UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   ----------

                                    FORM 10-Q


                        (X) QUARTERLY REPORT PURSUANT TO
                           SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
               For the quarterly period ended September 30, 2004

                                       OR

              ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                  For the transition period from _____ to _____

                         Commission file number 0-24712

                          Metrologic Instruments, Inc.
             (Exact name of registrant as specified in its charter)


                              New Jersey 22-1866172
                (State or other jurisdiction of (I.R.S. Employer
               incorporation or organization) Identification No.)


                   90 Coles Road, Blackwood, New Jersey 08012
               (Address of principal executive offices) (Zip Code)

                                 (856) 228-8100
                         (Registrant's telephone number,
                              including area code)


         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No __

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).  Yes __    No X

As of November 9, 2004, there were 21,619,484 shares of Common Stock, $.01 par
value per share, outstanding.


<PAGE>


                          METROLOGIC INSTRUMENTS, INC.


                                      INDEX

                                                                            Page

No.
Part I -  Financial Information

Item 1.   Financial Statements

          Condensed Consolidated Balance Sheets -
          September 30, 2004 (unaudited) and December 31, 2003              3

          Condensed Consolidated Statements of Operations (unaudited)
          -Three and Nine Months Ended September 30, 2004 and 2003          4

          Condensed Consolidated Statements of Cash Flows (unaudited)
          -Nine Months Ended September 30, 2004 and 2003                    5

          Notes to Condensed Consolidated Financial Statements (unaudited)  6

Item 2.   Management's Discussion and Analysis of
          Financial Condition and Results of Operations                    12

Item 3.   Quantitative and Qualitative Disclosures about Market Risk       20

Item 4.   Controls and Procedures                                          20

Part II - Other Information
Item 1.   Legal Proceedings                                                21
Item 6.   Exhibits                                                         23

Signatures                                                                 24


<PAGE>
                         PART 1 - FINANCIAL INFORMATION

Item 1.  Financial Statements


                          Metrologic Instruments, Inc.
                      Condensed Consolidated Balance Sheets
                    (amounts in thousands except share data)


                                                    September 30,  December 31,
Assets                                                   2004         2003
                                                       --------     --------
                                                      (Unaudited)
     Current assets:
        Cash and cash equivalents                      $ 44,858     $ 48,817
        Accounts receivable, net of allowances
          of $563 and $485, respectively                 31,557       27,369
        Inventory                                        24,299       16,972
        Deferred income taxes                             1,757        1,758
        Other current assets                              2,517        3,692
                                                       --------     --------
     Total current assets                               104,988       98,608

     Property,  plant and equipment, net                 18,315       16,940
     Goodwill                                            23,213       17,536
     Other intangibles, net                              19,910        6,612
     Other assets                                           120          204
                                                       --------     --------
     Total assets                                      $166,546     $139,900
                                                       ========     ========

Liabilities and shareholders' equity

     Current liabilities:
        Current portion of lines of credit             $  4,567     $  4,886
        Current portion of notes payable                  2,176          321
        Accounts payable                                  8,436        7,482
        Accrued expenses                                 17,541       11,518
        Deferred contract revenue                           508          289
                                                       --------     --------
     Total current liabilities                           33,228       24,496

     Notes payable,  net of current portion               2,127          320
     Deferred income taxes                                3,516        3,515
     Other liabilities                                    3,622        3,961

     Shareholders' equity:
        Preferred stock,  $0.01 par value: 500,000 shares
            authorized;  none issued                          -            -
        Common stock,  $0.01 par value:  30,000,000 shares
            authorized; 21,564,308 and 20,807,884 shares
            issued and outstanding at June 30, 2004 and
            December 31, 2003, respectively                  216         208
        Additional paid-in capital                        82,791      80,201
        Retained earnings                                 42,453      28,482
        Accumulated other comprehensive loss              (1,407)     (1,283)
                                                       ---------    --------
        Total shareholders' equity                       124,053     107,608
                                                       ---------    --------
     Total liabilities and shareholders' equity        $ 166,546    $139,900
                                                       =========    ========


                             See accompanying notes.

<page>
                          Metrologic Instruments, Inc.
                Condensed Consolidated Statements of Operations
                                   (Unaudited)
             (amounts in thousands except share and per share data)

                                    Three Months Ended       Nine Months Ended
                                       September 30,           September 30,
                                      2004        2003        2004        2003
                                      ----        ----        ----        ----

Sales                            $   44,156 $    32,587 $   124,846 $    96,309
Cost of sales                        24,088      18,803      66,886      56,352
                                  ---------  ----------  ----------  ----------

Gross profit                         20,068      13,784      57,960      39,957

Selling, general and administrative
   expenses                          10,997       7,547      29,470      22,798
Research and development expenses     1,824       1,686       5,671       5,210
                                 ----------  ----------  ----------  ----------

Operating income                      7,247       4,551      22,819      11,949

Other income (expenses)
   Interest income                      170          13         418          25
   Interest expense                    (107)       (348)       (320)     (1,092)
   Foreign currency transaction
      gain (loss)                       330         184        (135)        339
   Gain on extinguishment of debt         -           -           -       2,200
   Other expense, net                   (88)       (114)       (248)       (824)
                                 ----------  ----------  ----------  ----------

   Total other income (expenses)        305        (265)       (285)        648
                                 ----------  ----------  ----------  ----------

Income before income tax
   provision                          7,552       4,286      22,534      12,587

Income tax provision                  2,870       1,630       8,563       3,952
                                 ----------  ----------  ----------  ----------

Net income                      $     4,682 $     2,656 $    13,971 $     8,645
                                 ==========  ==========  ==========  ==========

Basic income per share:

   Weighted average shares
     outstanding                 21,554,724  16,995,066  21,403,037  16,664,168
                                 ==========  ==========  ==========  ==========
   Basic income per share       $      0.22 $      0.16 $      0.65 $      0.52
                                 ==========  ==========  ==========  ==========

Diluted income per share:

   Weighted average shares
     outstanding                 21,554,724  16,995,066  21,403,037  16,664,168
   Net effect of dilutive
     securities                   1,393,028   2,129,804   1,553,221   1,583,688
                                 ----------  ----------   ---------  ----------

   Total shares outstanding
     used in computing diluted
     income per share            22,947,752  19,124,870  22,956,258  18,247,856
                                 ==========  ==========  ==========  ==========
   Diluted income per share     $      0.20 $      0.14 $      0.61 $      0.47
                                 ==========  ==========  ==========  ==========


                             See accompanying notes.
<page>


                          Metrologic Instruments, Inc.
                Condensed Consolidated Statements of Cash Flows
                                   (Unaudited)
                             (amounts in thousands)


                                                       Nine Months Ended
                                                         September 30,
                                                   ---------------------------
                                                     2004               2003
                                                   --------           --------
Operating activities

Net cash provided by
  operating activities                             $ 13,937            $ 7,083

Investing activities
Restricted cash                                           -              1,000
Payment for acquired business                        (9,100)                 -
Purchase of property,  plant and equipment           (3,742)            (1,166)
Purchase of minority interest in subsidiary          (6,139)              (864)
Patents and trademarks                                 (839)              (677)
Proceeds from sale of property                           43                  -
                                                    -------            -------
Net cash used in
  investing activities                              (19,777)            (1,707)

Financing activities

Proceeds from exercise of stock options and
     employee stock purchase plan                     2,598              2,658
Principal payments on notes payable                    (142)           (13,789)
Proceeds from issuance of notes payable                   -              4,141
Net (payments on) proceeds from lines of credit        (325)             2,014
Capital lease payments                                 (102)               (45)
Issuance of warrants                                      -                247
Increase in financing costs                               -               (110)
Net cash provided by (used in)                      -------            -------
  financing activities                                2,029             (4,884)

Effect of exchange rates on cash                       (148)              (334)
                                                    -------            -------
Net (decrease) increase in cash and
     cash equivalents                                (3,959)               158
Cash and cash equivalents at beginning of period     48,817              1,202
                                                    -------            -------
Cash and cash equivalents at end of period         $ 44,858            $ 1,360
                                                   ========            =======
Supplemental Disclosure:
     Cash paid for interest                        $    194            $ 1,365
                                                   ========            =======
     Cash paid for income taxes                    $  2,705            $ 1,962
                                                   ========            =======



                             See accompanying notes.
<page>
                          METROLOGIC INSTRUMENTS, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 2004
                  (amounts in thousands except per share data)
                                   (Unaudited)


1.       Business

Metrologic Instruments, Inc. and its subsidiaries (collectively, the "Company")
design, manufacture and market bar code scanning and high-speed automated data
capture solutions using laser, holographic and vision-based technologies. The
Company offers expertise in one-dimensional and two-dimensional bar code
reading, optical character recognition, image lift, and parcel dimensioning and
singulation detection for customers in retail, commercial, manufacturing,
transportation and logistics, and postal and parcel delivery industries.
Additionally, through its wholly-owned subsidiary, Adaptive Optics Associates,
Inc. ("AOA"), the Company is engaged in developing, manufacturing, marketing and
distributing custom electro-optical and opto-mechanical systems which include
wavefront correction, industrial inspection, and scanning and dimensioning
systems for commercial and government customers. The Company's products are sold
in more than 110 countries worldwide through the Company's sales, service and
distribution offices located in North and South America, Europe and Asia.

2.       Accounting Policies

Interim Financial Information

The accompanying unaudited Condensed Consolidated Financial Statements have been
prepared in accordance with accounting principles generally accepted in the
United States for interim financial information and the instructions to Form
10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of
the information and footnotes required by accounting principles generally
accepted in the United States for complete financial statements. In the opinion
of management, all adjustments (consisting solely of normal recurring
adjustments) necessary for a fair presentation of the Condensed Consolidated
Financial Statements have been included. The results of the interim periods are
not necessarily indicative of the results to be obtained for a full fiscal year.
The Condensed Consolidated Financial Statements and these Notes should be read
in conjunction with Management's Discussion and Analysis of Financial Condition
and Results of Operations contained in this Quarterly Report on Form 10-Q and
the Company's Annual Report on Form 10-K for the year ended December 31, 2003,
including the Consolidated Financial Statements and the Notes to Consolidated
Financial Statements for the year ended December 31, 2003 contained therein.

Stock-Based Compensation

The Company follows Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees" ("APB 25") and related interpretations in accounting
for stock options. Under APB 25, if the exercise price of the Company's stock
options equals or exceeds the market price of the underlying common stock on the
date of grant, no compensation expense is recognized. Had compensation expense
for the Company's stock option plan been determined based upon the fair value at
the grant date using the Black-Scholes pricing model prescribed under SFAS 123,
the Company's net earnings and net earnings per share would approximate the
pro-forma amounts as follows:

                                        Three Months Ended  Nine Months Ended
                                            September 30,      September 30,
                                           2004     2003      2004     2003
                                           ----     ----      ----     ----
 Net income:
  As reported                            $ 4,682  $ 2,656    $13,971  $ 8,645
  Deduct:  (total stock-based  employee
  compensation expense determined
  under fair  value based method, net of
  related taxes)                            (166)    (121)      (469)    (396)
                                         -------  -------    -------  -------
  Pro forma                              $ 4,516  $ 2,535    $13,502  $ 8,249
                                         =======  =======    =======  =======
 Net income per share:
   Basic:
    As reported                          $  0.22  $  0.16    $  0.65  $  0.52
    Pro forma                               0.21     0.15       0.63     0.50
   Diluted:
    As reported                          $  0.20  $  0.14    $  0.61  $  0.47
    Pro forma                               0.20     0.13       0.59     0.45
<page>
Use of Estimates

The preparation of the financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.

Stock Splits

On June 6, 2003, the Board of Directors approved a three-for-two stock split of
our common stock. The stock split was payable in the form of a 50% stock
dividend and entitled each stockholder of record at the close of business on
June 23, 2003 to receive three shares of common stock for every two outstanding
shares of common stock held on that date. The stock dividend was payable on July
3, 2003.

On October 7, 2003, the Board of Directors approved a two-for-one stock split of
our common stock. The stock split was payable in the form of a 100% stock
dividend and entitled each stockholder of record at the close of business on
October 20, 2003 to receive two shares of common stock for every outstanding
share of common stock held on that date. The stock dividend was payable on
October 30, 2003.

The capital stock accounts, all share data and earnings per share data in the
consolidated financial statements give effect to the stock splits, applied
retroactively, to all periods presented.

Reclassifications

Certain prior period amounts have been reclassified to conform to the current
period presentation.


3.        Inventory

     Inventory consists of the following:

                                       September 30, 2004   December 31, 2003
                                          --------------    ------------------
         Raw materials                      $  8,265             $  6,444
         Work-in-process                       2,686                1,945
         Finished goods                       13,348                8,583
                                              ------               ------
           Total                            $ 24,299             $ 16,972
                                              ------               ------

4.        Comprehensive Income

     The Company's total comprehensive income was as follows:

                                        Three Months Ended   Nine Months Ended
                                          September 30,         September 30,
                                         2004       2003       2004     2003
                                         ----       ----       ----     ----

     Net income                        $ 4,682    $ 2,656    $13,971  $ 8,645
     Other comprehensive (loss)
      income:
        Change in equity due to
         foreign currency
         translation adjustments            107       128       (124)     941
                                       -------    -------   --------  -------
     Comprehensive income              $ 4,789    $ 2,784   $ 13,847  $ 9,586
                                       =======    =======   ========  =======

<page>
5.       Goodwill and Other Intangible Assets

Goodwill represents the excess of the cost of businesses acquired over the fair
value of the related net assets at the date of acquisition. The changes in the
net carrying amount of goodwill for the nine months ended September 30, 2004
consist of the following:

                                                      Industrial/
                                         POS/OEM        Optical         Total
                                        ---------     ----------      ---------

      Balance as of December 31, 2003   $   6,858      $  10,678      $  17,536
      Purchase of minority interest in
        subsidiaries                        5,693              -          5,693
      Currency translation adjustments        (16)             -            (16)
                                        ---------      ---------      ---------
      Balance as of September 30, 2004  $  12,535      $  10,678      $  23,213
                                        =========      =========      =========

Identifiable Intangibles

The Company had identifiable intangible assets with a net book value of $19,900
million and $6,600 million as of September 30, 2004 and December 31, 2003,
respectively.

The following table reflects the components of identifiable intangible assets:

                                     September 30, 2004     December 31, 2003
                                    --------------------- ----------------------
                        Amortizable   Gross                Gross
                           Life     Carrying Accumulated  Carrying  Accumulated
                          (years)    Amount  Amortization  Amount   Amortization
                        ----------- --------------------- ----------------------
Patents and Trademarks      17        7,982     (2,284)     7,143     (1,959)
Holographic Technology      10        1,082       (916)     1,082       (830)
Advance license fee         17        2,000       (912)     2,000       (824)
Computer software            5       12,258          -          -          -
Covenants not to compete     3          700          -          -          -
                                     ------     ------     ------     ------
   Total                             24,022     (4,112)    10,225     (3,613)
                                     ======     ======     ======     ======

The Company has determined that the lives previously assigned to these
finite-lived assets are still appropriate and has recorded $499 and $492 of
amortization expense for the nine months ended September 30, 2004 and 2003,
respectively

6.     Business Segment Information

The Company generates its revenue from the sale of laser bar code scanners
primarily to distributors, value-added resellers, original equipment
manufacturers and directly to end users, in locations throughout the world. No
individual customer accounted for 10% or more of revenues for the three-month
and nine-month periods ended September 30, 2004 and 2003.

The Company manages its business on a business segment basis and divides the
business into two major segments: Industrial Scanning and Optical; and Point of
Sale ("POS")/Original Equipment Manufacturers ("OEM"). Sales for the three-
month and nine-month periods ended September 30, 2004 and 2003 were as follows:

                                      Three Months Ended   Nine Months Ended
                                         September 30,        September 30,
                                        2004       2003      2004      2003
                                        ----       ----      ----      ----
Business segment net sales:
     POS/OEM                         $  34,553     26,109    97,742    79,112
     Industrial/Optical                  9,603      6,478    27,104    17,197
                                      ---------------------------------------
     Total                              44,156     32,587   124,846    96,309
                                      ---------------------------------------
Business segment gross profit:
     POS/OEM                         $  17,343     11,819    49,962    34,260
     Industrial/Optical                  2,725      1,965     7,998     5,697
                                      ---------------------------------------
     Total                              20,068     13,784    57,960    39,957
                                      ---------------------------------------
Business segment operating income:
     POS/OEM                         $   6,220      3,978    19,736    11,020
     Industrial/Optical                  1,027        573     3,083       929
                                      ---------------------------------------
     Total                               7,247      4,551    22,819    11,949
                                      ---------------------------------------
Total other (expenses) income        $     305       (265)     (285)      648
                                      ---------------------------------------
Income before income taxes           $   7,552      4,286    22,534    12,597
                                     ---------------------------------------
<page>
7.       Acquisitions

Omniplanar, Inc.

On September 24, 2004, the Company acquired 100% of the common stock of
Omniplanar, Inc. ("Omniplanar"), an imaging software company, for $13,000,
including acquisition costs. The Company paid $9,050 at closing, and will pay
$650 in March 2005, $1,300 in September 2005 and $1,950 in March 2006.
Omniplanar supplies a complete package of bar code reading software for 2D
imaging for fixed position, conveyor belt and hand held readers which can be
optimized for specific hardware applications. The Company has completed a
preliminary purchase price allocation and assets acquired have been recorded at
their estimated fair values. The consolidated statements of operations for the
three and nine month periods ending September 30, 2004 reflect the results of
Omniplanar since the effective date of the acquisition. The pro forma results of
operations have not been provided because the effects were not material.

In connection with the acquisition, the Company allocated $12,958 to
identifiable intangible assets comprising $12,258 of computer software which are
being amortized over 5 years and $700 to a non-compete agreement which is being
amortized over 3 years.

The following table summarizes the allocation of the purchase price of assets
recorded at the date of acquisition. The Company is still finalizing our
valuations of certain intangible assets; thus, the allocation of the purchase
price is subject to refinement. The Company expects this to be completed during
the fourth quarter of 2004.

                                             September 30, 2004
                                                --------------

                Accounts receivable               $     17
                Property, plant and quipment            25
                Intangible assets                   12,958
                                                  --------
                Total cash paid                   $ 13,000
                                                  ========

The Company accounted for this acquisition under the purchase method of
accounting.

Metrologic do Brasil

On February 4, 2003, the Company paid cash of $71 and signed three promissory
notes with a total discounted value of $204 for the remaining 49% interest in
Metrologic do Brasil. During the nine months ended September 30, 2004, the
Company paid one promissory note in the amount of $75 with the two remaining
promissory notes payable on February 4, 2005 and February 4, 2006, respectively.

The Company accounted for this acquisition under the purchase method of
accounting. The total purchase price and costs in excess of assets acquired
(goodwill) was $275.

Metrologic Eria Iberica ("MEI")

On August 5, 2003, the Company entered into an agreement to purchase the
remaining 49% interest in MEI for a purchase price of 5,900 euros. Payments are
being made in twelve quarterly installments over three years which commenced
August 5, 2003 and matures April 3, 2006. As of September 30, 2004, the Company
had purchased an additional 22.1%, of which 4.0% was purchased during the third
quarter of 2004 for approximately 500 euros, or $600 at the exchange rate on
September 30, 2004.

Metrologic Eria France ("MEF")

On March 19, 2004, the Company entered into an agreement to purchase the
remaining 49% minority interest of MEF for a purchase price of 3,600 euros, or
$4,300 at the exchange rate on March 31, 2004. As of September 30, 2004, wthe
Company owned 100% of MEF.
<page>

8.       Recently Issued Accounting Standards

In December 2003, the Financial Accounting Standards Board ("FASB") issued
Interpretation No. 46 (revised), "Consolidation of Variable Interests Entities"
("FIN 46R"), which addresses how a business enterprise should evaluate whether
it has a controlling financial interest in an entity through means other than
voting rights and, accordingly, should consolidate the variable interest entity
("VIE"). FIN 46R replaces FASB Interpretation No. 46 that was issued in January
2003. Companies are required to apply FIN 46R to VIEs generally as of March 31,
2004 and to special-purpose entities as of December 31, 2003. For any VIEs that
must be consolidated under FIN 46R that were created before January 1, 2004, the
assets, liabilities and non-controlling interest of the VIE initially would be
measured at their carrying amounts, and any difference between the net amount
added to the balance sheet and any previously recognized interest would be
recorded as a cumulative effect of an accounting change. If determining the
carrying amounts is not practicable, fair value at the date FIN 46R first
applies may be used to measure the assets, liabilities and non-controlling
interest of the VIE. The adoption of FIN 46 and related revisions had no
significant impact on our consolidated financial position, consolidated results
of operations or liquidity.

9.       Legal Matters

Symbol Technologies, Inc. v. Metrologic

On May 3, 2002, the Company was served with a lawsuit that was filed on April
12, 2002 by Symbol Technologies, Inc., in the U.S. District Court for the
Eastern District of New York alleging that the Company was in breach of the
terms of the License Agreement between the Company and Symbol (the "Agreement").
The Complaint sought a declaratory judgment from the Court that the Company was
in breach of the Agreement. On March 31, 2003, the Court entered its decision on
the parties' respective motions for summary judgment, and finding in the
Company's favor, the Court dismissed certain counts of Symbol's complaint. On
April 9, 2003, Symbol voluntarily dismissed the remaining counts of the
complaint. Symbol filed its Notice of Appeal with the U.S. Court of Appeals for
the Second Circuit on May 7, 2003. On December 23, 2003, the Court of Appeals
dismissed Symbol's appeal in this matter. In the interim, Symbol decided to
proceed with the arbitration for which the Company had filed a Demand in June
2002, which had been stayed pending the decision by the lower court. On June 26,
2003, Symbol filed an Amended Answer and Counterclaims in the Arbitration
asserting that (a) the Company's allegedly infringing products are royalty
bearing products, as defined under the Agreement, and (b) in the alternative,
those products infringe upon one or more of Symbol's patents. In December 2003,
the Company withdrew its Demand for Arbitration, and the parties briefed the
threshold issue of arbitrability in this matter on Symbol's counterclaims in
view of the decision rendered by the District Court. In May 2004, the arbitrator
reached a decision that the parties should move forward with the arbitration of
the issue of whether or not certain of the Company's products are royalty
bearing products as defined under the Agreement. An arbitration hearing was held
and the parties are awaiting a decision by the arbitrator.


<page>
Item 2.         Management's Discussion and Analysis of Financial Condition
                and Results of Operations

Forward Looking Statements; Certain Cautionary Language

Written and oral statements provided by us from time to time may contain certain
forward looking information, as that term is defined in the Private Securities
Litigation Reform Act of 1995 (the "Act") and in releases made by the Securities
and Exchange Commission ("SEC"). The cautionary statements which follow are
being made pursuant to the provisions of the Act and with the intention of
obtaining the benefits of the "safe harbor" provisions of the Act. While we
believe that the assumptions underlying such forward looking information are
reasonable based on present conditions, forward looking statements made by us
involve risks and uncertainties and are not guarantees of future performance.
Actual results may differ materially from those in our written or oral forward
looking statements as a result of various factors, including, but not limited
to, the following: (i) difficulties or delays in the development, production,
testing and marketing of products, including, but not limited to, a failure to
ship new products when anticipated, failure of customers to accept these
products when planned, any defects in products or a failure of manufacturing
efficiencies to develop as planned; (ii) continued or increased competitive
pressure which could result in reduced selling prices of products or increased
sales and marketing promotion costs; (iii) reliance on third party resellers,
distributors and OEMs which subject us to business failure risks of such
parties, credit and collections exposure, and other business concentration
risks; (iv) the future health of the United States and international economies
and other economic factors that directly or indirectly affect the demand for our
products; (v) foreign currency exchange rate fluctuations between the U.S.
dollar and other major currencies including, but not limited to, the euro,
Singapore dollar, Brazilian real, Chinese renminbi and British pound affecting
our results of operations; (vi) the effects of and changes in trade, monetary
and fiscal policies, laws, regulations and other activities of government,
agencies and similar organizations, including, but not limited to trade
restrictions or prohibitions, inflation, monetary fluctuations, import and other
charges or taxes, nationalizations and unstable governments; (vii) continued or
prolonged capacity constraints that may hinder our ability to deliver ordered
product to customers; (viii) a prolonged disruption of scheduled deliveries from
suppliers when alternative sources of supply are not available to satisfy our
requirements for raw material and components; (ix) the costs and potential
outcomes of legal proceedings or assertions by or against us relating to
intellectual property rights and licenses; (x) our ability to successfully
defend against challenges to our patents and our ability to develop products
which avoid infringement of third parties' patents; (xi) occurrences affecting
the slope or speed of decline of the life cycle of our products, or affecting
our ability to reduce product and other costs and to increase productivity;
(xii) and the potential impact of terrorism and international hostilities.

All forward-looking statements included herein are based upon information
presently available, and we assume no obligation to update any forward-looking
statements.

General

The following discussion of our results of operations and liquidity and capital
resources should be read in conjunction with our Condensed Consolidated
Financial Statements and the related Notes thereto appearing elsewhere in this
Quarterly Report on Form 10-Q and the Consolidated Financial Statements and the
Notes to Consolidated Financial Statements for the year ended December 31, 2003
contained in our Annual Report on Form 10-K for the year ended December 31,
2003. The Condensed Consolidated Financial Statements for the three and nine
months ended September 30, 2004 and 2003 are unaudited.

Executive Overview

We are experts in optical image capture and processing solutions. In recent
years, we have increased sales, cash flow from operations and net income
primarily through the introduction of new products and a focus on cost reduction
activities to maintain a competitive advantage.

Success factors critical to our business include sales growth through continued
penetration in existing and new markets, maintaining a highly responsive and
cost efficient infrastructure, achieving the financial flexibility to ensure
that we can respond to new market opportunities in order to return value to our
shareholders and selective pursuit of strategic acquisitions.
<page>
In order to continue our penetration into new and existing markets, our strategy
involves expanding our sales channels and expanding our product development
activities. We have recently concentrated our direct sales efforts to further
penetrate some of the largest retailers in the United States. During 2003 and
2004, we were awarded significant contracts from some major customers in our
POS/OEM and Industrial/Optical business segments. A significant portion of the
shipments related to these orders occurred in the first nine months of 2004
contributing to our year over year sales growth of 29.6%. Another key factor in
this double-digit sales growth has been our ability to continue our growth in
eastern Europe and throughout Asia, which we believe will continue to be an
opportunity for continued growth, as evidenced by our investment in the
expansion of our Suzhou manufacturing facility which was completed in the third
quarter of 2004. In addition, we continued to invest in developing new and
improved products to meet the changing needs of our existing customers. We are
continuing to focus on executing our core strategy of leveraging our engineering
expertise to produce new POS and industrial products that will allow us to
penetrate new markets that we have not previously served and gain market share
in our existing markets. During the first nine months of 2004, we began to
recognize the benefits of the new products introduced during fiscal 2003 as
sales of these products for the three and nine months ended September 30, 2004
were approximately $2.7 million and $6.0 million, respectively. Furthermore, we
currently have several promising new products in the pipeline. We continue to
believe sales for 2004 and beyond will be positively affected as these new
products either begin to ship or ship in larger quantities.

To maintain a highly responsive and cost efficient infrastructure, our focus is
to maximize the efficiency of our organization through process improvements and
cost containment. We continue to focus on our strategy for margin expansion
through specific engineering initiatives to reduce product and manufacturing
costs. During the three and nine months ended September 30, 2004, we continued
to realize the benefits of these process improvements. In addition, the
expansion of our manufacturing facility in Suzhou, China was completed during
the third quarter of 2004. This expansion will nearly double the size of the
existing China operations and more importantly, will provide cost efficiencies
through lower direct labor costs.

Closely linked to the success factors discussed above is our continued focus to
achieve financial flexibility. In October 2003, we completed a follow-on public
offering, which provided us with net proceeds of $55.5 million. We used a
portion of those net proceeds to pay down existing indebtedness and purchase our
Blackwood, New Jersey facility. We intend to use the remaining net proceeds to
fund working capital requirements in the future for continued growth of our
business. As of September 30, 2004, we had total debt of approximately $8.9
million compared to $12.7 million as of June 30, 2003. Furthermore, we had cash
and cash equivalents of approximately $44.9 million as of September 30, 2004. We
believe that our current cash and working capital positions and expected
operating cash flows will be sufficient to fund our working capital, planned
capital expenditures and debt repayment requirements for the foreseeable future.

In addition to our internal development and organic growth, we may selectively
pursue strategic acquisitions that we believe will broaden or complement our
current technology base and allow us to serve additional end users and the
evolving needs of our existing customers. In March 2004, we purchased the
remaining 49% interest in Metrologic Eria France for approximately 3.6 million
euros, or $4.3 million at the exchange rate on March 31, 2004. During September
2004, we acquired 100% of the common stock of Omniplanar Inc. ("Omniplanar"), an
imaging software company for $13.0 million. Omniplanar supplies a complete
package of bar code reading software for 2D imaging for fixed position, conveyor
belt and hand held readers which can be optimized for specific hardware
applications. The acquisition of Omniplanar represents a significant addition to
our technology portfolio. Metrologic has licensed from Omniplanar the
SwiftDecoder software since the year 2000 for use in our iQ(R) line of
industrial vision-based products. We also intend to make use of the software in
other products as well. By acquiring this 2D imaging technology we will be able
to reduce our licensing costs for our current and future imaging-based products.
We expect this acquisition to be accretive to sales and earnings on a
prospective basis.

Forward-looking statements contained in this overview are highly dependent upon
a variety of important factors which could cause actual results to differ
materially from those reflected in such forward looking statements. For a list
of the factors that could cause actual results to differ from expectations,
refer to the section above on Forward Looking Statements. Results of Operations

Our business is divided into two major segments: Point-of-Sale/Original
Equipment Manufacturers, or POS/OEM, and Industrial Scanning and Optical.

POS/OEM bar code scanners are typically either handheld scanners or fixed
projection scanners. Handheld bar code scanners are principally suited for
retail point-of-sale, document processing, library, healthcare and inventory
applications. Fixed projection scanners, which can be mounted on or in a
counter, are principally suited for supermarkets, convenience stores, mass
merchandisers, health clubs and specialty retailers.
<page>
Industrial Scanning and dimensioning products are comprised of fixed position
systems that are either laser or vision-based. These systems range from simple,
one-scanner solutions to complex, integrated systems incorporating
multi-scanner, image capture and dimensioning technologies. Adaptive optical
solutions are highly customized, sophisticated, laser-based systems that correct
for the natural distortion of light as it exits a complex laser and travels
through the atmosphere or other transmission medium.

The following table sets forth certain information regarding our revenues by our
two reportable business segments for the periods indicated.


                                    Three Months Ended    Nine Months Ended
                                      September 30,          September 30,
                                     2004       2003        2004       2003
                                     ----       ----        ----       ----

       ($ in Thousands)
       POS/OEM                   $  34,553  $  26,109      97,742     79,112
       Industrial & Optical:
            Industrial               3,763      3,820      12,592      9,844
            Optical                  5,840      2,658      14,512      7,353
                                  --------   --------     -------   --------
               Total Industrial      9,603      6,478      27,104     17,197
                                  --------   --------     -------   --------
       Total Company             $  44,156  $  32,587    $124,846  $  96,309
                                  ========   ========     =======   ========

Most of our product sales in Western Europe, Brazil and Asia are billed in
foreign currencies and are subject to currency exchange rate fluctuations.
Currently, a significant percentage of our products are manufactured in our U.S.
facility, and therefore, sales and results of operations are affected by
fluctuations in the value of the U.S. dollar relative to such foreign
currencies. We expect, however, that the manufacture of our point-of-sale
("POS") products in our Suzhou, China facility will increase in 2004 and beyond,
which will result in reduced labor and manufacturing costs in our POS scanners.
For the three and nine months ended September 30, 2004, sales were favorably
affected by the continuing decline in the value of the U.S. dollar in relation
to certain foreign currencies, especially the euro, when compared to the
comparable period in 2003.

The following table sets forth certain information as to our sales by
geographical location:


                       Three Months Ended              Nine Months Ended
                          September 30,                   September 30,
                   2004     %      2003     %      2004     %      2003     %
                   ----            ----            ----            ----
($ in Thousands)

North America     19,193  43.4%   14,530  44.6%   53,459  42.8%   42,113  43.7%
Europe            16,160  36.6%   12,253  37.6%   49,474  39.6%   39,612  41.1%
Rest of World      8,803  20.0%    5,804  17.8%   21,913  17.6%   14,584  15.2%
                 ------- -----   ------- -----   ------- -----   ------- -----
  Total          $44,156 100.0%  $32,587 100.0% $124,846 100.0%  $96,309 100.0%
                 ======= =====   ======= =====  ======== =====   ======= =====


Three Months Ended September 30, 2004 Compared with Three Months Ended
September 30, 2003

Sales increased 35.5% to $44.2 million in the three months ended September 30,
2004 from $32.6 million in the three months ended September 30, 2003. Sales of
our POS and original equipment manufacturers ("OEM") products increased by
32.3%, sales of industrial products decreased by 1.5% and sales of optical
systems increased by 120%. Approximately $1.4 million of the increase in POS/OEM
sales resulted from the strengthening of the euro against the U.S. dollar.
POS/OEM sales increased approximately $9.2 million due to increased unit sales
of handheld and in-counter scanners, of which $2.7 million was attributed to the
introduction of new products during 2003. These factors were partially offset by
a decrease of approximately $2.2 million resulting from lower average selling
prices due to competitive pricing pressures experienced in the retail sector,
primarily in Europe.
<page>
The decrease in our industrial sales is attributable to the winding down of a
fixed priced contract during the third quarter of 2004. The increase in optical
systems sales reflects an increase in customer-funded research and development
programs and an increase in the scope of work for selected cost plus type
contracts during the three months ended September 30, 2004.

International sales accounted for $25.0 million, or 56.6% of total sales, for
the three months ended September 30, 2004 and $18.1 million, or 55.4% of total
sales, for the three months ended September 30, 2003. The predominant portion of
the growth in international sales was from increased sales in the Rest of World
territory, primarily Asia. The increase in this territory is attributable to
higher volume through increased market growth as countries continue to expand
and develop. No individual customer accounted for 10.0% or more of sales in the
three months ended September 30, 2004 or 2003.

Cost of sales increased to $24.1 million in the three months ended September 30,
2004 from $18.8 million in the three months ended September 30, 2003. As a
percentage of sales, cost of sales decreased from 57.7% in 2003 to 54.6% in
2004. The decrease in the percentage of cost of sales can be attributed to the
following key factors:

o       The strengthening of the euro against the U.S. dollar, as discussed
        above, net of the effect of decreases in average selling
        prices.
o       More favorable product mix resulting from increased sales of certain
        more profitable handheld scanners in 2004.
o       A decrease in direct material costs as a percentage of sales resulting
        from productredesigns and our engineering efforts to reduce bill of
        material costs.
o       Lower variable overhead charges, including a decrease in rent expenses
        due to the purchase of the Blackwood manufacturing facility in December
        2003 and decrease in indirect labor attributed to efficiencies in
        manufacturing engineering and product support efforts.
o       Increased utilization of our Suzhou, China facility resulting in cost
        efficiencies through lower direct labor costs.
o       A decrease in royalty costs due to a reduction in the number of
        products covered by the agreement between Symbol Technologies and the
        Company.

The decreases noted above are partially offset by an increase in material and
labor costs associated with the procurement of a contract with a significant
customer in the industrial business. While this investment may have a negative
near-term margin impact, we believe this is an important element of our strategy
to continue our penetration into new and existing markets.

Selling, general and administrative ("SG&A") expenses increased 45.7% to $11.0
million in the three months ended September 30, 2004 from $7.5 million for the
three months ended September 30, 2003. As a percentage of sales, SG&A expenses
increased from 23.1% of sales in the three months ended September 30, 2003 to
24.9% of sales in the corresponding period in 2004. The increase in SG&A
expenses can be attributed to increased variable selling expenses associated
with the higher sales volume in 2004, the strengthening of the euro against the
U.S. dollar on euro denominated expenses, increased professional service fees
related to our Sarbanes-Oxley section 404 compliance, increased legal expenses
associated with ongoing litigation matters, and an increase in salaries and
wages due to increased headcount.

Research & development ("R&D") expenses increased 8.2% to $1.8 million in the
three months ended September 30, 2004 from $1.7 million for the three months
ended September 30, 2003. As a percentage of sales, R&D expenses decreased
slightly from 5.2% of sales in the three months ended September 30, 2003 to 4.1%
of sales in the corresponding period in 2004, which can be attributed to higher
sales volume in 2004. In absolute dollars the increase in R&D expenses, which
consists of higher salaries and higher R&D material costs, is attributed to
ongoing new product development efforts.

Net interest income/expense reflects net interest income of $0.1 million for the
three months ended September 30, 2004 compared with net interest expense of $0.3
million for the comparable period in 2003. The decrease can be attributed to the
following factors: (i) lower interest expense and related borrowings outstanding
in 2004 due to repayments and/or termination of outstanding debt issuances
during fiscal 2003 and (ii) higher interest income due to higher cash and cash
equivalent balance resulting from proceeds received from the follow-on public
offering that closed in October 2003.

Other income/expense reflects net other income of $0.2 million for the three
months ended September 30, 2004 compared with net other income of $0.1 million
for the comparable period in 2003. The change can be attributed to foreign
exchange gains of approximately $0.3 million in 2004 as compared with foreign
exchange gains of $0.2 million in 2003.
<page>
Net income was $4.7 million, or $0.20 per diluted share for the three months
ended September 30, 2004 compared with net income of $2.7 million or $0.14 per
diluted share in 2003. Net income reflects a 38% effective tax rate for both
periods. The decrease in the value of the U.S. dollar relative to other foreign
currencies favorably affected diluted earnings per share by approximately $0.04
per diluted share in 2004 as compared to the corresponding period in 2003.

Nine Months Ended September 30, 2004 Compared with Nine Months Ended
September 30, 2003

Sales increased 29.6% to $124.8 million for the nine months ended September 30,
2004 from $96.3 million in the nine months ended September 30, 2003. Sales of
our POS and OEM products increased by 23.5%, sales of industrial products
increased by 27.9% and sales of optical systems increased by 97.4%.
Approximately $5.2 million of the increase in POS/OEM sales resulted from the
strengthening of the euro against the U.S. dollar. POS/OEM sales increased
approximately $19.9 million due to increased unit sales of handheld and
in-counter scanners, of which $6.0 million was attributed to the introduction of
new products during 2003. These factors were partially offset by a decrease of
approximately $6.4 million resulting from lower average selling prices due to
competitive pricing pressures experienced in the retail sector, primarily in
Europe.

The increase in industrial products sales is attributable to several significant
new contracts in 2004 including a contract with a major airline customer for bar
code scanning equipment and installation services to build and install scanning
stations and tunnels for use in baggage handling systems. The increase in
optical systems sales reflects an increase in customer-funded research and
development programs and an increase in the scope of work for selected cost type
contracts during the nine months ended September 30, 2004.

International sales accounted for $71.4 million, or 57.2% of total sales, for
the nine months ended September 30, 2004 and $54.2 million, or 56.3% of total
sales, for the nine months ended September 30, 2003. The predominant portion of
the growth in international sales was from increased sales in Rest of World
territory, primarily Asia. The increase in this territory is attributable to
higher volume through increased market growth as these countries continue to
expand and develop.

Cost of sales increased to $66.9 million for the nine months ended September 30,
2004 from $56.4 million for the nine months ended September 30, 2003. As a
percentage of sales, cost of sales decreased from 58.5% in 2003 to 53.6% in
2004. The decrease in the percentage of cost of sales can be attributed to the
following key factors:

o       The strengthening of the euro against the U.S. dollar, as discussed
        above, net of the effect of decreases in average selling prices.
o       A decrease in direct material costs as a percent of sales resulting
        from product redesigns and our engineering efforts to reduce bill of
        material costs.
o       More favorable product mix resulting from increased sales of certain
        more profitable handheld scanners and certain industrial products in
        2004.
o       Lower variable overhead charges, including a decrease in rent expenses
        due to the purchase of the Blackwood manufacturing facility in December
        2003 and decrease in indirect labor attributed to efficiencies in
        manufacturing engineering and product support efforts.
o       Increased utilization of our Suzhou, China facility resulting in cost
        efficiencies through lower direct labor costs.
o       A decrease in royalty costs due to a reduction in the number of
        products covered by the agreement between Symbol Technologies and the
        Company.

The decreases noted above are partially offset by an increase in material and
labor costs associated with the procurement of a contract with a significant
customer in the industrial business. While this investment may have a negative
near-term margin impact, we believe this is an important element of our strategy
to continue our penetration into new and existing markets.

SG&A expenses increased 29.3% to $29.5 million for the nine months ended
September 30, 2004 from $22.8 million for the nine months ended September 30,
2003. As a percentage of sales, SG&A expenses decreased slightly from 23.7% of
sales for the nine months ended September 30, 2003 to 23.6% of sales in the
corresponding period in 2004. The increase in SG&A expenses, in absolute
dollars, can be attributed to increased variable selling expenses associated
with the higher sales volume in 2004, the strengthening of the euro against the
U.S. dollar on euro denominated expenses, increased professional service fees
related to our Sarbanes-Oxley section 404 compliance, increased legal expenses
associated with ongoing litigation matters, increased tax expenses associated
with stock options and an increase in salaries and wages.
<page>
R&D expenses increased 8.8% to $5.7 million in the nine months ended September
30, 2004 from $5.2 million for the nine months ended September 30, 2003. As a
percentage of sales, R&D expenses decreased from 5.4% of sales in the nine
months ended September 30, 2003 to 4.5% of sales in the corresponding period in
2004, which can be attributed to higher sales volume in 2004. In absolute
dollars, the increase in R&D expenses, which consists of higher salaries and
higher R&D material costs, is attributed to ongoing new product development
efforts.

Net interest income/expense reflects net interest income of $0.1 million for the
nine months ended September 30, 2004 compared with net interest expense of $1.1
million for the comparable period in 2003. The change can be attributed to the
following factors: (i) lower interest expense and related borrowings outstanding
in 2004 due to repayments and/or termination of outstanding debt issuances
during fiscal 2003 and (ii) higher interest income due to higher cash and cash
equivalent balance resulting from proceeds received from the follow-on public
offering that closed in October 2003.

Other income/expense reflects net other expense of $0.4 million for the nine
months ended September 30, 2004 compared with net other income of $1.7 million
for the comparable period in 2003. The change can be attributed to (i) a $2.2
million gain in 2003 on the early repayment of subordinated debt related to the
acquisition of AOA in 2003, (ii) $0.5 million of charges in 2003 incurred in
connection with our efforts to refinance our bank debt and restructure our
overall debt position (iii) and foreign exchange losses of approximately $0.1
million in 2004 as compared with foreign exchange gains of $0.3 million in 2003.

Net income was $14.0 million, or $0.61 per diluted share for the nine months
ended September 30, 2004 compared with net income of $8.6 million or $0.47 per
diluted share in 2003. Net income reflects a 38% effective tax rate in 2004, as
compared with 31.4% in 2003. The lower effective tax rate in 2003 is
attributable to the $2.2 million gain on early extinguishment of debt which, for
tax purposes, was treated as a reduction of the purchase price of AOA, and as
such was not subject to federal or state income tax. The decrease in the value
of the U.S. dollar relative to other foreign currencies favorably affected
diluted earnings per share by approximately $0.11 per diluted share as compared
to the corresponding period in 2003.

Inflation and Seasonality

Inflation and seasonality have not had a material impact on our results of
operations. However, our sales are typically impacted by decreases in seasonal
demand from European customers in our third quarter.

Liquidity and Capital Resources

Operating activities

Net cash provided from operations was $13.9 million and $7.1 million for the
nine-month periods ended September 30, 2004 and 2003, respectively. Net cash
provided by operating activities for the nine months ended September 30, 2004
can be attributed primarily to net income of $14.0 million, depreciation and
amortization of approximately $2.8 million, increases in accounts payable and
accrued expenses of $7.4 million offset by increases in inventory and accounts
receivable of $11.7 million.

Our working capital decreased $2.3 million or 3.2% to $71.8 million as of
September 30, 2004 from $74.1 million as of December 31, 2003. The key
components of the decrease in working capital were a decrease in cash of $4.0
million and an increase in current portion of debt of approximately $1.9 million
as a result of the Omniplanar acquisition, an increase in accrued expenses and
accounts payable of $7.0 million, offset by an increase in accounts receivable
of $4.2 million attributed to higher sales volume, and an increase in inventory
of $7.3 million as a result of a buildup in the inventory levels resulting from
longer delivery cycles of finished goods as we increase our use of ocean
shipments to maximize logistic efficiencies as well as to improve product
availability so that we may capitalize on opportunities that require a timely
delivery response.
<page>
Investing activities

Cash used in investing activities was $19.8 million for the nine months ended
September 30, 2004 as compared to $1.7 million for the comparable period in
2003. The increase in cash used in investing activities is primarily due to (i)
the closing of the Omniplanar acquisition (ii) the quarterly installment made to
purchase the 49% minority interest of Metrologic Eria Iberica, (iii) the
purchase of the remaining 49% interest in Metrologic Eria France (See
"Acquisitions" below for additional information), and (iv) increase in cash used
for property, plant and equipment purchases of $2.6 million primarily for
manufacturing expansion related investments as well as manufacturing automation
and information technology related equipment.

Financing activities

Cash provided by financing activities was $2.0 million for the nine months ended
September 30, 2004 compared to cash used in financing activities of $4.9 million
for the comparable period in 2003. Cash provided by financing activities for the
nine months ended September 30, 2004 consists primarily of $2.6 million of
proceeds from the exercise of stock options and employee stock purchase plan
offset by $0.6 million of net repayments on outstanding lines of credit and
other related debt obligations.

We believe that our current cash and working capital positions and expected
operating cash flows will be sufficient to fund our working capital, planned
capital expenditures and debt repayment requirements for the foreseeable future.

Foreign Currency Exchange

Our liquidity has been, and may continue to be, adversely affected by changes in
foreign currency exchange rates, particularly the value of the U.S. dollar
relative to the euro, the Brazilian real, the Singapore dollar, and the Chinese
renminbi. In an effort to mitigate the financial implications of the volatility
in the exchange rate between the euro and the U.S. dollar, we have selectively,
from time to time, entered into derivative financial instruments to offset our
exposure to foreign currency risks. Derivative financial instruments may include
foreign currency forward exchange contracts with our primary bank for periods
not exceeding nine months, which partially hedge sales to our German subsidiary.
In addition, we have euro based loans, which act as a partial hedge against
outstanding intercompany receivables and the net assets of our European
subsidiary, which are denominated in euros. Additionally, our European
subsidiary invoices and receives payment in certain other major currencies,
including the British pound, which results in an additional mitigating measure
that reduces our exposure to the fluctuation between the euro and the U.S.
dollar although it does not offer protection against fluctuations of that
currency against the U.S. Dollar. No derivative instruments were outstanding at
September 30, 2004.

Acquisitions

Our original 51% minority interests in Metrologic Eria Iberica and Metrologic
Eria France contained options for us to purchase the remaining 49% interests. In
August 2003, we entered into an agreement to purchase the 49% minority interest
of Metrologic Eria Iberica for approximately 5.9 million euros, or $6.8 million
at the exchange rate on September 30, 2003, over three years commencing in
August 2003. As of September 30, 2004, we had purchased an additional 22.1%, of
which 4.0% was purchased during the third quarter of 2004, for approximately 0.5
million euros, or $0.6 million at the exchange rate on September 30, 2004.

In March 2004, we entered into an agreement to purchase the 49% minority
interest of Metrologic Eria France for approximately 3.6 million euros, or $4.3
million at the exchange rate on March 31, 2004. As of September 30, 2004, we
owned 100% of Metrologic Eria France.

In September 2004, we acquired 100% of the common stock of Omniplanar, Inc.
("Omniplanar"), an imaging software company, for $13.0 million, including
acquisition costs. The Company paid $9.05 million at closing, and will pay $0.65
million in March 2005, $1.3 million in September 2005 and $1.95 million in March
2006.

New Legislation

On October 22, 2004, the President signed the American Jobs Creation Act of
2004. This new legislation contains tax relief for U.S. based manufacturing
activities, reforms in the taxation of multinational businesses (including a
temporary provision that allows, under certain conditions, an 85 percent
dividend received deduction for certain dividends from controlled foreign
corporations), and various items of business income tax relief. The Company is
currently evaluating this new legislation and has yet to determine the impact of
any actions, if any, it may take in response.
<page>
Impact of Recently Issued Accounting Standards

In December 2003, the Financial Accounting Standards Board ("FASB") issued
Interpretation No. 46 (revised), "Consolidation of Variable Interests Entities"
("FIN 46R"), which addresses how a business enterprise should evaluate whether
it has a controlling financial interest in an entity through means other than
voting rights and, accordingly, should consolidate the variable interest entity
("VIE"). FIN 46R replaces FASB Interpretation No. 46 that was issued in January
2003. Companies are required to apply FIN 46R to VIEs generally as of March 31,
2004 and to special-purpose entities as of December 31, 2003. For any VIEs that
must be consolidated under FIN 46R that were created before January 1, 2004, the
assets, liabilities and non-controlling interest of the VIE initially would be
measured at their carrying amounts, and any difference between the net amount
added to the balance sheet and any previously recognized interest would be
recorded as a cumulative effect of an accounting change. If determining the
carrying amounts is not practicable, fair value at the date FIN 46R first
applies may be used to measure the assets, liabilities and non-controlling
interest of the VIE. The adoption of FIN 46 and related revisions had no
significant impact on our consolidated financial position, consolidated results
of operations or liquidity.

Item 3- Quantitative and Qualitative Disclosures about Market Risk

There have been no material changes in our quantitative and qualitative
disclosure about market risk since the Company's Annual Report on Form 10-K for
the year ended December 31, 2003.

Item 4- Controls and Procedures

As required by Rule 13a-15(e) under the Exchange Act, as of the end of the
period covered by this report, we carried out an evaluation of the effectiveness
of the design and operation of our disclosure controls and procedures. This
evaluation was carried out under the supervision and with the participation of
our Management, including our principal executive officer and principal
financial officer. These officers concluded that these disclosure controls and
procedures are sufficient to provide that (a) material information relating to
the Company is made known to these officers by other employees of the Company,
particularly material information related to the period for which this periodic
report is being prepared; and (b) this information is recorded, processed,
summarized, evaluated and reported, as applicable, within the time periods
specified in the rules and forms promulgated by the Securities and Exchange
Commission.

There have been no changes in the Company's internal controls over financial
reporting during the period covered by this report that have materially
affected, or are reasonably likely to materially affect, our internal control
over financial reporting.


<PAGE>
                           PART II. OTHER INFORMATION

Item 1.  Legal Proceedings

The Company is currently involved in matters of litigation arising in the normal
course of business as well as the matters described below. Management is of the
opinion that there are no legal claims against the Company which are expected to
have a material adverse effect on the Company's consolidated financial position,
results of operations or cash flows.

A. Symbol Technologies, Inc. et. al. v. Lemelson Medical, Educational & Research
Foundation, Limited Partnerships

On July 21, 1999, the Company and six other leading members (Accu-Sort Systems,
Inc., Intermec Technologies Corporation, a wholly-owned subsidiary of UNOVA,
Inc., PSC Inc., Psion Teklogix Corporation, Symbol Technologies, Inc., and Zebra
Technologies Corporation) of the Automatic Identification and Data Capture
Industry (the "Auto ID companies") jointly initiated a litigation against the
Lemelson Medical, Educational, & Research Foundation, Limited Partnership (the
"Lemelson Partnership"). The suit was commenced in the U.S. District Court,
District of Nevada in Reno, Nevada, and later transferred to the District Court
in Las Vegas, Nevada. In the litigation, the Auto ID companies sought, among
other remedies, a declaration that certain patents, which have been asserted by
the Lemelson Partnership against end users of bar code equipment, are invalid,
unenforceable and not infringed.

On September 25, 2002, the District Court issued a trial order allocating
thirty-four (34) days for the trial on this matter commencing November 18, 2002.
The trial on this matter was held from November 2002 through January 2003. On
January 23, 2004, the Judge issued a decision in favor of the Auto ID companies
finding that the patents in suit were not infringed, and were invalid and
unenforceable. On June 23, 2004, the Lemelson Partnership filed its notice to
appeal the judge's decision.

B. Metrologic v. PSC Inc.

On October 13, 1999, the Company filed suit for patent infringement against PSC
Inc. (PSC) in United States District Court for the District of New Jersey. The
complaint asserts that at least seven of the Company's patents are infringed by
a variety of point-of-sale bar code scanner products manufactured and sold by
PSC. The patents cited in the complaint cover a broad range of bar code scanning
technologies important to scanning in a retail environment including the
configuration and structure of various optical components, scanner
functionalities and shared decoding architecture. The complaint seeks monetary
damages as well as a permanent injunction to prevent future sales of the
infringing products.

On November 22, 2002, PSC filed for protection under Chapter 11 of the U.S.
Bankruptcy Code. The Court issued an automatic stay in this case while the
bankruptcy was pending. The stay was lifted on July 18, 2003, and the Court
issued a ruling on the Markman hearing on August 26, 2003 entering a decision
and order providing an interpretation of the claims in suit. On October 1, 2004,
the parties argued several motions for summary judgment to the Court and are
waiting for the Court's decision on those motions.

C.       Symbol Technologies, Inc. v. Metrologic

On May 3, 2002, we were served with a lawsuit that was filed on April 12, 2002
by Symbol Technologies, Inc., in the U.S. District Court for the Eastern
District of New York alleging that we were in breach of the terms of the License
Agreement between us and Symbol (the "Agreement"). The Complaint sought a
declaratory judgment from the Court that we were in breach of the Agreement. On
March 31, 2003, the Court entered its decision on the parties' respective
motions for summary judgment, and finding in our favor, the Court dismissed
certain counts of Symbol's complaint. On April 9, 2003, Symbol voluntarily
dismissed the remaining counts of the complaint. Symbol filed its Notice of
Appeal with the U.S. Court of Appeals for the Second Circuit on May 7, 2003. On
December 23, 2003, the Court of Appeals dismissed Symbol's appeal in this
matter. In the interim, Symbol decided to proceed with the arbitration for which
the Company had filed a Demand in June 2002, which had been stayed pending the
decision by the lower court. On June 26, 2003, Symbol filed an Amended Answer
and Counterclaims in the Arbitration asserting that (a) Metrologic's allegedly
infringing products are royalty bearing products, as defined under the Symbol
Agreement, and (b) in the alternative, those products infringe upon one or more
of Symbol's patents. In December 2003, the Company withdrew its Demand for
Arbitration, and the parties briefed the threshold issue of arbitrability in
this matter on Symbol's counterclaims in view of the decision rendered by the
District Court. In May 2004, the arbitrator reached a decision that the parties
should move forward with the arbitration of the issue of whether or not certain
of the Company's products are royalty bearing products as defined under the
Agreement. An arbitration hearing was held and the parties are awaiting a
decision by the arbitrator.
<page>
D. Metrologic v. Symbol Technologies, Inc.

On June 18, 2003, the Company filed suit against Symbol Technologies, Inc. in
the U.S. District Court for the District of New Jersey alleging claims of patent
infringement of certain of our patents by at least two Symbol products. The
complaint also contains a claim for breach of the 1996 Cross License Agreement
between the parties (the "Cross License Agreement"). Symbol's answer to the
complaint, filed on July 30, 2003, included counterclaims requesting that a
declaratory judgment be entered that patents in suit are invalid, are not
infringed by Symbol and that Symbol is not in breach of the Cross License
Agreement. This matter is still in discovery.

E.       PSC Scanning, Inc. v. Metrologic

On May 17, 2004, PSC Scanning, Inc. ("PSC") filed suit against the Company in
the U.S. District Court for the District of Oregon alleging claims of patent
infringement of certain of its patents by at least one Metrologic product. The
Company believes that PSC's claims are wholly without merit and intends to
vigorously defend against them. The Company has filed an answer and
counterclaims to the complaint, and the matter is now in the early stages of
discovery.

Item 6.  Exhibits

         Exhibits:

                  10.1     Stock Purchase Agreement bewtween Omniplanar, Inc.
                           and MTLG Investments Inc. dated September 24, 2004.

                  31.1     Certification by Chief Executive Officer pursuant to
                           Exchange Act Rule 13a-14(a) or Rule 15d-14(a) as
                           adopted pursuant to Section 302 of the Sarbanes-Oxley
                           Act of 2002.

                  31.2     Certification by Chief Financial Officer pursuant to
                           Exchange Act Rule 13a-14(a) or Rule 15d-14(a) as
                           adopted pursuant to Section 302 of the Sarbanes-Oxley
                           Act of 2002.

                  32.1     Certification by Chief Executive Officer pursuant to
                           Exchange Act Rule 13a-14(b) or Rule 15d-14(b) and
                           Section 1350 of Chapter 63 of Title 18 of the United
                           States Code, as adopted pursuant to Section 906 of
                           the Sarbanes-Oxley Act of 2002.

                  32.2     Certification by Chief Financial Officer pursuant to
                           Exchange Act Rule 13a-14(b) or Rule 15d-14(b) and
                           Section 1350 of Chapter 63 of Title 18 of the United
                           States Code, as adopted pursuant to Section 906 of
                           the Sarbanes-Oxley Act of 2002.




<PAGE>





                                   SIGNATURES




Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



                                   METROLOGIC INSTRUMENTS, INC.



Date: November 12, 2004            By:/s/ Benny Noens
      -----------------            ----------------------------------------
                                   Benny Noens
                                   Chief Executive Officer
                                   (Principal Executive Officer)





Date: November 12, 2004            By:/s/ Kevin J. Bratton
      -----------------            -----------------------------------------
                                   Kevin J. Bratton
                                   Chief Financial Officer
                                   (Principal Financial and Accounting Officer)




<PAGE>

Exhibit Index                                                     Page Number

10.1     Stock Purchase Agreement between Omniplanar, Inc. and
         MTLG Investments Inc. dated September 24, 2004.                25

31.1     Certification by Chief Executive Officer pursuant to
         Exchange Act Rule 13a-14(a) or Rule 15d-14(a) as
         adopted pursuant to Section 302 of the Sarbanes-Oxley
         Act of 2002.                                                   59

31.2     Certification by Chief Financial Officer pursuant to
         Exchange Act Rule 13a-14(a) or Rule 15d-14(a) as
         adopted pursuant to Section 302 of the Sarbanes-Oxley
         Act of 2002.                                                   60

32.1     Certification by Chief Executive Officer pursuant to
         Exchange Act Rule 13a-14(b) or Rule 15d-14(b) and
         Section 1350 of Chapter 63 of Title 18 of the United
         States Code, as adopted pursuant to Section 906 of
         the Sarbanes-Oxley Act of 2002.                                61

32.2     Certification by Chief Financial Officer pursuant to
         Exchange Act Rule 13a-14(b) or Rule 15d-14(b) and
         Section 1350 of Chapter 63 of Title 18 of the United
         States Code, as adopted pursuant to Section 906 of
         the Sarbanes-Oxley Act of 2002.                                62



<PAGE>

Exhibit 10.1


                            STOCK PURCHASE AGREEMENT


                                  BY AND AMONG


                             MTLG INVESTMENTS, INC.


                                       AND


                 THE STOCKHOLDERS SET FORTH IN SCHEDULE A HERETO






                         Dated as of September 24, 2004



<PAGE>
                                Table of Contents

                                                                          Page

1.       Definitions........................................................1
         1.2      Other Defined Terms.......................................3
         1.3      Usage of Terms............................................4
         1.4      References to Sections, Exhibit and Schedules.............4
2.       Purchase and Sale of Shares........................................5
         2.1      Purchase and Sale.........................................5
         2.2      Further Assurances........................................5
3.       Consideration......................................................5
4.       Representations and Warranties by the Sellers......................6
         4.1      Organization..............................................6
         4.2      Capitalization............................................6
         4.3      Authority.................................................7
         4.4      Charter Documents.........................................7
         4.5      Financial Statements......................................8
         4.6      Absence of Undisclosed Assets and Liabilities.............8
         4.7      Operations and Obligations................................8
         4.8      Properties................................................9
         4.9      Leases....................................................10
         4.10     Assets....................................................10
         4.11     Working Capital...........................................10
         4.12     Contracts.................................................10
         4.13     Absence of Default........................................12
         4.14     Insurance.................................................12
         4.15     Litigation................................................12
         4.16     Compliance with Law.......................................12
         4.17     Intellectual Property.....................................13
         4.18     Tax Matters...............................................13
         4.19     Employee Benefit Plans....................................15
         4.20     Environmental Laws........................................15
         4.21     Bank Accounts, Letters of Credit and Powers of Attorney...16
         4.22     Subsidiaries..............................................16
         4.23     Brokers' and Finders' Fees................................16
         4.24     Disclosure................................................16
5.       Representations and Warranties of Buyer............................16
         5.1      Organization..............................................16
         5.2      Authority.................................................16
         5.3      Litigation................................................17
         5.4      Financing.................................................17
         5.5      Brokers' and Finders' Fees................................17
6.       Covenants..........................................................17
         6.1      Tax Matters...............................................17
         6.2      Severance Rights..........................................19
         6.3      Actions by the Parties....................................19
         6.4      Other Agreements..........................................20
7.       Conditions.........................................................22
         7.1      Conditions Precedent to Each Party's Obligation to Close..22
         7.2      Conditions Precedent to Obligations of Buyer..............23
         7.3      Conditions Precedent to Obligations of Sellers............24
8.       Survival of Representations and Warranties.........................25
         8.1      Representations and Warranties............................25
9.       Indemnification....................................................25
         9.1      Limitation of Liability...................................25
         9.2      General Indemnification...................................25
         9.3      Claims....................................................26
         9.4      Objections to Claims......................................26
         9.5      Third-Party Claims........................................27
         9.6      Sellers' Representative...................................27
         9.7      Access....................................................28
10.      Set -off...........................................................28
11.      Expenses; Taxes....................................................28
12.      Press Releases.....................................................28
13.      Contents of Agreement; Parties in Interest; etc....................28
14.      Assignment and Binding Effect......................................28
15.      Notices............................................................29
16.      Amendment..........................................................30
17.      Governing Law......................................................30
18.      No Benefit to Others...............................................30
19.      Severability.......................................................30
20.      Section Headings...................................................30
21.      Schedules and Exhibit..............................................30
22.      Counterparts.......................................................30

         Exhibit A         Wire Instruction
         Exhibit B         Opinion of Counsel to Sellers
         Exhibit C         Opinion of Counsel to Buyer
         Exhibit D         Transition Services Agreement
         Exhibit E         Consulting Agreement
<PAGE>

                            STOCK PURCHASE AGREEMENT

         This STOCK PURCHASE AGREEMENT (this "Agreement") dated as of September
24, 2004 is entered into by and among MTLG INVESTMENTS, INC., a Delaware
corporation with an office located at 90 Coles Road, Blackwood, New Jersey 08012
("Buyer") and each of the individuals set forth in Schedule A to this Agreement
(each, a "Seller" and collectively, "Sellers").

                                    RECITALS

A.      Sellers collectively own all the issued and outstanding shares of
common stock,  no par value per share  ("Company  Common  Stock") of Omniplanar,
Inc., a New Jersey corporation (the "Company").  Each Seller's shares of Company
Common Stock are referred to in this Agreement as such "Seller's Shares."

B.      The Company is engaged in the business of designing, developing,
producing,  testing and selling or  licensing,  enhancing,  and  supporting  (i)
software  capable of locating and then  decoding  bar codes,  2D codes and other
codes and (ii) other software products related to package sortation,  including,
but  not  limited  to  package  segmentation,   identification,  inspection  and
dimensioning (the "Business").

C.      Buyer desires to purchase from Sellers, and Sellers desire to sell to
Buyer,  all of the shares of Company  Common Stock upon the terms and conditions
contained in this Agreement.

         NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements contained herein and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto intending to be legally bound do hereby agree
as follows:

                                    AGREEMENT

1.       Definitions. As used in this Agreement the terms set forth below shall
have the following meanings:

                (a)     "Affiliate" of a Person means any other Person who (i)
directly  or  indirectly  through  one  or  more  intermediaries   controls,  is
controlled  by or is  under  common  control  with,  such  Person  including  an
individual's  spouse and minor children or (ii) owns more than five percent (5%)
of the capital stock or equity interest in such Person.

                (b)     "Benefit Plan" shall mean each "employee benefit plan"
within the  meaning of Section  3(3) of ERISA,  and each other  bonus,  pension,
profit sharing, deferred compensation,  incentive compensation, stock ownership,
stock purchase,  stock option,  phantom stock, equity compensation,  retirement,
vacation,  severance,  disability,  death  benefit,  hospitalization,   medical,
employment,   retention,   change  in  control  or  other  employee  or  retiree
compensation  or benefit  plan,  fund,  program,  arrangement  or  understanding
(whether or not legally binding) that is sponsored, maintained or contributed to
or  required  to be  contributed  to by the  Company,  a  Seller  or a  Commonly
Controlled  Entity, or to which the Company,  a Seller or a Commonly  Controlled
Entity is a party,  whether  written or oral,  providing  material  benefits  or
compensation  to any  current or former  employee,  officer or  director  of the
Company.

                (c)     "Code" shall mean the Internal Revenue Code of 1986, as
amended.

                (d)     "Commonly Controlled Entity" means any trade or
business,  whether or not  incorporated,  that  together  with the  Company or a
Seller would be deemed a single  employer  within the meaning of Section 414(b),
(c), (m) or (o) of the Code.

                (e)     "Control" shall mean the possession of the power,
directly or  indirectly,  to direct or cause the direction of the management and
policies of a Person  whether  through the  ownership of voting  securities,  by
contract or otherwise.

                (f)     "Dollars" and "$" shall mean, unless otherwise
specified, United States Dollars.

                (g)     "Environmental Laws" shall mean all applicable federal,
state, local or foreign laws, rules and regulations, orders, decrees, judgments,
permits,  filings and licenses  relating (i) to  protection  and clean-up of the
environment  and  activities  or conditions  related  thereto,  including  those
relating to the generation,  handling,  disposal,  transportation  or release of
Hazardous Substances and (ii) the health or safety of employees in the workplace
environment, all as amended from time to time, and shall also include any common
law theory based on nuisance, trespass, negligence or other tortious conduct.
<page>
                (h)     "Final Determination" shall mean (i) a decision of the
United  States Tax Court,  or a  decision,  judgment,  decree or other  order by
another court of competent jurisdiction, which has become final and is either no
longer  subject  to appeal or for which a  determination  not to appeal has been
made;  (ii) a  closing  agreement  made  under  Section  7121 of the Code or any
comparable   foreign,   state,  local  or  municipal  Tax  statute;   (iii)  any
disallowance of a claim for refund or credit in respect of an overpayment of Tax
unless  a suit  related  thereto  is filed on a  timely  basis;  (iv) any  final
disposition  by  reason  of  the   expiration  of  the  applicable   statute  of
limitations, or (v) the actual payment by the Company of Taxes.

                (i)     "GAAP" shall mean United States generally accepted
accounting principles, consistently applied.

                (j)     "Hazardous Substances" shall mean any and all hazardous
and toxic  substances,  wastes or materials,  any pollutants,  contaminants,  or
dangerous materials (including,  but not limited to, polychlorinated  biphenyls,
PCBS,  friable asbestos,  volatile and  semi-volatile  organic  compounds,  oil,
petroleum  products and  fractions,  and any materials  which include  hazardous
constituents or become hazardous,  toxic, or dangerous when their composition or
state is  changed),  or any other  similar  substances  or  materials  which are
included under or regulated by any Environmental Laws.

                (k)     "Knowledge of the Sellers" shall mean the actual
knowledge  of the Sellers  after due inquiry of all  relevant  employees  of the
Company and  reasonable  investigation  of the Material  Contracts  and internal
books and records of the Company.

                (l)     "Liens" any liens, encumbrances, pledges, restrictive
agreements,  claims, security interests,  mortgages,  charges, escrows, options,
proxies,  rights  of first  refusal,  preemptive  rights,  indentures,  security
agreements or  imperfections,  limitations,  encumbrances or restrictions of any
kind, character or nature whatsoever, direct or indirect.

                (m)     "Material Adverse Effect" shall mean (unless otherwise
specified)  any condition or event that may: (a) have a material  adverse effect
on the assets,  Business,  financial  condition,  operations or prospects of the
Company,  (b)  materially  impair  the  ability  of  Sellers  to  perform  their
obligations  under this Agreement,  or (c) prevent or delay the  consummation of
transactions  contemplated  under  this  Agreement,  other  than as a result  of
business and economic  conditions  generally affecting the software industry and
general economic conditions.

                (n)     "Permitted Liens" shall mean (a) Liens for taxes,
assessments,  or similar  charges,  incurred in the ordinary  course of business
that are not yet due and  payable  or are being  contested  in good  faith;  (b)
pledges  or  deposits  made in the  ordinary  course of  business;  (c) Liens of
mechanics,  materialmen,  warehousemen or other like Liens securing  obligations
incurred in the ordinary  course of business that are not yet due and payable or
are being contested in good faith; and (d) similar Liens and encumbrances  which
are  incurred  in the  ordinary  course  of  business  and  which  do not in the
aggregate  materially  detract  from the value of such assets or  properties  or
materially impair the use thereof in the operation of such business.

                (o)     "Person" shall mean any individual, corporation,
partnership,  limited partnership, limited liability company, trust, association
or entity or government agency or authority.

                (p)     "Subsidiary" of a Person shall mean any corporation,
partnership,  joint  venture  or other  entity in which  such  Person  (a) owns,
directly or indirectly,  fifty percent (50%) or more of the  outstanding  voting
securities or equity interests or (b) is a general partner.

                (q)     "Tax" (and, with correlative meaning, "Taxes" and
"Taxable")  shall mean any federal,  state,  local or foreign net income,  gross
income, gross receipts, windfall profit, severance, property, production, sales,
use, license, excise, franchise,  employment, payroll, withholding,  alternative
or add-on minimum, ad valorem,  value-added,  transfer,  stamp, or environmental
tax, or any other tax, custom,  duty,  governmental fee or other like assessment
or  charge  of any kind  whatsoever,  together  with any  interest  or  penalty,
addition to tax or additional amount imposed by any governmental authority.

                (r)     "Tax Return" shall mean any return, report or similar
statement  required to be filed with respect to any Tax  (including any attached
schedules),  including,  without limitation,  any information return,  claim for
refund, amended return or declaration of estimated Tax.
<page>
        1.2     Other Defined Terms. The following terms shall have the
meanings defined for such terms in the Sections set forth below:

              Defined Term                   Location of Definition

              2003 Balance Sheet                Section 4.5(a)
              AAA                               Section 9.4(b)
              Agreement                         Preamble
              Allocation                        Section 6.1(b)(ii)
              Business                          Recitals
              Buyer                             Preamble
              Buyer Notice                      Section 9.3(a)
              Cap                               Section 9.1(a)
              Closing                           Section 2.1(a)
              Closing Date                      Section 2.1(a)
              Closing Date Consideration        Section 3(a)
              Consideration                     Section 3
              Company                           Recitals
              Company Common Stock              Recitals
              Damages                           Section 9.2(a)
              Financial Statements              Section 4.5
              Indemnified Person                Section 9.2(a)
              Intellectual Property Rights      Section 4.17(a)
              IRS                               Section 4.18(a)
              June 30 Balance Sheet             Section 4.5(b)
              Laws                              Section 4.16
              Material Contracts                Section 4.12(o)
              Metrologic                        Section 6.4(j)
              Owned Assets                      Section 4.10(a)
              Personal Property Leases          Section 4.9(b)
              Post-Closing Returns              Section 6.1(d)
              Real Estate Leases                Section 4.9(a)
              Section 338(h)(10) Election       Section 6.1(a)
              Seller                            Preamble
              Seller's Shares                   Recitals
              Sellers                           Preamble
              Sellers' Representative           Section 9.6(a)
              Shares                            Section 4.2(a)
              Territory                         Section 6.4(c)(i)
              Threshold                         Section 9.1(b)
              Transition Services Agreement     Section 6.4(a)


        1.3 Usage of Terms. Except where the context otherwise requires, words
importing the singular number shall include the plural number and vice versa.

        1.4 References to Sections, Exhibit and Schedules. All references in
this Agreement to Sections (and other subdivisions), Exhibit and Schedules refer
to the corresponding Sections (and other subdivisions), Exhibit and Schedules of
or attached to this  Agreement,  unless the context  expressly,  or by necessary
implication otherwise requires.

2.      Purchase and Sale of Shares.

        2.1     Purchase and Sale. Subject to the terms and conditions of this
Agreement, on the Closing Date, each Seller shall sell, transfer, assign, convey
and deliver to Buyer and Buyer  shall  purchase  from each Seller such  Seller's
Shares,  in each case, free and clear of all Liens.  The closing of the purchase
and sale of the Shares (the "Closing") shall take place  simultaneously with the
execution  of this  Agreement  or on such other date and time as the parties may
mutually agree (the "Closing Date").  At the Closing,  Sellers (through Sellers'
Representative)  shall  deliver to Buyer  stock  certificates  representing  the
Shares along with fully  executed  stock  powers or  assignments  separate  from
certificates  and Buyer shall pay the Closing Date  Consideration  to Sellers in
accordance with Schedule A.

        2.2     Further Assurances. If, at any time after the Closing Date,
Buyer shall consider or be advised that any deeds, bills of sale, assignments or
assurances or any other acts or things are necessary, desirable or proper (a) to
vest,  perfect or confirm,  of record or otherwise,  in Buyer its right to, and,
title or interest  in, the Shares or (b)  otherwise to carry out the purposes of
this Agreement,  Buyer shall so advise Sellers'  Representative in writing,  and
Sellers  thereupon shall promptly  execute and deliver all such deeds,  bills of
sale,  assignments  and  assurances  and do  all  such  other  acts  and  things
necessary,  desirable or proper to vest, perfect or confirm Buyer's right, title
or interest  in, to or under the Shares and  otherwise to carry out the purposes
of this Agreement.
<page>
3.      Consideration.

                (a)     On the Closing Date, the Buyer shall deliver to Sellers
by wire transfer (in accordance with the wire  instructions set forth on Exhibit
A) of  immediately  available  funds,  the amount of Nine Million Fifty Thousand
Dollars ($9,050,000) (the "Closing Date Consideration").

                (b)     On the six (6) month anniversary of the Closing Date
(or,  on the next  business  day if such six month  anniversary  is a  Saturday,
Sunday or banking  holiday in the State of New Jersey),  the Buyer shall deliver
to Sellers by wire transfer of immediately  available  funds,  the amount of Six
Hundred Fifty Thousand Dollars ($650,000), less the amounts (if any) withheld by
the Buyer for any indemnification claim made pursuant to Section 9.

                (c)     On the one (1) year anniversary of the Closing Date
(or, on the next business day if such one year anniversary is a Saturday, Sunday
or banking  holiday in the State of New Jersey),  the Buyer shall deliver to the
Sellers by wire  transfer  of  immediately  available  funds,  the amount of One
Million Three Hundred Dollars  ($1,300,000),  less the amounts (if any) withheld
by the Buyer for any indemnification claim made pursuant to Section 9.

                (d)     On the Eighteen (18) month anniversary of the Closing
Date (or, on the next business day if such 18-month  anniversary  is a Saturday,
Sunday or banking  holiday in the State of New Jersey),  the Buyer shall deliver
to the Sellers by wire transfer of immediately  available  funds,  the amount of
One Million Nine Hundred Fifty Thousand Dollars  ($1,950,000),  less the amounts
(if any)  withheld by the Buyer for any  indemnification  claim made pursuant to
Section 9.

The funds provided under Sections 3(a)-(d) shall be proportionally divided among
the individual Sellers in accordance with Schedule A. Buyer and the Sellers
agree that the Consideration shall be allocated for all Tax purposes in
accordance with Section 6.1(c). The aggregate amounts (Twelve Million Nine
Hundred Fifty Thousand Dollars ($12,950,000) less the amounts (if any) withheld
by the Buyer for any indemnification claim made pursuant to Section 9) to be
paid by Buyer pursuant to Sections 3(a)-(d) is hereinafter referred to as the
"Consideration".

4.      Representations and Warranties by the Sellers. Except as set forth in
the disclosure  schedule  accompanying  this Agreement,  the schedule numbers of
which are numbered to  correspond  to the section  numbers of this  Agreement to
which they refer,  the Sellers  hereby  represent  and warrant to Buyer that the
statements  contained in this Section 4 are, when read in  conjunction  with the
disclosure  schedule,  true  and  correct  as of the  Closing  Date  (with  such
exceptions as may be specifically  permitted under or specifically  contemplated
by this Agreement and except for representations and warranties that relate to a
specific date, which shall speak only as of such date).

        4.1     Organization. The Company is a corporation duly organized,
validly  existing and in good standing under the laws of the jurisdiction of its
incorporation  and has all  requisite  corporate  power  and  authority  and all
necessary  governmental  approval to carry on its business as it has been and is
now being conducted.  The Company is duly qualified as a foreign  corporation to
do business and is in good  standing as a foreign  corporation  in each state in
which the ownership or leasing of its  properties or the conduct of its Business
makes it necessary to qualify,  except where the failure to so qualify would not
reasonably be expected to have a Material  Adverse  Effect.  Schedule 4.1 hereto
sets forth the  jurisdictions  in which the  Company is  qualified  as a foreign
corporation.  This Agreement and all other agreements herein  contemplated to be
executed by the Company have been (or will be prior to the Closing)  effectively
authorized by all necessary action,  corporate or otherwise,  by the Company and
the Sellers.

        4.2     Capitalization.

                (a)     The total authorized shares of capital stock of the
Company  consists solely of 2,500 shares of Company Common Stock, of which 103.3
shares are issued and outstanding (the "Shares"). The Shares constitute,  in the
aggregate,  all the issued and  outstanding  capital stock of all classes of the
Company. All the Shares have been duly and validly authorized and issued and are
fully paid and  nonassessable.  None of the Shares have been issued in violation
of the  preemptive  rights of any  shareholder  of the Company.  The Shares were
issued in compliance in all material  respects with all  applicable  federal and
state  securities  laws and  regulations.  Each Seller owns all of such Seller's
Shares free and clear of all Liens.  No Person  (other than each Seller) has any
powers or right of any kind,  to dispose of or direct  the  disposition  of such
Seller's Shares or to vote or direct the voting of such Seller's Shares.
<page>
                (b)     Except as set forth in Schedule 4.2(b), there are no
existing  agreements,  subscriptions,  options,  warrants,  calls,  commitments,
trusts (voting or otherwise),  or rights of any kind whatsoever  granting to any
Person any  interest in or the right to purchase or  otherwise  acquire from the
Company or granting  to the Company any  interest in or the right to purchase or
otherwise  acquire from any Person,  at any time, or upon the  occurrence of any
stated event, any securities of the Company (whether of a debt, equity or hybrid
nature),  whether  or not  presently  issued or  outstanding,  nor are there any
outstanding  securities of the Company or any other entity which are convertible
into or  exchangeable  for other  securities  of the Company,  nor are there any
agreements,  subscriptions,  options,  warrants, calls, commitments or rights of
any kind  granting  to any Person any  interest  in or the right to  purchase or
otherwise  acquire  from the  Company  or any other  Person  any  securities  so
convertible  or  exchangeable,   nor  are  there  any  proxies,   agreements  or
understandings with respect to the voting of the Shares.

        4.3     Authority.

                (a)     Each Seller has full power and authority to execute,
deliver and perform this Agreement.  The execution,  delivery and performance of
this Agreement has been duly authorized and approved by all necessary  corporate
action  and no  other  corporate  proceedings  on the  part of the  Company  are
necessary to authorize this Agreement and the transactions  contemplated hereby.
This Agreement has been duly  authorized,  executed and delivered by each Seller
and is the legal,  valid and binding  obligation of each Seller,  enforceable in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement  of  creditors  rights  generally  and  by  the  effect  of  general
principles  of equity  (regardless  of whether  enforcement  is  considered in a
proceeding in equity or at law).

                (b)     The execution, delivery, performance by each Seller of
this Agreement and the consummation of the transactions  contemplated  hereunder
do not,  and will  not,  (i)  violate  or  conflict  with any  provision  of the
Certificate of  Incorporation  or By-laws of the Company,  (ii) violate any law,
rule,  regulation,  order,  writ,  injunction,  judgment or decree of any court,
governmental  authority or  regulatory  agency  applicable  to any Seller or the
Company,  except,  in each case, for violations  which,  individually  or in the
aggregate,  would not reasonably be expected to have a Material  Adverse Effect,
or (iii) result in a violation or breach of, or constitute  (with or without due
notice  or lapse  of time or  both) a  default  (or  give  rise to any  right of
termination,  cancellation or acceleration)  under,  any note, bond,  indenture,
Lien,  mortgage,  lease,  permit,  guaranty or other  agreement,  instrument  or
obligation  to which  the  Company  or any  Seller is a party or by which any of
their respective properties may be bound.

                (c)     The execution and delivery of this Agreement by each
Seller does not, and the  performance by each Seller of this Agreement will not,
require any consent, approval, authorization or permission of, or filing with or
notification to any governmental or regulatory  authority,  domestic or foreign,
except any such consent, approval,  authorization,  permission, notice of filing
which if not  obtained  or made  would  not  reasonably  be  expected  to have a
Material Adverse Effect.

        4.4     Charter Documents. The Company has previously furnished to
Buyer (a) a true,  complete and correct copy of the Certificate of Incorporation
and the By-laws of the Company and each such  Certificate of  Incorporation  and
By-laws is in full force and effect;  and (b) each  agreement,  trust,  proxy or
other arrangement among its current or former shareholders,  if any. The Company
is not in violation of any provision of its Certificate of  Incorporation or its
By-laws.  The minute books and stock  records of the Company  contain  accurate,
correct  and  complete  records of all  meetings,  accurately  reflect all other
material  corporate  action of the shareholders and directors and any committees
of the board of directors of the Company and accurately reflect the ownership of
the Company.

        4.5     Financial Statements. The Company has previously furnished to
Buyer true and complete  copies of the  following  financial  statements  of the
Company (the "Financial Statements"):

                (a)     unaudited balance sheet of the Company as of December
31, 2002 and December 31, 2003 (the "2003 Balance Sheet");

                (b)     unaudited balance sheet of the Company as of June 30,
2004 (the "June 30 Balance Sheet");

                (c)     unaudited statements of operations and shareholders'
equity of the Company for the fiscal years ended  December 31, 2003 and December
31, 2002; and
<page>
                (d)     unaudited statements of operations and shareholders'
equity of the Company for the period ending June 30, 2004.

         The Financial Statements were prepared on the basis of the books and
records of the  Company  and  present  fairly,  in all  material  respects,  the
financial position of the Company as of the dates thereof and the results of its
operations, and changes in shareholders' equity for the period then ended. There
has been no change in accounting  methods or practices  during the years covered
by the Financial Statements.

        4.6     Absence of Undisclosed Assets and Liabilities. The Financial
Statements  disclose  all of the  assets of the  Company as of the dates of such
Financial Statements. Except as disclosed on Schedule 4.6 or as set forth in the
notes to the  Financial  Statements,  the Company does not have any liability or
obligation of any nature (whether absolute,  accrued or contingent or otherwise)
which is in excess of  amounts  shown or  reserved  therefore  in the  Financial
Statements other than liabilities or obligations  incurred after the date of the
June 30 Balance Sheet reasonably incurred in the ordinary course of business and
consistent with past practice.

        4.7     Operations and Obligations.

                (a)     Except as set forth in Schedule  4.7, since December
31, 2003,

                        (i)     there has been no event or condition that has
had or could reasonably be expected to have a Material Adverse Effect; and

                        (ii)    there has been no impairment, damage,
destruction, loss or claim, whether or not covered by insurance, or condemnation
or other taking which would  reasonably  be expected to have a Material  Adverse
Effect.

                (b)     Except as set forth in Schedule 4.7, since December 31,
2003, the Company has conducted its business only in the ordinary  course and in
conformity with past practice. Without limiting the generality of the foregoing,
since  December 31, 2003,  except as set forth in Schedule  4.7, the Company has
not:

                        (i)     issued, delivered or agreed (conditionally or
unconditionally)  to issue or deliver any bonds, notes or other debt securities,
or borrowed or agreed to borrow any funds,  other than in the ordinary course of
business consistent with past practice;

                        (ii)    paid any obligation or liability (absolute or
contingent) other than current  liabilities  reflected on the 2003 Balance Sheet
and current liabilities  incurred since December 31, 2003 in the ordinary course
of business consistent with past practice;

                        (iii)   declared or made, or agreed to declare or make,
any payment of dividends or  distributions  to its  shareholders or purchased or
redeemed, or agreed to purchase or redeem, any capital stock of the Company;

                        (iv)    except in the ordinary course of business
consistent  with past  practice,  made or permitted  any  material  amendment or
termination of any agreement to which the Company is a party and is or should be
set forth on Schedule 4.12;

                        (v)     undertaken or committed to undertake capital
expenditures  exceeding  $25,000  for any single  project  or related  series of
projects;

                        (vi)    sold, leased (as lessor), transferred or
otherwise  disposed  of,  mortgaged  or  pledged,  or imposed or  suffered to be
imposed any Lien on, any of the assets  reflected on the 2003 Balance  Sheet (or
which should be reflected on the 2003 Balance  Sheet) or any assets  acquired by
the Company after December 31, 2003,  except for inventory and personal property
sold or  otherwise  disposed  of for fair  value in the  ordinary  course of its
business consistent with past practice and except for Permitted Liens;

                        (vii)   canceled any debts owed to or claims held by
the Company (including the settlement of any claims or litigation) other than in
the ordinary course of its business consistent with past practice;

                        (viii)  accelerated the payment by any third party of
any amount due the Company for  services  provided  or future  license  payments
other than in the ordinary course of its business consistent with past practice;
or
<page>
                        (ix)    delayed the payment of any accounts payable
other than in the ordinary course of its business consistent with past practice.

        4.8     Properties.

                (a)     The Company has good and valid title to or has valid
leaseholds  in all its  properties  and assets  reflected on the June 30 Balance
Sheet or acquired  after the date thereof  except for (I)  properties and assets
sold or otherwise  disposed of in the ordinary course of business since the date
of such June 30  Balance  Sheet (ii)  leasehold  interests,  in which  event the
Company has a valid  leasehold  interest and (iii)  properties  and assets which
individually or in the aggregate are not material.

                (b)      The Company does not own any real property.

        4.9     Leases.

                (a)     Schedule 4.9 sets forth a correct and complete list of
all real property leased or subleased by the Company including identification of
the lease or sublease,  street  address and list of all  contracts,  agreements,
leases, subleases, options and commitments, oral or written, affecting such Real
Estate or any  interest  therein to which the Company is a party or by which any
of its  interests  in real  property is bound (the "Real  Estate  Leases").  The
Company has been in peaceable  possession  of the premises  covered by each Real
Estate Lease since the  commencement  of the  original  term of such Real Estate
Lease.  The Sellers have  delivered to Buyer a correct and complete copy of each
Real  Estate  Lease.  At the  Closing,  the Company  shall  deliver to Buyer any
consents  or  approvals  of  any  parties   required  in  connection   with  the
transactions  contemplated  hereby with respect to the Real Estate Leases listed
on Schedule 4.9.

                (b)     Schedule 4.9 sets forth a correct and complete list of
all leases or bailments of personal property used in the Business (the "Personal
Property Leases").  The Company has been in peaceable possession of the property
covered by each Personal  Property  Lease since the  commencement  thereof.  The
Company has  delivered  to Buyer a correct and  complete  copy of each  Personal
Property Lease.

        4.10    Assets.

                (a)     The Company has good and marketable title to all of the
owned assets used in and related to the Business, located on its premises, shown
on the  Financial  Statements  or acquired  after the date  thereof  (the "Owned
Assets").  Except as set forth in  Schedule  4.10,  none of the Owned  Assets is
subject to any Lien, except for (i) Liens set forth on the Financial Statements,
and (ii) other  imperfections of title,  restrictions or  encumbrances,  if any,
which imperfections, restrictions or encumbrances do not, individually or in the
aggregate,  significantly  impair the  continued  use and operation of the Owned
Assets to which they relate.

                (b)     Except as set forth in Schedule 4.10, the Owned Assets
are in good operating  condition and repair  (ordinary wear and tear  excepted),
and are  suitable  for the  purposes  for which they are  presently  being used.
Except as set forth in Schedule  4.10,  the Owned  Assets,  together with assets
currently  being leased by the Company,  are sufficient for the Buyer to conduct
the business of the Company as currently conducted.

        4.11    Working Capital.  As of the Closing Date, the cash balance of
Company shall be $0.

        4.12    Contracts. Schedule 4.12 lists all of the following contracts
and  agreements  (whether  written or oral),  except for (i) oral  contracts  or
commitments  that are terminable at will and (ii) contracts and agreements  that
are expired as of the Closing Date:

                (a)     each contract or commitment which creates an obligation
on the part of the Company in excess of $10,000;

                (b)     each debt instrument, including, without limitation,
any loan agreement, line of credit, promissory note, security agreement or other
evidence of indebtedness,  where the Company is a lender, borrower or guarantor,
in a principal amount in excess of $10,000;

                (c)     each contract or commitment restricting the Company
from engaging in any line of business;

                (d)     each contract or commitment in excess of $10,000 to
which the Company is a party for any charitable contribution;
<page>
                (e)     each joint development, joint venture or partnership
agreement to which the Company is a party;

                (f)     each agreement in excess of $10,000 to which the
Company is a party with respect to any  assignment,  discounting or reduction of
any receivables of the Company;

                (g)     each distributorship, sales agency, sales
representative,  reseller or marketing, value added reseller, original equipment
manufacturing,  technology transfer, source code license agreement and any other
agreements  containing the right to sublicense  software and/or  technology,  in
each case, to which the Company is a party;

                (h)     each agreement, option or commitment or right with, or
held by, any third party to acquire any assets or  properties,  or any  interest
therein,  of the  Company,  having a value  in  excess  of  $25,000  except  for
contracts  for the sale of  inventory,  machinery  or  equipment in the ordinary
course of business;

                (i)     each employment, consulting or independent contractor
agreement entered into by the Company;

                (j)     each guarantee, contingent liability or indemnity
involving  an  obligation  or  potential  obligation,  to which the Company is a
party;

                (k)     each power of attorney of the Company;

                (l)     any material restrictions imposed on the Company
regarding competition or solicitation of customers or employees;

                (m)     any agreement or other commitment with an Affiliate of
the Sellers, to which the Company is a party;

                (n)     any agreement with respect to the treatment of
confidential information furnished by or to the Company, or

                (o)     any contract, agreement, arrangement and commitment of
any kind (other than contracts with any  governmental  authorities) to which the
Company is a party  regarding  commercial  transactions  involving the Company's
products and services and involving payments to or from the Company in excess of
$25,000 (collectively, the foregoing (a)-(o) being the "Material Contracts").

Each of the Material Contracts is in full force and effect and is a validly
binding obligation of the Company, and to the Knowledge of Sellers, the other
parties thereto.

        4.13    Absence of Default. Except as set forth in Schedule 4.13, each
of the leases, contracts and other agreements listed or required to be listed in
Schedules 4.9, 4.12, and 4.17,  that create  obligations on any Person in excess
of $25,000 constitutes a valid and binding obligation of the parties thereto and
is in full force and effect and will continue in full force and effect after the
Closing Date, in each case,  without breaching the terms thereof or resulting in
the  forfeiture or impairment of any rights  thereunder and without the consent,
approval  or act of, or the making of any filing  with,  any other  Person.  The
Company has  fulfilled and  performed in all material  respects its  obligations
under each such lease, contract or other agreement to which it is a party to the
extent such obligations are required by the terms thereof to have been fulfilled
or performed  through the date hereof and the Company is not, and, except as set
forth in Schedule  4.13,  the Company is not alleged in writing to be, in breach
or default under any such lease,  contract or other agreement.  To the Knowledge
of the Sellers,  no other party to any such lease,  contract or other  agreement
has breached or defaulted thereunder.  No event has occurred and no condition or
state of facts exists which, with the passage of time or the giving of notice or
both,  would  constitute  such a default  or breach  by the  Company  or, to the
Knowledge of the Sellers, by any such other party.

        4.14    Insurance. Schedule 4.14 sets forth a list and brief
description (including nature of coverage, limits, deductibles, premiums and the
loss experience  since the inception of the Company with respect to each type of
coverage) of all policies of insurance maintained,  owned or held by the Company
during the period  from  inception  up to and  including  the date  hereof.  The
Company has not received any notice or other  communication  within one (1) year
prior  to the  date  hereof  canceling  or  materially  amending  or  materially
increasing the premium  payable under any of such insurance  policies and to the
Knowledge  of the  Sellers,  no such  cancellation,  amendment or an increase of
premiums  is  threatened.  The  Company  shall use all  commercially  reasonable
efforts to keep such insurance or comparable  insurance in full force and effect
through the Closing Date. The Company has complied in all material respects with
each such insurance policy to which it is a party.
<page>
        4.15    Litigation. Except as set forth in Schedule 4.15, (i) there are
no  actions,  suits,  arbitrations,   legal  or  administrative  proceedings  or
investigations  pending or, to the Best  Knowledge  of the  Sellers,  threatened
against the Company; and (ii) neither the Company nor any assets,  properties or
business of the Company, is subject to any judgment,  order, writ, injunction or
decree of any court,  governmental agency or arbitration  tribunal.  None of the
Sellers have any claim  against the Company,  for whatever  reason,  either as a
stockholder,  director,  officer, employee or otherwise. To the Knowledge of the
Sellers, there is no pending suit, claim, litigation or other proceeding against
any  Person  based in whole or in part on the fact that such  Person is or was a
director  or  officer  of the  Company  nor are the  Sellers  aware  of any such
contemplated  action.  Except as set forth in Schedule  4.15, the Company is not
the  plaintiff  in any such  proceeding  and the  Company  is not  contemplating
commencing legal action against any other Person.

        4.16    Compliance with Law. Except as set forth in Schedule 4.16, the
Company  has  complied in all  material  respects  with,  and is not in material
violation of any law, statute,  order, judgment,  ordinance or governmental rule
or regulation (collectively, "Laws") to which it or the Business is subject.

        4.17    Intellectual Property.

                (a)     The Company owns or is validly licensed or otherwise
has the  right to use all  patents,  trademarks,  trade  secrets,  trade  names,
service marks, copyrights and other proprietary intellectual property rights and
computer programs (the "Intellectual  Property  Rights"),  which are material to
the  conduct  of  the  Business.  Schedule  4.17  contains  a list  and  summary
description of the Company's Intellectual Property Rights.

                (b)     Other than as disclosed on Schedule 4.17, the Company
has not: (i) to the Knowledge of the Sellers, infringed upon, misappropriated or
otherwise come into conflict with any Intellectual  Property Rights of any other
Person; or (ii) received any written charge, complaint,  claim, demand or notice
alleging any infringement,  misappropriation  or violation  (including any claim
that the Company must license or refrain  from using any  Intellectual  Property
Rights or other proprietary  information of any other Person or must indemnify a
third  party  as a  result  of any  alleged  infringement)  of the  Intellectual
Property  Rights of any other  Person,  which has not been  settled or otherwise
fully  resolved.  Other than as set forth on Schedule  4.17, the Company has not
received any request,  whether written or oral, suggesting that the Company take
a license to any Intellectual Property Rights of any other Person.

                (c)     To the Knowledge of the Sellers, no other Person has
infringed upon, misappropriated or otherwise come into conflict with any Company
Intellectual Property Rights or other proprietary information of the Company.

                (d)     Except as disclosed on Schedule 4.17, the Company has
not entered into any agreement  containing any provision  that would  materially
interfere with or diminish its  Intellectual  Property Rights as a result of the
acquisition by Buyer of the Shares as contemplated by this Agreement.

                (e)     Except as disclosed on Schedule 4.17, each employee,
agent,  consultant or contractor who has  contributed to or  participated in the
creation  or  development  of any  copyrightable,  patentable  or  trade  secret
material on behalf of the  Company or any  predecessor  in interest  thereto has
conveyed  all right,  title and  interest  to such  material  to the  Company by
either:  (i) such party  having  executed a  "work-for-hire"  agreement  (to the
extent such  material  may be validly  covered by a  "work-for-hire"  agreement)
under  which  the  Company  is  deemed to be the  original  owner/author  of all
property  rights  therein;  or (ii) by executing an  assignment  in favor of the
Company or such  predecessor  in interest,  as  applicable.  A copy of each such
"work-for-hire" agreement or assignment has been furnished to Buyer.

        4.18    Tax Matters.

                (a)     Except as set forth on Schedule 4.18(a), (i) the
Company has filed all Tax Returns  required to be filed with  respect to taxable
periods  ending  on or  before  the  Closing  Date  and  is  not  currently  the
beneficiary  of any extension of time within which to file any Tax Return;  (ii)
all such Tax Returns are complete and accurate in all material  respects and all
Taxes  shown to be due on such Tax  Returns  have  been  paid;  (iii)  all Taxes
(whether  or not shown on any Tax Return) for which the Company may be liable in
its own  right or as a  transferee  of the  assets  of,  or  successor  to,  any
corporation,  Person, association,  partnership,  joint venture or other entity,
have been paid or the Company has established  adequate reserves therefor;  (iv)
the Company has not waived or been requested to waive any statute of limitations
in respect of Taxes;  (v) none of the Tax Returns referred to in clause (i) have
been examined by the Internal Revenue Service ("IRS") or the appropriate  state,
local or foreign  taxing  authority or the period for assessment of the Taxes in
<page>
respect of which such Tax Returns were required to be filed has expired; (vi) to
the Knowledge of the Sellers,  there is no action, suit,  investigation,  audit,
claim or assessment pending, proposed or threatened with respect to Taxes of the
Company (including, but not limited to, any action, suit, investigation,  audit,
claim or assessment by an authority in a jurisdiction where the Company does not
file Tax Returns that it is or may be subject to taxation by such jurisdiction);
(vii)  all  deficiencies  asserted  or  assessments  made  as a  result  of  any
examination of the Tax Returns referred to in clause (i) have been paid in full;
(viii) there are no Liens for Taxes upon the assets of the Company  except Liens
relating to current  Taxes not yet due; and (ix) all Taxes which the Company are
required by law to withhold or to collect for payment in connection with amounts
paid or owing to any employee, independent contractor,  creditor, stockholder or
other third party have been duly withheld and  collected,  and have been paid or
accrued,  reserved against and entered on the books of the Company in accordance
with GAAP.

                (b)     Correct and complete copies of all federal, state,
     local and foreign  income Tax Returns and all written  communications  from
the Internal  Revenue Service or other Tax authorities  relating to any such Tax
Returns,  examination reports and statements of deficiencies assessed against or
agreed to by the Company  since  December  31, 1997 have been made  available to
Buyer or will be made available to Buyer prior to Closing.

                (c)     The Company is not a party to any Tax allocation or
sharing agreement.  Except as set forth on Schedule 4.18(c), the Company (i) has
not been a member of an affiliated  group filing a  consolidated  federal income
Tax Return, (ii) is not or has never been a partner in a partnership or an owner
of an  interest in an entity  treated as a  partnership  for federal  income tax
purposes  and (iii) has no  liability  for the Taxes of any Person  under Treas.
Reg. ss. 1.1502-6 (or any similar provision of state,  local or foreign law), as
a transferee, successor or indemnitor, by contract or otherwise.

                (d)     Except as set forth on Schedule 4.18(d), the unpaid
Taxes of the Company do not exceed the reserve for Tax  liability  (rather  than
any reserve for deferred Taxes established to reflect timing differences between
book and Tax income) set forth on the face of the June 30 Balance  Sheet (rather
than in any notes  thereto)  as  adjusted  for the  passage of time  through the
Closing Date in  accordance  with the past custom and practice of the Company in
filing its Tax Returns.

                (e)     The Company has been a validly electing S corporation
within the meaning of Sections 1361 and 1362 of the Code at all times during its
existence and will be an S corporation up to and including the Closing Date. The
Company has not in the 10-year  period  preceding  the date hereof (i)  acquired
assets from another  corporation  in a transaction in which the tax basis of the
Company for the acquired  assets was determined in whole or in part by reference
to the tax basis of the acquired  assets (or any other property) in the hands of
the transferor,  (ii) acquired the stock of any corporation,  or (iii) taken any
action that  resulted or could result in the loss of the  Company's  status as a
validly electing S corporation prior to the Closing.

        4.19    Employee Benefit Plans.

                (a)     Schedule 4.19 contains a list of all Benefit Plans. A
true,  correct and complete copy of each Benefit Plan or a detailed  description
thereof if such Benefit Plan is unwritten,  has been delivered or made available
to Buyer.

                (b)     Neither the Company nor any Commonly Controlled Entity
has  maintained,  contributed  to or been  obligated to contribute to or had any
liability  in  connection  with any Benefit  Plan that is subject to Title IV of
ERISA or Section 412 of the Code.  No Benefit Plan is  maintained  in connection
with any trust under Section 501(c)(9) or 501(c)(17) of the Code.

                (c)     Each Benefit Plan has been maintained, operated and
administered in material  compliance  with its terms and in material  compliance
with all applicable  provisions of ERISA,  the Code, and all laws,  regulations,
rulings and other authority issued  thereunder.  All  contributions  required to
have been made to any Benefit  Plan by the  Company,  any Seller or any Commonly
Controlled  Entity have been made within the time  required by such Benefit Plan
and applicable  law,  taking into account all applicable  extensions of time for
such contributions.

                (d)     There are no actions, suits, negotiations, demands,
proposals, investigations, proceedings or claims pending, or to the Knowledge of
the Sellers,  threatened  (other than in any case with respect to routine claims
for benefits) with respect to any Benefit Plan.
<page>
                (e)     No non-exempt prohibited transaction described in
Section 406 of ERISA or Section  4975 of the Code has  occurred  with respect to
any Benefit  Plan.  Neither the Company nor any Commonly  Controlled  Entity has
liability  under Part 4 of Title I,  Subtitle B of ERISA by an  fiduciary of any
Benefit Plan or has unpaid civil liability under Section 502(l) of ERISA.

                (f)     Neither the Company nor any Commonly Controlled Entity
knows of any event that has occurred,  either by reason of any action or failure
to act,  which would cause any such Benefit  Plan not to be so  qualified  under
Section 401(a) of the Code and cannot be corrected without material liability.

                (g)     The Company does not have any liability or obligation
under any Benefit  Plan to provide  life  insurance  or medical  benefits  after
termination of employment to any employee or dependent other than as required by
Part 6 of Title I of ERISA or Section 4980B of the Code.

                (h)     Except as set forth on Schedule 4.19, no employee of
the Company will be entitled to any additional  compensation  or benefits or any
acceleration  of the time of payment or vesting of any  compensation or benefits
under any  Benefit  Plan as a result of the  transactions  contemplated  by this
Agreement.

        4.20    Environmental Laws. The Company has not received any notice or
claim (and is not aware of any facts that would form a reasonable  basis for any
claim),  or entered into any  negotiations  or agreements with any other Person,
and,  to the  Knowledge  of the  Sellers,  the Company is not the subject of any
investigation by any governmental or regulatory authority,  domestic or foreign,
relating to any material or potentially  material  liability or remedial  action
under any Environmental Laws.

        4.21    Bank Accounts, Letters of Credit and Powers of Attorney.
Schedule  4.21 lists (a) all bank  accounts,  lock boxes and safe deposit  boxes
relating to the business and  operations of the Company  (including  the name of
the Bank or other institution where such account or box is located,  the account
numbers of such accounts and the name of each authorized signatory thereto), (b)
all  outstanding  letters of credit  issued by  financial  institutions  for the
account of the Company  (setting forth, in each case, the financial  institution
issuing such letter of credit, the maximum amount available under such letter of
credit,  the terms  (including the expiration date) of such letter of credit and
the party or parties in whose favor such letter of credit was  issued),  and (c)
the name and address of each Person who has a power of attorney to act on behalf
of the Company.  The Company has heretofore delivered to Buyer true, correct and
complete copies of each letter of credit and each power of attorney described on
Schedule 4.21.

        4.22    Subsidiaries.  The Company has no Subsidiaries.

        4.23    Brokers' and Finders' Fees. Sellers represent and warrant to
Buyer that no broker,  investment  banker or financial  advisor is entitled to a
brokerage fee, financing  commission or other commission from Sellers in respect
of the  execution of this  Agreement  or the  consummation  of the  transactions
contemplated hereby.

        4.24    Disclosure. To the Knowledge of the Sellers, neither this
Agreement nor any attachment,  schedule, exhibit, certificate or other statement
delivered by the Sellers  pursuant to this  Agreement  omits to state a material
fact necessary in order to make the statements and information contained herein,
in light of the circumstances in which they were made, not misleading.

5.      Representations and Warranties of Buyer. Buyer represents and warrants
to Sellers as follows:

        5.1     Organization. Buyer is a corporation duly organized, validly
existing  and in  good  standing  under  the  laws  of the  jurisdiction  of its
incorporation and has all requisite  corporate power and authority to enter into
and  perform  this  Agreement  and the  transactions  contemplated  hereby to be
performed by it.

        5.2     Authority. Buyer has full corporate power and authority to
execute,  deliver  and perform  this  Agreement.  The  execution,  delivery  and
performance of this Agreement by it has been duly authorized and approved by all
necessary  corporate  action and no other  corporate  proceedings on the part of
Buyer  are  necessary  to  authorize   this   Agreement  and  the   transactions
contemplated  hereby.  This  Agreement  has been duly  authorized,  executed and
delivered  by Buyer and is the  legal,  valid and  binding  obligation  of Buyer
enforceable  in  accordance  with its  terms,  except as  enforceability  may be
limited by  applicable  bankruptcy,  insolvency,  reorganization,  moratorium or
similar laws affecting the enforcement of creditors  rights generally and by the
effect of general  principles of equity  (regardless  of whether  enforcement is
considered in a proceeding in equity or at law).
<page>
                (a)     The execution, delivery, performance by Buyer of this
Agreement and the consummation of the transactions  contemplated  hereby do not,
and will not, (i) violate or conflict with any provision of the  Certificate  of
Incorporation  or By-laws of Buyer,  (ii)  violate  any law,  rule,  regulation,
order,  writ,  injunction,   judgment  or  decree  of  any  court,  governmental
authority, or regulatory agency, except for violations which, individually or in
the  aggregate,  will not have a  Material  Adverse  Effect on Buyer  taken as a
whole,  or (iii)  result in a  violation  or breach of, or  constitute  (with or
without  due  notice  or lapse of time or both) a  default  (or give rise to any
right of  termination,  cancellation or  acceleration)  under,  any note,  bond,
indenture,   lien,  mortgage,   lease,  permit,  guaranty  or  other  agreement,
instrument or obligation, oral or written, to which Buyer is a party or by which
any of the properties of Buyer may be bound, except for violations,  breaches or
defaults  which,  individually  or in the  aggregate,  will not have a  Material
Adverse Effect on Buyer and its Subsidiaries taken as a whole.

                (b)     The execution and delivery of this Agreement by Buyer
does not, and the  performance by Buyer of this Agreement will not,  require any
consent,  approval,  authorization  or permit of, or filing with or notification
to, any governmental or regulatory  authority,  domestic or foreign,  except any
such consent, approval, authorization, permission, notice or filing which if not
obtained or made would not have a Material Adverse Effect on Buyer.

        5.3     Litigation.

                (a)     Buyer is not a party to any suit, action, arbitration
or legal,  administrative,  governmental  or other  proceeding or  investigation
pending or, to its knowledge threatened, which reasonably could adversely affect
or restrict its ability to  consummate  the  transactions  contemplated  by this
Agreement or to perform its obligations hereunder.

                (b)     There is no judgment, order, writ, injunction or decree
of any court,  governmental  agency or  arbitration  tribunal  to which Buyer is
subject which might  adversely  affect or restrict its ability to consummate the
transactions  contemplated  by this  Agreement  or to  perform  its  obligations
hereunder.

        5.4     Financing. Buyer has (a) sufficient cash in hand or (b)
obtained financing  necessary to pay the Consideration due Sellers in accordance
with Section 3.

        5.5     Brokers' and Finders' Fees. Buyer represents and warrants to
Sellers that no broker,  investment  banker or financial  advisor is entitled to
any  brokerage  fee,  financing  commission  or other  commission  from Buyer in
respect  of  the  execution  of  this  Agreement  or  the  consummation  of  the
transactions contemplated hereby.

6.      Covenants.

        6.1     Tax Matters.

                (a)     Election under Section 338(h)(10). At Buyer's request,
made in writing to the Sellers'  Representative within one hundred (100) days of
the  Closing  Date,  and  within  such time as is  specified  by the  applicable
provisions  of  Section  338  of  the  Code  and  the  regulations   promulgated
thereunder, the Sellers will join with Buyer in making an election under Section
338(h)(10) of the Code (and any corresponding  election requested by Buyer under
state,  local, and foreign tax law) with respect to the purchase and sale of the
stock of the Company hereunder (a "Section 338(h)(10) Election").

                (b)     Section 338(h)(10) Payment. If a Section 338(h)(10)
Election  is made  with  respect  to the  purchase  and sale of the stock of the
Company contemplated by this Agreement:

                        (i)     Buyer and the Sellers shall timely make any
required filings (including, but not limited to the filing of the Forms 8023 and
8883) in  accordance  with the  Allocation  and take any and all  other  actions
necessary  to  effect  a  Section  338(h)(10)  Election  under  the Code and the
Treasury  Regulations (and under any comparable  provision of foreign,  state or
local law); and

                        (ii)    Buyer and the Sellers shall allocate the
"aggregate  deemed  selling price" (as defined in Treasury  Regulations  Section
1.338-4) and the "adjusted grossed-up basis" (as defined in Treasury Regulations
Section  1.338-5)  as set  forth on  Exhibit  F among  the  Company's  assets in
accordance with Section 338 of the Code and the Treasury Regulations  thereunder
(the "Allocation").
<page>
                        (iii)   Buyer and Sellers shall share on a 75%/25%
basis respectively any federal or state Tax paid by any Seller in excess of such
Seller's  aggregate  Tax  liability  with  respect  to such  Section  338(h)(10)
Election as calculated in accordance with the Allocation (including any such Tax
as a result of a payment pursuant to this Section 6.1(b)(iii)),  but only to the
extent  such  additional  Tax  payment  is  attributable  to the  allocation  of
additional amounts to tangible personal property or inventory of the Company, or
any other  category  that is taxed at  ordinary  income  rates  (except  for any
imposed increase to the non-compete  and/or transition  services portions of the
Allocation) as a consequence of an audit  adjustment of such Seller's Tax return
by a federal or state tax authority.  In such case, Sellers shall timely furnish
Buyer with  appropriate  documentation,  including  any relevant work papers and
computations  in support of any claim for  reimbursement  from Buyer  under this
Section  6.1(b)(iii)  and Buyer shall make such  payment to each Seller no later
than  the  tenth  (10th)  day  following  the  latest  of (A) the  date all such
documentation  is  received  by  Buyer,  (B) the date of a  determination  under
Section  1313(a) of the Code with  respect to the Tax  liability  of such Seller
attributable to the Section  338(h)(10)  Election (or the date of the occurrence
of an event with the same legal consequence under applicable state law), and (C)
the date the statute of limitations expires for claims of refund of the Tax with
respect to which a claim for  reimbursement  has been made by such Seller (if no
such claim for refund of Tax has been filed).

                (c)     Consistency Statement. Buyer and the Sellers agree that
the  Consideration  shall be  allocated  for all Tax  purposes  as set  forth on
Exhibit F;  provided,  however,  that the amounts  allocated to "sale of Company
Common Stock" shall be subject to Section 6.1(b)(ii) in the event of any Section
338(h)(10) Election requested by Buyer. Each of the parties covenants and agrees
to  report  gain or  loss,  or cost  basis,  as the  case  may be,  in a  manner
consistent  with the  preceding  sentence in all tax returns  filed by either of
them  subsequent to the Closing Date;  or, if a Section 338 Election is made, to
report  such  gain or loss,  or cost  basis,  as the  case  may be,  in a manner
consistent with the Allocation. Each of the parties further covenants and agrees
not to take voluntarily any position inconsistent with the preceding sentence in
any  administrative  or judicial  proceeding  relating to such returns  (whether
federal,  state,  local or  foreign),  except  if,  in the  opinion  of  counsel
reasonably  acceptable to the other party, there has been a change in applicable
law since the Closing Date.

                (d)     Tax Returns. The Sellers shall prepare or cause to be
prepared  as  promptly  as  practicable  all Tax Returns for the Company for all
periods  ending on or prior to the  Closing  Date that are  required to be filed
after the Closing  Date  ("Post-Closing  Returns").  No later than ten (10) days
prior to the due date of any Post-Closing Return (but prior to its filing),  the
Sellers  shall  furnish a draft  form of such  Post-Closing  Return to Buyer for
review and comment. If Buyer determines that there are no material errors in the
form of a Post-Closing  Return prepared by the Sellers (and timely  furnished to
Buyer),  Buyer shall cause such form to be timely  filed as a Tax Return for the
Company.  To the extent  permitted by applicable  law, the Sellers shall include
any income,  gain, loss,  deduction or other Tax items for such periods on their
Tax  Returns in a manner  consistent  with the  Schedule  K-1s  included  in the
Post-Closing  Returns.  The Sellers agree to provide Buyer with all  information
available  to the Sellers  and not  otherwise  available  to Buyer to the extent
reasonably  necessary  for Buyer to fulfill its  obligations  under this Section
6.1.

                (e)     Cooperation. Sellers (on their own behalf and on behalf
of the  Company) and Buyer will  provide  each other with such  cooperation  and
information as they may request of the other in filing any return  determining a
liability  for Taxes or a right to a refund of Taxes,  or in conducting an audit
or other proceeding in respect of Taxes. Such cooperation shall include, but not
be limited to,  making  employees  available on a mutually  convenient  basis to
provide  explanation  of any  documents  or  information  provided  hereunder or
otherwise as required in the conduct of any audit or other proceeding.  Sellers,
Buyer and the Company will retain all Returns, schedules and work papers and all
other material records or documents  relating to matters of the Company relating
to Taxes for the Tax period  first  ending  after the  Closing  Date and for all
prior Tax periods until the  expiration of the statute of limitations of the Tax
periods  to which  such  Returns  and  other  documents  relate  (including  any
extensions thereof),  and at the expiration of such period each party shall have
the right to dispose of any such  Returns or other  documents  or records  after
providing   thirty  (30)  days  in  written  notice  to  the  other  party.  Any
information,  documents or records obtained under this Section 6.1 shall be kept
confidential, except as may be otherwise necessary in connection with the filing
of Returns or claims for refund or in conducting an audit or other proceeding.

        6.2     Severance Rights. By executing this Agreement, each Seller
hereby  irrevocably  waives  any and all rights  such  Seller may have under any
employment  or other  arrangement  with the Company to receive  severance or any
other similar benefits.
<page>
        6.3     Actions by the Parties.

                (a)     Upon the terms and subject to the conditions set forth
in this  Agreement,  each of the  parties  hereto will use its  reasonable  best
efforts  to take or cause to be taken  all  actions,  and to do,  or cause to be
done,  all  things  necessary,  proper or  advisable  under  applicable  law and
regulations  to consummate  and make  effective in the most  expeditious  manner
practicable,  the transactions  contemplated by this Agreement including (i) the
obtaining of all necessary  actions and  non-actions,  waivers and consents,  if
any, from any  governmental  agency or authority and the making of all necessary
registrations  and  filings  and the  taking of all  reasonable  steps as may be
necessary  to  obtain  an  approval  or  waiver  from,  or to avoid an action or
proceeding by any  governmental  agency or authority;  (ii) the obtaining of all
necessary  consents,  approvals  or  waivers  from any other  Person;  (iii) the
defending of any claim,  investigation,  action, suit or other legal proceeding,
whether   judicial  or   administrative,   challenging  this  Agreement  or  the
consummation of the transactions  contemplated  hereby and (iv) the execution of
additional instruments necessary to consummate the transactions  contemplated by
this  Agreement.  Each party will  promptly  consult  with the other and provide
necessary  information  (including  copies  thereof) with respect to all filings
made by such  party  with any  agency  or  authority  in  connection  with  this
Agreement and the transactions contemplated hereby.

                (b)     Sellers shall cause the Company to comply with its
obligations under this Agreement.

        6.4     Other Agreements.

                (a)     Technology Transition Assistance. On the Closing Date,
Sellers shall execute
the Transition Services Agreement, in the form of which is attached hereto as
Exhibit D (the "Transition Services Agreement").

                (b)     Independent Contractor Consultant Agreement. Robert
Dunphy  shall  have  executed  the  consulting  agreement,  the form of which is
attached hereto as Exhibit E.

                (c)     "Key Man" Insurance. Sellers agree to cooperate with
Buyer and make themselves  available for medical examinations or otherwise so as
to permit Buyer to apply for policies of insurance on each of the Sellers  which
policies shall terminate or be terminated when the Transition Services Agreement
terminates.

                (d)     Covenants Not To Compete Or Solicit. Except when acting
as an officer,  employee or  consultant to the Company or with the prior written
consent of the Company,  for a period of three (3) years from the Closing  Date,
each Seller  agrees,  that unless he obtains the prior written  consent of Buyer
and the  Company,  he will not,  for his own  account or as an agent,  employee,
officer, director, trustee, consultant or member, partner,  shareholder or other
equity holder of any  corporation,  firm,  company,  partnership or other entity
(other  than  as an  owner  of 5% or  less  of  any  class  of  publicly  traded
securities):

                        (i)     design, develop, manufacture, offer or sell
anywhere in the world (the  "Territory")  any software product that makes use of
any image capture device or method and which then performs any of or more of the
following actions:  locates or captures or reads or decodes or inspects any code
(including, but not limited to a bar code or a 2D code or any alphanumeric code)
that exists on a label or on the surface of any item;

                        (ii)    design, develop, manufacture, offer or sell in
the Territory  any product that makes use of any image capture  device or method
and  which  then  performs  any of or more of the  following  actions:  locates,
identifies, inspects or dimensions any tangible item;

                        (iii)   design, develop, manufacture, offer or sell in
the Territory any device that performs any one or more of the following actions:
locates or captures or reads or decodes or inspects any code (including, but not
limited  to a bar code or 2D code or any  alphanumeric  code)  that  exists on a
label or on the surface of any item;

                        (iv)    divulge, communicate, use or disclose any
nonpublic information  concerning the Company, Buyer or any of their Affiliates,
their  personnel,  business  and  affairs  of which  Seller is aware;  provided,
however,  that such information shall not include any information  which: (i) is
or becomes  publicly known through no wrongful act of the Sellers,  (ii) becomes
known or  available  without  restriction  to the  Sellers  from a third  party,
without  breach of this  Agreement  by the  Sellers,  or (iii) is required to be
disclosed  by the  Sellers  pursuant  to  applicable  law,  regulation  or legal
process;
<page>
                        (v)     interfere with the business relationships or
disparage  the good name or reputation  of the Company,  Buyer,  or any of their
Affiliates  or take any action which  brings the Company,  Buyer or any of their
Affiliates or its business into public ridicule or disrepute;

                        (vi)    solicit or accept any business competitive with
the Business from customers or suppliers of the Company,  or request,  induce or
advise  customers or  suppliers  of the Company to  withdraw,  curtail or cancel
their business with the Company;

                        (vii)   solicit for employment or employ any present or
future employee of the Company,  Buyer or any of their  Affiliates,  or request,
induce or advise any employee to leave the employ of the  Company,  Buyer or any
of their  Affiliates;  provided,  however,  that nothing  contained herein shall
prohibit a Seller who is not then  employed by the Company from  soliciting  for
employment or employing (or otherwise entering into a business  collaboration or
other  arrangement  with) another Seller who is not then employed by the Company
provided   such   employment   does  not  violate  the   provisions  of  Section
6.4(d)(i)-(vi); or

                        (viii)  use or disclose the names and/or addresses of
any customer, supplier or employee of the Company to any Person, with respect to
any commercial or business activities which compete directly in whole or in part
with the Business.

                (e)     The parties agree and acknowledge that the duration,
scope and geographic areas  applicable to the covenant not to compete  described
in Section 6.4(c) are fair, reasonable and necessary, that adequate compensation
has  been  received  by  the  Sellers  for  such  obligations,  and  that  these
obligations do not prevent the Sellers from earning a livelihood.  If,  however,
for any reason any court  determines that the restrictions in Section 6.4(c) are
not reasonable,  that  consideration is inadequate or that the Sellers have been
prevented  from  earning  a  livelihood  and  therefore  the   restrictions  are
unenforceable,  such restrictions shall be interpreted, modified or rewritten to
include as much of the duration, scope and geographic area identified in Section
6.4(c) as will render such restrictions valid and enforceable.

                (f)     The Sellers acknowledge that they have carefully read
and  considered  the  terms of this  Agreement.  The  Sellers  hereby  waive any
requirement of proof that such breach will cause serious or  irreparable  injury
to  Buyer or the  Company,  or that  there is an  adequate  remedy  at law.  The
existence of any claim or cause of action of the Sellers  against  Buyer and the
Company or any of their  Affiliates,  whether or not  predicated on the terms of
this  Agreement,  shall not  constitute  a  defense  to the  enforcement  of the
Sellers'  obligations  under this Agreement.  All costs and expenses,  including
court costs and  reasonable  attorneys'  fees incurred or paid by the prevailing
party in protecting or enforcing its rights and remedies hereunder shall be paid
by the non-prevailing party or parties.

                (g)     During the period of time Section 6.4(c) is in effect,
neither Buyer nor the Company will  disparage the good name or reputation of any
Seller or take any action  which  brings  any Seller  into  public  ridicule  or
disrepute;  provided,  however,  that this  subsection  shall in no way limit or
restrict Buyer's or the Company's ability to enforce the terms of this Agreement
or the obligations of any Seller hereunder.

                (h)     Waiver of Recourse. The Sellers undertake (if any claim
is made against him in  connection  with the sale of the Shares to Buyer and the
transactions  contemplated  by this Agreement) not to make any claim against the
Company or any past or  present  director  or  employee  of the  Company on whom
Sellers may have relied before agreeing to any of the terms of this Agreement.

                (i)     Assignments. The Sellers will use their best efforts to
secure and obtain any assignments of Company  Intellectual  Property Rights that
Buyer, in its reasonable  business judgment believes are necessary to fully vest
all such rights in the Company.

                (j)     Confidentiality. Except as may be required by law, or
as  expressly  consented  to by  Buyer,  no party  hereto  or  their  respective
Affiliates,  employees, agents and representatives (including the Company) shall
disclose to any third party this  Agreement,  the subject matter or terms hereof
or any confidential  information or other proprietary  knowledge  concerning the
business  or affairs of any other  party  which it may have  acquired  from such
party in the course of pursuing the transactions  contemplated by this Agreement
or use or knowingly  permit the use of such  confidential  information  or other
proprietary  knowledge  for any  purpose  other  than  in  connection  with  the
transactions  contemplated hereby without the prior consent of the other parties
hereto;  provided,  that any information that is otherwise  publicly  available,
without  breach  of this  provision,  or has been  obtained  from a third  party
without a breach of such third party's duties,  shall not be deemed confidential
information.
<page>
                (k)     Parent Guaranty. To induce Sellers to execute and
deliver this  Agreement,  Metrologic  Instruments,  Inc.,  the parent company of
Buyer ("Metrologic"),  hereby absolutely and unconditionally guarantees the full
and prompt  payments  by Buyer of the  Consideration  set forth in Section 3; it
being  understood that each  obligation to pay any such payment  constitutes the
direct  and  primary   obligation  of  Metrologic.   Metrologic   hereby  waives
presentment,  demand  of  payment,  protest,  dishonor,  notice  of  protest  or
dishonor, and notice of acceptance of the guaranty set forth in this Section and
all rights to require  Sellers to  proceed  against  Buyer.  In the event of the
merger, acquisition,  termination, liquidation or dissolution of Buyer after the
Closing Date, this  unconditional  guaranty by Metrologic shall continue in full
force and effect until the Consideration is fully paid.

7.      Conditions.

        7.1     Conditions Precedent to Each Party's Obligation to Close. The
respective   obligations  of  each  party  hereto  to  effect  the  transactions
contemplated   by  this  Agreement  shall  be  subject  to  the  fulfillment  or
satisfaction, prior to or on the Closing Date of the following conditions:

                (a)     Approvals. All authorizations, consents, orders,
declarations or approvals of, or filings with, or terminations or expirations of
waiting periods imposed by, any governmental or regulatory  authority,  domestic
or foreign,  which the failure to obtain, make or occur would have the effect of
making  any of the  transactions  contemplated  hereby  illegal  or would have a
Material Adverse Effect on Buyer or the Company, shall have been obtained,  made
or occurred.

                (b)     No Injunction. No action or proceeding shall have been
commenced  seeking any temporary  restraining  order,  preliminary  or permanent
injunction  or other order from any court of competent  jurisdiction  or seeking
any other legal restraint or prohibition  preventing the  consummation of any of
the  transactions  contemplated  hereunder other than any of the foregoing which
shall have been dismissed with prejudice.

        7.2     Conditions Precedent to Obligations of Buyer. All obligations
of Buyer under this Agreement are subject to the  fulfillment  or  satisfaction,
prior to or on the Closing Date, of each of the following conditions precedent:

                (a)     Performance of Obligations; Representations and
Warranties.  The Sellers  shall have  performed  and  complied  in all  material
respects with all agreements and conditions contained in this Agreement that are
required to be  performed  or complied  with by them prior to or at the Closing.
Sellers' representations and warranties contained in Section 3 of this Agreement
shall be true and correct.

                (b)     Resignations. The Company shall have delivered to Buyer
the written  resignation of each director,  officer and employee of the Company,
each of which is listed on Schedule 7.2(b).

                (c)     Company Projections. The Company shall have provided
Buyer with good faith  projections  for the  expected  financial  results of the
Company through its 2006 fiscal year.

                (d)     No Material Adverse Change. Since June 30, 2004, there
shall have been no material  adverse change in the assets,  Business,  financial
condition,  operations  or prospects of the Company and no event or events shall
have  occurred  that could  reasonably  be expected  to have a Material  Adverse
Effect on the Company and Buyer shall have received a certificate signed by each
Seller to such effect.

                (e)     Certificates. Sellers will furnish Buyer with such
certificates  to  evidence  compliance  with the  conditions  set  forth in this
Section 7.2 as may be reasonably requested by Buyer.

                (f)     Corporate Documents. Buyer shall have received from
Sellers  resolutions  adopted by the board of directors and  shareholders of the
Company  approving  this  Agreement  and the  transactions  contemplated  hereby
certified  by the  President  of the  Company.  Buyer shall have  received  from
Sellers  a  certificate  of  good  standing  of the  Company  and a copy  of the
Certificate  of  Incorporation,  each certified by the Secretary of the State of
New Jersey, dated within seven (7) business days prior to the Closing Date.

                (g)     Consents. The Company shall have received all necessary
consents,  or waivers,  in form and substance  satisfactory  to Buyer,  from the
other  parties (i) to each contract or agreement  listed on Schedule  7.2(g) and
(ii) all other contracts,  leases or agreements to which the Company is a party,
except,  in the case of any consents  required under clause (ii) of this Section
7.2(g),  where the  failure to receive  such  consent  would not  reasonably  be
expected, individually or in the aggregate, to have a Material Adverse Effect on
the Company.
<page>
                (h)     Share Transfer. Each Seller shall have duly executed
and witnessed "stock power" or assignment separate from certificate  pursuant to
which such Seller shall transfer his Shares in the Company to Buyer.

                (i)     Opinion. Buyer shall have received the opinion of
Morgan Lewis & Bockius, LLP, counsel to the Sellers, in the form attached hereto
as Exhibit B.

        7.3     Conditions Precedent to Obligations of Sellers. All obligations
of Sellers under this Agreement are subject to the fulfillment or  satisfaction,
prior to or on the Closing Date, of each of the following conditions precedent:

                (a)     Performance of Obligations; Representations and
Warranties.  Buyer shall have  performed  and complied in all material  respects
with all agreements and conditions contained in this Agreement that are required
to be performed or complied with by them prior to or at the Closing. Each of the
representations and warranties of Buyer contained in Section 5 of this Agreement
shall be true and correct.

                (b)     Consent. All consents, approvals and waivers necessary
to permit Sellers to transfer the Shares to Buyer as  contemplated  hereby shall
have been obtained,  unless the failure to obtain any such consent,  approval or
waiver would not have a Material Adverse Effect upon Sellers.

                (c)     Certificates. Buyer will furnish Sellers with such
certificates  of its  officers  and  others  to  evidence  compliance  with  the
conditions  set forth in this  Section  7.3 as may be  reasonable  requested  by
Sellers.

                (d)     Corporate Documents. Sellers shall have received from
Buyer (a) resolutions adopted by the board of directions of Buyer approving this
Agreement  and  the  transactions  contemplated  hereby,  and  (b) a list of the
officers of Buyer  executing  this  Agreement  and any  agreement  contemplated,
certified by the Secretary or an Assistant  Secretary of Buyer,  evidencing  the
authority of the officer executing this Agreement on behalf of Buyer.

                (e)     Purchase Price. Buyer shall have, concurrently with the
Closing, paid the Closing Date Consideration to Sellers.

                (f)     Opinion. The Sellers shall have received the opinion of
Ballard  Spahr  Andrews &  Ingersoll,  LLP,  counsel to the  Buyer,  in the form
attached hereto as Exhibit C.

8.      Survival of Representations and Warranties.

        8.1     Representations and Warranties. The representations and
warranties of Sellers contained in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive for eighteen (18) months  following the
Closing  Date,  except that the  representations  and  warranties  contained  in
Sections  4.18,  4.19  and  4.20  shall  survive  until  the  expiration  of the
applicable  statute  of  limitations  and  the  representations  and  warranties
contained in Sections 4.1, 4.2 and 4.3 shall survive the closing in  perpetuity.
This Section 8.1 shall not limit any covenant or agreement by the parties  which
contemplates performance after the Closing Date.

9.      Indemnification.

        9.1     Limitation of Liability.

                (a)     The aggregate liability of the Sellers for the sum of
all  Damages  under this  Section 9 shall (i) for the period  commencing  on the
Closing  Date and  ending on the 18 month  anniversary  of the  Closing  Date be
limited to the unpaid  portion(s)  of the  Consideration  then  outstanding  (in
accordance with the payment schedules set forth in Sections  3(b)-(d)) as of the
date of the Buyer Notice (as  hereinafter  defined) and (ii) after such 18 month
anniversary  of the  Closing  Date be limited to ten (10%) of the  Consideration
(such  limitation  is being  referred  to as the "Cap").  The Cap,  which may be
recovered  severally  from  the  Sellers  (and for  purposes  of  clarity,  each
individual  Seller's  Cap  shall  be  their  percentage  of  the  aggregate  Cap
determined  based on the proportion of the  Consideration to be received by such
Seller as compared to the total  Consideration  to be received by all  Sellers),
shall be the sole and exclusive  remedy  available to  compensate  Buyer for the
indemnification  obligations  of each Seller with  respect to this Section 9 and
all other claims that arise relating to the subject matter of this Agreement and
the transactions  contemplated hereby, except for any claim of fraud or a breach
of any covenant under Sections 6.4(a), (d) or (j) of this Agreement.
<page>
                (b)     Notwithstanding the foregoing, (i) with respect to any
claim by Buyer for  indemnification  under  Sections  9.2(a) (i) (other than any
claim by Buyer for any  inaccuracy in Section 4.1, 4.2 or 4.3, fraud on the part
of any Seller or the breach of any covenant under Sections 6.4(a), (d) or (j) of
this Agreement by any Seller),  Buyer may not seek  indemnification with respect
to any claim for Damages until the sum of all Damages for which Buyer is seeking
indemnification   thereunder  equals  or  exceeds  $150,000  (the  "Threshold"),
whereupon  Buyer shall be entitled to seek  indemnification  with respect to all
such Damages  (subject to the limitations set forth in this Section 9) exceeding
the  Threshold  and (ii) to the  extent  that an  individual  Seller  breaches a
covenant in this Agreement (the  "Breaching  Seller"),  Buyer shall look only to
such  Breaching  Seller for any claims and  Damages to which  Buyer is  entitled
under this Agreement resulting from such breach and the other Sellers shall have
no  liability  whatsoever  with  respect  to any  claims  or  damages  resulting
therefrom.

        9.2     General Indemnification.

                (a)     Subject to the limitations set forth in this Section 9,
Sellers will  severally  indemnify and hold harmless  Buyer,  its Affiliates and
each Person, if any, who controls or may control Buyer within the meaning of the
Securities  Act of 1933 (and the rules and  regulations  thereunder),  and their
respective  officers,  directors,  employees,  agents  and  advisors  (each such
indemnitee  being  referred  to herein  as an  "Indemnified  Person"),  from and
against  any  and  all  losses,   costs,  damages,   liabilities,   obligations,
impositions,  inspections, assessments, fines, deficiencies and expenses arising
from claims, demands, actions, causes of action, including,  without limitation,
reasonable  legal  fees  (collectively,  "Damages"),  arising  out  of  (i)  any
inaccuracy in any  representation  or warranty made by Sellers in this Agreement
or in any Schedule to this Agreement,  and (ii) any breach or default by Sellers
of any of the  covenants  or  agreements  given  or  made by any of them in this
Agreement,  any  Schedule  to  this  Agreement  or in  the  Transition  Services
Agreement.  The  Sellers  hereby  waive any right to  contribution  or any other
similar  right they may have  against  the  Company as a result of  agreeing  to
indemnify Buyer as set forth in this Section 9. All indemnification  obligations
of Sellers shall be deemed made in favor of and shall include  Damages  incurred
by, Buyer, the Company and their respective  Affiliates,  successors and assigns
and the respective officers and directors of each of the foregoing.

                (b)     Buyer and Sellers each acknowledge that any payment
pursuant  to this  Section  9 shall  be  treated  by the  parties  hereto  as an
adjustment to the Consideration for all applicable Tax purposes.

        9.3     Claims.

                (a)     Upon receipt by Sellers' Representative of a
certificate  signed by any  officer of Buyer (a "Buyer  Notice")  specifying  in
reasonable  detail the nature of the claim,  including an estimate of the amount
of Damages that have been or may be suffered by the Buyer  attributable  to such
claim and the basis of the Buyer's request for  indemnification  under Section 9
of this  Agreement,  Buyer may  (subject to Section  9.4) for the account of the
Seller recover the amount severally from the Sellers.

                (b)     In the event Buyer shall make any claim upon and
recover any funds from Sellers and thereafter  shall recover any proceeds of any
insurance   in  respect  of  such  claim,   Buyer  shall   deliver  to  Sellers'
Representative  the  amount  of  such  insurance  proceeds  less  any  costs  of
collections.

        9.4     Objections to Claims.

                (a)     If Sellers' Representative shall object to a Buyer
Notice  within the ten (10) day period  after  receipt  thereof,  then Buyer and
Sellers'  Representative  shall use their  good faith  efforts  to resolve  such
dispute.  If Buyer and  Sellers'  Representative  resolve  such  dispute and the
resolution is in Buyer's favor, the Buyer may recover the Damages severally from
the Sellers.

                (b)     If Buyer and Sellers' Representative are unable to
resolve  such  dispute  within  thirty (30) days after  Sellers'  Representative
objects to such Buyer Notice, either Buyer or Sellers' Representative may demand
arbitration of such dispute.  Any such arbitration shall be conducted before the
American  Arbitration  Association  ("AAA"). The AAA shall select one arbitrator
reasonably  acceptable  to Buyer  and  Sellers'  Representative  who shall be an
attorney expert in the area of contract disputes. The decision by the arbitrator
shall be binding and conclusive  and,  notwithstanding  any other  provisions of
this Section 9, Buyer and the Sellers'  Representative  shall be entitled to act
in accordance with such decision.
<page>
                (c)     The arbitration shall be held in Princeton, New Jersey.
The costs of any such  arbitration  shall be borne  one-half  for the account of
Buyer  and  one-half  by  Sellers.  Judgment  upon  any  award  rendered  by the
arbitrator may be entered in any court of competent jurisdiction.

        9.5     Third-Party Claims. In the event Buyer becomes aware of a
third-party  claim which Buyer believes may result in a demand  pursuant to this
Section 9, Buyer shall promptly  notify Sellers'  Representative  of such claim;
provided,  however,  that no  delay on the part of the  Buyer in  notifying  the
Sellers'  Representative shall relieve the Sellers from any obligation hereunder
unless (and then solely to the  extent)  the  Sellers are  actually  prejudiced.
Sellers'  Representative  shall be  entitled,  at  Sellers'  expense,  to retain
co-counsel (unless the co-counsel has a conflict to represent all the Sellers at
the same time) and to participate in any defense of such claim;  provided,  that
Buyer shall control such  defense,  and shall have the right with the consent of
Sellers'  Representative  (which consent shall not be unreasonably  withheld, it
being understood that the withholding of such consent by Sellers' Representative
shall not be unreasonable if Sellers' payment  obligations under such settlement
would exceed its indemnification  obligations under this Section 9 to settle any
such claim) to settle  such claim;  provided  further,  that no such  consent of
Sellers'  Representative  shall be required  where the  third-party  claim which
Buyer  proposes  to settle  involves  the  business  reputation  of Buyer or its
Affiliates, or the possible criminal liability of Buyer or its Affiliates or any
of their respective officers, directors or employees. In the event that Sellers'
Representative has consented to any such settlement, Sellers shall have no power
or authority  to object  under any  provision of this Section 9 to the amount of
any claim by Buyer for indemnity with respect to such settlement.

        9.6     Sellers' Representative.

                (a)     Eric Batterman is hereby appointed as representative
(the "Sellers' Representative") for and on behalf of Sellers to take all actions
necessary  or  appropriate  in the judgment of Sellers'  Representative  for the
accomplishment  of the terms of this  Agreement.  The  holders of a majority  in
interest of the Shares may replace  Sellers'  Representative  upon not less than
ten (10) days'  prior  written  notice to Buyer.  No bond shall be  required  of
Sellers'   Representative   and  Sellers'   Representative   shall   receive  no
compensation  for his services.  Notices of  communications  to or from Sellers'
Representative  shall  constitute  notice  to or from each of  Sellers.  If Eric
Batterman  dies or is  otherwise  no longer able or willing to serve as Sellers'
Representative,  Donald  Chandler  shall  be  automatically  deemed  to  be  the
replacement Sellers' Representative.

                (b)     Sellers' Representative shall not be liable for any act
done or omitted in such capacity  while acting in good faith and in the exercise
of reasonable  judgment,  and any act done or omitted  pursuant to the advise of
counsel shall be conclusive evidence of such good faith. Sellers shall severally
indemnify  Sellers'  Representative  and hold him  harmless  against  any  loss,
liability or expense  incurred without gross negligence or bad faith on the part
of  Sellers'  Representative  and  arising  out  of or in  connection  with  the
acceptance or administration of his duties hereunder.

                (c)     Any decision, act, consent or instruction of Sellers'
Representative  shall  constitute a decision of all and shall be final,  binding
and  conclusive  upon every  Seller and Buyer may rely upon any  decision,  act,
consent or instruction of each and every Seller.  Buyer is hereby  relieved from
any  liability  to any  Person  for acts  done by them in  accordance  with such
decision, act, consent or instruction of Sellers' Representative.

        9.7     Access. In connection with any indemnification claim, Buyer
shall give Sellers' Representative  reasonable access to the books, records, and
assets of the Company  which relate to the act,  omission or  occurrence  giving
rise  to  such  Damages  and the  right,  upon  prior  notice,  and at  mutually
acceptable  times during normal  business  hours,  to interview any  appropriate
personnel  of the Company with respect  thereto and Buyer shall  cooperate  with
Sellers' Representative in defending any third party claim.

10.     Set -off. Subject to Section 9.1(a), Buyer shall be entitled to recover
any  indemnification  payments due in accordance  with Section 9 only by setting
off such amount  against  any amount due from Buyer to the  Sellers  pursuant to
Section 3. In the event  that Buyer  exercises  its  set-off  right and is later
determined (through arbitration,  settlement or otherwise) not to be entitled to
indemnification for the set-off amount,  Buyer shall promptly pay such amount to
Sellers  (which shall be  proportionally  divided among the  individual  Sellers
based on the number of Shares held by such  Seller as of the Closing  Date) plus
interest  at the prime rate (as  reported in the Wall  Street  Journal,  Eastern
Edition) plus two hundred basis points from the date the set-off payment was due
to the paid pursuant to Section 3.
<page>
11.     Expenses; Taxes. Each party hereto shall pay its own expenses incidental
to the preparation of this Agreement, the carrying out of the provisions of this
Agreement and the  consummation of the  transactions  contemplated  hereby.  Any
sales,  use, stamp or transfer taxes, and any other filing or recording fees, if
any, which may be payable with respect to the  consummation of the  transactions
contemplated  hereby shall be payable by the party  prescribed by applicable law
or regulation as primarily liable.

12.     Press Releases. Except as required by law or Buyer's listing agreement
with the NASDAQ National  Market,  neither Buyer, the Company nor any of Sellers
shall issue any press  release or  otherwise  make public any  information  with
respect to this Agreement nor the transactions  contemplated  hereby without the
prior written consent of the other parties to this Agreement.

13.     Contents of Agreement; Parties in Interest; etc. This Agreement and the
agreements referred to or contemplated herein set forth the entire understanding
of the parties hereto with respect to the transactions contemplated hereby, and,
except as set forth in this Agreement, and such other agreements and the
Schedules hereto, there are no representations or warranties, express or
implied, made by any party to this Agreement with respect to the subject matter
of this Agreement. Any and all previous agreements and understandings between or
among the parties regarding the subject matter hereof, whether written or oral,
are superseded by this Agreement and the agreements referred to or contemplated
herein.

14.    Assignment and Binding Effect. This Agreement may not be assigned by
either  party hereto  without the prior  written  consent of the other  parties;
provided,  that Buyer may assign its rights and obligations under this Agreement
to any directly or indirectly  wholly-owned  Subsidiary  of Buyer,  upon written
notice to the Company if the  assignee  shall  assume the  obligations  of Buyer
hereunder and Buyer shall remain liable for its obligations  hereunder.  All the
terms and  provisions of this  Agreement  shall be binding upon and inure to the
benefit of and be enforceable  by the  respective  successors and assigns of the
parties hereto.

15.     Notices. Any notice, request, demand, waiver, consent, approval, or
other  communication  which is  required or  permitted  to be given to any party
hereunder  shall be in writing and shall be deemed given only if hand  delivered
at the  address  specified  below or sent by  facsimile  transmission  (promptly
followed  by a  hard-copy  delivered  in  accordance  with this  Section  15) by
overnight   delivery  or  by  registered  or  certified  mail  (return   receipt
requested), with postage and registration or certification fees thereon prepaid,
addressed to the party at its address set forth below:

                  If to Buyer:

                  MTLG Investments, Inc.
                  90 Coles Road
                  Blackwood, New Jersey 08012
                  Attention:  Nancy A. Smith, Vice President and General Counsel
                  Facsimile: (856) 228-0653

                  with a copy to:

                  Ballard Spahr Andrews & Ingersoll, LLP
                  1735 Market Street, 51st Floor
                  Philadelphia, PA 19103
                  Attention: Justin P. Klein, Esq.
                  Facsimile: (215) 864-8999

                  If to the Sellers' Representative

                  Eric Batterman
                  c/o Omniplanar, Inc.
                  14 Washington Road, Building 1
                  Princeton Junction, New Jersey 08550
                  Facsimile: (609) 275-9474

                  with a copy to:

                  Morgan, Lewis & Bockius LLP
                  502 Carnegie Center
                  Princeton, New Jersey 08540
                  Attention:  Steven M. Cohen, Esq.
                  Facsimile: (609) 919-6701

or to such other address or Person as any party may have specified in a notice
duly given to the other party as provided herein. Such notice, request, demand,
waiver, consent, approval or other communication will be deemed to have been
given as of the date so delivered, telegraphed or mailed.
<page>
16.     Amendment. This Agreement may be amended, modified or supplemented at
any time prior to the Closing Date by mutual agreement of the Buyer and Sellers'
Representative.  Any amendment,  modification  or revision of this Agreement and
any waiver of compliance or consent with respect  hereto shall be effective only
if in a written instrument executed by the parties hereto.

17.     Governing Law. This Agreement shall be governed by and interpreted and
enforced in accordance with the laws of the State of New Jersey as applied to
contracts made and fully performed in such state.

18.     No Benefit to Others. The representations, warranties, covenants and
agreements contained in this Agreement are for the sole benefit of the parties
hereto, and their respective successors and assigns, and they shall not be
construed as conferring, and are not intended to confer, any rights on any other
Person.

19.     Severability. If any term or other provision of this Agreement is
determined to be invalid,  illegal or incapable of being enforced by any rule of
law or public  policy,  all other terms and  provisions of the  Agreement  shall
remain in full force and effect.  Upon such  determination,  the parties  hereto
shall  negotiate in good faith to modify this  Agreement so as to give effect to
the original intent of the parties to the fullest extent permitted by applicable
law.

20.     Section Headings. All section headings are for convenience only and
shall in no way modify or restrict any of the terms or provisions hereof.

21.     Schedules and Exhibit. All Schedules and Exhibit referred to herein are
intended to be and hereby are specifically made a part of this Agreement. The
Schedules and Exhibit referred to herein are intended to be and hereby are
specifically made a part of this Agreement.

22.     Counterparts. This Agreement may be executed by facsimile and in two or
more  counterparts,  each of which shall be deemed an original,  and Sellers and
Buyer may become a party hereto by executing a counterpart to this Agreement and
any counterpart so executed shall be deemed to be one and the same instrument.

                            [Signature Page Follows]



<PAGE>

         IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have duly executed this Agreement as of the date first above written.

                                                     MTLG INVESTMENTS, INC.


                                        By:   /s/Benny A. Noens
                                      Name:   Benny A. Noens
                                     Title:   President

                                    SELLERS:


                                                           /s/Eric Batterman
                                                           ------------------
                                                     Name: Eric Batterman


                                                           /s/Donald Chandler
                                                           ------------------
                                                     Name: Donald Chandler


                                                           /s/Robert Dunphy
                                                           ------------------
                                                     Name: Robert Dunphy


         IN WITNESS WHEREOF, the undersigned, intending to be legally bound
hereby, has duly executed this Agreement as of the date first above written for
purpose of Section 6.4(k) of this Agreement.

                                                METROLOGIC INSTRUMENTS, INC.


                                        By:   /s/Benny Noens
                                      Name:   Benny A. Noens
                                     Title:   Chief Executive Officer

<page>
Exhibit 31.1

                                 CERTIFICATIONS


I, Benny Noens, certify that:

        1.      I have reviewed this quarterly report on Form 10-Q of Metrologic
                Instruments, Inc.;

        2.      Based on my knowledge, this report does not contain any untrue
                statement of a material fact or omit to state a material fact
                necessary to make the statements made, in light of the
                circumstances under which such statements were made, not
                misleading with respect to the period covered by this report;

        3.      Based on my knowledge, the financial statements, and other
                financial information included in this report, fairly present in
                all material respects the financial condition, results of
                operations and cash flows of the registrant as of, and for, the
                periods presented in this report;

        4.      The registrant's other certifying officer and I are responsible
                for establishing and maintaining disclosure controls and
                procedures (as defined in Exchange Act Rules 13a-15(e) and
                15d-15(e)) for the registrant and we have:

                (a)     designed such disclosure controls and procedures, or
                        caused such disclosure controls and procedures to be
                        designed under our supervision, to ensure that material
                        information relating to the registrant, including its
                        consolidated subsidiaries, is made known to us by others
                        within those entities, particularly during the period in
                        which this report is being prepared;
                (b)     evaluated the effectiveness of the registrant's
                        disclosure controls and procedures and presented in this
                        report our conclusions about the effectiveness of the
                        disclosure controls and procedures, as of the end of the
                        period covered by this report based on such evaluation;
                        and
                (c)     disclosed in this report any change in the registrant's
                        internal control over financial reporting that occurred
                        during the registrant's most recent fiscal quarter that
                        has materially affected, or is reasonably likely to
                        materially affect, the registrant's internal control
                        over financial reporting; and

        5.      The registrant's other certifying officer and I have disclosed,
                based on our most recent evaluation of internal control over
                financial reporting, to the registrant's auditors and the audit
                committee of registrant's board of directors (or persons
                performing the equivalent functions):

                (a)     all significant deficiencies and material weaknesses in
                        the design or operation of internal control over
                        financial reporting which are reasonably likely to
                        adversely affect the registrant's ability to record,
                        process, summarize and report financial information; and
                (b)     any fraud, whether or not material, that involves
                        management or other employees who have a significant
                        role in the registrant's internal control over financial
                        reporting.




Date: November 12, 2004                     /s/ Benny Noens
                                            ----------------------------------
                                            By: Benny Noens
                                            Chief Executive Officer and
                                            President


<PAGE>



Exhibit 31.2
                                 CERTIFICATIONS


I, Kevin J. Bratton, certify that:




        1.      I have reviewed this quarterly report on Form 10-Q of Metrologic
                Instruments, Inc.;

        2.      Based on my knowledge, this report does not contain any untrue
                statement of a material fact or omit to state a material fact
                necessary to make the statements made, in light of the
                circumstances under which such statements were made, not
                misleading with respect to the period covered by this report;

        3.      Based on my knowledge, the financial statements, and other
                financial information included in this report, fairly present in
                all material respects the financial condition, results of
                operations and cash flows of the registrant as of, and for, the
                periods presented in this report;

        4.      The registrant's other certifying officer and I are responsible
                for establishing and maintaining disclosure controls and
                procedures (as defined in Exchange Act Rules 13a-15(e) and
                15d-15(e)) for the registrant and we have:

                (a)     designed such disclosure controls and procedures, or
                        caused such disclosure controls and procedures to be
                        designed under our supervision, to ensure that material
                        information relating to the registrant, including its
                        consolidated subsidiaries, is made known to us by others
                        within those entities, particularly during the period in
                        which this report is being prepared;
                (b)     evaluated the effectiveness of the registrant's
                        disclosure controls and procedures and presented in this
                        report our conclusions about the effectiveness of the
                        disclosure controls and procedures, as of the end of the
                        period covered by this report based on such evaluation;
                        and
                (c)     disclosed in this report any change in the registrant's
                        internal control over financial reporting that occurred
                        during the registrant's most recent fiscal quarter that
                        has materially affected, or is reasonably likely to
                        materially affect, the registrant's internal control
                        over financial reporting; and

        5.      The registrant's other certifying officer and I have disclosed,
                based on our most recent evaluation of internal control over
                financial reporting, to the registrant's auditors and the audit
                committee of registrant's board of directors (or persons
                performing the equivalent functions):

                (a)     all significant deficiencies and material weaknesses in
                        the design or operation of internal control over
                        financial reporting which are reasonably likely to
                        adversely affect the registrant's ability to record,
                        process, summarize and report financial information; and
                (b)     any fraud, whether or not material, that involves
                        management or other employees who have a significant
                        role in the registrant's internal control over financial
                        reporting.




Date: November 12, 2004                     /s/ Kevin J. Bratton
                                            ----------------------------------
                                            By: Kevin J. Bratton
                                            Chief Financial Officer




<page>
EXHIBIT 32.1



                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

                  In connection with the Quarterly Report of Metrologic
Instruments, Inc. (the "Company") on Form 10-Q for the period ending September
30, 2004 as filed with the Securities and Exchange Commission on the date
hereof (the "Report"), I, Benny Noens, Chief Executive Officer and President of
the  Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to
ss. 906 of the Sarbanes-Oxley Act of 2002, that:

        1. The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and

        2. The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.


/s/ Benny Noens
------------------------------------
By: Benny Noens
Chief Executive Officer and President
November 12, 2004


A signed original of this written statement required by Section 906, or other
document authenticating, acknowledging, or otherwise adopting the signature that
appears in typed form within the electronic version of this written statement
required by Section 906, has been provided to Metrologic Instruments, Inc. and
will be retained by Metrologic Instruments, Inc. and furnished to the Securities
and Exchange Commission or its staff upon request.



<PAGE>



EXHIBIT 32.2


                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

                  In connection with the Quarterly Report of Metrologic
Instruments, Inc. (the "Company") on Form 10-Q for the period ending September
30, 2004 as filed with the Securities and Exchange Commission on the date
hereof (the "Report"), I, Kevin J. Bratton, Chief Financial Officer of the
Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss.
906 of the Sarbanes-Oxley Act of 2002, that:

        1. The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and

        2. The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.


/s/ Kevin J. Bratton
------------------------------------
By: Kevin J. Bratton
Chief Financial Officer
November 12, 2004


A signed original of this written statement required by Section 906, or other
document authenticating, acknowledging, or otherwise adopting the signature that
appears in typed form within the electronic version of this written statement
required by Section 906, has been provided to Metrologic Instruments, Inc. and
will be retained by Metrologic Instruments, Inc. and furnished to the Securities
and Exchange Commission or its staff upon request.