EMPLOYMENT AGREEMENT

     This Employment  Agreement (the  "Agreement"),  entered into as of December
16, 1996, is by and between MERRIMAC INDUSTRIES, INC. (the "Company") and EUGENE
W. NIEMIEC (the "Executive").

     In  consideration  of the promises in this  Agreement,  the  mutuality  and
sufficiency of which are hereby acknowledged, the parties agree as follows:

     1.  Employment.  The Company hereby employs the Executive and the Executive
hereby  accepts  employment  by the Company under the terms and  conditions  set
forth in this Agreement.

     2. Term. Subject to the provisions of Paragraph-6  herein  ("Termination of
Employment"),  the  initial  term  of  the  Executive's  employment  under  this
Agreement  will commence on December 16, 1996 and will end on December 31, 1999,
and will continue from year to year thereafter, unless:

     (A) either party gives notice of termination of this Agreement to the other
at least  ninety (90) days prior to the end of the then present  term,  in which
case the  Executive's  employment  will terminate at the end of the then present
term; or

     (B) the  Executive's  employment is terminated  under Paragraph 6, in which
event the Agreement will terminate on the date set forth in Paragraph 6.

     3. Title and Duties.  The Executive  will serve as the Vice Chairman of the
Company.  The Executive shall be responsible for, among other things,  assisting
the President and Chief  Executive  Officer of the Company and  performing  such
other  duties  and  responsibilities  that are  consistent  with  his  position,
including  duties  consistent with his position that may be assigned to him from
time to time by the President and Chief Executive  Officer.  The Executive shall
report exclusively to the President and Chief Executive  Officer.  The Executive
agrees to devote  his full time,  attention,  skill and energy to the duties set
forth herein and to the operations of the Company, to use his efforts to promote
the success of the Company,  and to cooperate fully with the President and Chief
Executive  Officer in the advancement of the best interests of the Company.  The
Executive  will serve,  without  additional  compensation,  as a director of the
Company.   Nothing  in  this  Agreement  prevents  Executive  from  engaging  in
additional  activities in connection  with  personal  investments  and community
affairs that are not inconsistent with the Executive's duties4. Compensation and
Related Matters.  (a) In consideration  for Executive's  services to the Company
during the first year of  employment,  Executive  shall receive a base salary at
the annual rate of One  Hundred and Eighty  Thousand  Dollars  (U.S.  $ 180,000)
("Base  Salary").  The Base  Salary  shall be  payable  in  accordance  with the
Company's  regular payroll  schedule,  from which the Company shall withhold and
deduct all federal and state income,  social  security and disability  taxes and
other  deductions  as  required  by  applicable  laws.  The Base  Salary will be
reviewed by the Board of Directors on an annual basis and may be adjusted upward
but not  downward  to  reflect  the  Executive's  performance  and the scope and
success of the Company.

     (b) Sign-On Bonus.  (i) In connection with the execution of this Agreement,
the Company  shall grant to the  Executive  stock  options  (the  "Options")  to
purchase  50,000  shares of the common stock of the Company,  such Options to be
exercisable at the fair market price of the common stock at the close of trading
on December  31, 1996 and to have a term of ten (10)  years.  The Options  shall
vest as follows:

     Options to purchase  20,000 shares shall vest on the first  anniversary  of
the execution of this Agreement

     Options to purchase  15,000 shares shall vest on the second  anniversary of
the execution of this Agreement

     Options  to  purchase  15,000  shall vest on the third  anniversary  of the
execution of this Agreement.

     (ii) Except as otherwise provided in this Agreement,  the provisions of the
Stock  Option  Plan  shall  govern in  respect  of the  Executive's  rights  and
obligations relating to the Options.

                                      -1-
<PAGE>

     5. Employment Benefits. During the term of this Agreement,  Executive shall
be eligible for the following benefits:

     (a) Employee  Benefits.  The Executive  shall be entitled to participate in
the  Company's  employee  benefit  plans,  including  but not limited to medical
benefits,  life  insurance,  Employee Stock Purchase  Plans,  Stock Option Plan,
401(k)  plan and profit  sharing  plans,  as may be in effect from time to time,
under the same terms and conditions as similarly situated employees.

     (b)  Vacation and  Holidays.  The  Executive  shall be entitled to four (4)
weeks paid vacation per year,  plus those paid holidays to which other similarly
situated employees of the Company shall be entitled.

     (c) Bonuses and Stock Options. The Executive is eligible to receive bonuses
and stock options,  in addition to and separate from the stock options specified
in paragraph  4(b),  to the extent  bonuses and stock options are awarded by the
Company as determined within the sole discretion of the Board of Directors.

     (d) Automobile. The Executive shall be entitled to the use of an automobile
at the Company's expense, up to $700 per month, for the Executive's  performance
of his duties  under this  Agreement.  The car shall be  provided  either by the
Company, either owned or leased, or through reimbursement by the Company for the
costs of the car. The costs for which the Company shall be  responsible  are the
costs of  maintenance  and  repair,  applicable  insurance  and  gasoline  costs
incurred  by  the  Executive  for  business  purposes  in  connection  with  the
Executive's use of such automobile.

     (e) Expenses.  During his  employment  hereunder,  the  Executive  shall be
entitled  to receive  prompt  reimbursement  for all  reasonable  and  necessary
expenses  incurred by him in performing  services  hereunder,  provided that the
Executive  properly  accounts for such expenses in accordance with the Company's
policy then in effect.

     (f) Deferral of Compensation. The Company and the Executive agree to create
a  deferred  compensation  arrangement  for  some  portion  of  the  Executive's
compensation  hereunder for retirement purposes,  consistent with applicable law
as in effect from time to time.

     6. Termination of Employment.

     (a) Death. The Executive's  employment shall terminate immediately upon his
death. In such event, the Company shall pay to the Executive's estate all salary
and benefits accrued but unpaid through the date of death, and the Company shall
not have any further  obligations  under this Agreement,  except as set forth in
paragraphs  6(e), 6(f), 6(g) and as except for any accrued or vested benefits or
as may otherwise be required by law.

     (b)  Disability.  The  Executive's  employment  under this Agreement  shall
terminate if the Executive is deemed to have a "Disability"  (as defined herein)
as  determined by the Board of Directors.  For purposes of this  Agreement,  the
term  "Disability"  means that (i) as a result of physical or mental  illness or
injury as determined  under  applicable law and as confirmed by a medical doctor
of  appropriate  experience,  the  Executive is unable to perform the  essential
duties of his  position  for a period of four  consecutive  months;  or (ii) the
Executive is absent from his  position  for a period of ninety (90)  consecutive
work days or for a period  of 120  non-consecutive  work days in a  twelve-month
period.  In such  event,  the  Company  shall pay to  Executive  all  salary and
benefits  accrued but unpaid  through the date of  termination,  and the Company
shall not have any further obligations under this Agreement, except as set forth
in  paragraphs  6(e),  6(f) and 6(g),  and as except  for any  accrued or vested
benefits or as may otherwise be required by law.

     (c) For Cause.  Notwithstanding  any of the  foregoing  provisions  of this
Agreement,  the  Company  may,  at any time  during  the term of this  Agreement
without  prior  notice,  discharge  the  Executive  for "Cause" (as  hereinafter
defined).  In such event,  the  Company  shall pay to  Executive  all salary and
benefits  accrued but unpaid  through the date of  termination,  and the Company
shall not have any  further  obligations  under this  Agreement,  except for any
accrued or vested  benefits or as may  otherwise  be  required  by law.  For the
purposes  of this  Agreement,  the  Company  shall be  deemed  to have  Cause to
terminate the  Executive's  employment  hereunder  for:  (i) willful  failure to
perform normal and customary  duties for an extended period for any reason other
than death or total  disability;  (ii) gross  negligence or willful  misconduct,
including   but   not   limited   to,   fraud,   embezzlement   or   intentional
misrepresentation;  (iii)  commission  of, or indictment  or  conviction  for, a
felony; (iv) willfully engaging in competitive activities against the Company or
purposely aiding a competitor of the Company; (v) misappropriation of a material
opportunity  of the Company;  and (vi)  violation  of any material  term of this
Agreement  and failure to cure  within ten days after  receipt of notice of such
violation.  If the  Executive is dismissed  for Cause,  the Company shall pay to
Executive  all salary  and  benefits  accrued  but  unpaid  through  the date of
Termination,  and the Company shall not have any further  obligations under this
Agreement,  except for any  accrued or vested  benefits or as may  otherwise  be
required by law.

                                      -2-
<PAGE>

     (d) Notice of  Termination.  Any  termination  of employment by the Company
shall be communicated by a written notice of termination to the Executive.

     (e) Severance Benefits. If the Executive's  employment is terminated before
the end of the term as a result of death or Disability,  or if the Company gives
notice of termination  pursuant to Section 2(A), or the  Executive's  employment
ends and the  Company  elects not to renew the  Agreement,  then (i) the Company
shall pay to the Executive (or his estate),  on a monthly basis, the Base Salary
(less applicable withholdings) as in effect on the date of termination, from the
date of termination to (x) the end of the then present term or (y) eighteen (18)
months,  whichever period is greater (the "Severance Period");  (ii) the Company
shall continue the Executive's  group medical coverage for the Executive and his
spouse under the Company's group medical plan in effect from time to time, under
the same terms and  conditions as provided to comparable  employees,  during the
Severance  Period;  (iii) the Company shall provide life insurance  benefits and
long-term  disability  insurance benefits for the Executive during the Severance
Period;  and  (iv)  all  unvested  stock  Options  held by the  Executive  shall
immediately   vest  and  be   exercisable  by  the  Executive  of  his  estates'
representative in accordance with their terms.  During the Severance Period, the
Executive  agrees to provide  consulting  services to the Company as  reasonably
requested.

     (f) Consulting  Agreement.  At the conclusion of the Severance Period,  the
Company and the Executive shall enter into a Consulting  Agreement,  pursuant to
which  the  Executive  shall  provide  consulting  services  to the  Company  as
reasonably  requested for a period of ten (10) years.  In  consideration  of the
Executive's  services  under the  Consulting  Agreement,  during the term of the
Consulting Agreement the Company (i) shall pay to the Executive an annual amount
equal to one-half of his Base Salary as in effect as of the date of  termination
of employment,  (ii) provide to the Executive and his spouse continued  coverage
under the Company's  group health plan as in effect from time to time; and (iii)
maintain  life  insurance  for the  Executive  in the  amount  of  $500,000  and
long-term disability insurance intended to provide the Executive with 2/3 of his
compensation  under the  Consulting  Agreement  in the event that the  Executive
becomes  disabled.  In the event that the  Executive  dies or  becomes  disabled
during the Severance Period or during the term of the Consulting Agreement,  the
Company's  obligations to the Executive  cease and the Executive (or his estate)
shall be  eligible  to  receive  the  benefits  provided  under  the  applicable
insurance policy as provided  therein,  and any other accrued or vested benefits
or other benefits as required by law.

     (g) Severance Benefit Agreement.  To the extent the Executive's  employment
is terminated by the Company, and the Executive is otherwise entitled to receive
benefits  under a  Severance  Benefit  Agreement  between  the  Company  and the
Executive,  the Executive shall receive either the benefits  provided under this
Agreement or the benefits  provided  under the  Severance  Benefit  Agreement if
applicable, whichever are greater.

     7. Confidential Information.

     (a) The  Executive  agrees not to disclose,  either while in the  Company's
employ or at any time thereafter,  to any person not employed by the Company, or
not engaged to render  services to the  Company,  any  confidential  information
obtained  by  him  while  in  the  employ  of the  Company,  including,  without
limitation, any of the Company's inventions, software, data lists, client lists,
trading  policies,  pricing  policies,  business  plans,  or  customer  or trade
secrets; provided, however, that this provision shall not preclude the Executive
from use or  disclosure  of  information  which is in the public  domain or from
disclosure  required by law or court order.  The Executive also agrees that upon
leaving  the  Company's  employ  he will not take with  him,  without  the prior
written consent of the Board of Directors, any document of the Company, which is
of a confidential nature relating to the Company or its affiliates,  or, without
limitation, relating to its or their customers or trade secrets.

                                      -3-
<PAGE>

     8. Non-Competition.

     (a) The Executive agrees that if his employment with the Company terminates
for Cause, or he leaves the Company voluntarily,  he will not, without the prior
written consent of the Company,  for a period of twelve (12) months  thereafter,
alone or with or for others,  in  whatever  capacity,  directly  or  indirectly,
solicit or attempt to solicit  clients or  customers of the Company with whom he
did business  during his employment  with the Company,  or solicit or attempt to
solicit employees of the Company to leave the Company's employ.

     (b) The Executive expressly acknowledges and understands that the remedy of
law for any breach by him of this  Section-8  will be  inadequate,  and that the
damages  flowing from such breach are not readily  susceptible to being measured
in monetary terms.  Accordingly,  it is  acknowledged  that upon the Executive's
violation of any provision of this  Section-8,  the Company shall be entitled to
immediate  injunctive  relief and may obtain a temporary  order  restraining any
threatened or further breach. Nothing in this Section-8 shall be deemed to limit
the  Company's  remedies at law or in equity for any breach by the  Executive of
any of the  provisions of this  Section-8  which may be pursued or availed of by
the Company.

     (c) If  following  termination  of the  Executive's  employment  any of the
restrictions  pursuant to this  Section-8  shall for any reason be held by to be
excessively broad as to duration,  geographical scope, activity or subject, such
restrictions shall be construed so as to thereafter be limited or reduced to the
extent  required to be enforceable in accordance  with  applicable law; it being
understood  and agreed that by execution of this  Agreement  the parties  hereto
regard such  restrictions  as reasonable  and compatible  with their  respective
rights.

     9. Indemnification. The Executive agrees to indemnify and hold harmless the
Company and its  directors,  officers,  employees  and agents,  for all damages,
losses,  claims and expenses,  including reasonable attorneys' fees, arising out
of any violation by Executive of the terms of this  Agreement,  or from any acts
of intentional wrongdoing by the Executive.  The Company agrees to indemnify and
hold  harmless the  Executive  for all  damages,  losses,  claims and  expenses,
including  reasonable  attorneys'  fees,  arising  out of any  violation  by the
Company of the terms of this Agreement.

     10. Entire Agreement.  This Agreement contains the entire agreement between
the parties with respect to the subject  matter of this Agreement and supersedes
all prior agreements and  understandings,  oral or written,  between the parties
with respect to the subject  matter of this  Agreement.  This  Agreement  may be
amended only by an agreement in writing signed by both parties.

     11.  Governing  Law;  Arbitration.  This  Agreement will be governed by and
construed in accordance with the laws of the State of New Jersey, without giving
effect to the principles of conflicts of laws.

     All disputes  concerning the Executive's  employment with the Company,  the
termination  thereof,  the breach by either party of the terms of this Agreement
or any other matters relating to or arising from Executive's employment with the
Company shall be resolved in binding arbitration in a proceeding administered by
and under the rules and regulations of the American Arbitration Association,  in
the AAA office  located in New York,  New York.  The  arbitrator  shall not have
authority to modify or change any of the terms of this  Agreement.  Both parties
and the arbitrator will treat the arbitration  process and the activities  which
occur in the proceedings as confidential.

     12. Binding Effect;  Delegation of Duties  Prohibited.  This Agreement will
inure  to the  benefit  of and  will be  binding  upon  the  parties  and  their
respective successors, heirs and legal representatives.  Neither the Company nor
the  Executive  may assign or  delegate  their  respective  performance  of this
Agreement.

                                      -4-
<PAGE>

     13. Notices.  All notices and other communications that are required or may
be given under this Agreement must be in writing and will be deemed to have been
duly given when  delivered in person,  when received by telecopy  (provided that
the  sender  has  retained  a copy of the  notice  showing  the date and time of
receipt), upon delivery by a nationally recognized overnight courier service, or
three days after  being  mailed by  registered  or  certified  first class mail,
postage prepaid,  return receipt  requested,  to the party to whom the notice is
being given, as follows:


     If to the Company:

     Merrimac  Industries,  Inc. 
     41 Fairfield  Place 
     West  Caldwell,  New Jersey 07006  
     Facsimile:  (201)  575-0531  
     Attention:   Chairman  of  the  Compensation Committee

     If to the Executive:

     Eugene W. Niemiec 
     66 Skytop Rd. 
     Cedar Grove, New Jersey 07009

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


                                     MERRIMAC INDUSTRIES, INC.



                                     By:  Reynold K. Green    
                                     -----------------------
                                     Name:  Reynold K. Green




                                     EUGENE W. NIEMIEC
                                     ---------------------
                                     By: Eugene W. Niemiec

   




                                       -5-