STOCK PURCHASE AND CONFIDENTIALITY AGREEMENT

Stock Purchase and Confidentiality Agreement (the “Agreement”), dated March 13,
2007, between and among Merrimac Industries, Inc., a Delaware corporation (the
“Company”), with an address of 41 Fairfield Place, West Caldwell, MJ 07006, and
Adam Smith Investment Partners, L.P., a New York limited partnership (“ASIP”),
Adam Smith Capital Management LLC, a New York limited liability company
(“ASCM”), Diamond Capital Management, a New York Corporation (“DCM”), Adam Smith
Investments, Ltd., a British Virgin Island limited company (“ASI”), Richard
Grossman (“RG”), Orin Hirschman, (“OH”) and Richard and Ana Grossman JTWROS
(“RAG”), each with the address set forth on the signature pages attached hereto
(each of ASIP, ASCM, DCM, ASI, RG, OH and RAG, a “Seller”, and collectively, the
“Sellers”).

WHEREAS, The Sellers wish to sell to the Company, and the Company wishes to
purchase from the Sellers, certain outstanding shares of common stock of the
Company owned by the Sellers (such sale and purchase being referred to herein as
the “Transaction”);

WHEREAS, in connection with the Transaction, the Company will disclose to the
Seller certain confidential information relating to the Company’s business; and

WHEREAS, the Seller and the Company wish to set forth their understanding with
respect to such confidential information.

NOW, THEREFORE, the parties agree as follows:

1. Each Seller agrees to sell to the Company, free and clear of all liens and
encumbrances, and the Company agrees to purchase from each Seller, the number of
shares of common stock, par value $0.01 per share, of the Company set forth next
to each Seller’s name on Schedule A hereto (the “Shares”), at a price of $9.00
per share, representing an aggregate of 238,700 shares and an aggregate purchase
price of $2,148,300.

2. Each Seller represents to the Company, and the Company represents and
warrants to the Sellers, that it has the full right, power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby. Each Seller represents and warrants to the Company that it holds
exclusive record and beneficial legal title to the Shares set forth next to its
name on Schedule A attached hereto, free and clear of all liens, pledges,
encumbrances, restrictions, and claims.

3. Confidential Information For purposes of this Agreement, “Confidential
Information” means the information included in Schedule B hereto. The Sellers
hereby acknowledge the receipt of the Confidential Information included in
Schedule B.

4. Non-Disclosure and Trading Restrictions. Each Seller shall use the
Confidential Information only in connection with the Transaction. Each Seller
agrees to maintain the Confidential Information in confidence (within the
meaning of Rule 100(b)(2)(ii) of Regulation FD) and to not disclose the
Confidential Information to any third party without the

 

 

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Company’s prior written consent. While in possession of any Confidential
Information, none of any Seller, any affiliate or representative of any Seller,
and any person to whom the Seller discloses Confidential Information shall
engage in any transactions involving the Company’s securities except for the
Transaction. Each Seller acknowledges and agrees that it is aware of the
restrictions imposed by the United States securities laws on the purchase or
sale of securities by any person possessing material non-public information
about the issuer of such securities, and on the communication of such
information to any other person when it is reasonably foreseeable that such
other person is likely to purchase or sell such securities in reliance upon such
information.

5. Term. Each Seller’s obligations under this Agreement shall continue until the
earlier of (i) the time 48 hours after the Company files its Annual Report on
Form 10-K for the year ended December 31, 2006 with the Securities and Exchange
Commission or (ii) the time the Confidential Information shall become publicly
available.

6. Miscellaneous.

(a) This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of New York.

(b) This Agreement represents the entire understanding and agreement between the
Sellers and the Company with respect to the subject matter hereof, and
supersedes all other oral or written negotiations, communications,
understandings, agreements and representations (if any) made by or between the
Sellers and the Company.

(c) The provisions of this Agreement may not be amended, supplemented, or waived
orally, but only by a writing signed by the party as to whom enforcement of any
such amendment, supplement or waiver is sought.

(d) All of the terms and provisions of this Agreement shall be binding upon,
inure to the benefit of, and be enforceable by the Company, the Sellers and
their respective successors and assigns.

 

 

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.

 

 

 

 

COMPANY:

 

 

 

By: 

/s/ Robert V. Condon

 

 

 

 

Title: 

Vice President, Finance and
Chief Financial Officer

 

 

 

 

SELLERS:

 

 

/s/ Richard Grossman

 

 

 

Richard Grossman

101 East 52nd Street

New York, New York 10022

 

 

 

/s/ Orin Hirschman

 

 

 

Orin Hirschman

6006 Berkeley Avenue

Baltimore, Maryland 21209

 

 

 

ADAM SMITH INVESTMENT PARTNERS, L.L.C.

 

By: 

/s/ Richard Grossman

 

 

 

Richard Grossman

101 East 52nd Street

New York, New York 10022

 

 

 

ADAM SMITH INVESTMENT PARTNERS, L.P.

 

 

By: ADAM SMITH CAPITAL MANAGEMENT, L.L.C.

General Partner

 

By: 

/s/ Richard Grossman

 

 

 

Richard Grossman, Manager

101 East 52nd Street

New York, New York 10022

 

 

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DIAMOND CAPITAL MANAGEMENT INC.

 

 

 

By: 

/s/ Richard Grossman

 

 

 

 

Richard Grossman, Vice President

 

 

 

 

101 East 52nd Street

 

 

 

 

New York, New York 10022

 

 

 

ADAM SMITH INVESTMENT LTD.

 

 

 

 

By: DIAMOND CAPITAL MANAGEMENT, INC.

 

 

 

 

Investment advisor

 

 

 

 

By: 

/s/ Richard Grossman

 

 

 

 

Richard Grossman

 

 

 

 

c/o Insingor Trust (BVI) Limited

 

 

 

 

Tropic Isle Building

 

 

 

 

P.O. Box 438

 

 

 

 

Tortola, British Virgin Islands

 

 

 

RICHARD AND ANA GROSSMAN JTWROS

 

 

 

By: 

/s/ Richard Grossman

 

 

 

 

Richard Grossman

 

 

 

 

101 East 52nd Street

 

 

 

 

New York, New York 10022

 

 

 

 

By: 

/s/ Ana Grossman

 

 

 

 

Ana Grossman

 

 

 

HERSHEL & ETTIL BERKOWITZ

 

 

 

By: 

/s/ Hershel P. Berkowitz

 

 

 

 

Hershel P. Berkowitz

 

 

 

By: 

/s/ Ettil Berkowitz

 

 

 

 

Ettil Berkowitz

 

 

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JOSHUA HIRSCH

 

 

 

By: 

/s/ Joshua Hirsch

 

 

 

 

Joshua Hirsch

 

 

 

PAUL PACKER

 

 

 

By: 

/s/ Paul Packer

 

 

 

 

Paul Packer

 

 

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