8-K

                               FORM 8-K

                   SECURITIES AND EXCHANGE COMMISSION

                          Washinton, D.C. 20549

                             Current Report

                  Pursuant to Section 13 or 15(d) of the
                      Securities Exchange Act of 1934


 Date of Report (Date of earliest event reported) June 13, 1995 (June 12, 1995)


                       ESPEY MFG. & ELECTRONICS CORP.
           (Exact name of registrant as specified in its charter)


    NEW YORK                      1-4383                      14-1387171
State of incorporation      Commission file number        IRS Employer ID No. 



 P.O. Box 422, Saratoga Springs, New York                        12866
(Address of principal executive offices)                       (Zip Code)


Registranst's telephone number, including area code       518-584-4100

                               Not Applicable
       (Former name or former address, if changed since last report.)



Item 5.        Other Materially Important Events.

 On June 12, 1995, pursuant to prior authorization by the Board of Directors, 
 the registrant entered into an employment contract with Sol Pinsley, as 
 President and Chief Executive Officer, superseding the existing employment 
 contract with Mr. Pinsley which had a term expiring December 31, 1995.  The 
 new employment contract is dated and effective as of January 1, 1995 for a 
 term expiring December 31, 1998 and covers Mr. Pinsley's employment as 
 President (or Chairman of the Board) and Chief Executive Officer and also as 
 a non-executive officer employee should Mr. Pinsley elect to become a 
 non-executive officer employee.  The agreement provides minimum base annual 
 compensation of $182,000 for each calendar year commencing 1995 and the Board 
 of Directors in its discretion may increase such compensation for any calendar 
 year and/or award Mr. Pinsley a bonus for any calendar year.  The foregoing 
 compensation is to be reduced by $40,000 per annum in the event Mr. Pinsley 
 elects to become a non-executive officer employee.  The employment agreement 
 further provides that in the event of his disability the foregoing 
 compensation shall continue to be paid to Mr. Pinsley until the expiration 
 date of the agreement, and, in the event of his death, such compensation 
 shall be paid to his estate until the expiration date of the agreement or
 187 days after his death, whichever is later.  The agreement provides for 
 (i) a restrictive covenant of non competition by Mr. Pinsley and (ii) his 
 covenant not to divulge or use other than for the registrant confidential 
 information concerning the registrant, during and for 18 months after the 
 expiration date of the agreement.

 Item 7.        Financial Statements and Exhibits

     (c)  Exhibits:

          1.   Copy of Employment Agreement dated and effective as
 of January 1, 1995 between registrant and Sol Pinsley.


                           SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of
 1934, the registrant has duly caused this report to be signed by
 the undersigned thereunto duly authorized.


                                   ESPEY MFG. & ELECTRONICS CORP.


 Dated:  June 13, 1995                                             
                                   Herbert Potoker, Treasurer

EX-99

 


                            AGREEMENT


     AGREEMENT made effective as of the 1st day of January, 1995, between ESPEY
 MFG. & ELECTRONICS CORP., a New York corporation having its principal executive
 office at Saratoga Springs, New York 12866 (hereinafter "Espey") and SOL
 PINSLEY, residing at 359 Ballston Avenue, Saratoga Springs, New York 12866
 (hereinafter "Pinsley").
                      W I T N E S S E T H :


     WHEREAS, Espey and Pinsley have had a long term employment relationship and
 Pinsley has been the President and/or Chief Executive Officer of Espey since
 September 23, 1976, and Pinsley having been an executive officer and key
 employee of Espey for many years prior thereto; and
     WHEREAS, Pinsley has been and continues to be a key executive employee of
 Espey, and Espey in order to assure itself of Pinsley's continued services,
 advices and "know-how" desires to modify, extend and restate effective as of
 January 1, 1995 the terms of Pinsley's existing employment agreement in order
 to secure and to have available exclusively to Espey the services of Pinsley
 on the terms and conditions contained herein;
     NOW, THEREFORE, for good and valuable consideration, the sufficiency of
 which is hereby acknowledged, it is agreed by and between Espey and Pinsley as
 follows:
     1.   Duties: Espey shall employ Pinsley as an executive officer and Pinsley
 accepts such employment as an executive officer of Espey or, as provided in
 Paragraph 5 hereof, as a non-executive officer employee of Espey, all in
 accordance with the terms and conditions of this Agreement.  Pinsley shall
 render services in the manner previously rendered by him in the capacity of
 President and Chief Executive Officer, or as provided in Paragraph 5 hereof, as
 a non-executive officer employee ("NEO-employee").  It is understood that
 Pinsley may be appointed and serve as Chairman of the Board instead of as
 President while continuing as Chief Executive Officer.  In this regard
 Pinsley's powers and duties shall be determined, from time to time,
 consistent with past practices by Espey's Board of Directors.  It is agreed
 that Pinsley will devote such efforts, time, energy and skill to the
 business and affairs of Espey as is reasonably required for the performance
 of the services to be rendered by him as an executive officer or a
 NEO-employee, as the case may be, except for vacation periods, holidays and
 other leaves of absence.  During the term of this Agreement, Pinsley shall
 make his services available only to Espey.
     2.   Term.  This Agreement and the employment of Pinsley hereunder shall
 commence January 1, 1995.  This Agreement and Pinsley's employment as an
 executive officer or NEO-employee, as the case may be, shall continue until
 December 31, 1998 (hereinafter the "ExpirationDate") except as otherwise
 provided in this Agreement.  Pinsley may not be terminated by Espey prior to
 the Expiration Date as an executive employee serving in the capacity of
 President (or Chairman of the Board) and Chief Executive Officer or, if Pinsley
 has elected pursuant to Paragraph 5 hereof to be a NEO-employee, serving as a
 NEO-employee except and only for Pinsley's willful breach of a material
 provision of this Agreement or for gross misconduct as provided in Paragraph
 10(a) hereof.
     3.   Compensation.  In consideration for Pinsley's services and commitments
 hereunder, Espey shall pay to Pinsley an annual minimum base compensation of
 One Hundred Eighty-Two Thousand  and no/100 Dollars ($182,000.00) for each
 calendar year during the term of the Agreement commencing January 1, 1995.  An
 additional percentage increment to the annual minimum base compensation may be
 determined and granted by Espey's Board of Directors in its discretion.  In
 addition, the Board of Directors in its discretion may also award Pinsley a
 bonus for any calendar year during the term of this Agreement based upon
 Pinsley's performance and/or the performance of Espey and such other factors as
 the Board deems pertinent.  The base annual compensation shall be paid
 periodically in accordance with Espey's customary employment payroll
 practices for executive employees.
     4.   Office; Reimbursement of Expenses; Fringe Benefits.
          (a)  During the term of this Agreement Pinsley's fringe benefits,
 office, base of operations and secretarial assistance shall continue to be of
 the same nature and similar as heretofore.  His office shall continue to be
 located where it is presently located unless he at his election wishes it to
 be located elsewhere. 
          (b)  During the term of this Agreement Espey will promptly reimburse
 Pinsley for all reasonable expenses incurred by him in the furtherance of and
 carrying out his duties under this Agreement.
          (c)  Pinsley shall be entitled to participate in any life insurance,
 disability insurance and group medical plans or any other fringe benefit,
 including pension and deferred compensation plans  of Espey in effect from time
 to time. 
     5.   Pinsley's Option to Become a NEO-Employee.  At any time during the
 term of this Agreement, Pinsley shall have the right to resign as President
 (or Chairman of the Board, if previously appointed to and serving in such
 office) and Chief Executive Officer of Espey, and he may elect to serve for the
 remainder of the term as a NEO-employee of Espey, making himself available
 to Espey in person, by telephone or by such other means of communication, at
 such reasonable times as he deems reasonably necessary to consult with and
 advise Espey's officers and Board of Directors on the matters submitted to him
 for such consultation and advice.  During the period that Pinsley is a
 NEO-employee, the compensation and other benefits provided for by Espey
 (including the same fringe benefits that were made available to Pinsley as an
 executive officer) set forth in Paragraphs 3 and 4 hereof shall remain
 unchanged and shall be paid and accorded to him, except that the annual base
 compensation that would have been payable to Pinsley had he
 remained as President (or Chairman of the Board) and Chief Executive Officer
 shall thereafter be reduced by Forty Thousand and no/100 Dollars ($40,000.00)
 per annum for the remainder of the term of this Agreement.
     6.   Disability and Death.
          (a)  If Pinsley shall be unable to substantially perform his duties
 hereunder by reason of illness, physical or mental disability or other
 incapacity (hereinafter for convenience called "disability"), the base annual
 minimum compensation and benefits required to be paid or accorded to Pinsley
 pursuant to Paragraphs 3 and 4 or 5 hereof, shall remain in effect and continue
 to be paid and accorded to him until the Expiration Date based on Pinsley's
 status as President (or Chairman of the Board) and Chief Executive Officer or
 as a NEO-employee, as the case may be, at the time such disability occurs.
          (b)  In the event of the death of Pinsley during the term of this
 Agreement, the base annual minimum compensation required to be paid to
 Pinsley pursuant to Paragraph 3 or 5 hereof as President (or Chairman of the
 Board) and Chief Executive Officer or as a NEO-employee, as the case may be,
 shall remain in effect and continue to be paid to the legal representatives
 of his estate until the later of (i) the Expiration Date, or (ii) a period
 of one hundred eighty-seven (187) consecutive days from the date of his
 death.  The provisions of this Paragraph 6(b) shall also apply if at the
 time of his death Pinsley is in a disability status as referred to in
 Paragraph 6(a).
     7.   Restrictive Covenant.  During the term of this Agreement, and for a
 period of eighteen (18) consecutive months after the Expiration Date,
 Pinsley shall not without the express written consent of Espey, directly or
 indirectly, on his own behalf or on behalf of any other person, firm,
 partnership, corporation or other business entity:
          (a)  Engage in or participate (in his own capacity or as an officer,
 director, shareholder, employee, consultant, independent contractor,
 partner, principal or sole proprietor), have any material financial interest
 in, or knowingly permit his name to be used by or in connection with any
 business or activity that competes in any material way, directly or
 indirectly, with Espey or any of its subsidiaries;
          (b)  Solicit business for products or services similar to those
 offered, sold, provided or under active development, by Espey or any of its
 subsidiaries, from any business entity which, at any time during the term of
 this Agreement, did business with, or was a customer or account of Espey or
 any of its subsidiaries, or which, at any time, during the term of this
 Agreement, had been solicited for business by Espey or any of its subsidiaries;
          (c)  Solicit or encourage any person not to become an employee of
 Espey or any of its subsidiaries;
          (d)  Solicit any employee of Espey or any of its subsidiaries to
 terminate his employment with Espey or any of its subsidiaries, or otherwise
 knowingly interfere with Espey or its subsidiaries' relations with their
 respective employees; or 
          (e)  Interfere in any manner with the business or other activities of
 Espey or its subsidiaries. 
          Because Espey does not have an adequate remedy at law to protect the
 business of Espey and its subsidiaries from a breach by Pinsley of the
 foregoing provisions of this Paragraph 7 or to protect its interests in the
 trade secrets, privileged, proprietary or confidential information and
 similar commercial assets of Espey and its subsidiaries from a breach by
 Pinsley of the provisions of Paragraph 8, Espey shall be entitled to injunctive
 relief, in addition to such other remedies and relief that would, in the event
 of a breach of the provisions of Paragraph 7 and/or 8 of this Agreement, be
 available to Espey.
     8.   Secret or Confidential Information.  Except as shall be required by
 order of any court or governmental agency of competent jurisdiction or except
 as otherwise required by law, during the term of this Agreement and for a
 period of eighteen (18) consecutive months after the Expiration Date
 (a) Pinsley will not without the express written consent of Espey, divulge or
 communicate to anyone other than Espey, or such persons, if any, designated by
 it, any trade secret, production technique, engineering know-how or other
 confidential information or any invention, discovery, improvement, device,
 practice, process, method or product, whether or not patented or patentable,
 directly or indirectly useful in or relating to any material aspect of the
 business of Espey as conducted from time to time as to which Pinsley is, or at
 any time during the term of his employment  under this Agreement or at any time
 prior thereto or thereafter, shall become informed of and which shall not be
 generally known to the public or recognized as standard practice; or
 (b) Pinsley shall not retain or use for the benefit of Pinsley or any third
 person or entity (other than Espey or any affiliate thereof) any document or
 papers used or owned or formerly used or owned by Espey or any of its
 subsidiaries, which divulges or relates to any of the matters referred to in
 clause (a) above; provided, that Pinsley shall not be responsible under this
 Paragraph 8 for the actions of any third party.
     9.   Suits for Enforcement; Attorney's Fees and Expenses.  In the event of
 any dispute between Espey and Pinsley arising out of or to enforce or protect
 rights under any of the provisions of this Agreement, either party may proceed
 to enforce or protect such rights either by suit in equity or by action at
 law, or both, whether for specific performance (or, as the case may be,
 injunctive relief) of any covenant or agreement contained in this Agreement or
 to enforce any payment hereunder or to enforce or to protect any other legal or
 equitable right of such party hereunder.  If Pinsley (or his estate) is the
 prevailing party in any such suit, action or proceeding he (or his estate)
 shall be entitled to recover in such suit, action or proceeding (or in a
 separate action) from Espey his (or his estate's) reasonable attorney's fees
 and other expenses and costs of enforcement, protection or collection incurred
 in connection with or arising out of any such dispute, suit, action or
 proceeding.  Any amounts in an action awarded Pinsley for compensation,
 damages, costs and expenses accrued, shall bear interest at an annual rate
 equal to the prime rate of Espey's principal bank in effect from time to time
 until paid.  The provisions of this Paragraph 9 shall also inure to the
 benefit of Pinsley's successors and legal representatives.
     10.  Miscellaneous.
          (a)  No breach of this Agreement by Pinsley shall be deemed willful
 nor shall any claim of gross misconduct by him be a ground for termination
 of this Agreement by Espey unless and until Pinsley shall fail to cure or
 end such claimed breach of this Agreement or such conduct, or take
 reasonable steps to cure, or end such breach or conduct, within thirty (30)
 days after written notice delivered to him by Espey, which notice shall
 specify the claimed breach or conduct and set forth in reasonable detail the
 factual basis for such claim, provided, however, that, if Pinsley disputes
 such claimed breach or conduct in a writing delivered to Espey within such
 thirty (30) day period, then the period for curing or ending such claimed
 breach or conduct or to endeavor to cure the same by taking reasonable steps in
 furtherance of such cure, shall be tolled until ten business days after such
 dispute is resolved by a final court order, and further provided that, until
 such dispute is resolved by settlement or a final court order, the compensation
 and benefits to Pinsley provided for in this Agreement shall continue to be
 paid and accorded to him. 
          (b)  This Agreement shall be binding upon Espey and its successors and
 assigns, including any transferee of all or a substantial part of its assets or
 any entity into which it is merged or by which it is acquired.  The rights and
 benefits of Pinsley under this Agreement are personal benefits to him; no such
 right or benefit shall be subject to voluntary or involuntary alienation,
 assignment or transfer, except for his estate and as otherwise provided herein.
          (c)  The waiver by either party of a breach or provision of this
 Agreement by the other shall not operate or be construed as a waiver of any
 subsequent breach or provision by such other party.
          (d)  This Agreement contains the entire agreement between the parties
 with respect to the subject matter herein and Pinsley's employment as an
 executive officer and as a NEO-employee.  All prior discussions, compensation
 understanding, negotiations and agreement are merged herein, effective
 January 1, 1995.  This Agreement and any provision thereof may not be orally
 changed, waived or rescinded, but may only be changed, waived or rescinded by
 an agreement to such effect in writing signed by the party against whom
 enforcement of same is sought.
          (e)  The invalidity, illegality, or unenforceability of any provision
 hereof shall not in any way affect, impair, invalidate or render unenforceable
 this Agreement or any other provision hereof.  If any court of competent
 jurisdiction construes any restrictive covenants or any part hereof, to be
 unenforceable because of the duration of such provision or the area covered
 thereby, such court shall have the power to reduce the duration or area of such
 provision and, in its reduced form such provision shall then be enforceable and
 shall be enforced. 
          (f)  Any notice, election or other action required or desired to be
 served, given or delivered hereunder shall be in writing, and shall be deemed
 to have been validly served, given or delivered upon deposit in the United
 States Mail by registered or certified mail with proper postage prepaid and
 addressed to the party to be notified as follows:
               (a)  If to Espey at:

                    Espey Mfg. & Electronics Corp.
                    P.O. Box 422
                    Saratoga Springs, NY 12866

               (b)  If to Pinsley at:

                    Sol Pinsley
                    359 Ballston Avenue
                    Saratoga Springs, NY 12866

 or to such other address as either party may hereafter designate for itself or
 himself by written notice to the other party in the manner herein prescribed.
          (g)  This Agreement shall be governed by and construed in accordance
 with the laws of the State of New York.
          IN WITNESS WHEREOF, the parties have executed this Agreement effective
 as of the date first above written.
                              ESPEY MFG. & ELECTRONICS CORP.


                              By:  JOSEPH CANTERINO

                                                                        
                                   SOL PINSLEY


STATE OF NEW YORK
SARATOGA COUNTY, SS.

     At           4:20 PM                   , this 12th  day of JUNE    , 1995,
 Joseph Canterino personally appeared and he acknowledged this instrument,
 sealed and subscribed by him, to be his free act and deed and the free act and
 deed of Espey Mfg. & Electronics Corp.

                              Before me  SHEILA A. OSBORN  
                                         NOTARY PUBLIC
                                         Originally Commissioned
                                         Saratoga County
                                         My Commission Expires
                                         Dec. 30, 1996
STATE OF NEW YORK
SARATOGA COUNTY, SS.

     At           4:20 PM                    , this 12th  day of  JUNE,   1995,
 Sol Pinsley personally appeared and he acknowledged this instrument, sealed and
 subscribed by him, to be his free act and deed. 

                              Before me SHEILA A. OSBORN
                                        NOTARY PUBLIC
                                        Originally Commissioned
                                        Saratoga County
                                        My Commission Expires
                                        Dec. 30, 1996