Exhibit 10.3

        Employment Agreement between the Company and Richard A. Thompson




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August 1, 1995              PERSONAL & CONFIDENTIAL


Mr. Richard Thompson
1733 Wind Haven Way
Vienna, Virginia  22182

Dear Dick:

This will confirm our agreement in connection with your continued employment, as
of 01 June 1995, by Microlog  Corporation  (the  "Corporation").  Please confirm
your acceptance of these terms by signing at the space provided on the last page
of this letter.

1.       Duties and responsibilities.

You are to be employed on a full-time  basis as  President  and Chief  Operating
Officer of the Corporation,  reporting directly to me as the Corporation's Chief
Executive  Officer.  Your  duties and  responsibilities  will be those  normally
associated with such positions. Subject to the direction of the Board and CEO on
matters of general  policy,  and of the Board as to  matters  legally  requiring
Board  approval,  you will be  responsible  for strategic  planning,  day to day
operations, profitability, and company growth. Your duties will also include the
supervision of all aspects of finance, planning,  operations,  marketing, sales,
and  personnel.  With the  exception  of the CEO all company  employees  will be
subject to your orders and direction.  As I previously discussed with you, it is
my intent to retire as CEO sometime  during the term of this  agreement,  and to
continue on a part time basis as a consultant to the Corporation.  At such time,
you  will  succeed  to  the  office  of  CEO  at  which  time  your  duties  and
responsibilities  will be  those  normally  associated  with  that  position.  I
anticipate  such a transition to take place after December 1996. In anticipation
of such a  transition,  you are  expected  to prepare a plan of  succession  for
consideration by the Board within the next year. Pursuant to this understanding,
you are  authorized to disclose this fact to others as you consider  appropriate
and in the best  interest of the  Corporation.  However,  you  succession to the
office  of CEO is  subject  to  the  approval  by  the  Corporation's  Board  of
Directors.

2.       Compensation

You will be  compensated  at the base rate of $160,000 per year, or such greater
amount as determined by the Board from time to time,  payable twice a month less
normal withholdings and deductions.

You shall be entitled to  participate  in all benefit  plans which are generally
available to the  employees,  and those  available to executive  officers of the
Company,  including, but not limited to, executive perquisites,  incentive stock
option plan, and the executive bonus plan. You will be entitled to five weeks of
paid  vacation per year,  this  includes your time to perform your Naval Reserve
duty.

You shall be  entitled  to  continued  use of a  company  car,  leased  for your
business  and personal  use,  and the Company  will  continue to pay all related
costs such as fuel, maintenance, insurance, and any excess mileage charges. Upon
the  expiration  of the term of the lease for the car now  provided  to you,  or
earlier if  necessary,  you shall be provided  with a  replacement  vehicle of a
comparable type.

The Board of Directors  will  consider the purchase of key man insurance on your
life, and on the lives of other  executives if  appropriate,  in connection with
its review of proposals for executive  insurance to be prepared by you for Board
consideration in conjunction with the development of the next annual budget. You
will cooperate full with the Corporation on matters  relating to such insurance.
The Corporation will be the beneficiary of any such life key man life insurance,
unless otherwise agreed with you in writing.

3.       Stock Options

You will be granted an option to purchase  100,000  shares of the  Corporation's
common stock in  consideration of your acceptance of continued  employment.  The
terms and conditions of this stock option will be in accordance with a successor
plan to the  Corporation's  existing 1986 Stock Option plan.  It is  anticipated
that such options will be granted subject to stockholder approval of a successor
plan,  and that such options will not be granted  until the Board has approved a
successor plan to be developed and presented to the Board in September 1995. The
option  which  is  given  in  consideration  of  your  acceptance  of  continued
employment,  when granted,  will become exercisable over three years at the 

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rate of thirty three and a third percent per year, and will have an option price
per share which is the market price per share on the date of the grant.

If the Corporation  terminates your employment  other than that "for cause",  as
defined below, you will be permitted to exercise the option,  to the extent that
it had become  exercisable  before the termination of employment (but not beyond
the original ten year term of the option).  To the extent  eligible,  the option
will be issued as an  Incentive  Stock Option  (ISO),  within the meaning of the
Internal Revenue Code.

3a.      Restricted Stock Grant.

In  consideration of your continued  employment,  you will be awarded a grant of
100,000 shares of common stock as of June 14, 1995. Any shares issued under this
grant  will be  subject  to  forfeiture  back  to the  Corporation  as  follows:
one-third  shall  forfeit  if the  average  fair  market  value per share of the
Corporation's common stock does not exceed $3.50 for all trading days during the
month of June 1996; one-third shall forfeit if the average fair market value per
share of the  Corporation's  common  stock does not exceed $5.00 for all trading
days during the month of June 1997;  and one-third  shall forfeit if the average
fair market  value per share of the  Corporation's  common stock does not exceed
$10.00 for all trading  days during the month of June,  1998;  the award will be
made pursuant to and subject to the provision of an appropriate restricted stock
agreement  appropriately  structured to avoid  taxation in advance of removal of
the risk of forfeiture and other restrictions on the sale of the stock, and will
also contain appropriate  anti-dilution  provisions to appropriately  adjust the
dollar  price  targets  stated  above in the event of forward  or reverse  stock
splits,  stock  dividends,  and other  changes in the capital  structure  of the
Corporation.

4.       Bonuses

You will be entitled to executive  bonuses in accordance  with the terms of each
Executive  Bonus Plan  approved by the Board during or with respect to each year
of your continued employment.

5.       Board Membership

You will  continue  to serve  as a  director  of the  Corporation  and  shall be
proposed for  re-election  at the expiration of your current term of office as a
director for as long as you continue to be an officer of the Corporation.

6.       Term of Employment

Your term of employment under this agreement,  shall be from 1 June 1995 thru 31
May 1998 unless earlier terminated as provided below. The Board of Directors may
terminate your  employment at any time with or without cause.  You shall have no
right to receive compensation or any other benefits form the Corporation for any
period after termination for cause other than such vested retirement benefits to
which you may be entitled under any qualified  employee  pension plan maintained
by the Corporation,  and any deferred compensation to which you may be entitled.
The term  "termination  for cause"  shall mean  termination  by the  Corporation
because of your gross  incompetence,  willful and intentional  misconduct to the
Corporation,  breach  of  fiduciary  duty  in  connection  with  your  services,
involving  personal  profit,  intentional  failure to perform the duties of your
office,  willful  violation  of any law,  rule or  regulation  other  than minor
traffic  violations or similar offenses,  or material breach of any provision of
this agreement.

In no event however will a termination be deemed to be "for cause" unless, prior
to such termination,  the Board of Directors after giving you reasonable notice,
and an opportunity to be heard, shall have duly adopted a resolution approved by
at least two thirds of its members finding that you have been guilty of specific
conduct as described  above, and further finding that the effect of such conduct
has been materially  adverse to the interests of the  Corporation.  In the event
that you do not agree with such findings,  the issue of whether the  termination
shall  be  "for  cause"  will  be  subject  to  binding  arbitration  under  the
"Employment Dispute Resolution" rules of the American Arbitration Association.

If your  employment is  terminated  for any reason other than "for cause" at any
time prior to the  expiration  of the three year term of your  employment  under
this agreement,  or prior to the expiration of any extension of the term, signed
by any authorized  representative  of the  Corporation,  your then existing base
salary plus all benefits or their equivalent  value,  will continue for a period
of  twelve  months  following  the date of such  termination,  and you will also
receive such vested  retirement  benefits to which you may be entitled under any
qualified employee pension plan maintained by the Corporation, plus any deferred
compensation to which you may be entitled.

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If you continue in the employment of the Corporation following expiration of the
term stated above, in the absence of a new written employment  agreement between
you and the  Corporation,  the  term of this  agreement  shall be  deemed  to be
extended in one year increments for year to year, unless  terminated  earlier as
provided  above,  or terminated  by either party  effective as of the end of any
incremental extension upon at least sixty days prior written notice.

7.       Noncompetition

During  the term of you  employment,  and for a period  of one  year  after  the
termination  of your  employment,  shall not compete,  directly or indirectly on
your  own  behalf,  or on  behalf  of any  other  person  or  entity,  with  the
Corporation or any of its affiliates;  nor shall you solicit or induce, directly
or  indirectly  on your own behalf,  or on behalf of any other person or entity,
any employee of the  Corporation  or its  affiliates  to leave the employ of the
Corporation or any of its affiliates;  nor shall you solicit or induce, directly
or  indirectly,  on your own behalf or on behalf of any other  person or entity,
any customer of the  Corporation or any of its affiliates to reduce its business
with the Corporation or any of its affiliates.

Dick, on behalf of Microlog and the other Board members,  I am pleased to extend
this  offer of  continued  employment,  and I look  forward  towards  a long and
mutually profitable association.

Yours truly,

Microlog Corporation



By:      /s/ Joe J Lynn
  ---------------------
Joe J. Lynn
Chief Executive Officer


Accepted:


/s/ Richard A. Thompson
-----------------------
Richard A. Thompson
Date:


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