MICROLOG CORP
PRE 14A, 1999-07-19
TELEPHONE & TELEGRAPH APPARATUS
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                                  SCHEDULE 14A
                                 (RULE 14A-101)
                     INFORMATION REQUIRED IN PROXY STATEMENT

                            SCHEDULE 14A INFORMATION

                  PROXY STATEMENT PURSUANT TO SECTION 14(A) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:

[X] Preliminary Proxy Statement
[ ] Confidential, For Use of the Commission Only (as permitted by Rule
    14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12


                              Microlog Corporation
                    -----------------------------------------
                (Name of Registrant as Specified In Its Charter)


                    -----------------------------------------
     (Name of Person(s) Filing Proxy Statement if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

     (1) Title of each class of securities to which transaction applies:

         -------------------------------------------------------------------

     (2) Aggregate number of securities to which transaction applies:

         -------------------------------------------------------------------

     (3) Per unit  price  or other  underlying  value  of  transaction  computed
         pursuant to  Exchange  Act Rule 0-11 (set forth the amount on which the
         filing fee is calculated and state how it is determined)

         -------------------------------------------------------------------

     (4) Proposed maximum aggregate value of transaction:

         -------------------------------------------------------------------

     (5) Total fee paid:

         -------------------------------------------------------------------

[ ]  Fee paid previously with preliminary proxy materials.

         -------------------------------------------------------------------

[ ]  Check  box  if any part of the fee is offset as provided  by  Exchange  Act
     Rule  0-11(a)(2)  and identify the filing for which the  offsetting fee was
     paid  previously.  Identify the previous filing by  registration  statement
     number, or the form or schedule and the date of its filing.

     (1) Amount previously paid:

         -------------------------------------------------------------------

     (2) Form, Schedule or Registration Statement no.:

         -------------------------------------------------------------------

     (3) Filing Party:

         -------------------------------------------------------------------

     (4) Date Filed:

         -------------------------------------------------------------------

<PAGE>
[GRAPHIC OMITTED]

                                                                 July 1, 1999

Dear Shareholder:

          You  are   cordially   invited  to  attend  the  Special   Meeting  of
Shareholders of Microlog Corporation (the "Company") to be held on September 16,
1999, at 10:00 a.m., at 20270 Goldenrod Lane, Germantown, Maryland 20876.

         The matters to be acted upon at the  Special  Meeting,  principally  an
investment in the Company which would bring us much needed  capital,  as well as
other important information, are described in the accompanying Notice of Special
Meeting and Proxy Statement which you are urged to review carefully.

         Your vote is important,  regardless of the number of shares you own. On
behalf of the Board of Directors, I urge you to vote, sign, date, and return the
enclosed proxy form as soon as possible,  even if you plan to attend the Special
Meeting.  Signing  this proxy will not prevent you from voting in person  should
you be able to attend the  Special  Meeting.  Signing the proxy will assure that
your vote is counted if, for any reason, you are unable to attend.

         We hope that you can attend the  Special  Meeting.  Your  interest  and
support in the affairs of Microlog Corporation are appreciated.

                                                  Sincerely yours,

                                                  Stephen D. Smith
                                                  President and
                                                  Chief Executive Officer


<PAGE>
                              MICROLOG CORPORATION

                              20270 Goldenrod Lane
                            Germantown, MD 20876-4070
                                 (301) 428-9100

                    NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
                          TO BE HELD SEPTEMBER 16, 1999

NOTICE IS HEREBY  GIVEN  that a Special  Meeting  of  Shareholders  of  Microlog
Corporation  (the  "Company") will be held on September 16, 1999, at 10:00 a.m.,
local  time,  at 20270  Goldenrod  Lane,  Germantown,  Maryland  20876,  for the
following purposes:

         (1) to consider  and vote upon a proposal to approve the  issuance  and
             sale of  1,812,104  shares of Common  Stock of the  Company  to TFX
             Equities Incorporated for $1.50 per share; and

         (2) to transact  such other  business as may  properly  come before the
             Special Meeting or any adjournments or postponements thereof.

         Pursuant  to the By-Laws of the  Company,  the Board of  Directors  has
fixed July 28, 1999 as the record date for the Special  Meeting  with respect to
this solicitation.  Only shareholders of record at the close of business on that
date will be  entitled  to notice of and to vote at the  Special  Meeting or any
adjournments thereof.

         In the event there are not  sufficient  votes to approve the  foregoing
proposal  at the  time  of the  Special  Meeting,  the  Special  Meeting  may be
adjourned in order to permit further solicitation of proxies by the Company.

                                         By Order of the Board of Directors,

                                         Stephen D. Smith
                                         President and Chief Executive Officer

Germantown, Maryland
July ____, 1999

PLEASE FILL OUT,  DATE,  AND SIGN THE  ENCLOSED  PROXY FORM AND RETURN IT IN THE
ENCLOSED  POSTAGE-PAID  ENVELOPE,  WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL
MEETING.  YOU MAY,  IF YOU  WISH,  WITHDRAW  YOUR  PROXY  AND VOTE  YOUR  SHARES
PERSONALLY AT THE SPECIAL MEETING.


<PAGE>
                              MICROLOG CORPORATION

                              20270 GOLDENROD LANE
                            GERMANTOWN, MD 20876-4070
                                 (301) 428-9100

                   ------------------------------------------
                                 PROXY STATEMENT
                   ------------------------------------------

                         SPECIAL MEETING OF SHAREHOLDERS
                               SEPTEMBER 16, 1999

                SOLICITATION, VOTING AND REVOCABILITY OF PROXIES

         This Proxy Statement is furnished in connection  with the  solicitation
of  proxies  by the Board of  Directors  of  Microlog  Corporation,  a  Virginia
corporation (the  "Company"),  for use at the Special Meeting of Shareholders to
be held on  September  16, 1999 at 10:00 a.m.,  local time,  at 20270  Goldenrod
Lane,  Germantown,  Maryland  20876  and at any  adjournments  or  postponements
thereof (the "Special Meeting").

         The Special Meeting is being called for the following purposes:

         (1) to consider  and vote upon a proposal to approve the  issuance  and
             sale of 1,812,104 shares (the "Additional Shares") of Common Stock,
             par value $.01 per share (the  "Common  Stock"),  of the Company to
             TFX Equities Incorporated ("TFX") for $1.50 per share; and

         (2) to transact  such other  business as may  properly  come before the
             Special Meeting or any adjournments or postponements thereof.


         This Proxy Statement and the accompanying notice of the Special Meeting
and proxy form will first be sent or given to shareholders on or about August 4,
1999.

         Record holders of the Common Stock at the close of business on July 28,
1999,  the record  date,  are entitled to notice of, and to vote at, the Special
Meeting. As of July 15, 1999, there were outstanding  5,150,723 shares of Common
Stock.  Each  shareholder  will be entitled to one vote for each share of Common
Stock held at the close of business on the record date. At the Special  Meeting,
votes will be counted by written ballot.  Only business  described in the notice
accompanying this proxy statement may be conducted at the Special Meeting.

         The presence,  in person or by proxy,  of a majority of the outstanding
shares of Common Stock entitled to vote at the Special Meeting shall  constitute
a  quorum  for  the  transaction  of  business.  The  issuance  and  sale of the
Additional  Shares to TFX  requires the approval of the holders of a majority of
the votes present and entitled to vote thereon at the Special Meeting.  However,
under special  rules of the Nasdaq Stock Market,  the Company will not count any
votes  cast  by TFX  with  respect  to the  proposed  issuance  and  sale of the
Additional Shares to TFX.

         In order to  approve  the  transaction  of any  other  business  as may
properly come before the Special  Meeting,  or any adjournments or postponements
thereof,  the votes cast at the Special Meeting approving the action must exceed
the votes cast opposing the action, unless a greater number of affirmative votes
is  required by law.  Abstentions  and broker  non-votes  will not be counted as
either approving or opposing the action.

         The shares of Common Stock represented by valid proxies received by the
Company  in time for the  Special  Meeting  will be voted as  specified  in such
proxies.  Executed but unmarked  proxies will be voted FOR the issuance and sale
of the Additional Shares to TFX.
<PAGE>

         If any other  matters  properly  come before the Special  Meeting,  the
persons named as proxies will, unless the shareholder otherwise specifies in the
proxy,  vote upon such  matters  as  determined  by a  majority  of the Board of
Directors.

         Any  shareholder  giving a proxy has the right to revoke it at any time
before it is exercised by attending the Special  Meeting and voting in person or
by  delivering  to the  Secretary  of the  Company  at the  Company's  principal
executive office,  20270 Goldenrod Lane,  Germantown,  MD 20876-4070,  a written
notice of revocation or duly executed proxy bearing a later date.

         The  cost of  soliciting  proxies  will be borne  by the  Company.  The
Company has engaged  Morrow & Co., Inc. to assist in the  distribution  of proxy
materials and  solicitation of votes for a fee of  approximately  $6,000.00 plus
out-of-pocket  expenses.  In  addition  to the use of the mails,  proxies may be
solicited  personally  or by  telephone,  facsimile,  or  telegraph by officers,
directors,  and  employees of the Company who will not be specially  compensated
for such solicitation activities.  Arrangements will also be made with brokerage
houses  and  other   custodians,   nominees,   and  fiduciaries  for  forwarding
solicitation materials to the beneficial owners of such shares held of record by
such persons,  and the Company will reimburse such persons for their  reasonable
expenses  incurred in  connection  therewith.  TFX will bear its own expenses in
connection with the issuance and sale of the Additional Shares.

              STOCK OWNED BY MANAGEMENT AND PRINCIPAL SHAREHOLDERS

         The  following  table sets forth  information  as of July 15, 1999 with
respect to the ownership of shares of Common Stock by (i) owners of more than 5%
of the Company's  outstanding  Common Stock,  (ii) each director and nominee for
director  of the  Company,  (iii) each of the named  executive  officers  of the
Company,  and (iv) all  directors  and  executive  officers  of the Company as a
group.  The information is based on the most recent filings with the SEC by such
persons or upon  information  provided by such  persons to the  Company.  Unless
otherwise  indicated,  the persons  shown in the table are believed to have sole
voting  and  investment  power  with  respect  to the  entire  number  of shares
reported.

NAME AND ADDRESS OF                NUMBER OF SHARES           PERCENTAGE OF
BENEFICIAL OWNER (1)               BENEFICIALLY OWNED         OWNERSHIP (2)
- --------------------               ------------------         -------------

TFX Equities Incorporated                854,563                  16.6%
1787 Sentry Parkway West
Building 16, Suite 220
Blue Bell, PA 19422

Hathaway & Associates, Ltd               373,000                   7.2%
119 Rowayton Avenue
Rowayton, Connecticut 06853

Joe J. Lynn                              310,000                   6.0%
20270 Goldenrod Lane
Germantown, MD  20876-4070

Steven R. Delmar                         116,300 (3)               2.2%
20270 Goldenrod Lane
Germantown, MD  20876-4070

Deborah M. Grove                          57,711 (4)               1.1%
20270 Goldenrod Lane
Germantown, MD  20876-4070

David M. Gische                           46,000 (5)                  *
20270 Goldenrod Lane
Germantown, MD  20876-4070

Robert E. Gray, Jr.                       33,520 (6)                  *
20270 Goldenrod Lane
Germantown, MD  20876-4070


                                       2
<PAGE>

David B. Levi                             57,000 (7)               1.1%
20270 Goldenrod Lane
Germantown, MD  20876-4070

John C. Mears                             53,000 (8)               1.0%
20270 Goldenrod Lane
Germantown, MD  20876-4070

John Sickler                             854,563 (9)               16.6%
1787 Sentry Parkway West
Building 16, Suite 220
Blue Bell, PA 19422

Stephen D. Smith                               0 (10)                 *
20270 Goldenrod Lane

Germantown, MD  20876-4070

All executive officers and director
as a group (9 persons)                  1,528,094 (9)(11)         29.7%
- ------

*      Less than 1% of the shares outstanding.

(1)    In accordance with Rule 13d-3 under the Securities  Exchange Act of 1934,
       a person is deemed to be the beneficial  owner of a security for purposes
       of the Rule if he or she has or shares voting power or  investment  power
       with respect to such security or has the right to acquire such  ownership
       within 60 days.  As used herein,  "voting  power" is the power to vote or
       direct  the  voting of  shares,  and  "investment  power" is the power to
       dispose or direct the disposition of shares.

(2)    For  the  purpose  of  computing  the  percentage  of  ownership  of each
       beneficial  owner,  any securities  which were not  outstanding but which
       were subject to options,  warrants, rights, or conversion privileges held
       by such  beneficial  owner  exercisable  within 60 days were deemed to be
       outstanding  in determining  the percentage  owned by such person but are
       not deemed  outstanding in determining the percentage  owned by any other
       person.

(3)    Includes  63,000 shares that may be acquired by Mr. Delmar within 60 days
       of the record date upon the exercise of stock  options and  approximately
       24,300 shares in a 401k Plan.  Does not include 10,000 shares that may be
       acquired  by Mr.  Delmar more than 60 days after the record date upon the
       exercise of stock options.

(4)    Includes  25,000  shares that may be acquired by Ms. Grove within 60 days
       of the record date upon the exercise of stock  options.  Does not include
       28,000  shares that may be acquired by Ms.  Grove more than 60 days after
       the record date upon the exercise of stock options.

(5)    Includes  33,000 shares that may be acquired within 60 days of the record
       date upon the exercise of stock  options.  Includes  3,000 shares held by
       Mr. Gische's spouse.  Mr. Gische disclaims  beneficial  ownership of such
       shares.  Does not include 3,000 shares that may be acquired by Mr. Gische
       more than 60 days after record date upon the exercise of stock options.

                                       4
<PAGE>
(6)    Includes  23,000 shares that may be acquired within 60 days of the record
       date upon the exercise of stock options that have been granted.  Includes
       6,500 shares held by Mr. Gray's  spouse.  Mr. Gray  disclaims  beneficial
       ownership  of such  shares.  Does not  include  3,000  shares that may be
       acquired  by Mr.  Gray  more  than 60 days  after  record  date  upon the
       exercise of stock options.

(7)    Includes  57,000  shares  that may be acquired by Mr. Levi within 60 days
       after  the  record  date upon the  exercise  of stock  options.  Does not
       include  6,000  shares that may be acquired by Mr. Levi more than 60 days
       after the record date upon the exercise of stock options.

(8)    Includes  25,000  shares that may be acquired by Mr. Mears within 60 days
       of the record date upon the exercise of stock  options and  approximately
       28,000 shares in a 401k Plan.  Does not include 58,000 shares that may be
       acquired  by Mr.  Mears more than 60 days after the record  date upon the
       exercise of stock options.

(9)    Mr.  Sickler was elected as a director of the Company in connection  with
       the purchase by TFX Equities  Incorporated  ("TFX") of 854,563  shares of
       the  Company's  Company  Stock.  See  "Approval  of the  Issuance  of the
       Additional Shares to TFX Equities Incorporated--Background of Transaction
       with  TFX" for a  description  of this  transaction.  Mr.  Sickler  is an
       officer of TFX and, thus, under the rules and regulations of the SEC, may
       be deemed to be the  beneficial  owner of the the shares of Common  Stock
       owned by TFX.  Accordingly,  those  shares are  included  in the table as
       beneficially  owned by Mr.  Sickler and for all  directors  and executive
       officers as a group. Mr. Sickler disclaims  beneficial  ownership of such
       shares.

(10)   Upon being hired as the Company's  President and Chief Executive Officer,
       Mr.  Smith was  granted an option to  purchase  275,000  shares of Common
       Stock,  which  shares may be acquired  upon  exercise of such option more
       than 60 days after the record date.  Information shown above with respect
       to Mr. Smith's beneficial ownership does not include such shares.

(11)   Includes 226,000 shares that may be acquired within 60 days of the record
       date upon the exercise of stock options.  Does not include 383,000 shares
       that may be  acquired  more than 60 days after the  record  date upon the
       exercise of stock options.

                            MATTERS TO BE CONSIDERED

              APPROVAL OF THE ISSUANCE OF THE ADDITIONAL SHARES TO
                            TFX EQUITIES INCORPORATED
                                (PROPOSAL NO. 1)

OVERVIEW

         At the Special  Meeting,  holders of the Common Stock will consider and
vote upon the proposed sale of the Additional  Shares to TFX at a purchase price
of $1.50 per  share.  The sale of the  Additional  Shares,  if  approved  by the
Company's  shareholders,  will be the  second of a two-part  investment  of $4.0
million in the Common Stock by TFX.

         The $2.7  million  of gross  proceeds  that  would be  received  by the
Company in the sale is critical to the continued  operations of the Company. Due
to  increased  competition  and the  declining  rate of growth  for  stand-alone
interactive voice response (IVR) systems,  the revenues from the Company's voice
processing business have declined  significantly.  Accordingly,  the Company has
invested  significant  amounts of time and money to become a premier  company in
the call  center  arena and in  developing  its  uniQue  family  of call  center
solutions.  To become a premier company in the call center arena,  the Company's
management  and  the  Board  of  Directors   have  concluded  that

                                       4
<PAGE>

significant  investments and additional  capital  expenditures will be required,
and that the TFX  investment  will  provide  critical  capital  resources to the
Company during this very important  transitional  period. The Board of Directors
has  also  determined  that the  proceeds  to the  Company  from the sale of the
Additional  Shares to TFX is very  important to the Company's  future  financial
stability and, based on these factors,  has unanimously approved the issuance of
the Shares to TFX and believes that this sale of stock is in the best  interests
of the Company.

         As part of the transaction,  the Company would increase the size of its
Board of  Directors  to seven and TFX  would  become  entitled  to  nominate  an
additional  director to the Board. The Company has already increased the size of
the Board to six and elected one nominee of TFX, John Sickler,  to the Company's
Board as part of its initial $1.3 million investment.

         This matter is being  submitted  to the holders of the Common Stock for
consideration and vote pursuant to the rules of the Nasdaq Stock Market.


BACKGROUND OF TRANSACTION WITH TFX

         The Company has been seeking additional capital for well over a year to
fund its operating losses and the development of its uniQue product.  On June 9,
1999, the Company entered into a non-binding  letter of intent with TFX in which
TFX agreed in principle to invest $4 million in the Company's  Common Stock at a
purchase price of $1.50 per share.  The Company believes the TFX investment will
provide  much-needed  capital and give the  Company the support of an  important
strategic investor.

         TFX is a wholly owned subsidiary of Teleflex  Incorporated (NYSE: TFX).
Teleflex  Incorporated is a diversified  industrial company with annual sales of
more  than $1.4  billion.  Teleflex  designs,  manufactures  and  sells  quality
engineered products and services for the automotive, marine, industrial, medical
and aerospace markets  worldwide.  Teleflex has produced 24 consecutive years of
increased   revenues  and  earnings  based  on  its  diversified   portfolio  of
businesses.

         On July 1, 1999,  the Company and TFX executed an Investment  Agreement
(the  "Investment  Agreement")  and closed the initial sale of 854,563 shares of
Common Stock to TFX at $1.50 per share for an aggregate  price of  approximately
$1.3 million.  The 854,563 shares represented  approximately  19.9% of the total
shares  of  Common  Stock  issued  and  outstanding  immediately  prior  to  the
investment.

         The  Investment  Agreement  also  provides  for  a  sale  of  1,812,104
Additional  Shares to TFX at $1.50 per share for an aggregate  of  approximately
$2.7 million, subject to approval of the sale by the Company's shareholders.


NASDAQ RULES AND SHAREHOLDER APPROVAL

         Under  the rules of the  Nasdaq  Stock  Market,  including  the  Nasdaq
SmallCap  Market  where the Common  Stock is listed,  the Company is required to
obtain  shareholder  approval of any  issuance  of Common  Stock (or a series of
related  issuances) equal to 20% or more of the Common Stock outstanding  before
the  issuance  where the sale  price is less than the  greater of book or market
value (the  "Nasdaq  20%  Rule").  In  addition,  shareholder  approval  is also
required by the Nasdaq Stock Market in connection  with  transactions  which are
deemed to be a "change in control"  under Nasdaq rules.  The staff of the Nasdaq
Stock  Market has  advised the  Company  that an issuance of Common  Stock (or a
series of related issuances) which would result in a shareholder  holding 30% or
more of the Common  Stock  likely  would be deemed to be a "change  in  control"
under Nasdaq rules.

         The issuance by the Company of the Additional Shares to TFX, when added
to the issuance of the 854,563 shares to TFX on July 1, 1999, would result in an
issuance subject to shareholder approval under the Nasdaq 20% Rule. The issuance
of the Additional Shares to TFX would result in TFX holding  approximately 38.3%
of the Common Stock then  outstanding.  Accordingly,  we have called the Special
Meeting and  delivered to you these proxy  materials to request your approval of
the

                                       5
<PAGE>

issuance of the  Additional  Shares to TFX. The Company has agreed with TFX that
the  Company  will use its best  efforts to obtain  shareholder  approval of the
issuance of the Additional Shares to TFX.

TERMS OF THE INVESTMENT AGREEMENT

         The  following  is a summary of the  material  terms of the  Investment
Agreement,  including  the proposed sale of the  Additional  Shares to TFX. This
summary is qualified by reference to the full text of the Investment  Agreement,
which is attached hereto as Exhibit A.

         Sale of  Shares  to TFX.  The  Investment  Agreement  provides  for the
Company to sell a total of 2,666,667  shares of Common Stock to TFX at $1.50 per
share for an aggregate of $4.0 million.  The Company sold 854,563  shares to TFX
at $1.50 per share for an aggregate of approximately  $1.3 million as of July 1,
1999, concurrently with the execution of the Investment Agreement.  Upon receipt
of shareholder approval of the sale of the Additional Shares to TFX, the Company
will hold a second closing,  which the Investment  Agreement requires to be held
on or before September 30, 1999, 90 days after the first closing.

         Two Board Seats for TFX. The Investment  Agreement provides that if the
entire  investment  by TFX is  concluded,  the Company  will take all  necessary
action to increase  the size of its Board of  Directors  to seven and grants TFX
the right to  nominate  two  directors  to the Board.  The  Company  has already
increased  the size of the Board to six and  elected  one  nominee of TFX,  John
Sickler,  to the Company's Board as part of its initial $1.3 million investment.
Upon  completion  of the sale of the  Additional  Shares  to TFX,  TFX  would be
entitled to nominate another director to the Company's Board.

         Corporate  Transactions  Requiring  Approval  of  TFX  Directors.   The
Investment  Agreement contains various corporate  governance  provisions.  Under
that  Agreement,  without the  approval of at least six of the  Company's  seven
directors (which must include at least one of the TFX nominees), the Company may
not do any of the following:

         1. Sell all or any  substantial  part of its  assets  other than in the
ordinary course of business, or consolidate or merge with any other corporation;

         2. Issue any shares of capital stock,  any securities  exchangeable for
or  convertible  into any such shares or any right or option to acquire any such
shares or securities.  This limitation  would not apply to shares issuable under
the Company's  stock option plans,  up to 250,000 shares in connection  with the
proposed sale of the  Company's  European  operations  to Comsys  International,
B.V., and issuances in the ordinary course of the Company's business;

         3. Guarantee the indebtedness of another person or entity;

         4. Pay any dividend or other  distribution  in respect of any shares of
its capital stock or redeem, purchase or acquire any shares;

         5. Amend its Articles of Incorporation or Bylaws; or

         6.  Change  the  number of persons  constituting  the  entire  Board of
Directors from seven.

These  "supermajority"  approval requirements would be in effect from completion
of the second TFX investment until TFX (or certain of its successors or assigns)
ceases to own 15% or more of the issued and outstanding  shares of the Company's
Common Stock.

         Registration  of TFX Shares.  The  Investment  Agreement  requires  the
Company,  at its  expense,  to  register  the  shares  issued  to TFX  under the
Securities Act of 1933, as amended, for resale by TFX on a Form S-3 Registration
Statement and to keep the registration statement current and effective until all
of the shares are sold.  The Company  presently is not eligible to use Form S-3,
and will not become eligible to use Form S-3 until at least April 2000. TFX also
has the right, subject to certain exceptions and

                                       6
<PAGE>

limitations,  to have the Company  register TFX's shares if the Company proposes
to register any shares of Common Stock under the Securities Act.

         Other Provisions.  The Investment Agreement also contains certain other
representations,  warranties,  agreements and indemnification obligations of the
Company, including the Company's obligation to indemnify TFX with respect to any
misrepresentation,  breach  of  warranty  or  non-fulfillment  of  any  covenant
contained in the Investment  Agreement or other document delivered in connection
with the Investment Agreement.


CONSEQUENCES IF SHAREHOLDER APPROVAL IS NOT OBTAINED

         The Investment Agreement and Nasdaq rules require the Company to obtain
shareholder  approval for the sale of the Additional  Shares to TFX. If approval
is not obtained, the Company would have to restructure its deal with TFX, obtain
a waiver from TFX or abandon the sale of the Additional  Shares.  If the Company
proceeded  with the  sale of the  Additional  Shares  to TFX  without  obtaining
shareholder approval,  its Common Stock likely would be delisted from the Nasdaq
Stock Market.

         Due to  increased  competition  and the  declining  rate of growth  for
stand-alone  interactive  voice response  (IVR)  systems,  the revenues from the
Company's voice processing  business have declined  significantly.  Accordingly,
the  Company  has  invested  significant  amounts  of time and money to become a
premier  company in the call center arena and in developing its uniQue family of
call center solutions. To become a premier company in the call center arena, the
Company's  management and the Board of Directors has concluded that  significant
investments and additional capital  expenditures will be required,  and that the
TFX investment  will provide  critical  capital  resources to the Company during
this very important transitional period. The Board of Directors further believes
that  it is  critical  to the  Company's  future  to  complete  the  sale of the
Additional  Shares to TFX and bring the  resulting  additional  capital into the
Company.  Accordingly,  the Board urges all shareholders to vote in favor of the
transaction.  If shareholder  approval is not received,  the Board will consider
what  actions  to take  at that  time to try to  preserve  some  portion  of its
proposed transaction with TFX.


USE OF PROCEEDS

         The  aggregate  gross  proceeds to the Company for the  issuance of the
1,812,104  Additional  Shares to TFX at $1.50 per  share is  approximately  $2.7
million.  These proceeds, and the approximately $1.3 million already received by
the  Company  from the initial  sale of shares to TFX,  will be used for working
capital  and general  corporate  purposes,  including  the funding of the uniQue
product  development  and other  programs to develop  and advance the  Company's
products  and  technology,   and  its  call  center  business,  the  payment  of
obligations to the Company's vendors and other third parties, and the payment of
salaries to the Company's officers and employees, and other operating expenses.


EFFECTS OF THE ISSUANCE OF THE ADDITIONAL SHARES

         Dilution.  The net tangible book value of the Company at April 30, 1999
was approximately $0.1 million, or $0.03 per share of Common Stock. Net tangible
book value represents the amount of total tangible assets of the Company reduced
by the amount of its total liabilities, divided by the total number of shares of
Common Stock  outstanding.  After giving  effect to the issuance and sale by the
Company of the 2,666,667 shares to TFX pursuant to the Investment Agreement, and
after deducting  estimated  expenses incurred in connection with the issuance of
such  Shares,  the net  tangible  book value of the Company as of April 30, 1999
would have been approximately $4.1 million,  or $0.58 per share of Common Stock.
This  represents  an increase in net  tangible  book value of $0.55 per share to
existing shareholders.

         Corporate  Governance.  As discussed  above under the caption "Terms of
the Investment  Agreement," the Investment  Agreement contains various corporate
governance provisions.  Under the Investment Agreement,  without the approval of
at least six of the Company's seven  directors

                                       7
<PAGE>
(which must include at least one of the TFX nominees),  the Company may not sell
any  substantial  part of its  assets  other  than  in the  ordinary  course  of
business,  consolidate or merge, issue any shares of capital stock,  convertible
securities or right or option to acquire  securities of the Company  (subject to
certain exceptions described above),  guarantee debt, pay any dividend or redeem
any capital stock,  amend its Articles of  Incorporation or Bylaws or change the
number of directors.  These  "supermajority"  approval  requirements would be in
effect from completion of the sale of the Additional Shares to TFX until TFX (or
certain of its  successors  or assigns)  ceases to own 15% or more of the issued
and outstanding shares of the Company's Common Stock.


INTERESTS OF CERTAIN PERSONS

         Prior to the  issuance of the shares of Common  Stock to TFX on July 1,
1999, none of TFX or any of its affiliates was a director,  executive officer or
5% or greater shareholder of the Company or any affiliate of the Company.  After
the issuance of 854,563  shares to TFX on July 1, 1999, TFX became the holder of
approximately  19.9% of the issued and  outstanding  shares of Common  Stock and
John  Sickler,  an  officer  of TFX,  was  elected  to the  Company's  Board  of
Directors.  Under special rules of the Nasdaq Stock Market, the Company will not
count any votes cast by TFX with  respect to the  proposed  issuance and sale of
the Additional Shares to TFX.


VOTE REQUIRED; RECOMMENDATION OF THE BOARD OF DIRECTORS

         The  proposal  requires  the  approval of a majority of the votes cast,
either in person or by proxy,  at the  Special  Meeting by holders of the Common
Stock.  Under  special  rules of the Nasdaq Stock  Market,  the Company will not
count any votes cast by TFX with  respect to the  proposed  issuance and sale of
the Additional Shares to TFX.

         THE  COMPANY'S  BOARD  OF  DIRECTORS  RECOMMENDS  THAT YOU VOTE FOR THE
PROPOSAL TO ISSUE THE ADDITIONAL SHARES TO TFX.


                                  OTHER MATTERS

         The Board of  Directors  does not intend to  present,  and has not been
informed that any other person intends to present, any matters for action at the
Special Meeting other than those  specifically  referred to herein. If, however,
any other matters  should  properly come before the Special  Meeting,  it is the
intention  of the  person  named  in the  enclosed  proxy  to  vote  the  shares
represented  thereby in accordance with the  determination  of a majority of the
Board of Directors.

         The Board of Directors of the Company urges each  shareholder,  whether
or not he or she  intends to be present at the  Special  Meeting,  to  complete,
sign, and return the enclosed proxy as promptly as possible.

                                          By Order of the Board of  Directors

                                          Stephen Smith
                                          President and Chief Executive Officer

Dated:  July ___, 1999

                                       8
<PAGE>


REVOCABLE PROXY

                              MICROLOG CORPORATION

       THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.

         The undersigned  shareholder hereby appoints Stephen Smith or Steven R.
Delmar, or either of them,  attorneys and proxies of the undersigned,  with full
power of  substitution  and with authority in each of them to act in the absence
of the other,  to vote and act for the  undersigned  at the  Special  Meeting of
Shareholders  of the  Company to be held at 20270  Goldenrod  Lane,  Germantown,
Maryland  20876,  on September 16, 1999, at 10:00 a.m.,  local time,  and at any
adjournments or  postponements  thereof,  in respect of all shares of the Common
Stock of the Company  which the  undersigned  may be  entitled  to vote,  on the
following matters:

1.  Proposed  issuance  of  1,812,104  shares  of Common  Stock to TFX  Equities
    Incorporated for $1.50 per share:

         |_|   FOR            |_|   AGAINST              |_|   ABSTAIN

2.  In their discretion,  on any other matters that may properly come before the
    meeting,  or any adjournments or postponements  thereof,  in accordance with
    the recommendations of a majority of the Board of Directors.

             (Continued and to be dated and signed on reverse side.)

<PAGE>


                           (continued from other side)

         This proxy, when properly executed, will be voted as directed herein by
the undersigned shareholder.  However, if no direction is given, this proxy will
be voted FOR the proposed  issuance of  1,812,104  shares of Common Stock to TFX
Equities Incorporated for $1.50 per share.

         The  undersigned  hereby  acknowledges  prior  receipt of a copy of the
Notice  of  Special   Meeting  of   Shareholders   and  Proxy   Statement  dated
________________,  1999,  including the attachments  thereto, and hereby revokes
any proxy or  proxies  heretofore  given.  This Proxy may be revoked at any time
before  it is voted by  delivering  to the  Secretary  of the  Company  either a
written  revocation of proxy,  or a duly executed proxy bearing a later date, or
by appearing at the Special Meeting and voting in person.

         If you  receive  more than one proxy  form,  please sign and return all
cards in the accompanying envelope.

|_| I PLAN TO ATTEND THE SEPTEMBER 16, 1999
    SPECIAL SHAREHOLDERS MEETING              Date: _____________________, 1999.
                                                 Signature of Shareholder(s)
                                                or Authorized Representative(s)

                                              Please  date and sign  exactly  as
                                              name    appears    hereon.    Each
                                              executor, administrator,  trustee,
                                              guardian,  attorney-in-fact,   and
                                              other  fiduciary  should  sign and
                                              indicate his or her full title. In
                                              the case of stock ownership in the
                                              name of two or more persons,  BOTH
                                              PERSONS SHOULD SIGN.

PLEASE MARK,  DATE AND SIGN THIS PROXY AND RETURN IT PROMPTLY TO ENSURE A QUORUM
AT THE  MEETING.  IT IS IMPORTANT  WHETHER YOU OWN FEW OR MANY SHARES.  DELAY IN
RETURNING YOUR PROXY MAY SUBJECT THE COMPANY TO ADDITIONAL EXPENSE.

<PAGE>
                                                                       EXHIBIT A

         THIS IS AN INVESTMENT AGREEMENT (this "Agreement"), dated as of July 1,
1999, between  MICROLOG  CORPORATION,  a Virginia  corporation ("MICROLOG"), and
TFX EQUITIES INCORPORATED, a Delaware corporation ("TFX").

         The parties  hereto,  intending to be legally  bound  hereby,  agree as
follows:


                                    ARTICLE 1

                                    Financing

         1.1  Purchase  of Common  Stock.  Subject  to the terms and  conditions
hereof,  at the Closings (defined in Article 3) MICROLOG will issue and TFX will
purchase  2,666,667  shares of MICROLOG  common stock,  par value $.01 per share
("Common Stock"), at the aggregate price of $4,000,000.

         1.2 First and  Second  Closings.  Subject  to the terms and  conditions
hereof,  such  transaction  will be  consummated  at two Closings.  At the First
Closing  (defined in Section  2.2),  MICROLOG  will issue and TFX will  purchase
854,563 shares of MICROLOG common stock valued at $1.50 per share for payment of
the sum of $1,281,844.  At the Second Closing (defined in Section 2.3), MICROLOG
will issue and TFX will  purchase  1,812,104  shares of  MICROLOG  common  stock
valued at $1.50 per share for  payment of the sum of  $2,718,156.  The  purchase
price will be paid by interbank wire transfer of immediately available funds.

                                    ARTICLE 2

                                    Closings

         2.1  Place  of  Closing.   Each  closing  hereunder  (a  "Closing"  and
collectively  the  "Closings")  will be held at the offices of TFX,  1787 Sentry
Parkway West, Building 16, Suite 220, Blue Bell, Pennsylvania 19422.

         2.2 The First Closing.  The First Closing hereunder will be held on the
date of this Agreement at 10:00 am.

         2.3 The Second Closing. The Second Closing hereunder will be held after
approval by MICROLOG's  shareholders of the issuance of the 1,812,104  shares of
MICROLOG  Common Stock to be issued and sold at the Second Closing and not later
than  ninety  (90)  days  after the date of the  First  Closing  on such date as
MICROLOG  shall specify by notice to TFX at least fifteen (15) days prior to the
date fixed for such Closing.



<PAGE>

                                    ARTICLE 3

         Conduct of Business and Affairs by MICROLOG Pending the Second Closing

         From and after the date  hereof to and  including  the  Second  Closing
date, except as TFX may otherwise agree in writing, MICROLOG will:

         3.1  Ordinary  Course.  Except  with  respect to the  proposed  sale by
MICROLOG of its European operations to Comsys  International,  B.V., conduct its
business  only in the  ordinary  course,  consistent  with  past  practices  and
policies,  and not make any material change in the nature or character of or the
manner of conducting the business conducted by it.

         3.2 Default. Not do or omit to do any act nor permit any event to occur
or  condition  to exist which will  result in or cause a breach of any  material
contract,  lease or other commitment,  the breach of which would have a material
adverse effect on the business, condition or prospects of MICROLOG.

                                    ARTICLE 4

         Conditions Precedent to the Obligations of TFX to Complete Closings

         4.1  Conditions  of Closing.  The  obligations  of TFX to complete  the
transactions  provided  herein to be  completed  at either of the  Closings  are
subject  to the  fulfillment  prior  to or at  such  Closing  of  the  following
conditions  (any of  which  may,  at its  option,  be  waived  by  TFX)  and the
obligation  of MICROLOG  to  complete  the  transactions  provided  herein to be
completed  at  the  Second  Closing  are  subject  to  MICROLOG   obtaining  its
shareholders' approval in the manner and as described in Section 4.1.2.1:

              4.1.1 Opinion  of   Counsel  for  MICROLOG.   MICROLOG  shall have
delivered to TFX an opinion of its counsel, Hogan and Hartson, dated the Closing
date, in the form attached hereto as Exhibit 4.1.1.

              4.1.2 Conditions of the Second Closing. The obligations of TFX and
MICROLOG to complete the Second Closing  contemplated  by  this  Agreement   are
subject to MICROLOG obtaining the following:

                    4.1.2.1 Shareholder Approval. The obligation of MICROLOG and
TFX to complete the Second Closing contemplated by this  Agreement is subject to
MICROLOG obtaining prior shareholder approval of such transaction.

              4.1.3 Additional Conditions of the Second Closing.  The obligation
of TFX to complete the Second Closing contemplated by  this Agreement is subject
to the following additional condition:

                                      -2-

<PAGE>


                    4.1.3.1  Y2K  Plan of  Action.  MICROLOG  warrants  that its
computer software and related items of systems hardware are, or will be prior to
year  2000,   reasonably   capable  of  accurately   processing,   managing  and
manipulating   date/time   data  from,   into  and  between  the  twentieth  and
twenty-first centuries, and the years 1999, 2000 and leap year calculations, and
that the obligation of TFX to complete the Second Closing  contemplated  by this
Agreement is subject to MICROLOG  implementing  such plan of Y2K compliance that
is reasonably satisfactory to TFX.

         4.2 Representations and Warranties.  The representations and warranties
of  MICROLOG  contained  in Article 5 shall be true at and as of the time of the
Second Closing, and TFX shall receive a certificate to that effect signed by the
Chairman and Chief Financial Officer of MICROLOG.

                                    ARTICLE 5

              Representations, Warranties and Covenants by MICROLOG

         MICROLOG represents, warrants and covenants as follows:

         5.1 Organization and Qualification.  MICROLOG (i) is a corporation duly
organized,  validly existing and in good standing under the laws of Virginia and
(ii) has the corporate power, holds all necessary licenses and permits and is in
all respects  entitled to carry on its business as now being conducted.  Neither
the  character of the  properties  owned or leased by MICROLOG nor the nature of
its business makes  qualification to do business as a foreign corporation in any
other jurisdiction necessary.  The copies (certified by MICROLOG'S Secretary) of
such company's  Articles of Incorporation  and bylaws,  each as amended to date,
which have been delivered to TFX are correct as at the date of this Agreement.

         5.2  Capitalization.  The authorized capital stock of MICROLOG consists
of ten million (10,000,000) shares of common stock, par value $.01 per share and
one million  (1,000,000) shares of preferred stock, par value $.01 per share, of
which 4,294,285 and 0 shares respectively are issued and outstanding. 601,870 of
such issued  shares are held by MICROLOG in its  treasury.  1,832,370  shares of
such authorized  common stock are reserved for issuance pursuant to stock option
plans,  of  which  1,468,846  shares  are  reserved  for  issuance  pursuant  to
outstanding  stock  options.  Upon  shareholder  approval  of  an  amendment  to
MICROLOG's  1995  Employee  Stock  Option  Plan,  the  number  of shares of such
authorized  common stock  reserved  for issuance  pursuant to stock option plans
shall increase by 600,000.  Except for such outstanding stock options, there are
no  outstanding  options,   warrants  or  other  commitments  of  any  character
obligating  MICROLOG  to issue any  shares of its  capital  stock or  options or
rights with respect thereto, and there are no existing or outstanding securities
of  MICROLOG  or  any of  its  Subsidiaries  of any  kind  convertible  into  or
exchangeable for shares of MICROLOG capital stock. There are not outstanding any
obligations or commitments of MICROLOG or any of its  Subsidiaries  to purchase,
redeem or otherwise  acquire any  outstanding  shares of such company's  capital
stock,  except as disclosed on the Schedule of Stock Options. Attached hereto as
Schedule  5.2 is a list of the MICROLOG  shareholders  of record as of April 29,
1999.


                                      -3-

<PAGE>


         5.3  Authorization  of  Agreement.  The  execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly  authorized  by the Board of  Directors  of  MICROLOG  and,  except for the
Shareholder  approval  required to  consummate  the Second  Closing  pursuant to
Section 4.1.2.1 hereof, the Shareholders of MICROLOG where required.

         5.4 No Violation of Law or Default by Execution and Performance of this
Agreement. The execution, delivery and performance of this Agreement by MICROLOG
will not violate any applicable law or constitute a default or result in a right
of  acceleration,  termination or similar right by any party (or would,  but for
the  passage  of time or the giving of notice or both,  constitute  a default or
result in such a right of acceleration,  termination or similar right) under any
contract, agreement or instrument to which MICROLOG is a party.

         5.5  Approvals  and  Consents.  Except as set forth in the  Schedule of
Required  Approvals and Consents,  no approval,  consent or authorization of, or
declaration or filing with, any governmental or judicial  authority or any other
person is  required  in  connection  with the  execution  and  delivery  of this
Agreement by MICROLOG or the  performance  of its  obligations  hereunder or the
consummation of the transactions contemplated hereby.

         5.6  Financial  Statements.  MICROLOG  has  delivered  to TFX:  (i) the
balance sheets of MICROLOG as at October 31, 1998 and 1997 and the statements of
profit and loss and of stockholders'  equity of MICROLOG for the years ending on
each such date,  in each case  certified by  PricewaterhouseCoopers,  MICROLOG'S
independent  accountants and (ii) the unaudited  balance sheet of MICROLOG as of
April 30, 1999 and the statement of profit and loss and of stockholders'  equity
of MICROLOG for the period then ended on such date  (collectively,  the "Interim
Financial  Statements").  (Such  October 31,  1998  balance  sheet is  sometimes
referred to herein as the  "Balance  Sheet" and October 31, 1998 as the "Balance
Sheet Date.") All such audited  financial  statements  are correct and complete;
fairly  present in all material  respects the  financial  condition,  assets and
liabilities of MICROLOG as at the date thereof and the results of its operations
for such periods;  and have been prepared in accordance with generally  accepted
accounting  principles ("GAAP")  consistently  maintained since the beginning of
such periods.  The Interim Financial Statements have been prepared in accordance
with GAAP.

         5.7 No  Undisclosed  Liabilities.  As at the Balance Sheet Date and the
respective dates of the Interim Financial  Statements,  MICROLOG had no material
liability or obligation of any nature,  whether due or to become due,  absolute,
contingent or otherwise,  including any  liabilities  for taxes  (including  any
interest or penalties  relating thereto) in respect of or measured by the income
of MICROLOG for any period prior to the Balance Sheet Date, except to the extent
reflected  or reserved  against in its  Balance  Sheet,  the  Interim  Financial
Statements or as disclosed by this Agreement. MICROLOG does not know or have any
reasonable  ground to know of any basis for the assertion against MICROLOG as at
the Balance Sheet Date of any material  liability of any nature or in any amount
not fully  reflected  or reserved  against in the Balance  Sheet or disclosed by
this Agreement.

                                      -4-

<PAGE>


         5.8  Licenses  and  Permits.   MICROLOG  has  all  permits,   licenses,
certificates  of inspection  and other  authorizations  necessary for or used to
carry on its business as now being  conducted,  or to use and occupy the premise
as now being used,  which are required by  presently  effective  laws,  rules or
regulations, the loss of which would have a material adverse effect.

         5.9 Compliance with Laws and Regulations.,  MICROLOG neither is nor has
been (by virtue of any action,  omission,  occurrence of any event, existence of
any  circumstances  or contract to which it is a party) in violation of any law,
ordinance,  regulation,  order or decree  (including,  without  limitation,  all
regulations of governmental agencies having jurisdiction or supervision over its
business or  properties),  the  violation  of which may have a material  adverse
effect on the business, assets, condition or prospects of MICROLOG.

         5.10  Employee  Benefit  Plans.  (a) MICROLOG is in  compliance  in all
material  respects with all laws,  including ERISA and the Internal Revenue Code
of 1986,  as amended  ("Code"),  applicable  to its  employee  benefit  plans as
defined in Section 3(3) of ERISA ("Benefit  Plans").  Each Benefit Plan has been
maintained,  operated and  administered  in compliance in all material  respects
with its  terms and any  related  documents  or  agreements  and the  applicable
provisions of ERISA and the Code.

                    (b) There are no  pending  audits or  investigations  by any
governmental  agency  involving the Benefit Plans,  and no threatened or pending
claims  (except  for  individual  claims  for  benefits  payable  in the  normal
operation of the Benefit  Plans),  suits or  proceedings  involving  any Benefit
Plan, any fiduciary  thereof or service  provider thereto in connection with the
Benefit Plan, nor to the knowledge of MICROLOG is there any reasonable basis for
any such claim, suit or proceeding.

                    (c) Neither  Seller nor any  employee of Seller on behalf of
Seller has engaged in or, in connection  with the  transactions  contemplated by
this Agreement,  will engage in a "prohibited transaction" within the meaning of
Section  406 of ERISA  or  Section  4975 of the  Code,  nor has any such  person
breached any duty imposed by Title I of ERISA, with respect to any Benefit Plan.
To the  knowledge  of Seller,  no other  person has engaged in such a prohibited
transaction or breach in connection  therewith.  Except for the 12,000 shares of
MICROLOG common stock that the Microlog  Corporation Money Purchase Pension Plan
has  invested  in,  none of the assets of any  Benefit  Plan is  invested in any
property constituting  "employer real property" or an "employer security" within
the meaning of Section 407 of ERISA.

         5.11 Material  Contracts.  MICROLOG has filed with the  Securities  and
Exchange  Commission  (the  "Exchange")  all  contracts  required to be filed as
material  contracts under the rules and regulations  promulgated by the Exchange
(collectively,  the  "Material  Contracts")  True  copies  of all such  Material
Contracts  have  been  made  available  to TFX.  No  event  has  occurred  which
constitutes a default or results in a right of acceleration,  termination or any
similar right by any party (or would,  but for the passage of time or the giving
of  notice,  constitute  a default  or  result in such a right of  acceleration,
termination or similar right) under any Material Contract.


<PAGE>


         5.12 Intellectual Property Rights.

              (a) The  Schedule  of  Intellectual  Property  Rights  contains  a
complete and  accurate  list of all patents and patent  applications,  copyright
registrations,  trademarks,  service marks,  trade names, and  registrations and
applications for registration of trademarks,  service marks,  trade names, trade
dress used by MICROLOG ("the  Intellectual  Property  Rights")  specifying as to
each such item, as applicable: (i) the owner of the item; (ii) the jurisdictions
in which the item is  issued  or  registered  or in which  any  application  for
issuance or  registration  has been filed,  including the  respective  issuance,
registration,  or application number; (iii) the date of application and issuance
or registration of trademarks or service marks and the class or classes of goods
or services on which each such trademark or service mark is or is intended to be
used.

              (b) The  Schedule  of  Intellectual  Property  Rights  contains  a
complete  and accurate  list of all  licenses,  sublicenses,  consents and other
agreements  (whether  written  or  otherwise)  (i)  pertaining  to any  patents,
trademarks,  service marks, trade names, trade dress, copyrights, trade secrets,
computer software programs,  or other intellectual  property used in the conduct
of the  business,  and (ii) by which  MICROLOG  licenses or  authorizes  a third
person  to use such  intellectual  property.  MICROLOG  is not in  breach  of or
default under any such license or other  agreement,  except where such breach or
default would not,  individually  or in the aggregate,  have a material  adverse
effect  upon  MICROLOG  and each  such  license  or other  agreement  is now and
immediately following the Closing will be valid and in full force and effect.

         5.13  Litigation.  Except as set forth in the  Schedule of  Litigation,
there is no litigation, proceeding or investigation pending, or to the knowledge
of MICROLOG,  threatened,  against or affecting  MICROLOG,  whether or not fully
covered by insurance.

         5.14 Absence of Creditors'  Arrangements or  Proceedings.  MICROLOG has
not made any  arrangement  with its  creditors  otherwise  than in the  ordinary
course of its business,  nor has any  involuntary or voluntary  proceeding  been
instituted  against or by MICROLOG or relating to any of its property  under any
bankruptcy, insolvency or similar law.

         5.15 No Change in  Contractual  Relations.  No person or entity dealing
with MICROLOG has given it any oral or written  notice that it intends to reduce
or  otherwise   materially  modify  its  business  with  MICROLOG,   where  such
modification  would have a material adverse effect on MIRCROLOG's  business.  No
person having a Material  Contract with MICROLOG has indicated  that such person
may breach, terminate or not renew such person's material contract.

         5.16 Minute Books,  Stock Records,  Officers,  Directors.  MICROLOG has
made  available  for  inspection  by TFX the  minute  books and  stock  books of
MICROLOG,  which contain all of such  corporation's  minutes and stock  records.
Such minute books  contain  minutes of all  meetings of the Board of  Directors,
committees of the Board of Directors and the shareholders of MICROLOG,  and such
minutes  reflect all  actions  taken at such  meetings  that

                                      -6-

<PAGE>

may have a material adverse effect on MICROLOG.  The Schedule  of  Officers  and
Directors sets forth a complete list of all the current officers  and  directors
of MICROLOG.

         5.17  Brokers.  MICROLOG has not made any agreement or taken any action
which may cause  anyone to become  entitled to a  commission  as a result of the
transactions contemplated by this Agreement.

         5.18  Full  Disclosure.  No  representation  or  warranty  by  MICROLOG
contained in this  Agreement and no statement  contained in any  certificate  or
other  instrument  furnished or to be  furnished  to TFX  pursuant  hereto or in
connection  with the  transactions  contemplated  hereby,  including  MICROLOG'g
reports filed with the Exchange, taken collectively,  contains or at the Closing
will contain any untrue  statement of a material  fact, or omits or will omit at
the  Closing to state a material  fact  necessary  to  provide  TFX with  proper
information as to MICROLOG and its affairs.


                                    ARTICLE 6

                              Corporate Governance

         6.1 Period of Effectiveness. Subject to completion of the Closings, the
provisions of this Article 6 shall be in effect (the "Period of Effectiveness of
this  Article  6") from the date of the Second  Closing  until none of TFX,  any
successor  to any part of its  business or any  assignee to whom TFX or any such
successor  shall have  transferred  its rights under this Agreement by a writing
specifically  referring  to this  Agreement  (such  successors  and  assigns are
sometimes  referred  to herein as the  "Contract  Assigns  of TFX")  shall own a
number of shares of Common Stock acquired  pursuant hereto which shall equal 15%
or more of the total number of shares of Common  Stock  issued and  outstanding.
Any  transfer by TFX of its rights  hereunder  to a  non-affiliate  of TFX shall
require  the prior  written  consent of  MICROLOG,  which  consent  shall not be
unreasonably withheld.

         6.2 Board of Directors.  MICROLOG will take all such action as shall be
necessary (or as any party hereto may  reasonably  request) to cause (a) one (1)
of the  directors  of  MICROLOG in office to be a person  nominated  by TFX upon
consummation  of the  First  Closing  and  (b) one (1)  additional  director  of
MICROLOG  in office to be a person  nominated  by TFX upon  consummation  of the
Second Closing.

         6.3 Board of Directors  Approval by Super Majority Required for Certain
Corporate  Action.  Without  the  prior  approval  of at  least  six  (6) of its
directors then in office (which number of directors  required for approval shall
be reduced  during any period where there is a vacancy on the board of directors
by one (1)  director  for each such  vacancy),  MICROLOG  will not do any of the
following:

                                      -7-

<PAGE>


              (a) Merger or Reorganization.  Sell or otherwise dispose of all or
any  substantial  part of its assets  otherwise  than in the ordinary  course of
business,  or consolidate with or merge into any other corporation or permit any
corporation to merge into it;

              (b)  Issuance of Shares,  Rights or  Options.  Issue any shares of
capital stock or any securities  exchangeable  for or convertible  into any such
shares or any right or option to acquire  any such  shares or  securities  other
than (i) up to 2,432,370  shares of common stock which may be issued pursuant to
an Employee  Stock  Option  Plan,  (ii) up to 250,000  shares of common stock in
connection  with the  proposed  sale by MICROLOG of its European  operations  to
Comsys  International,  B.V.  and  (iii)  issuances  in the  ordinary  course of
MICROLOG's business;

              (c) Guarantees.  Guarantee or otherwise  assume  liability for the
indebtedness of another person or entity;

              (d)  Dividends;  Redemption  or Other  Acquisition  of  Shares  of
Capital Stock.  Pay any dividend or other  distribution in respect of any shares
of its capital stock or redeem, purchase or otherwise acquire any such shares.

              (e)  Amendment  of  Articles  or  Bylaws.  Amend its  Articles  of
Incorporation or bylaws.

              (f) Change Size of Board.  Take any action to increase or decrease
the number of persons constituting the entire Board of Directors from seven (7).

         6.4  Remedies.  In the event of a breach or  threatened  breach of this
Article,  the remedy at law shall be  inadequate,  and TFX will be  entitled  to
appropriate injunctive relief.

                                    ARTICLE 7

                         Shares Acquired for Investment

         7.1  TFX represents and warrants to MICROLOG as follows:

              (a) TFX is  acquiring  the  shares of Common  Stock in good  faith
solely for its own account,  for investment only and without any view toward the
resale or other distribution thereof within the meaning of the Securities Act of
1933, as amended (the "Securities Act");

              (b) TFX  has  such  knowledge  and  experience  in  financial  and
business  matters that TFX is capable of evaluating  the merits and risks of its
investment in the Common Stock.  TFX understands and is able to bear any and all
economic risks associated with such investment  (including,  without limitation,
the necessity of holding such shares for an indefinite period of time,  inasmuch
as the shares have not been registered  under the Securities Act, and of a total
loss of the investment).  TFX is an Accredited  Investor as that term is defined
in  Regulation D  promulgated  under the  Securities  Act. TFX confirms that the
MICROLOG  has made  available  to

                                      -8-

<PAGE>


TFX and its  representatives  and agents the opportunity to ask questions of the
officers  and  management  employees  of the  MICROLOG  about the  business  and
financial  condition  of  the  MICROLOG  as  TFX  or  its  representatives  have
requested;

              (c) TFX understands  that the Common Stock to be issued  hereunder
has not been  registered  under the Securities Act and is being offered and sold
in reliance on specific  exemptions from the  registration  requirements of U.S.
securities  laws and that MICROLOG is relying upon the truth and accuracy of the
representations,  warranties, agreements,  acknowledgments and understandings of
TFX set forth herein in order to determine the  applicability of such exemptions
and the TFX's  suitability  to acquire  the Common  Stock.  TFX  represents  and
warrants that the information contained herein is complete and accurate.

              (d) TFX  acknowledges  and  hereby  agrees  that  the  certificate
representing  the Common Stock to be issued to TFX hereunder shall bear a legend
substantially in the following form:

              The shares of stock represented by this certificate have
              not been registered under the Securities Act of 1933, as
              amended (the "Act"), or applicable state securities laws
              and   may   not   be   offered,   encumbered,   pledged,
              hypothecated, sold, transferred or otherwise disposed of
              in the absence of registration or the availability of an
              exemption   from   registration   under   the   Act  and
              regulations  promulgated thereunder and applicable state
              securities laws. Microlog Corporation reserves the right
              prior to any such  transfer  to require  delivery  of an
              opinion of counsel  satisfactory  to it with  respect to
              compliance with the foregoing restrictions.

         7.2  Demand for Registration.

              7.2.1  Demand  Registration.  At any time  from and after the date
hereof that  MIRCOLOG  becomes  eligible to register  the Common Stock under the
Securities  Act on a Form  S-3  Registration  Statement,  TFX may  request  that
MICROLOG  effect  one (1) (and only one)  registration  for resale on a Form S-3
Registration  Statement  by TFX of all of the  shares of Common  Stock that were
issued  hereunder  to,  and are  then  owned  by,  TFX  (free  and  clear of all
encumbrances)  and that are not then  eligible  for resale  pursuant to Rule 144
under the Securities Act (the "Registrable Securities").

              7.2.2 Demand Registration Procedure.  Upon receipt of a request by
TFX as set forth in  section  7.2.1  above,  MICROLOG  agrees to use  reasonable
commercial efforts to: (i) prepare and file with the SEC, within sixty (60) days
after receipt of such request, a Form S-3 Registration  Statement  providing for
the  registration of the  Registrable  Securities;  (ii) keep such  registration
statement effective and current for a period of not less than sixty (60) days or
such shorter period which will terminate when all of the Registrable  Securities
have been sold; and (iii) register or qualify the Registrable  Securities  under
the securities or blue sky laws of such states as TFX shall  reasonably  request
and do any and all other acts and things which may be necessary to enable TFX to
complete any disposition in such  jurisdiction of such  Registrable

                                      -9-

<PAGE>


Securities;  provided,  however, that MICROLOG shall not for any such purpose be
required  to  (a)  qualify  to do  business  as a  foreign  corporation  in  any
jurisdiction where, but for the requirements of these procedures, it is not then
so qualified,  (b) subject itself to taxation in any such  jurisdiction,  or (c)
take any action  which  would  subject  it to  consent  to general or  unlimited
service of process in any such jurisdiction where it is not then so subject.

              7.2.3 Restrictions on Demand Registration.  MICROLOG may delay the
filing or effectiveness of the registration statement requested pursuant to this
Section 7.2 for a period of not less than ninety (90) days and not to exceed one
hundred  eighty  (180)  days  after  the  date  of  receipt  of  a  request  for
registration  pursuant to this  Section 7.2  if (i) at the time of such  request
MICROLOG is engaged,  or has plans to engage within ninety (90) days of the date
of receipt of such request, in a firm commitment underwritten public offering of
primary  shares  of  Common  Stock  in which  TFX may  include  the  Registrable
Securities pursuant to Section 7.3 below or (ii) MICROLOG shall furnish to TFX a
certificate  signed by the chief executive  officer of MICROLOG stating that, in
the good faith  judgment of the Board of  Directors  of  MICROLOG,  and with the
concurrence  of the  investment  banker,  if any, that is then  currently  being
advising  MICROLOG,  it would  be  seriously  detrimental  to  MICROLOG  and its
shareholders  for such  registration  statement  to be filed and it is therefore
essential to defer the filing of such registration statement.

         7.3 Piggyback Registration.


             7.3.1 Right to  Piggyback.  If MICROLOG proposes to register any of
its securities under the Securities Act (other than (i) registrations solely for
the  registration  of shares in  connection  with an employee  benefit plan or a
merger or share exchange or consolidation and (ii) the registration  pursuant to
Section 7.2), whether or not for sale for its own account,  and the registration
form to be used may be used for the  registration of the Registrable  Securities
(a  "Piggyback  Registration"),  MICROLOG  will at each such  time  give  prompt
written notice to TFX of its intention to do so. Upon the written request of TFX
made within thirty (30) days after the receipt of any such notice, MICROLOG will
use reasonable  commercial efforts to effect the registration of the Registrable
Securities  that  TFX  requests  to be so  registered  on  the  same  terms  and
conditions as the securities  otherwise being sold in such registration,  to the
extent  requisite to permit the disposition of such Registrable  Securities.  No
registration  effected  under this Section 7.3.1 shall  relieve  MICROLOG of its
obligation to effect one (1) registration upon request under Section 7.2 above.

              7.3.2 Priority in Piggyback  Registrations.  If (i) a registration
pursuant to this Section 7.3 involves an underwritten offering of the securities
so being registered,  whether or not for sale for the account of MICROLOG, to be
distributed (on a firm commitment  basis) by or through one or more underwriters
of  recognized   standing  under  underwriting  terms  appropriate  for  such  a
transaction  and (ii)  the managing  underwriter of such  underwritten  offering
shall  inform  MICROLOG in writing of its belief  that the number of  securities
requested  to be included in such  registration  exceeds the number which can be
sold in (or during the time of) such offering  without  adversely  affecting the
price to be received thereon,  then MICROLOG will include in such  registration,
to the  extent of the number  which  MICROLOG  is so advised  can be sold in (or
during the time of) such offering, first, all securities proposed by MICROLOG to
be sold for its

                                      -10-

<PAGE>

own account or all securities (other than the Registrable  Securities)  proposed
by MICROLOG to be sold for the account of the holders  thereof,  as the case may
be,  second,  the  Registrable  Securities  requested  to be  included  in  such
registration,  and third,  other  securities  requested  to be  included in such
registration.

         7.4  Termination of Registration  Rights.  In the event that either (i)
all of the  Registrable  Securities  become eligible for resale pursuant to Rule
144 under the Securities Act or (ii) the number of Registrable  Securities owned
beneficially  and of record by TFX falls below 5% of the total  number of shares
of Common Stock issued and outstanding, then all registration rights pursuant to
Sections 7.2 and 7.3 shall  immediately  terminate and be of no further force or
effect.

                                    ARTICLE 8

                                 Indemnification

         MICROLOG  shall  indemnify  and hold TFX harmless  from and against any
damage or deficiency resulting from any misrepresentation, breach of warranty or
non-fulfillment  of any covenant contained in this Agreement or in any statement
or  certificate  furnished  or to be  furnished  to TFX  pursuant  hereto  or in
connection with the transactions contemplated hereby and any actions, judgments,
costs and expenses incident to the foregoing.

                                    ARTICLE 9

                     Nature and Survival of Representations

         All  statements  contained  in  any  certificate  or  other  instrument
delivered  by  or on  behalf  of  MICROLOG  pursuant  to  this  Agreement  or in
connection   with  the   transactions   contemplated   hereby  shall  be  deemed
representations  and  warranties  by MICROLOG  hereunder.  All  representations,
warranties  and  agreements  made by MICROLOG  shall survive the Second  Closing
hereunder for a period of two (2) years.

                                   ARTICLE 10

                                  Governing Law

         This Agreement  will be governed by, and construed in accordance  with,
the laws of the Commonwealth of Pennsylvania.

                                   ARTICLE 11

                         Parties in Interest; Assignment

         This  Agreement  shall be binding  upon and inure to the benefit of the
parties  hereto and their  respective  heirs,  successors  and assigns.  TFX may
assign this agreement to an affiliate.


                                      -11-

<PAGE>

                                   ARTICLE 12

                                     Notices

         All notices and other communications  hereunder shall be in writing and
shall  be  deemed  to have  been  duly  given  if  delivered  or  mailed  in the
continental  United  States,  first-class  postage  prepaid,  to a party  at the
following address, or to such other address as such person may hereafter specify
by notice:

         If to MICROLOG:

         Microlog Corporation
         20270 Goldenrod Lane
         Germantown, Maryland 20876-4070
         Attention:  Stephen Smith, President and Chief Executive Officer

         If to TFX:

         TFX Equities Incorporated
         1787 Sentry Parkway West
         Building 16, Suite 220
         Blue Bell, Pennsylvania 19422
         Attention:  John J. Sickler, President

                                   ARTICLE 13

                               Headings and Titles

         The  headings  and titles of  Articles,  Sections  and the like in this
Agreement are inserted for  convenience of reference  only, form no part of this
Agreement  and shall not be  considered  for purposes of  interpreting  the text
hereof.

                                   ARTICLE 14

                                    Schedules

         Each  Schedule  referred  to herein and listed in the Table of Contents
hereof has been delivered by a party hereto and has been  identified by a legend
thereon referring to this Agreement,  signed for purposes of such identification
by representatives of MICROLOG and TFX.

                                      -12-

<PAGE>


                                   ARTICLE 15

                                  Modification

         Except as provided in Article 9, no  amendment  or  modification  of or
supplement to this Agreement will be effective  unless it is in writing and duly
executed by the party to be charged thereunder.

                                      -13-


<PAGE>

                                   ARTICLE 16

                                  Counterparts

         This  Agreement  may be executed in two or more  counterparts,  each of
which shall be deemed an original,  but all of which together  shall  constitute
one and the same instrument.

         IN WITNESS WHEREOF,  the parties have executed this Agreement as of the
date first above written.

                                            MICROLOG CORPORATION


                                            By: /s/ Steven R. Delmar
                                                ----------------------------
                                                Steven R. Delmar
                                                Executive Vice President and
                                                Chief Financial Officer


                                            TFX EQUITIES INCORPORATED


                                            By: /s/ John J. Sickler
                                                ---------------------------
                                                John J. Sickler
                                                President



                                      -14-

<PAGE>





                   SCHEDULE OF REQUIRED APPROVALS AND CONSENTS


1. The Shareholder  Approval to the issuance and sale of the 1,812,104 shares of
   MICROLOG Common Stock at the Second Closing.

2. Consent  of Silicon  Valley Bank to the  issuance  and sale of the  1,812,104
   shares of MICROLOG Common Stock at the Second Closing.









                                      -15-



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