SEPARATION AGREEMENT AND GENERAL RELEASE

     THIS SEPARATION AGREEMENT AND GENERAL RELEASE (hereinafter  "Agreement") is
made and entered into this 16th day of December,  1998, by and between  Merrimac
Industries, Inc., and its affiliated, subsidiary and related entities, and their
present and former officers, directors,  employees, trustees, agents, attorneys,
successors  and assigns  (hereinafter  "Merrimac"),  and Jacob Lin  (hereinafter
"Lin").  

     WHEREAS,  Lin's employment with Merrimac will be terminated on December 16,
1998; and

     WHEREAS,  Lin and Merrimac  agree that it is in the best  interests of both
parties to enter into this Agreement.

     NOW, THEREFORE, Lin and Merrimac hereby agree as follows:

     1. In consideration of the payments set forth herein,  Lin does irrevocably
and unconditionally  release and forever discharge Merrimac from and against any
and all  claims,  demands,  causes of  action,  suits,  judgments,  liabilities,
damages,  costs and  expenses,  of any kind or nature  whatsoever,  disputed  or
undisputed,  known or unknown, in law or in equity, which Lin ever had, now has,
or hereafter can,  shall or may have against  Merrimac from the beginning of the
world to the date of execution of this Agreement,  including but not limited to:

     (a) any and all claims arising out of Lin's employment with Merrimac or the
termination  thereof; any and all claims under Title VII of the Civil Rights Act
of 1964, as amended,  the Civil Rights Act of 1866,  the Age  Discrimination  in
Employment Act of 1967, as amended,  the New Jersey Law Against  Discrimination,
as amended, the Employee Retirement Income Security Act of 1974, as amended, the
Americans  With  Disabilities  Act  of  1990,  and  the  Conscientious  Employee
Protection Act;

     (b) any and all claims of  wrongful  discharge,  intentional  or  negligent
infliction  of  emotional  distress,  misrepresentation,  defamation,  breach of
contract or implied contract,  or any claims arising under Merrimac's  policies,
employee handbooks, insurance programs or oral or written representations; or

     (c)  any  and  all  claims  under  any  other   federal,   state  or  local
constitution,  statute,  rule,  regulation  or  principle  of  common  law.  Lin
understands  that he is not releasing any claims against Merrimac that may arise
after the date of execution of this Agreement.

     2. Merrimac  agrees to provide  certain  payments and benefits to Lin (less
applicable federal and state taxes) as follows: 

     a) Severance payments in the sum of $13,750.00 per month for six (6) months
(the  "Severance  Period") or a total sum of $ 82,500.00.  The Severance  Period
shall commence  after the expiration of the seven (7) day revocation  period set
forth in Paragraph 18 hereof.

     b) Payment in the sum of $ 6,346.15 for accrued but unused vacation time of
two (2) weeks.

     c)  Merrimac  group  medical and dental  benefits  during the six (6) month
Severance Period. Except for vacation pay, Lin acknowledges that he is receiving
the  aforesaid  payments and  benefits  under this  Agreement  that he would not
otherwise  have been  entitled  but for the  execution  of this  Agreement.  Lin
further  acknowledges  that no  other  wages,  compensation,  bonus,  incentive,
payments, monies or other benefits are due him.

     3. Lin  understands  and agrees  that no  payment  shall be made under this
Agreement  until seven (7) days after  Merrimac has received this document fully
executed by Lin. 

     4.  Lin  hereby  resigns  as  an  officer  and  director  of  Merrimac,  as
applicable. Lin shall execute and submit formal resignations as may be requested
by Merrimac. 

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<PAGE>
     5.  (a) In  exchange  for the  consideration  provided  to Lin  under  this
Agreement, Lin shall also provide up to ten (10) hours per month of advisory and
consulting  services to Merrimac during the Severance Period as may be requested
from time to time in the sole  discretion  of the  Chief  Executive  Officer  of
Merrimac or his designee. No additional compensation or fees will be paid to Lin
for such  services,  except for  reasonable  and actual  out-of-pocket  business
expenses  upon  presentation  of  appropriate   receipts  and  which  have  been
authorized in advance by Merrimac.  Lin shall fully  cooperate  with Merrimac in
providing such services from time to time during the Severance Period.

     (b) Lin shall provide such services in the New Jersey area or at such other
location as may be mutually agreed upon by Lin and the Chief  Executive  Officer
of Merrimac or his designee.
         
     (c) Nothing  contained in this  Agreement  shall  constitute  an employment
agreement  and  Lin  shall  not  be  considered  an  employee  nor  entitled  to
participate  in any  benefits,  plans or programs  maintained  for  employees of
Merrimac.   Lin  shall  provide  such  consulting  services  as  an  independent
contractor  and shall  have no power to bind  Merrimac  or assume or create  any
obligation  or  responsibility  on behalf of Merrimac.  

     6. Lin understands and agrees that neither this Agreement nor the execution
thereof nor the payment of any monies hereunder shall constitute an admission of
any liability or violation of any law, contract  provision,  rule or regulation,
as to which Merrimac  expressly  denies any such liability or violation.  

     7. Lin represents and warrants that he has not and will not file any claim,
complaint,  action, suit, charge or grievance against Merrimac with any federal,
state or local agency, board, commission, committee, legislative body, court, or
other  forum or  entity  relating  to any  alleged  claim  released  under  this
Agreement.  This  Agreement  shall  constitute  a  complete  defense to any such
proceeding.  Lin further  represents  and warrants  that he will not  encourage,
participate,  assist or  cooperate  with any person or entity to file any claim,
complaint,  action,  suit,  charge or grievance  against  Merrimac.  Lin further
represents  and  warrants  that  he  shall  fully  cooperate  with  Merrimac  in
connection with any investigation,  claim,  complaint,  action,  suit, charge or
grievance by or against Merrimac.
 
     Nothing  contained  in this  paragraph  shall affect the right of the Equal
Employment  Opportunity Commission to enforce applicable age discrimination laws
or conduct any investigation or proceeding. Lin waives and releases any right to
recover any remedial  relief,  damages or penalties in any lawsuit or proceeding
brought by Lin, any  administrative  agency, or any other person on Lin's behalf
or which includes Lin in any class.
        
     8.  Lin  agrees  to keep  this  Agreement  and the  terms  hereof  strictly
confidential and shall not disclose, directly or indirectly, such matters to any
person, firm, association, partnership, corporation or other entity except Lin's
legal  representatives,  accountants  or tax  authorities.  Lin may disclose the
terms of this  Agreement  on a strictly  confidential  basis to any  prospective
employer.
         
     9. Lin agrees not to use, copy, or disclose, directly or indirectly, to any
person,  firm,  association,   partnership,  corporation  or  other  entity  any
confidential, proprietary or financial information, or trade secrets of Merrimac
including,  without limitation,  any of Merrimac's inventions,  software,  data,
methods of doing business,  client or customer lists,  vendor or supplier lists,
sales or field representative lists, pricing plans or policies,  marketing plans
or policies,  human  resource  organization,  personnel,  plans or policies,  or
business plans or policies; provided, however, this provision shall not preclude
Lin from the use,  copy or  disclosure  of  information  which is in the  public
domain  through  no fault  of Lin or from  disclosure  required  by law or court
order.  Lin represents  and warrants that he has returned all  documents,  data,
information, software and other property of Merrimac.

     10. Lin  covenants  and agrees that for a period of two (2) years after the
date of this  Agreement,  he shall not,  directly or  indirectly:  (a)  recruit,
solicit,  entice, or initiate contact for the purpose of offering  employment to
any  current  employee of Merrimac or any person who was an employee of Merrimac
within a period of one (1) year after that person leaves the employ thereof, and
will notify Merrimac before  employing any such person;  (b) solicit,  interfere
with or endeavor to entice away from Merrimac any of its  customers,  suppliers,
or sales or field  representatives;  or (c) engage in any activity,  business or
service,  either  on his  own  account  or as an  employee,  officer,  director,
partner, trustee, principal,  consultant,  joint venturer, investor or otherwise
that in whole or in part is competitive with or adverse to the best interests of
the business activities of Merrimac.

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<PAGE>
     11. Lin  covenants  and agrees that for a period of two (2) years after the
date of this  Agreement,  he  shall  not,  directly  or  indirectly,  (a) seek a
position on the Board of  Directors  of  Merrimac;  (b) solicit  proxies for the
election of a member of the Board of Directors of Merrimac; or (c) join with any
other person to form a "group" for purposes of participating in any registration
under  Section  13(d) of the  Securities  Exchange Act of 1934,  as amended (the
"Exchange Act"), and the rules promulgated thereunder, with respect to shares of
capital stock of the Company;  provided,  however,  that these obligations shall
terminate  in the event of a "Change  in  Control"  (as  defined  herein) of the
ownership of Merrimac,  in which Change in Control Lin has no involvement during
the restricted period.
         
     For purposes of this  provision,  a "Change in Control"  shall be deemed to
have occurred if (x) any person (as the term is used in Sections 13(d) and 14(d)
of the Exchange Act), who is not now a current affiliate or a 5% or more holder,
is or becomes the beneficial owner (as that term is used in Section 13(d) of the
Exchange Act, and the rules and regulations promulgated thereunder, as in effect
on July 1, 1997) of stock of the  Company  entitled to cast more that 15% of the
votes at the time  entitled to be cast  generally for the election of directors;
(y) more than 50% of the members of the Board of Directors of Merrimac shall not
be  Continuing  Directors  (which term,  as used herein,  means the directors of
Merrimac (I) who were members of the Board of Directors of Merrimac on August 1,
1997 or (II) who subsequently  became directors of Merrimac and who were elected
or  designated  to be  candidates  for  election  as  nominees  of the  Board of
Directors,   or  whose   election  as  nomination  for  election  by  Merrimac's
stockholders was otherwise  approved,  by a vote of a majority of the Continuing
Directors  then on the Board of  Directors;  or (z) Merrimac  shall be merged or
consolidated   with,  or,  in  any   transaction  or  series  of   transactions,
substantially  all of the  business  or  assets  of  Merrimac  shall  be sold or
otherwise  acquired by, another  corporation or entity and, as a result thereof,
the  stockholders  of the Company  immediately  prior  thereto shall not have at
least 50% or more of the combined  voting power of the  surviving,  resulting or
transferee corporation or entity immediately thereafter.
       
     12. Lin and  Merrimac  agree not to publish or  otherwise  communicate  any
disparaging  statements  about  Merrimac  or its  former and  present  officers,
directors, employees and agents, or Lin.

     13.  In the  event  of an  actual  or  threatened  breach  of any of  Lin's
obligations  under this  Agreement,  Merrimac shall be entitled to an injunction
restraining such breach or an appropriate decree of specific performance of such
obligation without the necessity of: (a) showing actual damages or that monetary
damages  would not afford an adequate  remedy at law; or (b) posting any bond or
security. In the event of litigation to enforce or defend its rights or remedies
under  this  Agreement,  Merrimac  shall be  entitled  to recover  its  damages,
attorneys fees, costs of suit and litigation expenses.  Further, in the event of
a breach of any of Lin's obligations under this Agreement, Lin shall forfeit all
future  payments and benefits and Merrimac shall be entitled to recover all past
payments and benefits made to Lin under this Agreement.

     14.  Lin  waives  any  claim  for  reinstatement  and  will not  apply  for
re-employment for any position with Merrimac.

     15. Lin represents and  acknowledges  that in executing this Agreement,  he
does not rely and has not relied upon any  representation  or statement  made by
any  of   Merrimac's   officers,   directors,   employees,   agents,   trustees,
representatives or attorneys, except as specifically stated in this Agreement.

     16. This  Agreement is made and entered into within the State of New Jersey
and shall in all respects be  interpreted,  governed and enforced in  accordance
with the laws of the State of New Jersey  without  giving effect to any conflict
of law rules.

     17. Lin  acknowledges  that he has been given twenty-one (21) days from the
date of receipt of this Agreement to review and consider same. Lin is advised to
consult with an attorney of his choice prior to executing this Agreement and has
been given an opportunity to do so. Lin further acknowledges that this Agreement
is fair and equitable and enters into this Agreement  knowingly and  voluntarily
and of his own free will.  Lin may waive his right to the full  twenty-one  (21)
day review  period in order to execute  and return  this  Agreement  earlier and
receive payment sooner.

                                      -3-
<PAGE>
     18. Lin further  understands  and agrees that this  Agreement  shall not be
effective or enforceable  for a period of seven (7) days following his execution
of this Agreement,  and that Lin may revoke this Agreement for any reason during
this seven (7) day period in which event this  Agreement  shall  become null and
void in its entirety.  It is further  understood  that no payments shall be made
under  this  Agreement  until the  expiration  of the  seven (7) day  revocation
period.

     19. In the event any  restriction  or provision set forth in this Agreement
shall be adjudged  by a court to be void or  unenforceable  for any reason,  but
would be valid if part of the wording thereof were deleted or the period thereof
reduced or the area dealt with thereby reduced in scope,  then such  restriction
shall apply with such  revisions or  reductions as may be necessary to make them
valid,  effective and  enforceable.  If any provision of this  Agreement or part
thereof  shall  ultimately  be  held  to be void  or  unenforceable,  then  such
provision or part thereof shall be deemed  deleted and the remaining  provisions
of this Agreement shall remain in full force and effect.
         
     20. This Agreement sets forth the entire understanding  between the parties
hereto - 7 - and  supersedes  any and all prior  agreements  or  understandings,
written or oral,  between the parties  pertaining to the subject  matter hereof.
This  Agreement  shall be binding  upon and inure to the  benefit of the parties
hereto   and  their   respective   heirs,   executors,   administrators,   legal
representatives, successors and assigns.

     IN WITNESS  WHEREOF,  the parties hereto have executed this Agreement as of
the dates set forth below.


               THE UNDERSIGNED HAS READ THIS SEPARATION AGREEMENT
                 AND GENERAL RELEASE, FULLY UNDERSTANDS IT, AND
                 VOLUNTARILY AND KNOWINGLY AGREES TO ITS TERMS.


 

Witness:  /s/ Olivia McKay                            /s/  Jacob Lin
          -----------------                           ---------------
             (Olivia McKay)                               (Jacob Lin)
 
Date of Execution: December 23,1998                                             


                                                  MERRIMAC INDUSTRIES, INC.:


Witness:___________________________                By: /s/  Rey Green      
                                                   --------------------------
                                                           (Reynold K. Green)
Date of Execution: December 23, 1998


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