MERRIMAC INDUSTRIES, INC.

                  STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS

Section 1. Purpose

     The  purpose  of the  Merrimac  Industries,  Inc.  Stock  Option  Plan  for
Non-Employee  Directors is to enable  Merrimac  Industries,  Inc. to provide its
Non-Employee Directors (as defined below) with options to purchase shares of the
common  stock of  Merrimac  Industries,  Inc.  and thereby to attract and retain
non-employee  directors of  exceptional  ability and to enable the  non-employee
directors to participate in the long-term growth of the Company by providing for
or increasing the proprietary interests of such persons in the Company,  thereby
assisting the Company to achieve its long-range goals.

Section 2. Definitions

As used in the Plan:
               "Act" means the Securities Exchange Act of 1934, as amended.

               "Code" means the Internal Revenue Code of 1986, as amended from 
                time to time.

               "Board" means the Board of Directors of the Company.

     "Closing  Price" means the closing  price of a share of Common Stock on the
American  Stock  Exchange  or,  if not  listed  on such  exchange,  on any other
national exchange on which the Common Stock is listed or on NASDAQ.

                  "Committee" means the entire Board.

     "Company" means Merrimac Industries,  Inc. and any present or future parent
or  subsidiary  corporations  (as  defined  in  Section  424 of the Code) or any
successor to such corporations.

     "Common  Stock" or "Stock" means the Common Stock,  $.50 par value,  of the
Company.

     "Fair Market  Value" means,  with respect to Common Stock,  the fair market
value as determined by the Committee in good faith or in the manner  established
by the  Committee  from  time to time;  provided,  however,  that so long as the
Common Stock is listed on the American Stock Exchange,  the Fair Market Value of
Common  Stock  subject to an Option  shall be equal to the Closing  Price on the
date the Option is  granted.  

     "Non-Employee  Director"  means a director of the Company who is not at the
time of receipt of options to purchase  shares of Common  Stock  pursuant to the
Plan a full-time employee of the Company or any subsidiary thereof.

     "Non-Qualified  Stock Option" means an option to purchase  shares of Common
Stock granted to a Non-employee Director under the Plan which is not intended to
meet the requirements by Section 422 of the Code or any successor provision.

     "Option" means a Non-Qualified Stock Option.

     "Plan" means the Merrimac  Industries,  Inc.  Non-Employee  Director  Stock
Option Plan.

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Section 3. Administration

     (a) The Plan shall be  administered  by the Committee.  Among other things,
the Committee  shall have the power and  authority,  subject to the terms of the
Plan, to administer, construe and interpret the Plan.

     (b) Subject to the  provisions  of Section 7(a),  the Committee  shall have
authority to adopt, alter and repeal such administrative  rules,  guidelines and
practices  governing  the  operation  of the Plan as it shall  from time to time
consider  advisable and to decide all disputes  arising in  connection  with the
Plan. The Committee's  decision and interpretations  shall be final and binding.
Any action of the Committee with respect to the administration of the Plan shall
be taken pursuant to a majority vote or by the unanimous  written consent of its
members.

     (c) The Committee may employ such legal counsel,  consultants and agents as
it may deem desirable for the  administration  of the Plan and may rely upon any
opinion  received  from any  such  counsel  or  consultant  and any  computation
received from any such consultant or agent.  The Committee shall keep minutes of
its actions under the Plan.


Section 4. Eligibility

     All Non-Employee Directors of the Company shall participate in the Plan.


Section 5. Shares of Stock Available for Options

     Options  may be  granted  under the Plan for up to 50,000  shares of Common
Stock.  If any  Option  in  respect  of shares of  Common  Stock  expires  or is
terminated before exercise or is forfeited for any reason,  the shares of Common
Stock subject to such Option,  to the extent of such expiration,  termination or
forfeiture,  shall not be available for any future grant under the Plan.  Shares
of  Common  Stock  issued  under  the  Plan may  consist  in whole or in part of
authorized but unissued shares or treasury shares.

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Section 6.    Nondiscretionary Grants of Options to Non-Employee Directors

     (a) On the date of adoption of the Plan by the Board,  the  Chairman of the
Board shall receive the grant of a Non-Qualified Stock Option to purchase 20,000
shares of Common  Stock  and each  other  current  Non-Employee  Director  shall
receive the grant of a  Non-Qualified  Stock Option to purchase 15,000 shares of
Common Stock.

     Options granted to Non-Employee Directors shall be immediately exercisable.
The  number and nature of Shares  subject to any Option  held by a  Non-Employee
Director shall be subject to adjustment  only to the extent set forth in Section
6(f).

     (b) The term of each Option  granted a  Non-Employee  Director shall be ten
(10) years from its date of grant,  unless  sooner  terminated  or  extended  in
accordance with Section 6(e).

     (c) The purchase  price of the Shares  subject to each Option  granted to a
Non-Employee  Director  shall be the  Closing  Price on the date the  Option  is
granted.

     (d) Unless permitted by the Committee in the applicable award agreement, no
Options shall be transferable by a Non-Employee Director.


     (e) If a  Non-Employee  Director  dies while  serving as a  Director,  such
Non-Employee  Director's  Options  shall be  exercisable  by  either  his or her
executor  or  administrator  or, if not so  exercised,  by the  legatees  or the
distributees of his or her estate,  only during the twelve (12) months following
his or her death.

     If a  Non-Employee  Director's  membership on the Board  terminates for any
reason  other  than  death,  such  Non-Employee   Director's  Options  shall  be
exercisable only during the three (3) months following the date of termination.


     (f) In the event of a stock dividend,  stock split or combination of shares
of Common Stock, recapitalization or other increase or decrease in the number of
issued shares of Common Stock effected  without receipt of  consideration by the
Company,  appropriate and proportionate  adjustment shall be made in the number,
kind and per share exercise price of shares subject to Options then  outstanding
and to be granted to Non-Employee Directors under this Section 6.

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Section 7. General  Provisions  Applicable to Options 

     (a) Each Option under the Plan shall be  evidenced  by a writing  signed by
the Company and the  Non-Employee  Director  specifying the terms and conditions
thereof and containing such other terms and conditions not inconsistent with the
provisions  of the Plan as the  Committee  considers  necessary  or advisable to
achieve the purposes of the Plan or comply with  applicable  tax and  regulatory
laws and accounting principles.


     (b) If, and to the extent,  Federal income tax  withholding  (and state and
local income tax  withholding,  if applicable) may be required by the Company in
respect of taxes on income realized by the  Non-Employee  Director upon or after
exercise of the Option or upon disposition of the shares acquired thereby,  such
income tax withholding may be paid by the  Non-Employee  Director in (1) cash or
(2) by electing either (i) to have the Company  withhold a portion of the shares
of Common  Stock  otherwise  issuable  upon  exercise  of the  Option or (ii) to
deliver other shares owned by the Non-Employee Director, in either case having a
Fair Market  Value (on the date that the amount of tax elected to be withheld is
to be determined) of the amount to be withheld. The Company has no obligation to
issue any shares of Common  Stock upon  exercise of an Option until any required
taxes have been satisfied.


     (c) Upon exercise of an Option, the Non-Employee  Director shall deliver to
the Company an amount equal to the purchase  price of the Shares with respect to
which the Option is being  exercised  times the number of shares  subject to the
Option being  exercised.  Such payment may be made in accordance with procedures
established by the Committee.

Section 8.  Miscellaneous  

     (a)  Nothing  contained  herein  shall be deemed to create the right in any
Non-Employee  Director  to  remain a member  of the  Board of  Directors  of the
Company,  to be nominated for  re-election or to be re-elected as such or, after
ceasing to be such a member,  to receive any Options  under the Plan to which he
or she is not already entitled.


     (b) The Options granted hereunder shall be in addition to any other fees to
which a Non-Employee Director may be entitled.

     (c) Subject to the provisions of the  applicable  Option,  no  Non-Employee
Director  shall have any rights as a  shareholder  with respect to any shares of
Common Stock to be distributed under the Plan until he or she becomes the holder
thereof.

     (d)  Notwithstanding  anything to the contrary  expressed in this Plan, any
provisions  hereof that vary from or  conflict  with any  applicable  Federal or
State securities laws (including any regulations  promulgated  thereunder) shall
be deemed to be modified to conform to and comply with such laws.

     (e) No member of the Board of  Directors or the  Committee  shall be liable
for any action or  determination  taken or granted in good faith with respect to
this Plan nor shall any member of the Board of  Directors  or the  Committee  be
liable for any  agreement  issued  pursuant to this Plan or any grants under it.
Each member of the Board of Directors and the Committee  shall be indemnified by
the Company  against any losses  incurred  in such  administration  of the Plan,
unless his action constitutes serious and willful misconduct.

     (f) The Plan shall be effective on the date of adoption by the Board.


     (g) The Board may  amend,  suspend  or  terminate  the Plan or any  portion
thereof at any time, provided that it shall have no power to change the terms of
any award  theretofore  granted  under the Plan so as to impair  the rights of a
Non-Employee  Director  without the consent of the  Non-Employee  Director whose
rights would be affected by such change except to the extent,  if any,  provided
in the Plan or in the award.

     (h) To the extent that State laws shall not have been preempted by any laws
of the United States,  the Plan shall be construed,  regulated,  interpreted and
administered according to the other laws of the State of New Jersey.

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