<PAGE>
                                                                  EXHIBIT 10(rr)

                        TERM LOAN MODIFICATION AGREEMENT

         THIS TERM LOAN MODIFICATION AGREEMENT (this "Agreement") is made
effective as of the 28th day of December, 2002 by and between FLEET NATIONAL
BANK (F/K/A SUMMIT BANK), a national banking association organized and existing
under the laws of the United States of America with an address at 208 Harristown
Road, Glen Rock, New Jersey 07452 (the "Bank") and MERRIMAC INDUSTRIES, INC., a
Delaware corporation, with an address at 41 Fairfield Place, West Caldwell, New
Jersey 07006 (the "Borrower').

         WHEREAS, the Bank and the Borrower entered into a certain loan
arrangement (the "Loan Arrangement") on March 26, 2002, whereby the Bank
extended to the Borrower a certain term loan in the principal amount of Three
Million Five Hundred Thousand Dollars ($3,500,000.00);

         WHEREAS, as a condition to the Bank making certain additional
accommodations to the Borrower in connection with the Loan Arrangement the
Borrower has agreed and is required to, among other things, execute this
Agreement; and

         WHEREAS, this Agreement is being entered into to (i) accelerate the
maturity date to January 31, 2004, (ii) modify certain financial covenants, and
(iii) make certain other amendments and modifications to the Loan Documents (as
defined herein).

         NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, it is hereby agreed by the Bank
and the Borrower that the Loan Documents (as defined herein) are amended as
follows:

         1. LOAN DOCUMENTS. Reference is made to the Loan Arrangement between
the Bank and the Borrower evidenced by, among other documents, instruments, and
agreements, the following:

(i)      a certain Term Loan Note dated March 26, 2002, in favor of Bank in the
         original principal amount of Three Million Five Hundred Thousand
         Dollars ($3,500,000.00) (the "Note");

(ii)     a certain Term Loan and Security Agreement dated March 26, 2002, by and
         between Bank and Borrower (the "Loan Agreement");

(iii)    a certain First Mortgage and Security Agreement dated March 26, 2002,
         made by Borrower in favor of the Bank (the "Mortgage") as security for
         the Borrower's payment obligations due under the Note;

(iv)     a certain Absolute Assignment of Leases and Rents dated March 26, 2002,
         from the Borrower to the Bank (the "Assignment of Rents"); and



<PAGE>

(v) a certain Environmental Indemnity Agreement dated March 26, 2002, from the
Borrower to the Bank (the "Environmental Agreement).


         The Note, Loan Agreement, Mortgage, Assignment of Rents and
Environmental Agreement together with any and all other instruments, documents
contracts or agreements which evidence, secure or otherwise relate to the
Borrower's obligations with respect to the Loan Arrangement, all as modified by
any prior amendment agreements are herein collectively referred to as the "Loan
Documents." All capitalized terms used in this Agreement and not otherwise
defined herein shall have the meaning ascribed in the Loan Agreement.

         2. AMENDMENTS TO LOAN AGREEMENT. The parties hereto agree to make the
following changes to the Loan Agreement:

         (a) SECTION 2.1 is hereby deleted in its entirety and replaced with the
following:

                  "2.1. TERM LOAN. The Bank agrees, subject to the terms and
         conditions hereinafter set forth, to make a term loan to the Borrower
         in the aggregate principal amount of Three Million Five Hundred
         Thousand Dollars ($3,500,000) (the "LOAN" or "TERM LOAN") on the date
         hereof (the "CLOSING DATE"). The Borrower may not reborrow any
         principal amounts repaid or prepaid on the Term Loan. The Term Loan
         shall be evidenced by a Term Loan Note in the form provided to the
         Borrower by the Bank (together with any attachments thereto and
         amendments or modifications thereto in effect from time to time,
         hereinafter referred to as the "NOTE"). The Term Loan shall be for a
         term commencing on the Closing Date and terminating on January 31, 2004
         (the "MATURITY DATE").

         (b) SECTION 5.2(c) is hereby deleted in its entirety and replaced with
the following:

                  "(c) Within forty-five (45) days of the end of each fiscal
         quarter, quarterly reports on Form 10-Q, current reports on Form 8-K,
         proxy statements and any other reports filed with or filings made with
         the Securities and Exchange Commission. With respect to financial
         statements included in the reports on Form 10-Q, both the Chief
         Executive Officer and Chief Financial Officer of the Borrower shall
         certify same to be complete and correct, which certificate shall
         include a statement (i) of their examination (which shall include a
         review of the relevant provisions of this Agreement), (ii) that the
         Company is in compliance with all financial covenants contained in this
         Agreement, and (iii) indicating whether their examination has disclosed
         the existence of any condition or event which constitutes an Event of
         Default, and, if so, specifying the nature and period of existence
         thereof."

         (c) SECTION 5.2(d) is hereby deleted in its entirety and replaced with
the following:

                  "(d) Within fifteen (15) days of the end of each month (for
         each month under this Agreement), an accounts recivable and accounts
         payable aging report in a form reasonably satisfactory to Bank."




                                       2
<PAGE>


         (d) A new SECTION 5.2(g) is hereby added to the Loan Agreement as
follows:

                  "(g) Within thirty (30) days of the end of each month, monthly
         prepared management financial statements (which shall include a balance
         sheet and income statement) which contain a comparison of actual
         financial results to budgeted amounts for the Borrower (excluding
         Filtran), prepared using principles consistent with Borrower's
         historical financial statements, together with appropriate details and
         a statement of underlying assumptions."

         (e) A new SECTION 5.15 is hereby added to the Loan Agreement as
follows:

                  "5.15 CERTIFICATES AS TO COLLATERAL. The Borrower shall
         deliver to Bank, within thirty (30) days of the end of each fiscal
         quarter, a certificate from both the Chief Executive Officer and Chief
         Financial Officer of the Borrower, which certificate shall include a
         statement (i) of their examination of the Collateral, and (ii) setting
         forth whether any of the Collaterall has been removed or transferred
         from the location set forth on Schedule 3.3(a) and, if so, setting
         forth the exact dates and locations where such collateral was moved or
         transferred, and (iii) indicating whether their examination has
         disclosed the existence of any condition or event which constitutes a
         breach of the terms under Section 3.3, and, if so, specifying the
         nature and date(s) of such breach. Notwithstanding the foregoing,
         Borrower expressly acknowledges that, as conemplated by Section 3.3,
         Borrower is prohbited from transferrring, removing or disposing of any
         Collateral (including, without limitation, transferring Collateral to
         the Costa Rica Facilities) without the express written consent of Bank"

         (f) A new SECTION 5.16 is hereby added to the Loan Agreement as
follows:

                  "5.16 EXAMINATIONS BY BANK. Without limiting any of Bank's
         other rights under this Agreement, Borrower shall permit the Bank or
         any Persons designated by it to conduct one (1) field examination of
         Borrower (for all of the loans between Bank and Borrower) within each
         three (3) month period at the Borrower's expense. In connection with
         such field exams, the Persons designated by the Bank may call at the
         Borrower's places of business at any reasonable times, and, without
         hindrance or delay, inspect Collateral and inspect, audit, check and
         make extracts from the Borrower's `books, records, journals, orders,
         receipts and any correspondence and other data relating to the
         Borrower's businesses, the Collateral or any transactions between the
         parties hereto, and shall have the right to make such verification
         concerning such Borrower's businesses as the Bank may consider
         reasonable under the circumstances. The Bank, through its officers,
         employees or agents shall have the right, at any time and from time to
         time, in Borrower's name (or the Bank's name after the occurrence of an
         Event of Default), to verify the validity, amount or any other matter
         relating to any of Borrower's Accounts, by mail. The Borrower
         authorizes the Bank to discuss the affairs, finances and business of
         Borrower with any officers, employees or directors of Borrower and to
         discuss the financial condition of Borrower with Borrower's independent
         public accountants. Any such discussions shall be without liability to
         the Bank or to Borrower's independent public accountants. Borrowers
         shall reimburse the Bank for all expenses, plus all out-of-pocket costs
         incurred by the Bank in conjunction with such field exams hereunder,
         and, for other fees, costs and expenses incurred by the Bank in the
         exercise of any of its other rights


                                       3
<PAGE>

         hereunder. All such fees, costs and expenses shall constitute
         Obligations hereunder, shall be payable on demand and, until paid,
         shall bear interest at the highest rate then applicable to Loans
         hereunder."

         (g) SECTION 6.15 is hereby deleted in its entirety and replaced with
the following:

                  "6.15 FINANCIAL COVENANTS. The Borrower shall comply with the
         following financial covenants, unless the prior written consent of the
         Bank is obtained:

                  (a) Maximum Leverage Ratio. The Leverage Ratio shall not
         exceed 1.10:1. at the end of any quarter-annual period during the
         Borrower's fiscal year;

                  (b) Fixed Charge Coverage Ratio. Except as otherwise set forth
         in this Section 6.15(b), commencing with the fiscal quarter ending on
         or about December 28, 2002 and at the end of each fiscal quarter
         thereafter, the Fixed Charge Coverage Ratio shall not be less than
         1.75:1.00. Notwithstanding the foregoing, the Fixed Charge Coverage
         Ratio shall not be (i) less than 1.60:1.00 at the end of the fiscal
         quarter ending on or about June 28, 2003, and (ii) tested for
         compliance for the fiscal quarter ending on or about March 29, 2003;
         and

                  (c) Minimum Tangible Net Worth. As and at each date listed in
         the table below, the Tangible Net Worth shall not be less than the
         amount set forth opposite such date in said table:


                                                    Tangible
                        Testing Date                Net Worth
                        ------------                ---------
                          3/29/03                 12,936,000.00
                          6/28/03                 12,594,000.00
                          9/27/03                 12,623,000.00
                          1/03/04                 12,605,000.00
                (end date of each subsequent      12,605,000.00
                      fiscal quarter)

                  (d) The Borrower's negative net income, if any, for the fiscal
         quarter ending on or about March 29, 2003 shall not exceed the sum of
         Four Hundred Thousand Dollars ($400,000.00).

                  (e) Except as otherwise set forth above, each of the foregoing
         financial covenants will be tested for compliance at the end of
         eachfiscal quarter, and the Borrower will report its compliance or
         non-compliance therewith to the Bank in the manner and as required by
         Section 5.2(c) of this Agreement."

         (h) SCHEDULE 1 DEFINITIONS. The definitions of the terms "FIXED CHARGE
COVERAGE RATIO" and "LEVERAGE RATIO" shall each be deleted in their entirety and
replaced with the following:



                                       4
<PAGE>

                  "FIXED CHARGE COVERAGE RATIO" means net income plus taxes,
         interest expense, depreciation, amortization, principal repayments on
         loans due from Filtran and other subsidiaries less cash taxes,
         dividends, and unfunded capital expenditures divided by interest
         expense and principal payments on long-term debt.

                  ""LEVERAGE RATIO" means the ratio of total liabilities
         (excluding liabilities of Filtran) to Tangible Net Worth.


         3. WAIVER OF EVENT OF DEFAULT. The Borrower acknowledges that it failed
to comply with Section 6.15 of the Loan Agreement by failing to maintain
Borrower's Tangible Net Worth at the required level, as of December 28, 2002,
and that such failure constitutes an Event of Default under the Loan Agreement.
The Bank hereby grants a waiver of the aforesaid Event of Default. Except as
otherwise expressly provided in this Agreement, this waiver shall not constitute
(a) a modification or an alteration of any of the terms, conditions or covenants
of any of the Loan Documents, or (b) a waiver, release or limitation upon the
Bank's exercise of any of its rights and remedies thereunder, all of which are
hereby expressly reserved. This waiver shall not relieve or release the Borrower
in any way from any of duties, obligations, covenants or agreements under this
Agreement or Loan Documents (as amended hereby) or from the consequences of any
Event of Default thereunder, except as expressly set forth herein. This waiver
shall not obligate the Bank, or be construed to require the Bank, to waive any
other Event(s) of Default or defaults, whether now existing or which may occur
after the effective date of this Agreement.

         4. REPRESENTATIONS AND WARRANTIES. To induce the Bank to enter into
this Agreement, the Borrower represents and warrants that:

         (a) the execution and delivery by the Borrower of this Agreement and
the performance by the Borrower of the Loan Documents as amended hereby and the
transactions contemplated hereby and thereby: (i) are within the Borrower's
power and authority; (ii) have been authorized by all necessary action; (iii) do
not require the consent or approval of any governmental authority or any other
party; (iv) will not contravene any provision of the articles of incorporation
or by-laws, partnership agreement, declaration of trust, or similar organization
documentation of the Borrower, or any federal or state law, rule or regulation
applicable to the Borrower (including, without limitation, any securities laws);
and (v) will not constitute a default under any other agreement, order or
undertaking binding on the Borrower;

         (b) this Agreement has been duly executed and delivered by the
Borrower, and all of the terms and provisions hereof and of the Loan Documents
as amended hereby constitute the legal, valid, binding and enforceable
obligations of the Borrower, except as the same may be limited by bankruptcy,
insolvency, reorganization, moratorium or other laws affecting the enforcement
of creditors' rights generally;

         (c) all the representations and warranties contained in the Loan
Documents, after giving effect to the amendments, modifications and waiver
contemplated hereby are true and correct on and as of the date hereof as though
made on and as of the date hereof; and



                                       5
<PAGE>

         (d) as of the date hereof, the Borrower has no defenses, counterclaims,
offsets or other claims against the Bank or any of its officers, employees,
agents, attorneys, predecessors, affiliates, or other representatives of any
nature, relating to the Loan Arrangement.

         5. CONDITIONS TO EFFECTIVENESS. The effectiveness of this Agreement is
subject to the conditions precedent that:

         (a) the Bank shall have received, in form and substance satisfactory to
it, an executed copy of this Agreement;

         (b) the Bank shall have received certified copies of all documents
relating to the Borrower as the Bank may reasonably request, including, without
limitation, the resolution of the Borrower identifying the persons authorized to
execute, deliver and take all other actions required under or in furtherance of
this Agreement, and the Loan Documents, as amended hereby, and providing
specimen signatures of such persons;

         (c) no default or breach under any of the Loan Documents after giving
effect to the amendments and waiver contemplated hereby, and no event which the
passage of time or giving of notice or both would constitute such a default or
breach, exists on the date hereof;

         (d) the Bank shall have received the sum of One Hundred Thousand
Dollars ($100,000.00) as payment for all costs and expenses incurred by the Bank
(excluding the Counsel Fee) relating to and arising from the events giving rise
to the execution of this Agreement;

         (e) the Borrower shall have paid to Bank's counsel all reasonable costs
and fees (the "Counsel Fee") incurred in connection with the preparation,
execution and delivery of this Agreement and other documents related thereto;
and

         (f) Borrower shall have provided to the Bank true and accurate copies
of any and all written contracts or agreements (or, in lieu thereof, summaries
or abstracts of such agreements) relating to those certain sales reported to the
Bank regarding Multi-Mix(R) Microtechnology product.

         6. ADDITIONAL COVENANTS. Borrower hereby covenants and agrees as
follows:

         (a) Borrower shall cause to be delivered to Bank a management letter
given in connection with Borrower's year-end financial statements for fiscal
year 2002 from the accounting firm of Ernst and Young in connection with the
accounts, books or any audit of Borrower, which shall be delivered no later than
May 31, 2003; and

         (b) The Borrower shall permit the Bank to retain, at Borrower's sole
cost and expense, a consultant (the "Consultant") to review the Borrower's
current business plan and/or business operations. The scope and extent of such
review shall be determined by the Bank in its sole discretion. Borrower shall
provide the Consultant with full access to Borrower's business premises and to
all books, records, and documents required by Consultant to render a report
satisfactory to


                                       6
<PAGE>

Bank. Borrower shall also fully cooperate with any and all requests for
information or documentation made by the Consultant and shall not delay, hinder
or obstruct in any way whatsoever the rendering or preparation of the
Consultant's report. The Borrower agrees to pay to the Bank on demand the
Consultant's fees and to pay all reasonable out-of-pocket expenses paid or
incurred by the Bank in connection with such consulting services.

         The failure of Borrower to comply with any of the above covenants shall
constitute an Event of Default under the Loan Agreement.

         7. NO WAIVER , DISCHARGE OR RELEASE. Except and to the extent expressly
set forth in Section 3 of this Agreement, this Agreement does not constitute a
discharge, release or waiver of any of the Borrower's or any guarantor's
obligations or liabilities under the Loan Documents, or any other agreements to
which the Bank and the Borrower and any guarantor are parties, all of which
remain in full force and effect.

         8. RATIFICATION; CONFLICT. As amended hereby, all of the terms,
covenants and conditions of the Loan Documents as heretofore in effect shall
remain in full force and effect after the date hereof, are hereby ratified and
confirmed in all respects, and are hereby incorporated herein by reference as
though set forth fully herein. Should a conflict arise between the terms of any
of the Loan Documents and this Agreement, this Agreement shall control.

         9. COUNTERPARTS. This Agreement may be executed in one or more
counterparts and all of such counterparts taken together shall constitute one
and the same instrument.

         10. GOVERNING LAW. This Agreement shall be construed and interpreted in
accordance with, and governed by, the laws of the State of New Jersey.

         11. BINDING UPON SUCCESSORS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto, their respective administrators,
successors and assigns. This Agreement may only be amended in writing.

         12. ENTIRE AGREEMENT. The Loan Documents, as amended, are intended by
the parties as the final, complete and exclusive statement of the transactions
evidenced thereby. All prior or contemporaneous promises, agreements and
understandings, whether oral or written, are deemed to be superceded by the Loan
Documents, as amended hereby, and no party is relying on any promise, agreement
or understanding not set forth in the Loan Documents. The Loan Documents may not
be amended or modified except by a written instrument describing such amendment
or modification executed by the Borrower and the Bank.


                            [Signature Page Follows]




                                       7
<PAGE>


         IN WITNESS WHEREOF, the parties have caused this Term Loan Modification
Agreement to be duly executed as of the day and year first above written.



ATTEST:                                 MERRIMAC INDUSTRIES, INC.


/s/ Robert V. Condon                   By: /s/ Mason N. Carter
----------------------                     ---------------------------
                                            Name:  Mason N. Carter
                                            Title: Chairman and Chief Executive
                                                   Officer
Dated:  April 17, 2003

WITNESS:                                FLEET NATIONAL BANK



/s/ Mae Wong                            By: /s/ Richard Mady
----------------------                     --------------------------
                                            Name: Richard Mady
                                            Title: Senior Vice President
Dated: April 17, 2003


                                        8