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                            MERRIMAC INDUSTRIES, INC.

                                 SEVERANCE PLAN
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                          As Adopted September 17, 2003

1.       Purpose.
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         This Plan is intended to induce those key executive management
         personnel who are designated as Participants to remain in the employ of
         the Company, since, as is the case with many publicly-held
         corporations, the possibility of a Change in Control of the Company
         exists from time to time and such possibility, and the uncertainty,
         instability and questions which it may raise for and among key
         executive management personnel, may result in the premature departure
         or significant distraction of such personnel to the material detriment
         of the Company and its shareholders. The Board has determined that
         appropriate steps should be taken to reinforce, focus and encourage the
         continued attention and dedication of key members of the executive
         management of the Company and its subsidiaries to their assigned duties
         without distraction in the face of potentially disturbing or unsettling
         circumstances arising from the possibility of a Change in Control of
         the Company.

2.       Definitions.
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         Annual Base Salary shall mean the Participant's rate of regular basic
         annual compensation prior to any reduction under a salary reduction
         agreement pursuant to section 401(k) or section 125 of the Code, and
         shall not include (without limitation) cost of living allowances, fees,
         retainers, reimbursements, bonuses, incentive awards, prizes or similar
         payments.

         Board shall mean the Board of Directors of the Company.

         Cause for termination by the Company of a Participant's employment,
         after any Change in Control, shall mean (i) willful failure to perform
         normal and customary duties for an extended period of time for any
         reason other than death or disability; or (ii) gross negligence or
         willful misconduct, including but not limited to fraud, embezzlement or
         intentional misrepresentation; or (iii) commission of, or indictment or
         conviction for, a felony; or (iv) misappropriation of a material
         opportunity of the Company; or (v) willfully engaging in competitive
         activities against the Company or purposely aiding a competitor of the
         Company; or (vi) violation of any material term of this Plan and, if
         the violation may be cured by the Participant, the failure to cure the
         violation within ten days after receipt of written notice of such
         violation.

         Change in Control shall mean and be deemed to have occurred if: (i) any
         Person becomes the beneficial owner (as that term is used in Section
         13(d) of the Exchange Act) of stock of the Company entitled to cast
         more than 25% of the votes at the time entitled to be cast generally
         for the election of directors; or (ii) more than 50% of the members of
         the Board shall not be Continuing Directors; or (iii) the Company is
         merged or consolidated with, or in any transaction or series of
         transactions, all or substantially all of the business or assets of the
         Company 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.


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         Code shall mean the Internal Revenue Code of 1986, as amended from time
         to time.

         Company shall mean Merrimac Industries, Inc., a Delaware corporation,
         and any successor to its business and/or assets which assumes (either
         expressly, by operation of law or otherwise) and/or agrees to perform
         this Plan by operation of law or otherwise (except in determining
         whether or not any Change in Control of the Company has occurred in
         connection with such succession).

         Continuing Directors shall mean the directors of the Company (A) who
         were members of the Board on September 17, 2003 or (B) who subsequently
         became directors of the Company and who were elected or designated to
         be candidates for election as nominees of the Board, or whose election
         or nomination for election by the Company's stockholders was otherwise
         approved, by a vote of a majority of the Continuing Directors then on
         the Board.

         Date of Termination shall mean, with respect to any purported
         termination of a Participant's employment with the Company within one
         year after a Change in Control, (i) if the Participant's employment is
         terminated for Disability, 10 days after Notice of Termination is given
         (provided that the Participant shall not have returned to the full-time
         performance of the Participant's duties during such period), and (ii)
         if the Participant's employment is terminated for any other reason, the
         date specified in the Notice of Termination which, in the case of a
         termination by the Company, shall not be less than ten business days
         except in the case of a termination for Cause and, in the case of a
         termination by the Participant, shall not be less than ten business
         days nor more than 20 business days, respectively, after the date such
         Notice of Termination is given.

         Disability shall mean if, as result of physical or mental illness or
         injury, a Participant is unable to perform the essential duties of his
         or her position for a period of 90 consecutive days or for a period of
         120 non-consecutive days in any twelve month period, or poses a direct
         threat to the safety and health of the Participant or others and there
         is no reasonable accommodation that can be provided by the Company that
         would allow the Participant to perform the essential functions of the
         Participant's position as determined by applicable law.

         Exchange Act shall mean the Securities Exchange Act of 1934, as amended
         from time to time.

         Good Reason for termination by a Participant of the Participant's
         employment in connection with or as a result of any Change in Control,
         shall mean the occurrence (without the Participant's prior express
         written consent) of any one of the following acts, or failures to act:
         (i) a material diminution of the duties and responsibilities of the
         Participant; or (ii) a reduction in compensation or benefits of the
         Participant; or (iii) any failure by the Company to comply with any of
         the provisions of this Plan, other than an isolated, insubstantial and
         inadvertent failure not occurring in bad faith and which is remedied by
         the Company promptly after receipt of notice thereof given by the
         Participant; or (iv) any purported termination of the Participant's
         employment which is not pursuant to a Notice of Termination; or (v) the
         relocation of the Company's principal executive offices where the
         Participant works to a location more than 25 miles from its location on
         the date of the adoption of this Plan or the Company's requiring the
         Participant to be based anywhere other than the Company's principal
         executive offices. Required travel on the Company's business to an
         extent substantially consistent with the Participant's business travel
         obligations as of the date of this Plan is not a relocation event under
         this Plan.


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         Notice of Termination shall mean a notice which shall indicate the
         specific termination provision in this Plan relied upon, if any, and
         shall set forth in reasonable detail the facts and circumstances
         claimed to provide a basis for termination of the Participant's
         employment with the Company under the provision so indicated. For
         purposes of this Plan, any purported termination not effected in
         accordance with this definition shall not be effective.

         Participant shall mean each key executive management employee of the
         Company or any of its subsidiaries who shall be designated from time to
         time by the Compensation Committee of the Board. Any Participant who
         shall be a Participant at the time of a Change in Control shall remain
         a Participant until the earlier to occur of the expiration of one year
         following a Change in Control or the termination of such Participant's
         employment with the Company.

         Person shall have the meaning ascribed thereto in Section 13(d) and
         14(d) in the Exchange Act, provided, however, a Person shall not
         include (i) the Company or any of its subsidiaries, (ii) a trustee or
         other fiduciary holding securities under an employee benefit plan of
         the Company or any of its subsidiaries (in its capacity as such), or
         (iii) an underwriter temporarily holding securities pursuant to an
         offering of such securities, or (iv) a corporation owned, directly or
         indirectly, by the stockholders of the Company in substantially the
         same character and proportions as their ownership of stock of the
         Company.

         Plan shall mean the Merrimac Industries, Inc. Severance Plan.

         Severance Payments shall mean the payments described in Section 3(a)
         below.

3.       Severance Payments.

         (a)      Severance. The Company shall pay each Participant the
                  Severance Payments provided for in clauses (i) and (ii) below
                  upon the termination of the Participant's employment with the
                  Company within one year after a Change in Control, unless such
                  termination is (i) by the Company for Cause, or (ii) by the
                  Participant without Good Reason, or (iii) due to the
                  Participant's death or Disability. The Participant's right to
                  terminate his or her employment for Good Reason shall not be
                  affected by his or her incapacity due to physical or mental
                  illness. The Participant's continued employment shall not
                  constitute consent to, or a waiver of rights with respect to,
                  any act or failure to act constituting Good Reason.

                  (i)      The Company shall pay to the Participant for a period
                           of twelve months, in accordance with the Company's
                           regular salary payment procedures, an annualized
                           amount equal to an amount designated from time to
                           time by the Compensation Committee of the Board,
                           being either one times or two times the Annual Base
                           Salary of the Participant; provided that such amount
                           cannot be changed following a Change in Control.

                  (ii)     For a twenty-four month period after the Date of
                           Termination, the Company shall arrange to provide the
                           Participant with health insurance benefits
                           substantially similar to those which the Participant
                           is receiving immediately prior to any Change in
                           Control.

         (b)      Round Down. To the extent that any payments made under this
                  Plan may be subject to the excise tax imposed under section
                  4999 of the Code, the Company


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                  shall reduce the amount of such payments by the minimum
                  amount necessary to avoid being subject to such excise tax.

4.       Notice of Termination. Within one year after a Change in Control any
         purported termination of the Participant's employment with the Company
         (other than by reason of death) shall be communicated by written Notice
         of Termination from the Company to the Participant or from the
         Participant to the Company.

5.       No Mitigation. The Company agrees that, if a Participant's employment
         is terminated, the Participant is not required to seek other employment
         or attempt in any way to reduce any amounts payable to the Participant
         by the Company pursuant to Section 3. Further, the amount of any
         payment or benefit provided for in Section 3 (other than pursuant to
         Section 3(a)(ii)) shall not be reduced by any compensation earned by
         the Participant as the result of employment by another employer, by
         retirement benefits, or offset against any amount claimed to be owed by
         the Participant to the Company or any of its subsidiaries or otherwise.

6.       Successors. In addition to any obligations imposed by law upon any
         successor to the Company, the Company will require any successor
         (whether direct or indirect, by purchase, merger, consolidation or
         otherwise) to all or substantially all of the business and/or assets
         of the Company to expressly assume and agree to perform this Plan in
         the same manner and to the same extent that the Company would be
         required to perform if such succession had not taken place. Failure of
         the Company to obtain such assumption and agreement prior to the
         effectiveness of any such succession shall be a breach of this Plan
         and shall entitle each Participant to compensation from the Company in
         the same amount and on the same terms as the Participant would be
         entitled to hereunder if the Participant were to terminate the
         Participant's employment for Good Reason after a Change in Control,
         except that, for purposes of implementing the foregoing, the date on
         which any such succession becomes effective shall be deemed the Date
         of Termination.

7.       Binding Plan. This Plan shall inure to the benefit of and be
         enforceable by each Participant's personal or legal representatives,
         executors, administrators, successors, heirs, distributees, devisees
         and legatees. If the Participant shall die while any amount would still
         be payable to the Participant hereunder (other than amounts which, by
         their terms, terminate upon the death of the Participant), all such
         amounts shall be paid to the executors, personal representative or
         administrators of the Participant's estate.

8.       Notices. Notices and all other communications provided for in this Plan
         shall be in writing and shall be deemed to have been duly given when
         delivered or mailed by United States certified mail, return receipt
         requested, postage prepaid, if for a Participant, at the Participant's
         address as it appears on the records of the Company, or at such other
         address as the Participant shall have specified by notice to the
         Company in the manner herein provided, and if for the Company, at
         Merrimac Industries, Inc., 41 Fairfield Place, West Caldwell, NJ 07006,
         attention of its chief executive officer, or at such other address as
         the Company shall have specified by notice to the Participants in the
         manner herein provided. Notwithstanding the foregoing, any notice of
         change of address shall be effective only upon actual receipt.

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9.       Miscellaneous.

         The Board may amend or terminate this Plan in whole or in part at any
         time upon notice to all of the Participants; provided, however, that,
         subsequent to a Change in Control or during the period of 180 days
         prior to a Change in Control, no such amendment which could adversely
         affect the rights of any Participant nor any termination shall become
         effective until the expiration of one year following the Change in
         Control. No waiver by either the Company or any Participant at any time
         of any breach by either the Company or the Participant, or compliance
         with, any condition or provision of this Plan to be performed by either
         the Company or the Participant shall be deemed a waiver of similar or
         dissimilar provisions or conditions at the same or at any prior or
         subsequent time. The validity, interpretation, construction and
         performance of this Plan shall be governed by the laws of the State of
         New York without regard to the principles of conflict of laws thereof.
         All references to sections of the Exchange Act or the Code shall be
         deemed also to refer to and include any successor provisions to such
         sections. Any payments provided for hereunder shall be paid net of any
         applicable withholding required under federal, state, or local law and
         any additional withholding to which the Participant has agreed.

10.      Validity. The invalidity or unenforceability of any provision of this
         Plan shall not affect the validity or enforceability of any other
         provision of this Plan which shall remain in full force and effect.

11.      No Limitation. Nothing in this Plan shall prevent or limit any
         Participant's continuing or future participation in any plan, program,
         policy or practice provided by the Company or any of its affiliated
         companies and for which the Participant may qualify, nor shall anything
         herein limit or otherwise affect such rights as the Participant may
         have under any other contract or agreement with the Company or any of
         its affiliated companies. Amounts which are vested benefits or which
         the Participant is otherwise entitled to receive under any plan,
         policy, practice or program of or any contract or agreement with the
         Company or any of its affiliated companies at or subsequent to the Date
         of Termination shall be payable in accordance with such plan, policy,
         practice or program or contract or agreement except as explicitly
         modified by this Plan.