FOR A
THREE YEAR TERM EXPIRING AT THE 2002 ANNUAL MEETING

Period to
Offices and Date
Positions Held Served as
Name Age with Company Principal Occupation or Employment Director
- ---- --- ------------ ---------------------------------- --------

Michael W. Wool . . . . . . . . 55 -- Attorney engaged in private practice 1990
of law and Senior partner 1982 in the
law firm of Langrock, Sperry & Wool,
with offices in Burlington, VT and
Middlebury, VT.

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

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

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

Garry M. Jones, 61, Assistant Treasurer and Principal Accounting Officer of
the Company since August 4, 1988. He was also the Principal Financial Officer
from August 4, 1988 to September 10, 1993. Prior to being elected an officer of
the Company, Mr. Jones was employed by the Company on a full-time basis as a
Senior Accountant.

John J. Pompay, Jr., 66, Vice President of Marketing and Sales since
December 6, 1996. During the past five years and before being elected to his
present position, Mr. Pompay was employed by the Company on a full-time basis as
Director of Marketing and Sales.

Peggy Murphy, 43, 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, 36, Treasurer and Principal Financial Officer since
January 4, 2000. Mr. O'Neil is a Certified Public Accountant who, prior to
joining the Company, was a Senior Manager at the accounting firm of KPMG LLP.

Timothy A. Polidore, 41, Assistant Treasurer since December 8, 2000. Mr.
Polidore joined the Company on May 17, 1999. Prior to joining the Company he was
Accounting Manager for Brinks, Inc.

BOARD OF DIRECTORS MEETINGS AND COMMITTEES

During the Company's fiscal year ended June 30, 2001, the Board of
Directors held a total of 8 meetings, and each director then in office attended
at least 75% of such meetings.

The Board has a standing Audit Committee whose members are Paul J. Corr,
Chairman, Alvin O. Sabo and Michael W. Wool. 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, 2001 the
Committee held 4 meetings, and each Committee member attended at least 75% of
such meetings.

The Board has a standing Stock Option Committee whose members are Howard
Pinsley, Paul Corr and Barry Pinsley. The functions of this Committee include
determining to whom, and the time or times at which, options will be granted,
the number of shares of common stock that comprise each option and the exercise
price and vesting schedule for options granted pursuant to the Company's 2000
Stock Option Plan. During the fiscal year ended June 30, 2001, the Stock Option
Committee held 1 meeting, and each Stock Option Committee member attended this
meeting.

There is no standing nominating or compensation committee of the Board of
Directors, or committees performing similar functions with the exception of the
Stock Option Committee.

COMPENSATION OF DIRECTORS

The Company's standard arrangement compensated each director of the Company
an annual fee in the amount of $10,000 for being a member of the Board of
Directors. Each Director that also served as a member of the Audit Committee was
compensated an additional annual fee of $5,000. These fees are paid monthly to
the Directors. Barry Pinsley was paid $5,600 for additional services in
connection with his duties as a director for the fiscal year ended June 30,
2001. Executive officers that also serve on the Company's Board of Directors do
not receive director's fees.

COMPENSATION OF EXECUTIVE OFFICERS

The following table summarizes the annual compensation for each of the
fiscal years ended June 30, 2001, June 30, 2000 and June 30, 1999 received by
the Company's Chief Executive Officer (or acting in a similar capacity) and the
other three highest paid executive officers of the Company that received over
$100,000 in total compensation as of June 30, 2001:

SUMMARY COMPENSATION TABLE

Long Term
Compensation
Securities
Name and Annual Compensation Underlying All Other
Principal Position Fiscal Year Salary Bonus Options Compensation(1)
- ------------------ ----------- ------ ----- ------- ---------------

Howard Pinsley 2001 $172,600 $25,000 2,000 $ 9,590
President and Chief 2000 $160,520 $25,000 1,500 $ 8,623
Executive Officer 1999 $127,700 $ 0 0 $11,492

Seymour Saslow (2) 2001 $ 62,400 $0 0 $ 6,072
Senior Vice President 2000 $111,150 $25,000 700 $ 1,237
1999 $124,625 $ 0 0 $10,568

David A. O'Neil (3) 2001 $ 91,200 $12,500 800 $ 7,703
Treasurer and Principal 2000 $ 84,930 $10,000 600 $ 6,162
Financial Officer

John J. Pompay, Jr. 2001 $152,938 $25,000 800 $ 9,737
Vice President of 2000 $237,816 $20,000 600 $ 8,822
Marketing and Sales 1999 $189,399 $ 0 0 $ 8,679

- ------------------
(1) Represents (a) the cash and market value of the shares allocated for the
respective fiscal years under the Company's Employee Retirement Plan and
Trust (the "ESOP") to the extent to which each named executive officer is
vested, and (b) directors' fees through April 1, 1999 except for Mr.
Pompay. Effective April 1, 1999 employees of the Company that also serve on
the Company's Board of Directors or any committee thereof do not receive
director's fees.
(2) Represents wages as both an executive officer and non-executive officer.
Mr. Saslow resigned as Senior Vice President on December 31, 1999.
(3) Mr. O'Neil became Treasurer and Principal Financial Officer in January
2000.

OPTION GRANTS IN FISCAL 2001

Potential
Realizable
Value at
Assumed Annual
Number of Percent Rates of Stock
Securities of Total Price Appreciation
Underlying Options for Option Term (1)
Options Granted to Exercise Expiration
Name Granted Employees Price Date 5% ($) 10%($)
- ---- ------- --------- ----- ---- ------ ------

Howard Pinsley 2,000 15% $ 17.95 03/01/2011 22,580 57,200

John J. Pompay Jr. 800 6% $ 17.95 03/01/2011 9,032 22,880

David A. O'Neil 800 6% $ 17.95 03/01/2011 9,032 22,880

- ------------------
(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.

In accordance with the 2000 Stock Option Plan the above options have
exercise dates that range from March 1, 2002 through and expiring on March 1,
2011. Accordingly, no options were exercised by the above named executive
officers in fiscal 2001.

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 727 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 them in any actions.

EMPLOYMENT CONTRACTS

The Company has an employment contract with John J. Pompay Jr. in
connection with his duties as Vice President of Marketing and Sales. The
contract was effective as of January 1, 2001 and expires on December 31, 2001
unless the parties mutually agree to extend the agreement. The contract provides
for a minimum base annual salary of $143,000 plus commissions at the rate of 3%
on all payments received by the Company against Mr. Pompay's open orders booked
up to and including December 31, 1996, and 1% on all payments received against
orders booked by the Company between January 1, 1997 and December 31, 1998. The
contract further provides that if Mr. Pompay's employment is terminated by the
Company prior to the expiration date, other than for cause, he will continue to
receive his full salary for 27 months and commissions due on his orders when
payment is received. The contract also provides for a restrictive covenant of
non-competition by Mr. Pompay for a period of two years upon termination for
cause or termination of the contract by Mr. Pompay. At the end of the contract
term Mr. Pompay has the option to accept at the time of his voluntary
resignation as an executive officer, an employment contract as a non-executive
officer in which he would receive full compensation for 13 weeks and then for
the next 104 weeks receive $1,000 per week, for services rendered.

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,
which is attached as Appendix A.

In fulfilling its responsibilities, the Committee has reviewed and
discussed the Company's audited consolidated financial statements for the fiscal
year ended June 30, 2001 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, 2001.

Audit Committee:
Paul J. Corr, Chairman
Michael W. Wool
Alvin O. Sabo

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

The following table sets forth information regarding ownership of the
Company's outstanding Common Stock as of October 29, 2001, 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.

Name of Amount and Nature Percent
Beneficial Owner of Beneficial Ownership of Class
---------------- ----------------------- --------

Dimensional Fund Advisors Inc. . . . . . 72,600 -Direct (1) 7.02%
1299 Ocean Avenue
11th Floor
Santa Monica, CA 90401

Franklin Resources, Inc. . . . . . . . . 80,000 -Direct (2) 7.7%
777 Mariners Island Blvd.
P.O. Box 7777
San Mateo, CA 94403-7777

The Adirondack Trust Company, . . . . . 62,932 -Direct (3) 25.1%
as Trustee of the Company's Employee
Retirement Plan and Trust
473 Broadway
Saratoga Springs, NY 12866

- ------------------
(1) The information as to the number of shares of common stock of the Company
that may be deemed beneficially owned by Dimensional Fund Advisors Inc.
("Dimensional") is from the Schedule 13G dated February 2, 2001 filed with
the Securities and Exchange Commission (the "SEC"). Dimensional, a
registered investment advisor, is deemed to have beneficial ownership of
72,600 shares of Espey Mfg. & Electronics Corp. stock as of December 31,
2000, all of which shares are held in Dimensional investment companies,
trusts and accounts. Dimensional, in its role as investment advisor and/or
manager, disclaims beneficial ownership of all such shares. Dimensional, in
its role as investment advisor and/or manager, reported sole voting power
with respect to 72,600 shares.

(2) The information as to the number of shares of common stock of the Company
that may be deemed beneficially owned by Franklin Advisory Services, LLC
("Franklin") is from the Schedule 13G, dated January 26, 2001 filed with
the SEC. The Franklin statement indicated that Franklin's "investment
advisory subsidiaries," have sole voting and dispositive power with respect
to all of the shares of common stock shown in the table above for Franklin.
The Franklin statement indicates that the common stock set forth in the
table is beneficially owned by one or more open or closed-end investment
companies or other managed accounts which are advised by direct and
indirect Franklin investment advisory subsidiaries. The statement also
indicated that it filed the Schedule 13G on behalf of itself, Franklin
Advisory, 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.

(3) This information is from the Form 4 dated September 18, 2001 filed with the
SEC by the Trustee on behalf of the Company's ESOP. The ESOP Trustee has
sole voting power with respect to unallocated common shares owned by the
Trust, 63,036 shares as of September 18, 2001, as directed by the Plan
Administrator appointed by the Company's Board of Directors. As to the
common shares allocated to participants, 199,896 shares as of September 18,
2001, the ESOP Trustee has the power to vote such shares as directed by
such Plan Administrator to the extent the participants do not direct the
manner in which such shares are to be voted.

SECURITY OWNERSHIP OF MANAGEMENT

The following information is furnished as of October 29, 2001, as to each
class of equity securities of the Company beneficially owned by all the
Directors and by Directors and Officers of the Company as a Group:

Name of Amount and Nature Percent
Beneficial Owner of Beneficial Ownership of Class
---------------- ----------------------- --------

Paul J. Corr . . . . . . . . . . . . . 3,000 -Direct 0.29%

William P. Greene . . . . . . . . . . 100 -Direct 0.08%

765 -Indirect(2)

Michael W. Wool . . . . . . . . . . . 100 -Direct 0.01%

Barry Pinsley . . . . . . . . . . . . 41,630 -Direct 4.32%

2,845 -Indirect(1)(2)

Seymour Saslow . . . . . . . . . . 351 -Direct 0.66%

6,475 -Indirect (2)

John J. Pompay, Jr. . . . . . . . . . 8,052 -Indirect(2) 0.78%

Howard Pinsley . . . . . . . . . . 42,134 -Direct 4.83%

7,603 -Indirect(2)

Alvin O. Sabo . . . . . . . . . . 0 -Indirect .0000%

Carl Helmetag . . . . . . . . . . 2,500 -Direct 0.29%

800 -Indirect(3)

David A. O'Neil . . . . . . . . . . 1,000 -Direct 0.18%

853 -Indirect (2)

Garry M. Jones . . . . . . . . . . 3,789 -Indirect(2) 0.37%

Peggy Murphy . . . . . . . . . . . . . 2,449 -Indirect(2) 0.24%

Officers and Directors as a Group . . 90,815 -Direct 12.06%
33,631 -Indirect

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

(2) Includes shares allocated to named director or executive officer as of June
30, 2001 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.

(3) Includes 800 shares owned by the Molly K. Helmetag Trust. As trustee of the
trust, Carl Helmetag is deemed beneficial owner, as defined in Rule 13d-3,
of the shares held by the trust. Excludes 800 shares owned by the spouse of
Mr. Helmetag. Beneficial ownership is disclaimed by Mr. Helmetag.

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

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

As previously reported, the Company established and sold to the ESOP Trust
on June 5, 1989, 331,224 shares of the Company's treasury stock at a price of
$26.50 per share, which purchase price was funded by the Company making a cash
contribution and loan. Each year, the Company makes contributions to the ESOP,
which is used to make loan interest and principal payments to the Company. With
each such payment, a portion of the common stock held by the ESOP is allocated
to participating employees. As of June 30, 2001, there were 208,896 shares
allocated to participants. The loan from the Company to the ESOP is repayable in
annual installments of $1,039,605, including interest, through June 30, 2004.
Officers of the Company, (including Howard Pinsley) who is also a director, are
eligible to participate in the ESOP and to have shares and cash allocated to
their accounts and distributed to them in accordance with the terms of the ESOP.

The Company paid the law firm of Langrock, Sperry & Wool, of which Michael
W. Wool, a director of the Company, is a partner, a total of $27, 000 for legal
services during the fiscal year ended June 30, 2001.

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

The Board of Directors, upon the recommendation of the Audit Committee, has
appointed the firm of PricewaterhouseCoopers LLP as the Company's independent
accountants for the fiscal year ending June 30, 2002. PricewaterhouseCoopers LLP
was engaged by the Company on October 23, 1998.

Unless otherwise specified by the shareholders, the shares represented by
their properly executed proxies will be voted for ratification of the
appointment of PricewaterhouseCoopers LLP as independent accountants for the
fiscal year ending June 30, 2002. The Company is advised by said firm that
neither PricewaterhouseCoopers LLP nor any of its partners now has, or during
the past three years had, any direct financial interest or material indirect
financial interest or any connection with the Company.

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

The following amounts were billed to the Company by the independent
auditors for services rendered for the fiscal year ended June 30, 2001:

Type of Fee Amount Billed
----------- -------------

Audit $57,750

Financial Information Systems Design and
Implementation Fees None

All Other Fees $30,115

Total $87,865

The Audit Committee approved this appointment of the Company's independent
accountants. If the stockholders do not ratify the appointment of
PricewaterhouseCoopers LLP, the Board will consider other independent
accountants upon recommendation of the Audit Committee.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE
APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT ACCOUNTANTS FOR THE
COMPANY FOR FISCAL YEAR ENDING JUNE 30, 2002.

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

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

ANNUAL REPORTS

The Annual Report of the Company to the shareholders for the fiscal year
ended June 30, 2001, including financial statements, accompanies this Proxy
Statement. Such financial statements are not incorporated herein by reference.

A copy of the Company's Annual Report on Form 10-K (including financial
statements and schedules thereto) for the fiscal year ended June 30, 2001 filed
with the Securities and Exchange Commission will be provided without charge upon
the written request of shareholders to Espey Mfg. & Electronics Corp.,
attention: Investor Relations, 233 Ballston Avenue, Saratoga Springs, New York
12866. The Company's Form 10-K for the fiscal year ended June 30, 2001 can also
be viewed electronically through a link at the Company's website
(www.espey.com).

SHAREHOLDER PROPOSALS FOR 2001 ANNUAL MEETING

Any shareholder proposal which may be a proper subject for inclusion in the
proxy statement and for consideration at the 2002 Annual Meeting must be
received by the Company at its principal executive office no later than July 16,
2002, if it is to be included in the Company's 2002 proxy statement and proxy
form.

OTHER MATTERS

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.

Other Matters

The Company is unaware of any other matter that will be brought before the
meeting for action. If other matters should come before the meeting, which
require a shareholder vote, it is intended that the proxy holders will use their
own discretion in voting on such other matters.

By Order of the Board of Directors,

/s/ Howard Pinsley
---------------------
HOWARD PINSLEY
President and Chief Executive Officer

November 12, 2001
Saratoga Springs, New York

APPENDIX A

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

Purpose

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

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

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

Membership and Meetings

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

Accordingly, all of the members will be directors:

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

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

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

Key Responsibilities

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

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

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

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

A-1

The Committee shall:

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

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

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

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

Maintain minutes of meetings of the Committee.

Report to the Board subsequent to meetings of the Committee.

A-2

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

C O M M O N

PROXY FOR THE
2001 ANNUAL MEETING OF SHAREHOLDERS
December 7, 2001

The undersigned hereby appoints Howard Pinsley and Barry Pinsley 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 2001 Annual Meeting of
Shareholders to be held on December 7, 2001 or any adjournment thereof.

1. Election of Class B Directors

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

WILLIAM P. GREENE

SEYMOUR SASLOW

Management 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. Proposal to approve the appointment of PricewaterhouseCoopers LLP as the
independent public accountants of the Company.

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

Management recommends a vote FOR this proposal.

3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.

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

________Stockholder 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.

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

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

E S O P P L A N

PROXY FOR THE
2001 ANNUAL MEETING OF SHAREHOLDERS
December 7, 2001

1. Election of Class B Directors

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

WILLIAM P. GREENE

SEYMOUR SASLOW

Management 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. Proposal to approve the appointment of PricewaterhouseCoopers LLP as the
independent public accountants of the Company.

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

Management recommends a vote FOR this proposal.

3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.

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

________Stockholder sign above_________Co-holder (if any) sign above____________

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

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.

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