CUSTOMEDIX CORP, SC 13E3/A, 1996-08-16

CUSTOMEDIX CORP
SC 13E3/A, 1996-08-16
DENTAL EQUIPMENT & SUPPLIES

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<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________

SCHEDULE 13E-3/A
RULE 13e-3 TRANSACTION STATEMENT
(PURSUANT TO SECTION 13(e) OF THE SECURITIES EXCHANGE ACT OF 1934)

AMENDMENT NO. 2

CUSTOMEDIX CORPORATION
(NAME OF THE ISSUER)

CUSTOMEDIX CORPORATION
CUS ACQUISITION, INC.

DR. GORDON S. COHEN
COHEN FAMILY TRUST PARTNERSHIP

(NAME OF PERSON(S) FILING STATEMENT)

COMMON STOCK, PAR VALUE $.01 PER SHARE
(TITLE OF CLASS OF SECURITIES)
__________

232038 20 8
(CUSIP NUMBER OF CLASS OF SECURITIES)
_______________

<TABLE>

<S> <C>
Mr. Martin L. Schulman Dr. Gordon S. Cohen
President President
Customedix Corporation CUS Acquisition, Inc.
53 North Plains Industrial Road 53 North Plains Industrial Road
Wallingford, Connecticut 06492 Wallingford, Connecticut 06492
(203) 284-9079 (203) 269-5534

Dr. Gordon S. Cohen Dr. Gordon S. Cohen
c/o Customedix Corporation Managing Partner
53 North Plains Industrial Road The Cohen Family Trust Partnership
Wallingford, Connecticut 06492 3 Silo Hill
(203) 284-9079 Madison, Connecticut 06443
</TABLE>

(NAMES, ADDRESSES AND TELEPHONE NUMBERS OF PERSONS AUTHORIZED TO
RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF PERSON(S) FILING STATEMENT)

This statement is filed in connection with (check the appropriate box):
(a) /X/ The filing of solicitation materials or an information
statement subject to Regulation 14A, Regulation 14C, or Rule 13e-3(c)
under the Securities Exchange Act of 1934.

(b) / / The filing of a registration statement under the Securities Act of 1933.
(c) / / A tender offer.
(d) / / None of the above.
Check the following box if soliciting materials or information statement
referred to in checking box (a) are preliminary copies: /X/
_______________

CALCULATION OF FILING FEE

================================================================================
TRANSACTION VALUATION AMOUNT OF FILING FEE
$3,829,910.75* $ 765.98
================================================================================

* Solely for purposes of calculating the filing fee, the
transaction value assumes the purchase of up to 1,612,594 shares
of Common Stock held by stockholders of the Company other than
1,683,292 shares of Common Stock to be held by CUS Acquisition,
Inc. (the number of shares proposed to be acquired in the
transaction that is the subject of this Statement), at a
purchase price of $2.375 per share, without interest. The amount
of the filing fee, calculated pursuant to Section 13(e)(3) of
the Securities Exchange Act of 1934 and Rule 0-11 thereunder,
equals 1/50th of one percentum of the value of the shares to be
purchased.

/X/ Check box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee
was previously paid. Identify the previous filing by
registration statement number, or the Form or Schedule and the
date of its filing.

Amount Previously Paid: $765.98

Form or Registration No.: Preliminary Proxy Statement-Schedule 14A and Schedule
13E-3; File Nos. 001-0708 and 005-31938, respectively

Filing Party: Customedix Corporation (and with respect to Schedule
13E-3, CUS Acquisition, Inc., Dr. Gordon S. Cohen and
The Cohen Family Trust Partnership)

Date Filed: July 2, 1996
================================================================================
<PAGE> 2
INTRODUCTION

This Amendment No. 2 amends and restates the Rule 13e-3 Transaction
Statement (the "Statement") which was filed with the Securities and Exchange
Commission (the "Commission") on July 2, 1996, and amended on July 3, 1996, on
behalf of Customedix Corporation, a Delaware corporation and the issuer of the
class of equity securities to which the Statement relates (the "Company"), CUS
Acquisition, Inc., a Delaware corporation (the "Buyer"), Dr. Gordon S. Cohen and
the Cohen Family Trust Partnership, a Connecticut general partnership (the
"Partnership"), and relates to the Proxy Statement (the "Revised Preliminary
Proxy Statement") of the Company concerning the proposed merger (the "Merger")
of the Buyer with and into the Company. Upon consummation of the Merger, each
share of Common Stock, par value $.01 per share (the "Common Stock"), of the
Company (other than shares (i) held in the treasury of the Company, (ii) owned
by the Buyer and (iii) held by stockholders who have not voted in favor of the
Merger and who have otherwise properly exercised their rights for appraisal of
such shares in accordance with Section 262 of the Delaware General Corporation
Law) will be converted into the right to receive $2.375 per share in cash,
without interest, upon the terms and subject to the conditions of the Agreement
and Plan of Merger, dated as of June 10, 1996, between the Company and the Buyer
(the "Merger Agreement," a copy of which is included as Annex A to the Revised
Preliminary Proxy Statement which is attached hereto as Exhibit (d)). This
Amendment No. 2 to the Statement is being filed to incorporate certain changes
being made to the Revised Preliminary Proxy Statement included herewith as
Exhibit (d) and to include The Cohen Family Trust Partnership as a filing party.

The following cross reference sheet is being supplied pursuant to
General Instruction F to Schedule 13E-3 and shows the location in the Revised
Preliminary Proxy Statement filed by the Company with the Commission on the date
hereof, of the information required to be included in response to the items of
this Statement. The information in the Revised Preliminary Proxy Statement
included herewith as Exhibit (d), including all annexes thereto, is hereby
expressly incorporated herein by reference in answer to the items of this
Statement, and the responses to each item of this Statement are qualified in
their entirety by the provisions of the Revised Preliminary Proxy Statement. As
indicated below, certain exhibits previously filed with the Commission as part
of the Schedule 13E-3 are omitted from this Amendment No. 2.

<PAGE> 3
CROSS REFERENCE SHEET

<TABLE>
<CAPTION>
ITEM IN
SCHEDULE 13E-3 LOCATION IN PROXY STATEMENT

<S> <C>
Item 1(a)......................... Cover Page, "SUMMARY--Parties to the Merger Agreement; the Merger"
and "BUSINESS OF THE COMPANY"

Item 1(b)......................... Cover Page, "SUMMARY--Votes Required" and "THE SPECIAL
MEETING--Votes Required"

Item 1(c) and (d)................. "SUMMARY--Market Prices; Dividends" and "MARKET PRICES;
DIVIDENDS"

Item 1(e)......................... Not applicable

Item 1(f)......................... "CERTAIN TRANSACTIONS IN THE COMMON STOCK"

Item 2(a)-(d) and (g)............. Cover Page, "SUMMARY--Parties to the Merger Agreement; the Merger,"
"DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY,"
"INFORMATION CONCERNING THE BUYER" and "INFORMATION CONCERNING THE
PARTNERSHIP"

Item 2(e) and (f)................. Negative

Item 3(a) and (b)................. "SUMMARY--Background," "--Recommendation of the Board; Fairness of the
Merger," "--Financial Advisors," "--Certain Litigation," "--Conditions
to Consummation of the Merger," "--Termination; Amendments,"
"--Expenses," "--Source and Amount of Funds," "SPECIAL FACTORS--
Background," "--Recommendation of the Board," "--Fairness of the Merger,"
"--Financial Advisors," "--Certain Relationships and Related
Transactions," "--Certain Litigation," "THE MERGER--Terms of the Merger,"
"--Source and Amount of Funds" and "CERTAIN TRANSACTIONS IN THE COMMON
STOCK"

Item 4(a).......................... Cover Page, "SUMMARY--Parties to the Merger Agreement; the Merger,"
"--Votes Required," "--Effective Time of the Merger; Payment for Shares
of Common Stock," "--Conditions to Consummation of the Merger,"
"--Termination; Amendments," "--Expenses," "--Source and Amount of
Funds," "THE SPECIAL MEETING--Purpose; Record Date; Voting at the
Special Meeting," "--Votes Required," "SPECIAL FACTORS--Purpose and
Structure of the Transaction; Plans for the Company," "--Certain
Effects of the Merger," "THE MERGER" and Annex A

Item 4(b).......................... Cover Page, "SUMMARY--Parties to the Merger Agreement; the Merger,"
"--Conflicts of Interest; Interests of Certain Persons in the Merger,"
"--Certain Litigation," "--Certain Tax Consequences of the Merger,"
"--Conditions to Consummation of the Merger," "--Termination;
Amendments," "--Expenses," "THE SPECIAL MEETING--Purpose;
Record Date; Voting at the Special Meeting," "--Source and Amount of Funds,"
"SPECIAL FACTORS--Purpose and Structure of the Transaction; Plans for the Company,"
</TABLE>

<PAGE> 4

<TABLE>
<S> <C>
"--Certain Effects of the Merger," "--Conflicts of Interest; Interests of Certain Persons
in the Merger," "--Certain Litigation," "--Certain Tax Consequences of the Merger," "THE
MERGER," "FEES AND EXPENSES" and Annex A

Item 5(a)-(g)..................... Cover Page, "SUMMARY--Parties to the Merger Agreement; the Merger," "--Conflicts of
Interest; Interests of Certain Persons in the Merger," "--Source and Amount of Funds,"
"SPECIAL FACTORS--Purpose and Structure of the Transaction; Plans for the Company,"
"--Certain Effects of the Merger," "THE MERGER--Terms of the Merger" and "--Source
and Amount of Funds"

Item 6(a), (c) and (d)............ "SUMMARY--Source and Amount of Funds" and "THE MERGER--Source
and Amount of Funds"

Item 6(b)......................... "THE MERGER--Source and Amount of Funds" and "FEES AND
EXPENSES"

Item 7(a)-(d)..................... Cover Page, "SUMMARY--Parties to the Merger Agreement; the Merger,"
"--Background," "--Recommendation of the Board; Fairness of the Merger," "--Certain
Conflicts of Interest and Risk Factors," "--Conflicts of Interest; Interests of
Certain Persons in the Merger," "--Certain Tax Consequences of the Merger,"
"THE SPECIAL MEETING--Purpose; Record Date; Voting at the Special Meeting,"
"SPECIAL FACTORS--Background," "--Recommendation of the Board," "--Fairness of the Merger,"
"--Purpose and Structure of the Transaction; Plans for the Company," "--Certain Effects
of the Merger," "--Conflicts of Interest; Interests of Certain Persons in the Merger" and
"--Certain Tax Consequences of the Merger"

Item 8(a)-(e)..................... Cover Page, "SUMMARY--Votes Required," "--Background,"
"--Recommendation of the Board; Fairness of the Merger," "--Certain Conflicts of Interest
and Risk Factors," "THE SPECIAL MEETING--Votes Required," "SPECIAL FACTORS--Background,"
"--Recommendation of the Board," "--Fairness of the Merger" and "--Purpose
and Structure of the Transaction; Plans for the Company"

Item 8(f))........................ Not applicable

Item 9(a)-(c)..................... "SUMMARY--Background," "--Financial Advisors," "SPECIAL
FACTORS--Background," "--Fairness of the Merger" and "--Financial
Advisors"

Item 10(a)........................ "CERTAIN TRANSACTIONS IN THE COMMON STOCK"
and "STOCK OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS"

Item 10(b)........................ Not applicable

Item 11........................... Cover Page, "SUMMARY--Parties to the Merger Agreement; the Merger," "--Financial Advisors,"
"--Certain Litigation," "--Conditions to Consummation of the Merger,"
"--Termination; Amendments," "--Expenses," "SPECIAL FACTORS--Financial Advisors,"
"--Conflicts of Interest; Interests of Certain Persons in the Merger,"
"--Certain Litigation,"
</TABLE>

<PAGE> 5

<TABLE>
<S> <C>
"THE MERGER--Terms of the Merger" and Annex A

Item 12(a) and (b)................. Cover Page, "SUMMARY--Votes Required," "--Recommendation of the
Board; Fairness of the Merger," "THE SPECIAL MEETING--Purpose; Record
Date; Voting at the Special Meeting," "--Votes Required," "SPECIAL
FACTORS--Recommendation of the Board," "--Fairness of the Merger,"
"--Purpose and Structure of the Transaction; Plans for the Company"
and "--Conflicts of Interest; Interests of Certain Persons in the Merger"

Item 13(a)......................... "SUMMARY--Dissenters' Appraisal Rights," "THE SPECIAL MEETING--Purpose;
Record Date; Voting at the Special Meeting," "THE MERGER--Appraisal
Rights of Dissenting Stockholders," Annex B and Notice of Special Meeting

Item 13(b) and (c)................. Not applicable

Item 14(a)......................... "SUMMARY--Selected Financial Data," "SELECTED FINANCIAL DATA"
and Exhibit (g) hereto

Item 14(b)......................... Not applicable

Item 15(a)......................... "SUMMARY--Expenses," "--Source and Amount of Funds," "THE SPECIAL MEETING--
Revocation and Use of Proxies; Solicitation," "THE MERGER--Terms of the
Merger," "--Source and Amount of Funds" and "FEES AND EXPENSES"

Item 15(b)......................... Not applicable

Item 16............................ Proxy Statement, Letter to Stockholders and Notice of Special Meeting

Item 17............................ Separately included herewith
</TABLE>

<PAGE> 6
ITEM 1. ISSUER AND CLASS OF SECURITY SUBJECT TO THE TRANSACTION.

(a) The information set forth on the Cover Page and in
"SUMMARY--Parties to the Merger Agreement; the Merger" and "BUSINESS OF THE
COMPANY" of the Proxy Statement is incorporated herein by reference.

(b) The information set forth on the Cover Page and in "SUMMARY--Votes
Required" and "THE SPECIAL MEETING--Votes Required" of the Proxy Statement is
incorporated herein by reference.

(c) and (d) The information set forth in "SUMMARY--Market Prices;
Dividends" and "MARKET PRICES; DIVIDENDS" of the Proxy Statement is incorporated
herein by reference.

(e) Not applicable.

(f) The information set forth in "CERTAIN TRANSACTIONS IN THE COMMON
STOCK" of the Proxy Statement is incorporated herein by reference.

ITEM 2. IDENTITY AND BACKGROUND.

(a)-(d) and (g) This Statement is being filed by the Company, which is
the issuer of the Common Stock, the class of equity securities to which this
Statement relates, the Buyer, Dr. Gordon S. Cohen and the Partnership
(collectively, the "Filing Persons"). The information set forth on the Cover
Page and in "SUMMARY--Parties to the Merger Agreement; the Merger," "DIRECTORS
AND EXECUTIVE OFFICERS OF THE COMPANY," "INFORMATION CONCERNING THE BUYER" and
"INFORMATION CONCERNING THE PARTNERSHIP" of the Proxy Statement is incorporated
herein by reference.

(e) and (f) During the last five years, none of the Filing Persons, nor
to the best of their knowledge any of the persons listed under "DIRECTORS AND
EXECUTIVE OFFICERS OF THE COMPANY," "INFORMATION CONCERNING THE BUYER" or
"INFORMATION CONCERNING THE PARTNERSHIP" of the Proxy Statement, (i) has been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or (ii) was a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining further
violations of, or prohibiting activities subject to, federal or state securities
laws or finding any violation of such laws.

ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS.

(a) and (b) The information set forth in "SUMMARY--Background,"
"--Recommendation of the Board; Fairness of the Merger," "--Financial Advisors,"
"--Certain Litigation," "--Conditions to Consummation of the Merger,"
"--Termination; Amendments," "--Expenses," "--Source and Amount of Funds,"
"SPECIAL FACTORS--Background," "--Recommendation of the Board," "--Fairness of
the Merger," "--Financial Advisors," "--Certain Relationships and Related
Transactions," "--Certain Litigation," "THE MERGER-- Terms of the Merger,"
"--Source and Amount of Funds" and "CERTAIN TRANSACTIONS IN THE COMMON STOCK" of
the Proxy Statement is incorporated herein by reference.

ITEM 4. TERMS OF THE TRANSACTION.

(a) The information set forth on the Cover Page and in
"SUMMARY--Parties to the Merger Agreement; the Merger," "--Votes Required,"
"--Effective Time of the Merger; Payment for Shares of Common Stock,"
"--Conditions to Consummation of the Merger," "--Termination; Amendments,"
"--Expenses," "--Source and Amount of Funds," "THE SPECIAL MEETING--Purpose;
Record Date; Voting at the Special Meeting," "--Votes Required,"

5
<PAGE> 7
"SPECIAL FACTORS--Purpose and Structure of the Transaction; Plans for the
Company," "--Certain Effects of the Merger," "THE MERGER" and Annex A of the
Proxy Statement is incorporated herein by reference.

(b) The information set forth on the Cover Page and in
"SUMMARY--Parties to the Merger Agreement; the Merger," "--Conflicts of
Interest; Interests of Certain Persons in the Merger," "--Certain Litigation,"
"--Certain Tax Consequences of the Merger," "--Conditions to Consummation of the
Merger," "--Termination; Amendments," "--Expenses," "THE SPECIAL
MEETING--Purpose; Record Date; Voting at the Special Meeting," "--Source and
Amount of Funds," "SPECIAL FACTORS--Purpose and Structure of the Transaction;
Plans for the Company," "--Certain Effects of the Merger," "--Conflicts of
Interest; Interests of ertain Persons in the Merger," "--Certain Litigation,"
"--Certain Tax Consequences of the Merger," "THE MERGER," "FEES AND EXPENSES"
and Annex A of the Proxy Statement is incorporated herein by reference.

ITEM 5. PLANS OR PROPOSALS OF THE ISSUER OR AFFILIATE.

(a)-(g) The information set forth on the Cover Page and in
"SUMMARY--Parties to the Merger Agreement; the Merger," "--Conflicts of
Interest; Interests of Certain Persons in the Merger," "--Source and Amount of
Funds," "SPECIAL FACTORS--Purpose and Structure of the Transaction; Plans for
the Company," "--Certain Effects of the Merger," "THE MERGER--Terms of the
Merger" and "--Source and Amount of Funds" of the Proxy Statement is
incorporated herein by reference.

ITEM 6. SOURCE AND AMOUNTS OF FUNDS OR OTHER CONSIDERATION.

(a), (c) and (d) The information set forth in "SUMMARY--Source and
Amount of Funds" and "THE MERGER--Source and Amount of Funds" of the Proxy
Statement is incorporated herein by reference.

(b) The information set forth in "THE MERGER--Source and Amount of
Funds" and "FEES AND EXPENSES" of the Proxy Statement is incorporated herein by
reference.

ITEM 7. PURPOSE(S), ALTERNATIVES, REASONS AND EFFECTS.

(a)-(d) The information set forth on the Cover Page and in
"SUMMARY--Parties to the Merger Agreement; the Merger," "--Background,"
"--Recommendation of the Board; Fairness of the Merger," "--Certain Conflicts
of Interest and Risk Factors," "--Conflicts of Interest; Interests of Certain
Persons in the Merger,""--Certain Tax Consequences of the Merger," "THE SPECIAL
MEETING--Purpose; Record Date; Voting at Special Meeting," "SPECIAL FACTORS--
Background," "--Recommendation of the Board," "--Fairness of the Merger,"
"--Purpose and Structure of the Transaction; Plans for the Company," "--Certain
Effects of the Merger," "--Conflicts of Interest; Interests of Certain Persons
in the Merger" and "--Certain Tax Consequences of the Merger" of the Proxy
Statement is incorporated herein by reference.

ITEM 8. FAIRNESS OF THE TRANSACTION.

(a)-(e) The information set forth on the Cover Page and in
"SUMMARY--Votes Required," "--Background," "--Recommendation of the Board;
Fairness of the Merger," "--Certain Conflicts of Interest and Risk Factors,"
"THE SPECIAL MEETING--Votes Required," "SPECIAL FACTORS--Background,"
"--Recommendation of the Board," "--Fairness of the Merger" and "--Purpose and
Structure of the Transaction; Plans for the Company" of the Proxy Statement is
incorporated herein by reference.

(f) Not applicable.

6
<PAGE> 8
ITEM 9. REPORTS, OPINIONS, APPRAISALS AND CERTAIN NEGOTIATIONS.

(a)-(c) The information set forth in "SUMMARY--Background,"
"--Financial Advisors," "SPECIAL FACTORS--Background," "--Fairness of the
Merger" and "--Financial Advisors" of the Proxy Statement is incorporated herein
by reference.

ITEM 10. INTEREST IN SECURITIES OF THE ISSUER.

(a) The information set forth in "CERTAIN TRANSACTIONS IN THE COMMON
STOCK" and "STOCK OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS" of the
Proxy Statement is incorporated herein by reference.

(b) Not applicable.

ITEM 11. CONTRACTS, ARRANGEMENTS OR UNDERSTANDINGS WITH RESPECT TO THE ISSUER'S
SECURITIES.

The information set forth on the Cover Page and in "SUMMARY --Parties
to the Merger Agreement; the Merger," "--Financial Advisors," "--Certain
Litigation," "--Conditions to Consummation of the Merger," "--Termination;
Amendments," "--Expenses," "SPECIAL FACTORS--Financial Advisors," "--Conflicts
of Interest; Interests of Certain Persons in the Merger," "--Certain
Litigation," "THE MERGER--Terms of the Merger," and Annex A of the Proxy
Statement is incorporated herein by reference.

ITEM 12. PRESENT INTENTION AND RECOMMENDATION OF CERTAIN PERSONS WITH REGARD TO
THE TRANSACTION.

(a) and (b) The information set forth on the Cover Page and in
"SUMMARY--Votes Required," "--Recommendation of the Board; Fairness of the
Merger," "THE SPECIAL MEETING--Purpose; Record Date; Voting at the Special
Meeting," "--Votes Required," "SPECIAL FACTORS--Recommendation of the Board,"
"--Fairness of the Merger," "--Purpose and Structure of the Transaction; Plans
for the Company" and "--Conflicts of Interest; Interests of Certain Persons in
the Merger" of the Proxy Statement is incorporated herein by reference.

ITEM 13. OTHER PROVISIONS OF THE TRANSACTION.

(a) The information set forth in "SUMMARY--Dissenters' Appraisal
Rights," "THE SPECIAL MEETING--Purpose; Record Date; Voting at the Special
Meeting," "THE MERGER--Appraisal Rights of Dissenting Stockholders," Annex B of
the Proxy Statement, and in Notice of Special Meeting attached to the Proxy
Statement, is incorporated herein by reference.

(b) and (c) Not applicable.

ITEM 14. FINANCIAL INFORMATION.

(a) The information set forth in "SUMMARY--Selected Financial Data" and
"SELECTED FINANCIAL DATA" of the Proxy Statement, and in the financial
statements of the Company which are attached to this Statement as Exhibits
(g)(1) and (g)(2), is incorporated herein by reference.

(b) Not applicable.

ITEM 15. PERSONS AND ASSETS EMPLOYED, RETAINED OR UTILIZED.

(a) The information set forth in "SUMMARY--Expenses," "--Source and
Amount of Funds," "THE SPECIAL MEETING--Revocation and Use of Proxies;
Solicitation," "THE MERGER--Terms of the Merger," "--Source and Amount of Funds"
and "FEES AND EXPENSES" of the Proxy Statement is incorporated herein by
reference.

(b) Not applicable.

7
<PAGE> 9
ITEM 16. ADDITIONAL INFORMATION.

Additional information concerning the Merger is set forth in the
Revised Preliminary Proxy Statement, Letter to Stockholders and Notice of
Special Meeting of the Stockholders which are attached hereto as Exhibit (d).

ITEM 17. MATERIAL TO BE FILED AS EXHIBITS.

(a)(1) Commitment letter of New Jersey National Bank,
dated March 22, 1996, addressed to Dr. Gordon S.
Cohen.

(a)(2) Letter agreement, dated June 10, 1996, among New
Jersey National Bank, the Buyer and Dr. Gordon S.
Cohen.

(b) Discussion materials, dated May 1, 1996, delivered
by Tucker Anthony Incorporated to the Special
Committee of the Board of Directors.

(c)(1) Agreement and Plan of Merger, dated as of June 10,
1996, between the Company and the Buyer (filed
herewith as Annex A to the Proxy Statement that is
filed as Exhibit (d) hereto).

(c)(2) Engagement Letter, dated March 7, 1996, between the
Company and Tucker Anthony Incorporated.

(c)(3) Engagement Letter, dated June 7, 1996, among the
Company, Levett, Rockwood & Sanders Professional
Corporation and Carter Capital Corporation.

(c)(4) Memorandum of Understanding, dated June 3, 1996,
entered into by counsel to the parties to the
consolidated action In Re Customedix Corporation
Shareholders Litigation, Cons. Civil Action No.
14812.

(c)(5)* Stipulation of Settlement, dated July 25, 1996,
entered into by counsel to the parties to the
consolidated action In Re Customedix Corporation
Shareholders Litigation, Cons. Civil Action
No. 14812.

(d)* Revised Preliminary Proxy Statement of the
Company, Notice of Special Meeting of Stockholders
of the Company, Letter to Stockholders of the
Company, and Form of Proxy Card.

(e) Section 262 of the Delaware General Corporation Law
(filed herewith as Annex B to the Revised
Preliminary Proxy Statement that is filed as
Exhibit (d) hereto).

(f) None.

(g)(1) Consolidated Balance Sheets as of June 30, 1995,
and 1994; Consolidated Statements of Operations for
the Years Ended June 30, 1995, 1994 and 1993;
Consolidated Statements of Stockholders' Equity for
the Years Ended June 30, 1995, 1994 and 1993;
Consolidated Statements of Cash Flows for the Years
Ended June 30, 1995, 1994 and 1993; Notes to
Consolidated Financial Statements.

(g)(2) Condensed Consolidated Balance Sheets
March 31, 1996 (Unaudited), and June 30, 1995;
Condensed Consolidated Statements of Operations
(Unaudited)--Nine Months Ended March 31, 1996, and
1995; Condensed Consolidated Statement of
Operations (Unaudited)--Three Months Ended
March 31, 1996, and 1995; Condensed Consolidated
Statements of Cash Flows (Unaudited)--Nine Months
Ended March 31, 1996, and 1995; Notes to
Condensed Consolidated Financial Statements March
31, 1996 (Unaudited).

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

* Filed herewith. Unless otherwise indicated, items not marked with an
asterisk were previously filed.

8
<PAGE> 10
SIGNATURE

After due inquiry and to the best of its knowledge and belief,
the undersigned certifies that the information set forth in this statement is
true, complete and correct.

Dated: August 15, 1996 CUSTOMEDIX CORPORATION

By: /s/ Martin L. Schulman
--------------------------
Name: Martin L. Schulman
Title: President

9
<PAGE> 11
SIGNATURE

After due inquiry and to the best of its knowledge and belief,
the undersigned certifies that the information set forth in this statement is
true, complete and correct.

Dated: August 15, 1996 CUS ACQUISITION, INC.

By: /s/ Gordon S. Cohen
--------------------------
Name: Gordon S. Cohen
Title: President

10
<PAGE> 12
SIGNATURE

After due inquiry and to the best of his knowledge and belief,
the undersigned certifies that the information set forth in this statement is
true, complete and correct.

Dated: August 15, 1996

By: /s/ Gordon S. Cohen
--------------------------
Gordon S. Cohen

11
<PAGE> 13

SIGNATURE

After due inquiry and to the best of his knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct.

Dated: August 15, 1996 THE COHEN FAMILY TRUST PARTNERSHIP

By: /s/ Gordon S. Cohen
--------------------------
Name: Gordon S. Cohen
Title: Managing Partner

<PAGE> 14
EXHIBIT INDEX

EXHIBIT NO. DESCRIPTION
- ----------- -----------

(a)(1) Commitment letter of New Jersey National Bank, dated March 22,
1996, addressed to Dr. Gordon S. Cohen.

(a)(2) Letter agreement, dated June 10, 1996, among New Jersey
National Bank, the Buyer and Dr. Gordon S. Cohen.

(b) Discussion materials, dated May 1, 1996, delivered by Tucker
Anthony Incorporated to the Special Committee of the Board of
Directors.

(c)(1) Agreement and Plan of Merger, dated as of June 10, 1996,
between the Company and the Buyer (filed herewith as Annex A
to the Proxy Statement that is filed as Exhibit (d) hereto).

(c)(2) Engagement Letter, dated March 7, 1996, between the Company
and Tucker Anthony Incorporated.

(c)(3) Engagement Letter, dated June 7, 1996, among the Company,
Levett, Rockwood & Sanders Professional Corporation and Carter
Capital Corporation.

(c)(4) Memorandum of Understanding, dated June 3, 1996, entered into
by counsel to the parties to the consolidated action In Re
Customedix Corporation Shareholders Litigation, Cons. Civil
Action No. 14812.

(c)(5)* Stipulation of Settlement, dated July 25, 1996, entered into
by counsel to the parties to the consolidated action In Re
Customedix Corporation Shareholders Litigation, Cons. Civil
Action No. 14812.

(d)* Revised Preliminary Proxy Statement of the Company, Notice of
Special Meeting of Stockholders of the Company, Letter to
Stockholders of the Company, and Form of Proxy Card.

(e) Section 262 of the Delaware General Corporation Law (filed
herewith as Annex B to the Proxy Statement that is filed as
Exhibit (d) hereto).

(f) None.

(g)(1) Consolidated Balance Sheets as of June 30, 1995, and 1994;
Consolidated Statements of Operations for the Years Ended June
30, 1995, 1994 and 1993; Consolidated Statements of
Stockholders' Equity for the Years Ended June 30, 1995, 1994
and 1993; Consolidated Statements of Cash Flows for the Years
Ended June 30, 1995, 1994 and 1993; Notes to Consolidated
Financial Statements.

(g)(2) Condensed Consolidated Balance Sheets March 31, 1996
(Unaudited), and June 30, 1995; Condensed Consolidated
Statements of Operations (Unaudited)--Nine Months Ended
March 31, 1996, and 1995; Condensed Consolidated Statement of
Operations (Unaudited)--Three Months Ended March 31, 1996,
and 1995; Condensed Consolidated Statements of Cash Flows
(Unaudited)--Nine Months Ended March 31, 1996, and 1995; Notes
to Condensed Consolidated Financial Statements March 31, 1996
(Unaudited).

- ---------------
* Filed herewith. Unless otherwise indicated, items not marked with an asterisk
were previously filed.

<PAGE> 1

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

IN AND FOR NEW CASTLE COUNTY

IN RE CUSTOMEDIX CORPORATION ) Consolidated
SHAREHOLDERS LITIGATION ) C.A. No. 14812

STIPULATION OF SETTLEMENT

The parties to the above-captioned action (the "Consolidated
Action"), by and through their respective attorneys, have entered into the
following Stipulation of Settlement (the "Stipulation") subject to the approval
of the Court of Chancery of the State of Delaware in and for New Castle County
(the "Court"):
WHEREAS,

A. Customedix Corporation ("Customedix" or the "Company") is a
Delaware corporation with its principal executive offices in Wallingford,
Connecticut. Customedix is engaged in two principal industry segments: dental
health care products and medical health care products.

B. Dr. Gordon S. Cohen is the Company's Chief Executive
Officer and Chairman of its Board of Directors.

C. CUS Acquisition, Inc. (the "Buyer") is a Delaware
corporation that will be wholly-owned by Dr. Cohen and a partnership comprised
of trusts established for the benefit of Dr. Cohen and certain members of Dr.
Cohen's family (the "Partnership"). The Buyer was recently organized for the
purpose of effecting a merger with the Company.

<PAGE> 2
The Buyer will own approximately 51.07% of the issued and outstanding shares of
common stock of Customedix prior to the consummation of the Merger (as
hereinafter defined).

D. Martin L. Schulman, William T. Fitch, Elry C. Bird, Robert
S. Cooper, David H. Leigh and Robert N. Thomas, together with Dr. Cohen
(collectively, the "Individual Defendants"), have constituted the Customedix
Board of Directors (the "Board") from February 5, 1996 until present. On May 13,
1996, Adraine J. Tom also became a Director of the Company.

E. At a regularly scheduled meeting of the Board held on
February 5, 1996, Dr. Cohen delivered to the Company a proposal to acquire all
of the common shares of Customedix ("Common Stock") held by stockholders, other
than Dr. Cohen and the Partnership, in a negotiated cash merger for $1.9375 per
share in cash (the "Original Proposal").

F. In response to the Original Proposal, the Board appointed a
special committee consisting of Messrs. Fitch and Thomas, each an independent,
non-employee director of the Company (the "Original Special Committee"). The
Original Special Committee was charged with, among other things, representing
the interests of the unaffiliated stockholders of the Company and taking any and
all actions necessary or advisable in connection with the evaluation and, if
appropriate, the approval of the Original Proposal. Following the February 5,
1996 Board meeting, the Original Special Committee formally engaged Brody and
Ober, P.C., as legal counsel, and Tucker Anthony Incorporated ("Tucker
Anthony"), as financial advisor, with respect to the Original Proposal and
related matters. After such appointment and prior to May 3, 1996, the Original
Special Committee
<PAGE> 3
met on several occasions with its advisors.

G. On February 6, 1996, four putative class action complaints
were filed in the Delaware Court of Chancery, which suits are styled as follows:
Katz v. Cohen, et. al., C. A. No. 14812; Manillo v. Cohen, et. al., C.A. No.
14813; Thomas Torre v. Cohen, et. al., C.A. No. 14814; and Sylvia Torre v.
Cohen, et. al., C.A. No. 14818 (collectively, the "Complaints"). The Complaints
generally allege that the course of conduct taken by Dr. Cohen in proposing, and
by the Company and the other directors in responding to, the Original Proposal
was in violation of the Board's fiduciary duty to the Company's stockholders.
The Complaints all seek (i) to enjoin the Original Proposal, or, in the
alternative, (ii) damages.

H. On May 3, 1996, the Original Special Committee and its
counsel met with representatives of the Buyer and its counsel to negotiate the
terms of the Original Proposal. At that meeting, the Buyer suggested that
negotiations over the proposed price might be more productive if the Buyer
understood the information on which the Original Special Committee was relying
as well as the analysis of that information by the Original Special Committee
and/or Tucker Anthony. The Original Special Committee distributed to the Buyer
and its counsel the information prepared by Tucker Anthony and on which Tucker
Anthony was relying in rendering advice to the Original Special Committee (the
"Tucker Anthony Materials"). The parties agreed that they would engage in
further discussion after the Buyer had an opportunity to review the Tucker
Anthony Materials, and that a representative of Tucker Anthony should be present
during such discussion.

I. On May 8, 1996, the Original Special Committee,
representatives of
<PAGE> 4
the Buyer, their respective counsel and representatives of Tucker Anthony met to
discuss the Tucker Anthony Materials and to negotiate a price in connection with
the Original Proposal. After considerable discussion, both parties remained far
apart on pricing with Tucker Anthony's representative indicating that he
believed the Tucker Anthony Committee which would have to approve an opinion as
to the fairness of the price would certainly support a price of $3.25 per share,
probably support a price of $3.00 per share and perhaps a price as low as $2.90
per share. The Buyer indicated that it could not reach a price within the range
suggested by the representative of Tucker Anthony, and the representative of
Tucker Anthony indicated that he did not believe it would be worthwhile to seek
to have Tucker Anthony consider rendering an opinion as to the fairness of a
price lower than that range. The meeting concluded without an agreement on
price.

J. Following the meeting, the Tucker Anthony representative
advised the chairman of the Special Committee and counsel to the Special
Committee that if Dr. Cohen wished to submit a price to Tucker Anthony for
consideration, Tucker Anthony would advise the Special Committee as to its view
of the fairness of such price. However, such advice would require payment by the
Company of the $40,000 additional fee due to Tucker Anthony upon rendering of an
opinion. Dr. Cohen refused to accept Tucker Anthony's condition for its
consideration of an increased offer.

K. Later on May 8, Dr. Cohen advised the Company that he was
withdrawing the offer under the Original Proposal.

L. On June 3, 1996, the Court entered an order consolidating
the Complaints for all purposes under the caption In Re Customedix Corporation
Shareholder
<PAGE> 5
Litigation, Cons. C.A. No. 14812 (the "Consolidated Action").

M. Also on June 3, 1996, counsel for Dr. Cohen engaged in
settlement discussions with counsel for plaintiffs in the Consolidated Action.
In connection with those discussions, on June 3, 1996, Dr. Cohen's attorneys
informed the plaintiffs' attorneys that Dr. Cohen was willing to consider
another merger proposal, provided the parties to the litigation could reach an
agreement-in-principle to settle such litigation. After further arm's-length
negotiations, the parties to the litigation, by their respective attorneys,
entered into a Memorandum of Understanding on June 3, 1996, setting forth such
an agreement-in-principle (the "MOU").

N. The MOU provided that Dr. Cohen and the Partnership agreed
to make a merger proposal to the Company pursuant to which, subject to the
approval of a merger agreement by Dr. Cohen, the Board and the stockholders of
the Company, and further subject to the approval of the settlement by the Court,
the Buyer would be merged with and into the Company, and each share of Common
Stock (other than shares (i) held in the treasury of the Company, (ii) owned by
the Buyer and (iii) held by stockholders who had not voted in favor of the
Merger and who had otherwise properly exercised their rights for appraisal of
such shares in accordance with Section 262 of the DGCL) would be converted into
the right to receive, upon surrender of the certificate evidencing such share,
$2.375 per share (the "Merger Consideration"), thereby increasing the
consideration to be received by Customedix common stockholders under the Merger
by $0.4375 per share (the "Merger Proposal").

O. The MOU was subject to various conditions including the
completion
<PAGE> 6
of discovery sufficient to enable plaintiffs' counsel to determine the fairness
of the Settlement; the execution of a Stipulation of Settlement; consummation of
a merger pursuant to the Merger Proposal; and final approval by the Court of
Chancery of the Settlement.

P. On June 4, 1996, Dr. Cohen delivered the Merger Proposal to
the Company. In response to the Merger Proposal, the Board reconstituted the
Special Committee (the "Special Committee"), consisting of the Original Special
Committee and Adraine J. Tom, another independent, non-employee director of the
Company. The Special Committee was charged, among other things, to represent the
interests of the unaffiliated stockholders of the Company and take any and all
actions necessary or advisable in connection with the evaluation and, if
appropriate, the approval of the Merger Proposal. The Special Committee
indicated that it intended to continue to engage Brody and Ober, P.C., as legal
counsel. As a result of the discussions with Tucker Anthony on May 8, 1996, and
given the terms and conditions of the MOU and the role of plaintiffs' counsel in
connection therewith, neither Tucker Anthony nor any other financial advisor was
retained to deliver an opinion with respect to the fairness of the Merger
Consideration.

Q. After its appointment, the Special Committee held several
telephonic meetings with its legal advisors to evaluate the Merger Proposal and
the MOU, and the Special Committee and the Buyer, through their legal advisors,
held discussions regarding, and agreed upon certain revisions to, the Agreement
and Plan of Merger, dated as of June 10, 1996 (the "Merger Agreement"), pursuant
to which the Buyer will be merged with and into the Company (the "Merger").
Under the Merger Agreement, the obligations of the
<PAGE> 7
Buyer and the Company are subject to several conditions, including the approval
of the Settlement by the Delaware Court of Chancery.

R. On June 10, 1996, the Special Committee met and unanimously
determined that the Merger Proposal was fair to, and in the best interests of,
the stockholders of the Company (other than Dr. Cohen and the Partnership), and
unanimously voted to recommend that the Board accept the Merger Proposal and
approve the Merger Agreement and the Merger. After considering the
recommendations of the Special Committee, the independent directors of the Board
unanimously approved the Merger Proposal and the Merger Agreement. Thereafter,
the full Board likewise unanimously approved the Merger Proposal and the Merger
Agreement, and the Merger Agreement was executed immediately thereafter.

S. Pursuant to the MOU, plaintiffs' counsel reviewed
defendants' document production in the litigation, conducted the depositions of
Adraine Tom (a member of the Special Committee) and Dr. Gordon Cohen (the
originator of the Merger Proposal), and reviewed preliminary stockholder
disclosure materials relating to the Merger Proposal, including a preliminary
draft of the proxy statement filed with the Securities and Exchange Commission
on July 2, 1996 with respect to the Merger (the "Proxy Statement"). The Proxy
Statement is expected to be mailed to the Company's stockholders on or about
August 15, 1996. The special meeting of the Company's stockholders to consider
the Merger Agreement is expected to be held on or about September 19, 1996.

T. In light of the events, negotiations and agreements
described above, analysis of applicable law, and based on the discovery taken in
the Consolidated Action,
<PAGE> 8
and after consultation with their financial expert Howard, Lawson & Co., counsel
for plaintiffs have concluded that the terms and conditions of the settlement
provided for in this Stipulation (the "Settlement") are fair, reasonable, and
adequate to the plaintiffs and the class of stockholders represented in the
Consolidated Action.

U. Plaintiffs enter into the Stipulation after taking into
account (i) the financial benefits to the members of the Class (as defined
below) from the Merger Proposal and the Merger Agreement, (ii) the risk of
continued litigation, (iii) the desirability of permitting the Settlement to be
consummated as provided by the terms of this Stipulation, and (iv) the
conclusion of counsel for plaintiffs that the terms and conditions of the
Settlement are fair, reasonable, adequate to the Customedix stockholders
represented in the Consolidated Action. Plaintiffs and plaintiffs' counsel have
agreed to the terms of the Settlement because, in their view, the Settlement
achieves plaintiffs' objectives in the litigation, which were to assure that
Customedix stockholders received fair value in exchange for their stock, and to
provide independent representation for Customedix stockholder interests.

V. Customedix and the Individual Defendants consider the
Merger Agreement and its terms to have satisfied all of the claims asserted in
the Complaints.

W. Defendants have denied and continue to deny vigorously any
liability with respect to all claims alleged in any of the Complaints, or any
other claims arising out of the transactions described above. While maintaining
their innocence of any fault or wrongdoing, and relying on the provision hereof
that this Stipulation shall in no event be construed as or deemed to be evidence
of an admission or concession on the part of
<PAGE> 9
defendants or any Released Person (as defined below) of any fault or liability
whatsoever, and without conceding any infirmity in their defenses against the
claims alleged in the Complaints, defendants consider it desirable that the
Consolidated Action be settled and dismissed, subject to the terms and
conditions herein, because the Settlement will (i) halt the substantial expense,
inconvenience and distraction of continued litigation of plaintiffs' claims;
(ii) finally put to rest those claims; and (iii) dispel any uncertainty that may
exist as a result of this litigation.

NOW, THEREFORE, IT IS HEREBY STIPULATED AND AGREED, subject to
the approval of the Court, pursuant to Court of Chancery Rule 23, that any and
all claims, rights, demands, actions, causes of action, suits, damages, losses,
obligations, judgments, matters and issues of any kind or nature whatsoever,
whether known or unknown, foreseen, unforeseen or unforeseeable, asserted or
unasserted, contingent or absolute, suspected or unsuspected, disclosed or
undisclosed, hidden or concealed, matured or unmatured, material or immaterial,
which have been, could have been, or in the future can or might be asserted in
the Consolidated Action or in any court, tribunal or proceeding (including, but
not limited to, any claims arising under state or federal law relating to any
alleged fraud, breach of any duty, negligence, violations of federal securities
laws or otherwise) (collectively "Claims") by or on behalf of plaintiffs in the
Consolidated Action and/or any member of the Class (as defined below), whether
individual, class, derivative, representative, legal, equitable or any other
type or in any other capacity, which have arisen, arise now, or hereafter arise
out of or relate in any manner whatsoever, directly or indirectly, to the
allegations, facts, events, transactions, occurrences, acts, statements,
<PAGE> 10
representations, misrepresentations, omissions, or any other matter, thing or
cause whatsoever, or any series thereof, involved, embraced, set forth,
referenced in, or otherwise referred or related to, in any way, directly or
indirectly, any of the Complaints, the Merger Agreement, the Original Proposal,
the Merger Proposal, the Merger, any agreements or disclosures relating to the
Original Proposal, the Merger Proposal, the Merger Agreement or the Merger,
including but not limited to the Proxy Statement, or this Stipulation excepting
only such rights created under this Stipulation (collectively the "Settled
Claims") against any of the defendants in the Consolidated Action, their
families, parent entities, affiliates, associates or subsidiaries, and each of
their present or former officers, directors, stockholders, agents, employees,
attorneys, representatives, advisors, investment advisors, investment bankers,
commercial bankers, financial advisors, trustees, general and limited partners
and partnerships, heirs, executors, personal representatives, estates,
administrators, predecessors, successors, assigns, and any other person or
entity acting for or on behalf of any defendant (collectively, the "Released
Persons") are hereby fully, finally, and forever compromised, extinguished,
dismissed, discharged and released with prejudice subject only to compliance
with the following terms and conditions set forth herein (the "Settlement");
provided however, that the Settled Claims shall not include an action to enforce
compliance with the terms of the Settlement or to prosecute properly perfected
appraisal rights relating to the Merger pursuant to 8 Del. C.
Section 262.

THE SETTLEMENT

1. In consideration for the full settlement, satisfaction,
compromise and
<PAGE> 11
release of the Settled Claims, the Buyer presented Customedix with a Merger
Proposal, which was approved by the Company's Board of Directors, and which,
subject to the approval of the Company's shareholders, will result in the
acquisition by the Buyer of each outstanding share of Customedix common stock
held by stockholders other than the Buyer, Dr. Cohen or the Partnership for
$2.375 per share in cash, thereby increasing the consideration to be received by
Customedix common stockholders under the Merger by $0.4375 per share. Further,
counsel for plaintiffs reviewed and had the opportunity to comment upon
preliminary stockholder disclosure materials relating to the Merger Proposal.
The increased consideration in the Merger Proposal, together with plaintiffs'
review of related disclosure documents, furnishes consideration for plaintiffs'
agreement to release and forever discharge each of the defendants from the
Settled Claims.

SUBMISSION AND APPLICATION TO COURT

2. Within ten (10) days after the execution of the
Stipulation, the parties hereto shall jointly apply to the Court for an order in
the form attached hereto as Exhibit A (the "Scheduling Order"), which shall
include provisions that:

a. Provide for the certification of the Consolidated
Action, for settlement purposes only, as a class action pursuant to Chancery
Court Rules 23(b)(1) and (b)(2), consisting of all record and beneficial owners
of shares of Customedix stock from and including February 5, 1996 through and
including the date of consummation of the Merger as contemplated by the Merger
Agreement, including their successors in interest, predecessors, legal
representatives, trustees, heirs, assigns or transferees, immediate and remote,
and excluding defendants and their affiliates (the "Class"), and certifying the
<PAGE> 12
plaintiffs and their counsel as representative parties for the Class;

b. Provide that the plaintiffs, on whose behalf the
Stipulation has been executed, shall serve as representative parties for the
Class;

c. Direct that a settlement hearing (the "Settlement
Hearing") be held to determine whether the Court should (i) approve the
Settlement pursuant to Court of Chancery Rule 23(e) as fair, reasonable, and
adequate, (ii) enter an Order and Final Judgment dismissing the Consolidated
Action with prejudice and on the merits, each party to bear its own costs
(except as provided herein) and extinguish, release and enjoin prosecution of
any and all Settled Claims, (iii) approve any application of counsel for
plaintiffs for an allowance of fees and reimbursement of expenses in accordance
with paragraph 10 of this Stipulation, and (iv) hear such other matters as the
Court may deem necessary and appropriate; and

d. Provide that a copy of the Notice of Pendency of
Class Action, Proposed Settlement of Class Action and Settlement Hearing (the
"Notice"), substantially in the form attached hereto as Exhibit B, is approved
and that the mailing and provision of the Notice or a summary thereof
substantially in the manner set forth in the Scheduling Order constitutes the
best notice practicable under the circumstances, meets the requirements of
applicable law and due process, is due and sufficient notice of all matters
relating to the Settlement, and fully satisfies the requirements of due process
and of Court of Chancery Rule 23.

NOTICE

3. All costs incurred in identifying and notifying by mail the
members

<PAGE> 13

of the Class of the Settlement, including the printing and copying of the
Notice, will be paid by Customedix.

FINAL ORDER AND JUDGMENT

4. If the Settlement (including any modification thereto made
with the consent of the parties as provided for herein) is approved by the
Court, the parties shall promptly request the Court to enter an Order and Final
Judgment substantially in the form attached hereto as Exhibit C, which among
other things:

a. Approves the Settlement, adjudges the terms
thereof to be fair, reasonable, and adequate, directs consummation of the
Settlement in accordance with the terms and conditions of the Stipulation and
reserves jurisdiction to supervise the consummation of such Settlement;

b. Determines that the requirements of Rule 23 of the
Court of Chancery Rules and due process have been satisfied in connection with
Notice to the Class and formally certifies the Class pursuant to Court of
Chancery Rules 23(b)(1) and 23(b)(2);

c. Dismisses the Consolidated Action with prejudice
on the merits as to all Released Persons, extinguishing, discharging and
releasing any and all Settled Claims as against each plaintiff and each Class
member, without costs except as herein provided, said dismissal subject only to
compliance by the parties and Class members with the terms of this Stipulation
and any Order of the Court concerning this Stipulation, and permanently
enjoining plaintiffs and all members of the Class from asserting, commencing,
prosecuting or continuing either directly, individually,
<PAGE> 14
representatively, derivatively or in any other capacity any of the Settled
Claims; and

d. Without affecting the finality of the Order and
Final Judgment, reserves the Court's jurisdiction over all of the parties and
the Class members for the administration of the terms of this Settlement and
Stipulation.

FINALITY OF SETTLEMENT

5. The Settlement shall be considered final ("Final" or
"Finally Approved") for purposes of this Stipulation upon the later of:

a. the entry of the Order and Final Judgment
approving the Settlement and the expiration of any applicable appeal period for
the appeal of the Order and Final Judgment without an appeal having been filed
or, if an appeal is taken, upon entry of an order affirming the Order and Final
Judgment appealed from and the expiration of any applicable period for the
reconsideration, rehearing or appeal of such affirmance without any motion for
reconsideration or rehearing or further appeal having been filed; or

b. the consummation of the Merger in accordance with
the terms of the Merger Agreement.

RIGHT TO WITHDRAW FROM THE SETTLEMENT

6. Each of the parties shall have the option to withdraw from
and terminate the Settlement in the event that: (i) either the Scheduling Order
or the Order and Final Judgment referred to above are not entered substantially
in the forms specified herein, including such modifications thereto as may be
ordered by the Court with the consent of the parties; (ii) the Settlement is not
approved by the Court or is disapproved or substantially modified upon appeal;
or (iii) the Merger Agreement is not consummated in
<PAGE> 15
accordance with its terms. Defendants shall have the option to withdraw from and
terminate the Settlement in the event that, prior to the time the Settlement
becomes Final, any action is pending in any state or federal court which raises
any Settled Claims against any of the Released Persons.

7. In the event the Settlement proposed herein is not approved
by the Court, or the Court approves the Settlement but such approval is reversed
or vacated on appeal, reconsideration or otherwise and such order reversing or
vacating the Settlement becomes final by lapse of time or otherwise, or if any
of the conditions to such Settlement are not fulfilled, then the Settlement
proposed herein shall be of no further force and effect, and this Stipulation
and all negotiations, proceedings and statements relating thereto and any
amendment thereof shall be null and void and without prejudice to any party
hereto, and each party shall be restored to his, her or its respective position
as it existed prior to the execution of this Stipulation.

8. In order to exercise any option a party may have to
withdraw from and terminate this Settlement, a party must provide, within five
(5) days of the event giving rise to such option, written notice of such
withdrawal and the grounds therefor to all signatories to this Stipulation.

DEFENDANTS' DENIAL OF LIABILITY

9. The defendants specifically disclaim any liability
whatsoever relating to any of the Settled Claims, expressly deny having engaged
in any wrongful or illegal activity, or having violated or threatened to violate
any law or regulation or duty and expressly deny that any person or entity has
suffered any harm or damages as a result of
<PAGE> 16
the Settled Claims. The Court has made no finding that defendants engaged in any
wrongdoing or wrongful conduct or otherwise acted improperly or in violation of
any law or regulation or duty in any respect. The defendants believe they have
acted with the utmost care, candor and honesty, and have at all times acted in
the best interests of the Customedix stockholders. Without conceding any
infirmity in their defenses against the Settled Claims, the defendants are
agreeing to the Settlement solely to avoid the substantial burden, expense,
distraction and inconvenience of continued litigation.

ATTORNEYS' FEES

10. Class Counsel may apply to the Court at any time before
the entry of the Final Judgment for an award of attorneys' fees, expenses and
costs (including expert's fees and expenses) in an aggregate amount not to
exceed $200,000. Defendants will not object to plaintiffs' fee application
provided that such application does not exceed the foregoing amount. Any fee
award to plaintiffs' attorneys shall be paid exclusively by Customedix for the
benefit of the Individual Defendants in the event the Settlement becomes Final.
The fairness, reasonableness and adequacy of the Settlement may be considered
and ruled upon by the Court independently of any award of attorneys' fees and
expenses. Defendants retain the right to oppose any other application for fees
or disbursements by plaintiffs, plaintiffs' counsel or any other person. No
counsel for plaintiffs who have appeared in this action shall apply to any Court
for any fees or disbursements except as provided for in this Paragraph.

11. Subject to the terms and conditions of this Stipulation,
such fees and expenses shall not become payable until the later of (a) the date
on which the Order and
<PAGE> 17
Final Judgment approving the Settlement becomes Final as set forth in paragraph
5 above or (b) three (3) days from the date when the order of the Court granting
the application of plaintiffs' counsel for an award of fees and expenses has
become final and no longer subject to further appeal or review, whether by
exhaustion of any possible appeal, lapse of time or otherwise. Except as
expressly provided herein defendants shall bear no other expenses, costs,
damages, or fees alleged or incurred by the named plaintiffs, or any member of
the Class, or by any of their attorneys, experts, advisors, agents or
representatives.

AUTHORITY

12. Each of the attorneys executing the Stipulation on behalf
of one or more of the parties hereto warrants and represents that he or she has
been duly authorized and empowered to execute this Stipulation on behalf of his
or her respective client or clients.

STIPULATION NOT AN ADMISSION

13. The provisions contained in the Stipulation and all
negotiations, statements and proceedings in connection therewith shall not be
deemed a presumption, a concession or an admission by any defendant of any
fault, liability or wrongdoing as to any fact or claim alleged or asserted in
the Consolidated Action or any other actions or proceedings and shall not be
interpreted, construed, deemed, invoked, offered or received in evidence or
otherwise used by any person in these or any other actions or proceedings,
whether civil, criminal or administrative, except in a proceeding to enforce the
terms or conditions of this Stipulation.
<PAGE> 18
COUNTERPARTS

14. This Stipulation may be executed in any number of actual
or telecopied counterparts and by each of the different parties thereto on
several counterparts, each of which when so executed and delivered shall be an
original. The executed signature page(s) from each actual or telecopied
counterpart may be joined together and attached to one such original and shall
constitute one and the same instrument.

WAIVER

15. The waiver by any party of any breach of this Stipulation
shall not be deemed or construed as a waiver of any other breach, whether prior,
subsequent, or contemporaneous, of this Stipulation.

ENTIRE AGREEMENT; AMENDMENTS

16. This Stipulation constitutes the entire agreement among
the parties with respect to the subject matter hereof, and may not be amended,
or any of its provisions waived, except by a writing executed by all of the
parties hereto.

17. This Stipulation, upon becoming operative, shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors, assigns, heirs, executors and administrators and upon any
corporation, partnership or entity into or with which any party may merge or
consolidate.

18. All of the exhibits hereto are incorporated herein by
reference as if set forth herein verbatim, and the terms of all exhibits are
expressly made part of this Stipulation.

<PAGE> 19
GOVERNING LAW

19. This Stipulation shall be construed and enforced in
accordance with the laws of the State of Delaware, without regard to conflict of
law principles.

BEST EFFORTS

20. The parties hereto and their attorneys agree to cooperate
fully with one another in seeking the Court's approval of this Stipulation and
the Settlement and to use their best efforts to effect the confirmation of this
Stipulation and the Settlement.

21. If any claims which are or would be subject to the release
and dismissal contemplated by the Settlement are asserted against any person in
any court prior to Final Approval of the Settlement, the plaintiffs and their
counsel shall join, where possible, in any motion to dismiss or stay such
proceedings and shall otherwise use their best efforts to effect a withdrawal or
dismissal of the claims.

NON-ASSIGNMENT OF CLAIMS

22. Plaintiffs and their counsel represent and warrant that
(i) plaintiffs are members of the Class, and (ii) none of the plaintiffs' claims
or causes of action in the Consolidated Action have been assigned, encumbered or
in any manner transferred in whole or in part.
<PAGE> 20
Of Counsel: ___________________
Norman M. Monhait
John G. Day
Robert M. Kornreich Rosenthal, Monhait, Gross &
Wolf Popper Ross Wolf & Jones, LLP Goddess, P.A.
845 Third Avenue 919 Market Street, Suite 1401
New York, NY 10022 Mellon Bank Center
(212) 759-4600 P. O. Box 1070
Co-Lead Counsel for Plaintiffs Wilmington, Delaware 19899
(302) 656-4433
Faruqi & Faruqi, L.L.P. Delaware Liaison Counsel
415 Madison Avenue for Plaintiffs
New York, NY 10017
Co-Lead Counsel for Plaintiffs
Wechsler Harwood Halebian & Feffer,
L.L.P.
805 Third Avenue, 7th Floor
New York, NY 10022
Co-Lead Counsel for Plaintiffs

Of Counsel: _________________
Kevin G. Abrams
John Sanders Srinivas M. Raju
Levett, Rockwood & Sanders Richards, Layton & Finger
Professional Corporation One Rodney Square
33 Riverside Avenue P.O. Box 551
P.O. Box 5116 Wilmington, Delaware 19899
Westport, CT 06881 (302) 651-7720
(203) 222-0885 Attorneys for Dr. Gordon S. Cohen

___________________
Stephen E. Jenkins
Of Counsel: Ashby & Geddes
One Rodney Square, Suite 302
James M. Thorburn P.O. 1150
Brody and Ober, P.C. Wilmington, DE 19899
135 Rennell Drive (302) 654-1888
P.O. Box 579 Attorneys for Remaining Defendants
Southport, CT 06490-5572
(203) 259-7405

Dated: July 26, 1996
<PAGE> 21
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

IN AND FOR NEW CASTLE COUNTY

)
IN RE CUSTOMEDIX CORPORATION ) Consolidated
SHAREHOLDERS LITIGATION ) Civil Action No. 14812
)

ORDER PURSUANT TO CHANCERY COURT RULE 23

The parties to the above-captioned action (the "Consolidated Action")
having applied pursuant to Chancery Court Rule 23(e) for an Order to approve the
proposed settlement of the Consolidated Action in accordance with the
Stipulation of Settlement entered into by the parties, dated as of July 26, 1996
(the "Stipulation"), and for the dismissal of the Consolidated Action with
prejudice upon the terms and conditions set forth in the Stipulation (the
"Settlement"), and the Stipulation contemplating certification by this Court
(the "Court") of a class in the Consolidated Action, solely for purposes of
settlement, and the Court having read and considered the Stipulation and
accompanying documents, and all parties having consented to the entry of this
Order,

NOW, this ___ day of _______________, 1996, upon application of
plaintiffs and defendants, IT IS HEREBY ORDERED as follows:

1. The Court adopts and incorporates the definitions in the Stipulation
for purposes of this Order.
<PAGE> 22
2. Solely for purposes of the Settlement, (a) the Consolidated Action
shall be maintained as a class action pursuant to Chancery Court Rules 23(b)(1)
and (b)(2), on behalf of a class composed of all record and beneficial owners of
shares of Customedix stock from and including February 5, 1996 through and
including the date of consummation of the Merger involving Customedix
Corporation ("Customedix" or the "Company") as contemplated by the Merger
Agreement, including their successors-in-interest, predecessors, legal
representatives, trustees, heirs, assigns or transferees, immediate and remote,
and excluding defendants and their affiliates (the "Class"); (b) it is found
that plaintiffs are adequately represented by counsel and that plaintiffs will
fairly and adequately protect the interests of the Class; and (c) the law firms
of Wolf Popper Ross Wolf & Jones, L.L.P.; Faruqi & Faruqi, L.L.P.; and Wechsler
Harwood Halebian & Feffer LLP are certified as co-lead counsel for the Class
("Class Counsel").

3. The Court has found preliminarily that (a) the Class is so numerous
that joinder of all members is impracticable, (b) there are questions of law or
fact common to the Class, (c) the claims of the representative parties are
typical of the claims or defenses of the Class, and (d) the representative
parties will fairly and adequately protect the interests of the Class. The Court
has further found that (a) the prosecution of separate actions by or against
individual members of the Class would create a risk of (i) inconsistent or
varying adjudications which would establish incompatible standards of conduct
for the parties opposing the Class or (ii) adjudications which would as a
practical matter be dispositive of the interests of the other Class members not
parties to the

<PAGE> 23
adjudications or substantially impair or impede the ability of other Class
members to protect their interests or (b) the parties opposing the Class have
acted or refused to act on grounds generally applicable to the Class, thereby
making appropriate final injunctive relief or corresponding declaratory relief
with respect to the Class as a whole.

4. A hearing shall be held on August 26, 1996, at 11:00 a.m.
in the Court of Chancery in the Daniel L. Herrmann Courthouse, 10th & King
Streets, Wilmington, Delaware (the "Settlement Hearing") (a) to determine
whether the proposed Settlement on the terms and conditions set forth in the
Stipulation is fair, reasonable, and adequate, (b) to determine whether the
Stipulation and the Settlement should be approved by the Court and an Order and
Final Judgment as provided in the Stipulation entered thereon, and (c) to hear
and determine any objections to the Settlement. At the Settlement Hearing, Class
Counsel may apply for an award of attorneys' fees and expenses as set forth in
Paragraphs 10-11 of the Stipulation, which application shall be heard by the
Court at the Settlement Hearing or at such time thereafter as the Court in its
discretion deems appropriate.

5. The Court reserves the right to adjourn the Settlement Hearing,
including consideration of the application for attorneys' fees and costs,
without further notice other than by announcement at the Settlement Hearing or
any adjournment thereof.

6. The Court reserves the right to approve the Settlement at or after
the Settlement Hearing with such modifications as may be consented to by the
parties to the Stipulation and without further notice to the stockholders of
Customedix. The Court further reserves the right to enter its Order and Final
Judgment dismissing the
<PAGE> 24
Consolidated Action as to all defendants with prejudice as against the
plaintiffs, all members of the Class, and each of them, and their respective
representatives, trustees, successors, heirs and assigns, and order the payment
of attorneys' fees, all without further notice to the Class.

7. The Court approves of the form, content and method of the Notice of
Proposed Settlement of Class Action specified herein as the best notice
practicable, constituting due and sufficient notice of the Settlement Hearing to
all persons entitled to receive such notice. Customedix shall, on or before the
date of the Settlement Hearing directed herein, file proof of mailing of the
Notice as directed herein.

8. Within three (3) business days of the date of this Order, Customedix
shall mail, by first-class mail, postage prepaid, a Notice of Pendency of Class
Action, Proposed Settlement of Class Action and Settlement Hearing (the
"Notice") substantially in the form attached to the Stipulation as Exhibit B,
which shall have attached to it a copy of the proposed Order and Final Judgment
(Exhibit C to the Stipulation) to all record owners of Customedix stock from and
including February 5, 1996 through and including July 26, 1996. Customedix also
shall include a copy of the Notice when Customedix mails the Proxy Statement to
each holder of Customedix stock as of the record date for the Merger. On or
immediately after the days on which (i) the Court enters the Order and Final
Judgment and (ii) the Order and Final Judgment becomes Final, Customedix shall
file a Form 8-K with the Securities and Exchange Commission and issue a press
release summarizing the effect of the action occurring that day. The expenses of
such notices shall be paid in accordance with the Stipulation.
<PAGE> 25
9. Brokerage firms and other persons or entities who are members of the
Class in their capacity as record owners, but not as beneficial owners, are
requested to send promptly to the beneficial owners the Notice and to maintain a
list of beneficial owners. Customedix shall make available additional copies of
the Notice to any record holder requesting such for the purpose of distribution
to the beneficial owners.

10. Any member of the Class who objects to the Stipulation, the
Settlement, the class action determination, the judgment to be entered herein,
and/or the application for attorneys' fees and expenses, or who otherwise wishes
to be heard, may appear in person or by his attorney at the Settlement Hearing
and present any evidence or argument that may be proper and relevant; provided,
however, that no person other than plaintiffs, counsel for the plaintiffs,
defendants and counsel for defendants in the Consolidated Action shall be heard,
and no papers, briefs, pleadings or other documents submitted by any such person
shall be received and considered by the Court (unless the Court in its
discretion shall thereafter otherwise direct, upon application of such person
and for good cause shown), unless no later than ten (10) days prior to the
Settlement Hearing directed herein, the following documents are served and filed
in the manner provided below: (i) written notice of the intention to appear;
(ii) proof of membership in the Class; (iii) a detailed statement of such
persons' specific objections to any matter before the Court; and (iv) the
grounds for such objections and any reasons why such person desires to appear
and to be heard, as well as all documents and writings which such person desires
the Court to consider, shall be filed by such person with the Register in
Chancery and, on or before such filing, shall be served upon the following
counsel of record:
<PAGE> 26
Joseph A. Rosenthal, Esq.
Rosenthal Monhait Gross & Goddess
919 Market Street, Suite 1401
Mellon Bank Center
Wilmington, DE 19801
Delaware Liaison Counsel for Plaintiffs

Kevin G. Abrams, Esq.
Richards, Layton & Finger
One Rodney Square
P.O. Box 551
Wilmington, Delaware 19899
Attorneys for Dr. Gordon S. Cohen

Stephen E. Jenkins, Esq.
Ashby & Geddes
One Rodney Square, Suite 302
P.O. Box 1150
Wilmington, Delaware 19899
Attorneys for Certain Defendants

11. Any person who fails to object in the manner prescribed above shall
be deemed to have waived such objection and shall be forever barred from raising
such objection in the Consolidated Action or any other action or proceeding.

12. Pending final determination of whether the Stipulation should be
approved, plaintiffs and all members of the Class, or any of them, are barred
and enjoined from commencing or prosecuting any action asserting any claims,
either directly, representatively, derivatively or in any other capacity,
against any Released Person herein which are Settled Claims as defined in the
Stipulation.

13. If the Settlement provided for in the Stipulation shall be approved
by the
<PAGE> 27
Court following the Settlement Hearing, an Order and Final Judgment shall be
entered as described in the Stipulation.

14. If the Settlement is not approved by the Court or is terminated or
shall not become effective for any reason whatsoever, the Consolidated Action
shall proceed, completely without prejudice to any party as to any matter of law
or fact, as if the Stipulation had not been made and had not been submitted to
the Court (including the certification of the Class pursuant to this Order), and
neither the Stipulation nor any provision contained in the Stipulation nor any
action undertaken pursuant thereto nor the negotiation thereof by any party
shall be deemed an admission or offered or received in evidence at any
proceeding in the Consolidated Action or any other action or proceeding.

__________________________________
Vice Chancellor

<PAGE> 28

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

IN AND FOR NEW CASTLE COUNTY

IN RE CUSTOMEDIX CORPORATION Consolidated
SHAREHOLDERS LITIGATION Civil Action No. 14812

NOTICE OF PENDENCY OF CLASS ACTION, PROPOSED
SETTLEMENT OF CLASS ACTION AND SETTLEMENT HEARING

TO: ALL RECORD AND BENEFICIAL OWNERS OF SHARES OF CUSTOMEDIX
CORPORATION ("CUSTOMEDIX" OR THE "COMPANY") STOCK, FROM AND
INCLUDING FEBRUARY 5, 1996 THROUGH AND INCLUDING THE DATE OF
CONSUMMATION OF THE MERGER AS CONTEMPLATED BY THE MERGER
AGREEMENT, INCLUDING THEIR SUCCESSORS-IN-INTEREST, PREDECESSORS,
LEGAL REPRESENTATIVES, TRUSTEES, HEIRS, ASSIGNS OR TRANSFEREES,
IMMEDIATE AND REMOTE, AND EXCLUDING DEFENDANTS AND THEIR
AFFILIATES.

PLEASE READ THIS NOTICE CAREFULLY AND IN ITS ENTIRETY. YOUR
RIGHTS WILL BE AFFECTED BY THE LEGAL PROCEEDINGS IN THIS
LITIGATION. IF YOU WERE NOT THE BENEFICIAL HOLDER OF CUSTOMEDIX
STOCK, BUT HELD CUSTOMEDIX STOCK FOR A BENEFICIAL HOLDER, PLEASE
TRANSMIT THIS DOCUMENT TO SUCH BENEFICIAL HOLDER.

1. This notice to all record and beneficial owners of shares of Customedix
stock from and including February 5, 1996 through and including the date of
consummation of the Merger as contemplated by the Merger Agreement, including
their successors-in-interest, predecessors, legal representatives, trustees,
heirs, assigns or transferees, immediate and remote, and excluding defendants
and their affiliates (the "Class"), is given pursuant to Rule 23 of the Rules of
the Court of Chancery of the State of Delaware and pursuant to an Order of the
Court of Chancery of the State of Delaware in and for New Castle County (the
"Court") entered in the above-captioned action (the "Consolidated Action").

SETTLEMENT HEARING

2. Members of the Class have an interest in these proceedings and are
hereby notified that a hearing will be held before the Court of Chancery, Daniel
L. Herrmann Courthouse, 10th & King Streets, Wilmington, Delaware 19801 on
August 27, 1996, at 11:00 a.m. (the "Settlement Hearing"), to determine whether
(i) a Stipulation of Settlement dated July 25, 1996 (the "Stipulation"), and the
terms and conditions of the settlement proposed in the Stipulation (the
"Settlement"), are fair, reasonable and adequate; (ii) a class should be
certified in the Consolidated Action; (iii) final judgment should be entered (in
the form attached hereto) dismissing the Consolidated Action as to all
defendants named herein and their affiliates and with prejudice as against the
plaintiffs and all members of the Class (the "Order and Final Judgment"); (iv)
any objections to the Settlement have merit; and (v) if the Court approves the
Stipulation and the Settlement and enters the Order and Final Judgment, it
should award attorneys' fees and expenses to plaintiffs' attorneys in the amount
described herein.

3. The Court has reserved the right to adjourn the Settlement Hearing,
including consideration of the application for attorneys' fees and expenses, by
oral announcement at such hearing or any adjournment thereof, and without
further notice of any kind. The Court also has reserved the right to approve the
Stipulation and the Settlement, with or without modifications, to enter its
final judgment dismissing the Consolidated Action as to all defendants named
therein and their affiliates and with prejudice as against the
<PAGE> 29

plaintiffs and all members of the Class, and to order the payment of attorneys'
fees and expenses, without further notice of any kind.

THE FACTUAL BACKGROUND

4. Customedix Corporation ("Customedix" or the "Company") is a Delaware
corporation with its principal executive offices in Wallingford, Connecticut.
Customedix is engaged in two principal industry segments: dental health care
products and medical health care products.

5. Dr. Gordon S. Cohen is the Company's Chief Executive Officer and
Chairman of its Board of Directors.

6. CUS Acquisition, Inc. (the "Buyer") is a Delaware corporation that will
be wholly-owned by Dr. Cohen and a partnership comprised of trusts established
for the benefit of Dr. Cohen and certain members of Dr. Cohen's family (the
"Partnership"). The Buyer was recently organized for the purpose of effecting a
merger with the Company. The Buyer will own approximately 51.07% of the issued
and outstanding shares of common stock of Customedix prior to the consummation
of the Merger (as hereinafter defined).

7. Martin L. Schulman, William T. Fitch, Elry C. Bird, Robert S. Cooper,
David H. Leigh and Robert N. Thomas, together with Dr. Cohen (collectively, the
"Individual Defendants"), have constituted the Customedix Board of Directors
(the "Board") from February 5, 1996 until present. On May 13, 1996, Adraine J.
Tom also became a Director of the Company.

8. At a regularly scheduled meeting of the Board held on February 5, 1996,
Dr. Cohen delivered to the Company a proposal to acquire all of the common
shares of Customedix ("Common Stock") held by stockholders, other than Dr. Cohen
and the Partnership, in a negotiated cash merger for $1.9375 per share in cash
(the "Original Proposal").

9. In response to the Original Proposal, the Board appointed a special
committee consisting of Messrs. Fitch and Thomas, each an independent,
non-employee director of the Company (the "Original Special Committee"). The
Original Special Committee was charged with, among other things, representing
the interests of the unaffiliated stockholders of the Company and taking any and
all actions necessary or advisable in connection with the evaluation and, if
appropriate, the approval of the Original Proposal. Following the February 5,
1996 Board meeting, the Original Special Committee formally engaged Brody and
Ober, P.C., as legal counsel, and Tucker Anthony Incorporated ("Tucker
Anthony"), as financial advisor, with respect to the Original Proposal and
related matters. After such appointment and prior to May 3, 1996, the Original
Special Committee met on several occasions with its advisors.

10. On February 6, 1996, four putative class action complaints were filed
in the Delaware Court of Chancery, which suits are styled as follows: Katz v.
Cohen, et. al., C. A. No. 14812; Manillo v. Cohen, et. al., C.A. No. 14813;
Thomas Torre v. Cohen, et. al., C.A. No. 14814; and Sylvia Torre v. Cohen, et.
al., C.A. No. 14818 (collectively, the "Complaints"). The Complaints generally
allege that the course of conduct taken by Dr. Cohen in proposing, and by the
Company and the other directors in responding to, the Original Proposal was in
violation of the Board's fiduciary duty to the Company's stockholders. The
Complaints all seek (i) to enjoin the Original Proposal, or, in the alternative,
(ii) damages.

11. On May 3, 1996, the Original Special Committee and its counsel met with
representatives of the Buyer and its counsel to negotiate the terms of the
Original Proposal. At that meeting, the Buyer suggested that negotiations over
the proposed price might be more productive if the Buyer understood the
information on which the Original Special Committee was relying as well as the
analysis of that information by the Original Special Committee and/or Tucker
Anthony. The Original Special Committee distributed to the Buyer and its counsel
the information prepared by Tucker Anthony and on which Tucker Anthony was
relying in rendering advice to the Original Special Committee (the "Tucker
Anthony Materials"). The parties agreed that they would engage in further
discussion after the Buyer had an opportunity to review the Tucker Anthony
Materials, and that a representative of Tucker Anthony should be present during
such discussion.

2
<PAGE> 30

12. On May 8, 1996, the Original Special Committee, representatives of the
Buyer, their respective counsel and representatives of Tucker Anthony met to
discuss the Tucker Anthony Materials and to negotiate a price in connection with
the Original Proposal. After considerable discussion, both parties remained far
apart on pricing with Tucker Anthony's representative indicating that he
believed the Tucker Anthony Committee which would have to approve an opinion as
to the fairness of the price would certainly support a price of $3.25 per share,
probably support a price of $3.00 per share and perhaps a price as low as $2.90
per share. The Buyer indicated that it could not reach a price within the range
suggested by the representative of Tucker Anthony, and the representative of
Tucker Anthony indicated that he did not believe it would be worthwhile to seek
to have Tucker Anthony consider rendering an opinion as to the fairness of a
price lower than that range. The meeting concluded without an agreement on
price.

13. Following the meeting, the Tucker Anthony representative advised the
chairman of the Special Committee and counsel to the Special Committee that if
Dr. Cohen wished to submit a price to Tucker Anthony for consideration, Tucker
Anthony would advise the Special Committee as to its view of the fairness of
such price. However, such advice would require payment by the Company of the
$40,000 additional fee due to Tucker Anthony upon rendering of an opinion. Dr.
Cohen refused to accept Tucker Anthony's condition for its consideration of an
increased offer.

14. Later on May 8, Dr. Cohen advised the Company that he was withdrawing
the offer under the Original Proposal.

15. On June 3, 1996, the Court entered an order consolidating the
Complaints for all purposes under the caption In Re Customedix Corporation
Shareholder Litigation, Cons. C.A. No. 14812 (the "Consolidated Action").

16. Also on June 3, 1996, counsel for Dr. Cohen engaged in settlement
discussions with counsel for plaintiffs in the Consolidated Action. In
connection with those discussions, on June 3, 1996, Dr. Cohen's attorneys
informed the plaintiffs' attorneys that Dr. Cohen was willing to consider
another merger proposal, provided the parties to the litigation could reach an
agreement-in-principle to settle such litigation. After further arm's-length
negotiations, the parties to the litigation, by their respective attorneys,
entered into a Memorandum of Understanding on June 3, 1996, setting forth such
an agreement-in-principle (the "MOU").

17. The MOU provided that Dr. Cohen and the Partnership agreed to make a
merger proposal to the Company pursuant to which, subject to the approval of a
merger agreement by Dr. Cohen, the Board and the stockholders of the Company,
and further subject to the approval of the settlement by the Court, the Buyer
would be merged with and into the Company, and each share of Common Stock (other
than shares (i) held in the treasury of the Company, (ii) owned by the Buyer and
(iii) held by stockholders who had not voted in favor of the Merger and who had
otherwise properly exercised their rights for appraisal of such shares in
accordance with Section 262 of the DGCL) would be converted into the right to
receive, upon surrender of the certificate evidencing such share, $2.375 per
share (the "Merger Consideration"), thereby increasing the consideration to be
received by Customedix common stockholders under the Merger by $0.4375 per share
(the "Merger Proposal").

18. The MOU was subject to various conditions including the completion of
discovery sufficient to enable plaintiffs' counsel to determine the fairness of
the Settlement; the execution of a Stipulation of Settlement; consummation of a
merger pursuant to the Merger Proposal; and Final Approval by the Court of
Chancery of the Settlement.

19. On June 4, 1996, Dr. Cohen delivered the Merger Proposal to the
Company. In response to the Merger Proposal, the Board reconstituted the Special
Committee (the "Special Committee"), consisting of the Original Special
Committee and Adraine J. Tom, another independent, non-employee director of the
Company. The Special Committee was charged, among other things, to represent the
interests of the unaffiliated stockholders of the Company and take any and all
actions necessary or advisable in connection with the evaluation and, if
appropriate, the approval of the Merger Proposal. The Special Committee
indicated that it intended to continue to engage Brody and Ober, P.C., as legal
counsel. As a result of the discussions with Tucker Anthony on May 8, 1996, and
given the terms and conditions of the MOU and the role of

3
<PAGE> 31

plaintiffs' counsel in connection therewith, neither Tucker Anthony nor any
other financial advisor was retained to deliver an opinion with respect to the
fairness of the Merger Consideration.

20. After its appointment, the Special Committee held several telephonic
meetings with its legal advisors to evaluate the Merger Proposal and the MOU,
and the Special Committee and the Buyer, through their legal advisors, held
discussions regarding, and agreed upon certain revisions to, the Agreement and
Plan of Merger, dated as of June 10, 1996 (the "Merger Agreement"), pursuant to
which the Buyer will be merged with and into the Company (the "Merger"). Under
the Merger Agreement, the obligations of the Buyer and the Company are subject
to several conditions, including the approval of the Settlement by the Delaware
Court of Chancery.

21. On June 10, 1996, the Special Committee met and unanimously determined
that the Merger Proposal was fair to, and in the best interests of, the
stockholders of the Company (other than Dr. Cohen and the Partnership), and
unanimously voted to recommend that the Board accept the Merger Proposal and
approve the Merger Agreement and the Merger. After considering the
recommendations of the Special Committee, the independent directors of the Board
unanimously approved the Merger Proposal and the Merger Agreement. Thereafter,
the full Board likewise unanimously approved the Merger Proposal and the Merger
Agreement, and the Merger Agreement was executed immediately thereafter.

22. Pursuant to the MOU, plaintiffs' counsel reviewed defendants' document
production in the litigation, conducted the depositions of Adraine Tom (a member
of the Special Committee) and Dr. Gordon Cohen (the originator of the Merger
Proposal), and reviewed preliminary stockholder disclosure materials relating to
the Merger Proposal, including a preliminary draft of the proxy statement filed
with the Securities and Exchange Commission on July 2, 1996 with respect to the
Merger (the "Proxy Statement"). The Proxy Statement is expected to be mailed to
the Company's stockholders on or about August 15, 1996. The special meeting of
the Company's stockholders to consider the Merger Agreement is expected to be
held on or about September 19, 1996.

23. In light of the events, negotiations and agreements described above,
analysis of applicable law, and based on the discovery taken in the Consolidated
Action, and after consultation with their financial expert Howard, Lawson & Co.,
counsel for plaintiffs have concluded that the terms and conditions of the
Settlement provided for in the Stipulation are fair, reasonable, and adequate to
the plaintiffs and the class of stockholders represented in the Consolidated
Action.

24. Plaintiffs enter into the Stipulation after taking into account (i) the
financial benefits to the members of the Class (as defined below) from the
Merger Proposal and the Merger Agreement, (ii) the risk of continued litigation,
(iii) the desirability of permitting the Settlement to be consummated as
provided by the terms of this Stipulation, and (iv) the conclusion of counsel
for plaintiffs that the terms and conditions of the Settlement are fair,
reasonable and adequate to the Customedix stockholders represented in the
Consolidated Action. Plaintiffs and plaintiffs' counsel have agreed to the terms
of the Settlement because, in their view, the Settlement achieves plaintiffs'
objectives in the litigation, which were to assure that Customedix stockholders
received fair value in exchange for their stock, and to provide independent
representation for Customedix stockholder interests.

25. Customedix and the Individual Defendants consider the Merger Agreement
and its terms to have satisfied all of the claims asserted in the Complaints.

26. Defendants have denied and continue to deny vigorously any liability
with respect to all claims alleged in any of the Complaints, or any other claims
arising out of the transactions described above. While maintaining their
innocence of any fault or wrongdoing, and relying on the provision hereof that
this Stipulation shall in no event be construed as or deemed to be evidence of
an admission or concession on the part of defendants or any Released Person (as
defined below) of any fault or liability whatsoever, and without conceding any
infirmity in their defenses against the claims alleged in the Complaints,
defendants consider it desirable that the Consolidated Action be settled and
dismissed, subject to the terms and conditions herein, because the Settlement
will (i) halt the substantial expense, inconvenience and distraction of
continued

4
<PAGE> 32

litigation of plaintiffs' claims; (ii) finally put to rest those claims; and
(iii) dispel any uncertainty that may exist as a result of this litigation.

SUMMARY OF THE SETTLEMENT

27. In consideration of the benefits afforded the Class, as summarized
herein, the parties to the Consolidated Action have agreed to settle the
Consolidated Action upon the terms described below.

28. In consideration for the full settlement, satisfaction, compromise and
release of the Settled Claims (as defined below), and in furtherance of the
Merger Proposal and the Merger Agreement, the Buyer has proposed a merger, and
the Board has approved the Buyer's Merger Proposal, which will convert all of
the outstanding shares of Customedix not owned by the Buyer, Dr. Cohen or the
Partnership into the right to receive $2.375 per share in cash. Further, counsel
for plaintiffs reviewed and commented on preliminary shareholder disclosure
materials relating to the Merger Proposal. The increased consideration in the
Merger Proposal, together with plaintiffs' review of related disclosure
documents, furnishes consideration for plaintiffs' agreement to release and
forever discharge each of the defendants from the Settled Claims.

29. If the Stipulation and the Settlement are approved by the Court, the
Court will enter an Order and Final Judgment which, among other things, will
provide that: the Consolidated Action and any and all claims, rights, demands,
actions, causes of action, suits, damages, losses, obligations, judgments,
matters and issues of any kind or nature whatsoever, whether known or unknown,
foreseen, unforeseen or unforeseeable, asserted or unasserted, contingent or
absolute, suspected or unsuspected, disclosed or undisclosed, hidden or
concealed, matured or unmatured, material or immaterial, which have been, could
have been, or in the future can or might be asserted in the Consolidated Action
or in any court, tribunal or proceeding (including, but not limited to, any
claims arising under state or federal law relating to any alleged fraud, breach
of any duty, negligence, violations of federal securities laws or otherwise)
(collectively "Claims") by or on behalf of plaintiffs in the Consolidated Action
and/or any member of the Class, whether individual, class, derivative,
representative, legal, equitable or any other type or in any other capacity,
which have arisen, arise now, or hereafter arise out of or relate in any manner
whatsoever, directly or indirectly, to the allegations, facts, events,
transactions, occurrences, acts, statements, representations,
misrepresentations, omissions, or any other matter, thing or cause whatsoever,
or any series thereof, involved, embraced, set forth, referenced in, or
otherwise referred or related to, in any way, directly or indirectly, the
Consolidated Action, any of the Complaints, the Merger Agreement, the Original
Proposal, the Merger Proposal, the Merger, any agreements or disclosures
relating to the Original Proposal, the Merger Proposal, the Merger Agreement or
the Merger, including but not limited to the Proxy Statement, or the
Stipulation, excepting only such rights created under the Stipulation
(collectively, the "Settled Claims"), against any of the defendants in the
Consolidated Action, their families, parent entities, affiliates, associates or
subsidiaries, and each of their present or former officers, directors,
stockholders, agents, employees, attorneys, representatives, advisors,
investment advisors, investment bankers, commercial bankers, financial advisors,
trustees, general and limited partners and partnerships, heirs, executors,
personal representatives, estates, administrators, predecessors, successors,
assigns, and any other person or entity acting for or on behalf of any of the
defendants (collectively, the "Released Persons") are hereby fully, finally, and
forever compromised, extinguished, dismissed, discharged and released with
prejudice, and all members of the Class shall be forever barred from prosecuting
a class action or any other action arising out of or relating in any way to the
Settled Claims against any of the Released Persons; provided however, that the
Settled Claims shall not include an action to enforce compliance with the terms
of the Settlement or to prosecute properly perfected appraisal rights relating
to the Merger pursuant to 8 Del. C. sec. 262. A copy of the proposed form of the
Order and Final Judgment, to be entered by the Court upon the approval of the
settlement, is attached hereto.

30. THE COURT HAS NOT FINALLY DETERMINED THE MERITS OF THE CLAIMS MADE BY
PLAINTIFFS AGAINST, OR THE DEFENSES OF, THE DEFENDANTS. THIS NOTICE DOES NOT
IMPLY THAT THERE HAS BEEN OR WOULD BE ANY FINDING OF VIOLATION OF THE LAW OR
THAT RELIEF IN ANY FORM OR RECOVERY IN ANY AMOUNT COULD BE HAD IF THE
CONSOLIDATED ACTION WERE NOT SETTLED.

5
<PAGE> 33

DISMISSAL AND RELEASE

31. It is the intent of the parties to the Consolidated Action that the
proposed Settlement shall extinguish for all time all rights, claims and causes
of action that are or relate to the Settled Claims against any of the Released
Persons.

32. The Settlement shall be considered final ("Final," "Final Approval" or
"Finally Approved") and become effective upon the later of:

i. the entry of the Order and Final Judgment approving the Settlement
and the expiration of any applicable appeal period for the appeal of the
Order and Final Judgment without an appeal having been filed or, if an
appeal is taken, upon entry of an order affirming the Order and Final
Judgment appealed from and the expiration of any applicable period for the
reconsideration, rehearing or appeal of such affirmance without any motion
for reconsideration or rehearing or further appeal having been filed; or

ii. the consummation of the Merger in accordance with the terms of the
Merger Agreement.

33. In the event that the Settlement does not become Final, then the
Settlement shall be of no further force and effect and each party shall be
restored to his, her or its respective position prior to entering into the
Stipulation, except that all costs incurred in connection with notifying the
Class of the proposed Settlement shall be the obligation of Customedix. Under
the Stipulation, the parties have various rights to withdraw from and terminate
the Settlement, including the failure of the parties to consummate the Merger in
accordance with the Merger Agreement.

34. If the Settlement is approved by the Court, the Consolidated Action
will be dismissed on the merits with respect to all defendants and with
prejudice against plaintiffs and all members of the Class. The Stipulation
provides that the Settlement is a full compromise, settlement and release of all
claims, known or unknown, which have been or which could have been asserted by
plaintiffs or any other member of the Class against any of the Released Persons
arising now or hereafter from or relating to matters alleged in the Consolidated
Action, the Complaints, the Merger Agreement, the Original Proposal, the Merger
Proposal, the Merger, any agreements or disclosures relating to the Original
Proposal, the Merger Proposal, the Merger Agreement or the Merger, including but
not limited to the Proxy Statement, or the Stipulation. Under the terms of the
Stipulation, such release and dismissal will bar the institution or prosecution
by plaintiffs or any member of the Class, of any other action asserting any
Settled Claim against any of the Released Persons.

ATTORNEYS' FEES

35. Class counsel has agreed with the attorneys for defendants to apply to
the Court for an award of attorneys' fees and expenses (including expert's fees
and expenses) to class counsel in an aggregate amount not to exceed $200,000.
The defendants will not oppose any such fee application provided that it does
not exceed the foregoing amount. Any fee award to class counsel shall be paid
exclusively by Customedix for the benefit of the Individual Defendants in the
event the Settlement becomes Final. The fairness, reasonableness and adequacy of
the Settlement may be considered and ruled upon by the Court independently of
any award of attorneys' fees and expenses. Defendants retain the right to oppose
any other application for fees or disbursements by plaintiffs, plaintiffs'
counsel or any other person. No counsel for plaintiffs who have appeared in this
action may apply to any Court for any fees or disbursements except as provided
for in this Paragraph.

CLASS CERTIFICATION

36. On July 31, 1996, the Court entered an order (the "Scheduling Order")
determining preliminarily and solely for purposes of the Settlement, that the
Consolidated Action may be maintained as a class action by plaintiffs as
representative of the Class, and naming the law firms of Wolf Popper Ross Wolf &
Jones, L.L.P.; Wechsler Harwood Halebian & Feffer, LLP; and Faruqi & Faruqi,
L.L.P. as counsel for the Class ("Class Counsel"), pursuant to Chancery Court
Rules 23(b)(1) and (b)(2). The Scheduling Order also determined that, for
purposes of the Settlement, the claims of plaintiffs are typical of the Class,
plaintiffs will fairly and adequately protect the interests of the Class, and
the named plaintiffs are adequately represented by counsel.

6
<PAGE> 34

The Court will consider these issues further at the Settlement Hearing. Any
communications by Class members with plaintiffs and Class Counsel may be
directed to:

Joseph A. Rosenthal, Esq.
Rosenthal Monhait Gross & Goddess
919 Market Street, Suite 1401
Mellon Bank Center
Wilmington, DE 19801
Delaware Liaison Counsel for Plaintiffs

RIGHT TO APPEAR AT SETTLEMENT HEARING

37. Any Class member who objects to the Stipulation, the Settlement, the
class action determination, the Order and Final Judgment to be entered herein,
and/or the application for attorneys' fees and expenses, or who otherwise wishes
to be heard, may appear in person or by his attorney at the Settlement Hearing
and present any evidence or argument that may be proper and relevant; provided,
however, that no person other than the named plaintiffs, defendants and their
counsel in this action shall be heard, and no papers, briefs, pleadings or other
documents submitted by any such person shall be received or considered by the
Court (unless the Court in its discretion shall thereafter otherwise direct,
upon application of such person and for good cause shown), unless no later than
August 17, 1996, a date ten (10) days prior to the Settlement Hearing, (i) a
written notice of the intention to appear; (ii) proof of membership in the
Class; (iii) a detailed statement of such person's objections to any matter
before the Court, and (iv) the grounds therefor or the reasons why such person
desires to appear and to be heard, as well as all documents and writings which
such person desires the Court to consider, shall be filed by such person with
the Register in Chancery and, on or before such filing, shall be served by hand
or first class mail, postage prepaid, upon the following counsel of record:

Joseph A. Rosenthal, Esq.
Rosenthal Monhait Gross & Goddess
919 Market Street, Suite 1401
Mellon Bank Center
Wilmington, DE 19801
Delaware Liaison Counsel for Plaintiffs

Kevin G. Abrams, Esq.
Richards, Layton & Finger
One Rodney Square
P.O. Box 551
Wilmington, Delaware 19899
Attorneys for Dr. Gordon S. Cohen

Stephen E. Jenkins, Esq.
Ashby & Geddes
One Rodney Square, Suite 302
P.O. Box 1150
Wilmington, Delaware 19899
Attorneys for Certain Defendants

Any person who fails to object in the manner prescribed above shall be
deemed to have waived such objection and shall be forever barred from raising
such objection in this or any other action or proceeding.

INTERIM INJUNCTION

38. Pending final determination of whether the Stipulation should be
approved, the plaintiffs and all members of the Class, and each of them, and any
of their respective representatives, trustees, successors, heirs

7
<PAGE> 35

and assigns shall not commence or prosecute any action either directly or in any
other capacity which asserts Settled Claims against any of the Released Persons.

SCOPE OF THIS NOTICE AND FURTHER INFORMATION

39. This Notice does not purport to be a comprehensive description of the
Consolidated Action, the allegations or transactions related thereto, the MOU,
the terms of the Settlement or the Settlement Hearing. For a more detailed
statement of the matters involved in this litigation, you may inspect the
pleadings, the Stipulation, the Orders entered by the Chancery Court and other
papers filed in the litigation, unless sealed, at the Office of the Register in
Chancery of the Court of Chancery of the State of Delaware, Daniel L. Herrmann
Courthouse, 10th & King Streets, New Castle County, Wilmington, Delaware, during
regular business hours of each business day. DO NOT WRITE OR TELEPHONE THE
COURT.

NOTICE TO PERSONS OR ENTITIES HOLDING
RECORD OWNERSHIP ON BEHALF OF OTHERS

40. Brokerage firms, banks and other persons or entities who are members of
the Class in their capacities as record owners, but not as beneficial owners,
are requested to send this Notice promptly to beneficial owners. Additional
copies of this notice for transmittal to beneficial owners are available on
request directed to Customedix Corporation, 53 North Plains Industrial Road,
Wallingford, CT 06492, Attention: Secretary.

ENTERED BY ORDER OF THE COURT:

PRISCILLA B. RAKESTRAW

-----------------------------------
Register in Chancery
Dated: July 31, 1996

8
<PAGE> 36

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY

<TABLE>
<S> <C>
IN RE CUSTOMEDIX CORPORATION Consolidated
SHAREHOLDERS LITIGATION Civil Action No. 14812
</TABLE>

A hearing having been held before this Court (the "Court") on ,
1996, pursuant to the Court's Order of July 31, 1996, (the "Scheduling Order"),
upon a Stipulation of Settlement, dated July 25, 1996 (the "Stipulation"), of
the above-captioned action (the "Consolidated Action"), which is incorporated
herein by reference; it appearing that due notice of said hearing has been given
in accordance with the aforesaid Scheduling Order; the respective parties having
appeared by their attorneys of record; the Court having heard and considered
evidence in support of the proposed Settlement (as defined in the Stipulation);
the attorneys for the respective parties having been heard; an opportunity to be
heard having been given to all other persons requesting to be heard in
accordance with the Scheduling Order; the Court having determined that notice to
the Class (as defined below) preliminarily certified, pursuant to the aforesaid
Scheduling Order, was adequate and sufficient; and the entire matter of the
proposed Settlement having been heard and considered by the Court;

IT IS HEREBY ORDERED, ADJUDGED AND DECREED this day of ,
1996, that:

1. The form and manner of notice given to the members of the Class, as
provided in the Scheduling Order, is hereby determined to have been the best
notice practicable under the circumstances and to have been given in full
compliance with the requirements of due process and of Court of Chancery Rule
23.

2. Based on the record of the Consolidated Action, each of the provisions
of Court of Chancery Rule 23(a) has been satisfied and the Consolidated Action
has been properly maintained according to the provisions of Court of Chancery
Rules 23(b)(1) and (b)(2). Specifically, this Court finds that (1) the Class
contemplated in the Consolidated Action is so numerous that joinder of all
members is impracticable, (2) there are questions of law or fact common to the
Class, (3) the claims of the representative plaintiffs are typical of the claims
of the Class, and (4) the representative plaintiffs have fairly and adequately
protected the interests of the Class. This Court further finds that (a) the
prosecution of separate actions by or against individual members of the Class
would create a risk of (i) inconsistent or varying adjudications which would
establish incompatible standards of conduct for the parties opposing the Class
or (ii) adjudications which would as a practical matter be dispositive of the
interests of the other Class members not parties to the adjudications or
substantially impair or impede the ability of other Class members to protect
their interests or (b) the parties opposing the Class have acted or refused to
act on grounds generally applicable to the Class, thereby making appropriate
final injunctive relief or corresponding declaratory relief with respect to the
Class as a whole. The Consolidated Action is certified as a class action,
pursuant to Court of Chancery Rules 23(b)(1) and (b)(2), on behalf of a class
composed of all record and beneficial owners of shares of Customedix Corporation
("Customedix" or the "Company") stock from and including February 5, 1996
through and including the date of consummation of the Merger as contemplated by
the Merger Agreement, including their successors-in-interest, predecessors,
legal representatives, trustees, heirs, assigns or transferees, immediate and
remote, and excluding defendants and their affiliates (the "Class"); and the law
firms of Wolf Popper Ross Wolf & Jones, L.L.P.; Wechsler Harwood Halebian &
Feffer LLP; and Faruqi and Faruqi, L.L.P. are certified as co-lead counsel for
the Class ("Class Counsel").

3. The Stipulation and the Settlement are approved as fair, reasonable, and
adequate and shall be consummated in accordance with their terms and conditions.

4. The Consolidated Action is dismissed with prejudice against plaintiffs
and each member of the Class on the merits, each party to bear its own costs,
except as provided in the Stipulation, and any and all claims, rights, demands,
actions, causes of action, suits, damages, losses, obligations, judgments,
matters and issues, of

-1-
<PAGE> 37

any kind or nature whatsoever, whether known or unknown, foreseen, unforeseen or
unforeseeable, asserted or unasserted, contingent or absolute, suspected or
unsuspected, disclosed or undisclosed, hidden or concealed, matured or
unmatured, material or immaterial, which have been, could have been, or in the
future can or might be asserted in the Consolidated Action or in any court,
tribunal or proceeding (including, but not limited to, any claims arising under
state or federal law relating to any alleged fraud, breach of any duty,
negligence, violations of federal securities laws or otherwise) (collectively
"Claims"), by or on behalf of plaintiffs in the Consolidated Action and/or any
member of the Class, whether individual, class, derivative, representative,
legal, equitable or any other type or in any other capacity, which have arisen,
arise now, or hereafter arise out of or relate in any manner whatsoever,
directly or indirectly, to the allegations, facts, events, transactions,
occurrences, acts, statements, representations, misrepresentations, omissions,
or any other matter, thing or cause whatsoever, or any series thereof, involved,
embraced, set forth, referenced in, or otherwise referred or related to, in any
way, directly or indirectly, the Consolidated Action, any of the Complaints, the
Merger Agreement, the Original Proposal, the Merger Proposal, the Merger, any
agreements or disclosures relating to the Original Proposal, the Merger
Proposal, the Merger Agreement or the Merger, including but not limited to the
Proxy Statement, or the Stipulation (as defined in the Stipulation), excepting
only such rights created under the Stipulation (collectively, the "Settled
Claims") against any of the defendants in the Consolidated Action, their
families, parent entities, affiliates, associates or subsidiaries, or each of
their present or former officers, directors, stockholders, agents, employees,
attorneys, representatives, advisors, investment advisors, investment bankers,
commercial bankers, financial advisors, trustees, general and limited partners
and partnerships, heirs, executors, personal representatives, estates,
administrators, predecessors, successors, assigns, and any other person or
entity acting on behalf of any defendant (collectively, the "Released Persons")
are hereby fully, finally, and forever compromised, extinguished, dismissed,
discharged and released with prejudice; provided however, that the Settled
Claims shall not include an action to enforce compliance with the terms of the
Settlement or to prosecute properly perfected appraisal rights relating to the
Merger pursuant to 8 Del. C. sec. 262.

5. The plaintiffs, Class Counsel and all members of the Class, either
directly, individually, derivatively, representatively or in any other capacity,
are permanently barred and enjoined from instigating, instituting, commencing,
asserting, prosecuting, continuing or participating in any way in the
maintenance of any of the Settled Claims in any court or tribunal of this or any
other jurisdiction against any Released Person.

6. The attorneys for the plaintiffs and the Class are awarded attorneys'
fees and reimbursement of expenses in the aggregate amount of $ , which
sum the Court finds to be fair and reasonable, to be paid exclusively by
Customedix for the benefit of the Individual Defendants in accordance with the
terms of the Stipulation.

7. Without affecting the finality of this Order and Final Judgment in any
way, this Court reserves jurisdiction of all matters relating to the
administration and consummation of the Settlement.

-----------------------------------
Vice Chancellor

-2-

<PAGE> 1

PRELIMINARY PROXY

CUSTOMEDIX CORPORATION

, 1996
----------------
Dear Customedix Corporation Stockholder:

You are cordially invited to attend a Special Meeting of Stockholders
(the "Special Meeting") of CUSTOMEDIX CORPORATION (the "Company") to be held on
September 19, 1996, at 9:00 a.m., Eastern Daylight Time, at the Ramada Inn, 275
Research Parkway, Meriden, Connecticut. At the Special Meeting, you will be
asked to consider and vote upon a proposal to authorize and adopt the Agreement
and Plan of Merger, dated as of June 10, 1996 (the "Merger Agreement"), between
the Company and CUS Acquisition, Inc. (the "Buyer"). The Buyer is a Delaware
corporation which will be wholly-owned by Dr. Gordon S. Cohen, the Company's
Chief Executive Officer and Chairman of its Board of Directors ("Dr. Cohen"),
and a partnership comprised of trusts established for the benefit of Dr. Cohen
and certain members of Dr. Cohen's family (the "Partnership").

Upon the terms and subject to the conditions of the Merger Agreement,
the Buyer will be merged with and into the Company (the "Merger"), with the
Company continuing as the surviving corporation of the Merger (the "Surviving
Corporation"), and each share of common stock, par value $.01 per share (the
"Common Stock"), of the Company (other than shares (i) held in the treasury of
the Company, (ii) owned by the Buyer and (iii) held by stockholders who have not
voted in favor of the Merger and who have otherwise properly exercised their
rights for appraisal of such shares in accordance with Section 262 of the
Delaware General Corporation Law (the "DGCL")) will be converted into the right
to receive, upon surrender of the certificate evidencing such share, $2.375 per
share in cash, without interest. Upon the consummation of the Merger, the
Company will be wholly-owned by Dr. Cohen and the Partnership, and the former
stockholders of the Company will cease to share in the future earnings and
growth, and will have no further rights as stockholders, of the Company.
Details of the proposed Merger and information concerning the Company and the
Buyer appear in the accompanying Proxy Statement (the "Proxy Statement").

THE MEMBERS OF THE SPECIAL COMMITTEE (THE "SPECIAL COMMITTEE") OF THE
BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD") HAVE UNANIMOUSLY RECOMMENDED
THAT THE BOARD APPROVE THE MERGER AGREEMENT, AND THE BOARD HAS UNANIMOUSLY
VOTED TO APPROVE THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
THEREBY, INCLUDING THE MERGER. THE BOARD HAS DETERMINED THAT THE MERGER IS
FAIR TO, AND IN THE BEST INTERESTS OF, THE HOLDERS OF THE COMMON STOCK (OTHER
THAN DR. COHEN AND THE PARTNERSHIP) AND RECOMMENDS THAT THE STOCKHOLDERS OF THE
COMPANY VOTE FOR THE AUTHORIZATION AND ADOPTION OF THE MERGER AGREEMENT. The
Special Committee's recommendation and the Board's approval, determination
and recommendation were based on a number of factors more fully described in
the Proxy Statement. Certain members of the Board have conflicts of interest in
connection with the Board's recommendation, including, in the case of Dr.
Cohen, who voted in favor of the Merger, his continuing interest in the equity
of the Surviving Corporation. Such conflicts of interest are described in the
Proxy Statement.

The affirmative vote of at least a majority of the outstanding shares
of Common Stock is required to adopt the Merger Agreement and the Merger. Dr.
Cohen and the Partnership will be entitled to vote approximately 51.07% of the
issued and outstanding shares of Common Stock at the Special Meeting. Dr.
Cohen has voting and dispositive power with respect to the shares of Common
Stock owned by the Partnership and, accordingly, owns or controls a sufficient
number of shares of Common Stock to cause the Merger Agreement and the Merger
to be authorized and adopted by the stockholders of the Company. SINCE DR.
COHEN INTENDS TO VOTE ALL OF THE COMMON STOCK THAT HE OWNS OR CONTROLS IN FAVOR
OF THE MERGER AGREEMENT AND THE MERGER, THE APPROVAL AND ADOPTION OF THE MERGER
AGREEMENT AND THE MERGER BY THE COMPANY'S STOCKHOLDERS ARE ASSURED.

PLEASE READ THE PROXY STATEMENT, WHICH PROVIDES YOU WITH A DESCRIPTION
OF THE TERMS OF THE MERGER AND CERTAIN OTHER INFORMATION, BEFORE CASTING YOUR
VOTE. A conformed copy of the Merger Agreement is included as Annex A to the
Proxy Statement.

Whether or not you plan to attend the Special Meeting in person and
regardless of the number of shares of Common Stock you own, you should
complete, sign, date and return the enclosed proxy card promptly in the
accompanying prepaid envelope. You may, of course, attend the Special Meeting
and vote in person, even if you have previously returned your proxy card. A
failure to vote will have the same effect as a vote against the Merger. YOU
ARE URGED, THEREFORE, TO SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD
PROMPTLY.

PLEASE DO NOT SEND IN ANY STOCK CERTIFICATES AT THIS TIME. IF THE
MERGER BECOMES EFFECTIVE, YOU WILL BE SENT INSTRUCTIONS REGARDING THE SURRENDER
OF YOUR STOCK CERTIFICATES IN EXCHANGE FOR THE $2.375 PER SHARE CASH
CONSIDERATION.

Sincerely,

Barry L. Kosowsky
Secretary
<PAGE> 2
PRELIMINARY PROXY

CUSTOMEDIX CORPORATION

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

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 19, 1996

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

To the Stockholders of Customedix Corporation:

Notice is hereby given that a Special Meeting of Stockholders (the
"Special Meeting") of CUSTOMEDIX CORPORATION (the "Company") will be held on
September 19, 1996, at 9:00 a.m., Eastern Daylight Time, at the Ramada Inn, 275
Research Parkway, Meriden, Connecticut, for the following purposes:

(a) To consider and vote upon a proposal to authorize and adopt
the Agreement and Plan of Merger, dated as of June 10, 1996 (the
"Merger Agreement"), between the Company and CUS Acquisition, Inc. (the
"Buyer"), a Delaware corporation which will be wholly-owned by Dr.
Gordon S. Cohen, the Company's Chief Executive Officer and Chairman of
its Board of Directors ("Dr. Cohen"), and a partnership comprised of
trusts established for the benefit of Dr. Cohen and certain members of
Dr. Cohen's family (the "Partnership"), pursuant to which, among other
things: (i) the Buyer will be merged with and into the Company (the
"Merger"), with the Company continuing as the surviving corporation of
the Merger (the "Surviving Corporation"); and (ii) each share of common
stock, par value $.01 per share (the "Common Stock"), of the Company
(other than shares held in the treasury of the Company, shares owned by
the Buyer and shares held by stockholders who have not voted in favor
of the Merger and who have otherwise properly exercised their rights
for appraisal of such shares in accordance with Section 262 of the
Delaware General Corporation Law (the "DGCL")) will be converted into
the right to receive, upon surrender of the certificate evidencing such
share, $2.375 per share in cash, without interest, all as more fully
described in the accompanying Proxy Statement.

(b) To transact such other business as may properly come
before the Special Meeting, including any and all adjournments and
postponements thereof.

A conformed copy of the Merger Agreement appears as Annex A to, and is
described in, the accompanying Proxy Statement (the "Proxy Statement").

THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD") HAS DETERMINED THAT
THE MERGER IS FAIR TO, AND IN THE BEST INTERESTS OF, THE STOCKHOLDERS OF THE
COMPANY (OTHER THAN DR. COHEN AND THE PARTNERSHIP), HAS APPROVED THE MERGER
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE MERGER, AND
RECOMMENDS THAT THE STOCKHOLDERS OF THE COMPANY VOTE FOR THE AUTHORIZATION AND
ADOPTION OF THE MERGER AGREEMENT. Certain members of the Board have conflicts
of interest in connection with the Board's recommendation, including, in the
case of Dr. Cohen, his continuing interest in the equity of the Surviving
Corporation. Such conflicts of interest are described in the Proxy Statement.

Under Section 251 of the DGCL, the affirmative vote of at least a
majority of the outstanding shares of Common Stock is required to adopt the
Merger Agreement. Only holders of record of shares of Common Stock as of the
close of business on August 8, 1996, are entitled to notice of and to vote at
the Special Meeting and any and all adjournments and postponements thereof. A
list of stockholders of the Company entitled to vote at the Special Meeting
will be available for inspection by a stockholder at the Company's offices, for
the ten days prior to the Special Meeting and during normal business hours.

Under the DGCL, stockholders of the Company have the right to dissent
from the Merger and demand appraisal rights for their shares of Common Stock,
provided that the Merger is consummated and such stockholders comply with the
requirements of Section 262 of the DGCL. See "THE MERGER--Appraisal Rights of
Dissenting Stockholders" in the Proxy Statement, and Annex B thereto, for a
description of the rights of dissenting stockholders and a discussion of the
procedures which must be followed by dissenting stockholders of the Company to
obtain appraisal of their shares of Common Stock.

ATTENDANCE AT THE SPECIAL MEETING WILL BE LIMITED TO REGISTERED
STOCKHOLDERS AND INVITED GUESTS OF THE COMPANY. IF YOU ARE A STOCKHOLDER WHOSE
SHARES ARE NOT REGISTERED IN YOUR OWN NAME AND PLAN TO ATTEND, YOU MUST PRESENT
EVIDENCE OF YOUR STOCK OWNERSHIP, WHICH YOU CAN OBTAIN FROM YOUR BANK,
STOCKBROKER, ETC., TO GAIN ADMITTANCE TO THE SPECIAL MEETING.

Barry L. Kosowsky
Secretary
Wallingford, Connecticut
, 1996
- -----------------
<PAGE> 3
PRELIMINARY PROXY

CUSTOMEDIX CORPORATION
53 NORTH PLAINS INDUSTRIAL ROAD
WALLINGFORD, CONNECTICUT 06492

PROXY STATEMENT

SPECIAL MEETING OF STOCKHOLDERS TO BE HELD SEPTEMBER 19, 1996

This proxy statement ("Proxy Statement") is being furnished to the
stockholders of Customedix Corporation, a Delaware corporation (the "Company"),
in connection with the solicitation of proxies by the Board of Directors of the
Company (the "Board") for use at a Special Meeting of Stockholders to be held
on September 19, 1996, at 9:00 a.m., Eastern Daylight Time, at the Ramada Inn,
275 Research Parkway, Meriden, Connecticut, and at any and all adjournments and
postponements thereof (the "Special Meeting").

At the Special Meeting, you will be asked to consider and vote upon a
proposal (the "Proposal") to authorize and adopt the Agreement and Plan of
Merger, dated as of June 10, 1996 (the "Merger Agreement"), between the Company
and CUS Acquisition, Inc. (the "Buyer"), a Delaware corporation which will be
wholly-owned by Dr. Gordon S. Cohen, the Company's Chief Executive Officer and
Chairman of its Board of Directors ("Dr. Cohen"), and the Cohen Family Trust
Partnership, a partnership comprised of trusts established for the benefit of
Dr. Cohen and certain members of Dr. Cohen's family (the "Partnership").

Upon the terms and subject to the conditions of the Merger Agreement:
(i) the Buyer will be merged with and into the Company (the "Merger"), with the
Company continuing as the surviving corporation of the Merger (the "Surviving
Corporation"); and (ii) each share of common stock, par value $.01 per share
(the "Common Stock"), of the Company (other than shares held in the treasury of
the Company, shares owned by the Buyer and shares held by stockholders who have
not voted in favor of the Merger and who have otherwise properly exercised
their rights for appraisal of such shares in accordance with Section 262 of the
Delaware General Corporation Law (the "DGCL")) will be converted into the right
to receive, upon surrender of the certificate evidencing such share, $2.375 per
share in cash, without interest (the "Merger Consideration"). A copy of
Section 262 of the DGCL is included as Annex B to this Proxy Statement. As a
result of the Merger, Dr. Cohen and the Partnership will acquire the entire
equity of the Company, the Common Stock will cease to be publicly traded and
the former stockholders of the Company will cease to share in the future
earnings and growth, and will have no further rights as stockholders, of the
Company, all as more fully described in this Proxy Statement. A conformed copy
of the Merger Agreement is included as Annex A hereto. The summaries of the
portions of the Merger Agreement set forth in this Proxy Statement do not
purport to be complete and are subject to, and are qualified in their entirety
by reference to, the text of the Merger Agreement.

THE MEMBERS OF THE SPECIAL COMMITTEE (THE "SPECIAL COMMITTEE") OF THE
BOARD HAVE UNANIMOUSLY RECOMMENDED THAT THE BOARD APPROVE THE MERGER AGREEMENT,
AND THE BOARD HAS UNANIMOUSLY VOTED TO APPROVE THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE MERGER. THE BOARD HAS
DETERMINED THAT THE MERGER IS FAIR TO, AND IN THE BEST INTERESTS OF, THE
HOLDERS OF THE COMMON STOCK (OTHER THAN DR. COHEN AND THE PARTNERSHIP) AND
RECOMMENDS THAT THE STOCKHOLDERS OF THE COMPANY VOTE FOR THE AUTHORIZATION AND
ADOPTION OF THE MERGER AGREEMENT. The Special Committee's recommendation and
the Board's approval, determination and recommendation were based on a number
of factors more fully described in this Proxy Statement. Certain members of the
Board have conflicts of interest in connection with the Board's recommendation,
including, in the case of Dr. Cohen, who voted in favor of the Merger, his
continuing interest in the equity of the Surviving Corporation. Such conflicts
of interest are described in the Proxy Statement.

Under Section 251 of the DGCL, the affirmative vote of at least a
majority of the outstanding shares of Common Stock is required to adopt the
Merger Agreement and the Merger. Only holders of record of shares of Common
Stock at the close of business on August 8, 1996 (the "Record Date"), are
entitled to notice of and to vote at the Special Meeting and any and all
adjournments and postponements thereof. On the Record Date, Dr. Cohen and the
Partnership owned approximately 51.07% of the issued and outstanding shares of
Common Stock. Dr. Cohen has voting and dispositive power with respect to the
shares of Common Stock owned by the Partnership and, accordingly, owns or
controls a sufficient number of shares of Common Stock to cause the Merger
Agreement and the Merger to be authorized and adopted by the stockholders of
the Company. SINCE DR. COHEN INTENDS TO VOTE ALL OF THE SHARES OF COMMON STOCK
THAT HE OWNS OR CONTROLS IN FAVOR OF THE MERGER AGREEMENT AND THE MERGER, THE
APPROVAL AND ADOPTION OF THE MERGER AGREEMENT AND THE MERGER BY THE COMPANY'S
STOCKHOLDERS ARE ASSURED.

This Proxy Statement and the enclosed form of proxy are being first
mailed to the Company's stockholders on or about August 20, 1996. The
information herein concerning the Company and its advisors has been furnished
by the Company. The information herein concerning the Buyer, the Partnership
and the financing to be obtained in connection with the Merger has been
furnished by the Buyer and Dr. Cohen.

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

THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE FAIRNESS OR
MERITS OF SUCH TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF THE
INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO
THE CONTRARY IS UNLAWFUL.

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

The date of this Proxy Statement is ___________, 1996.
<PAGE> 4
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TABLE OF CONTENTS

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SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
THE SPECIAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Purpose; Record Date; Voting at the Special Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Votes Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Revocation and Use of Proxies; Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SPECIAL FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Recommendation of the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Fairness of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Financial Advisors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Purpose and Structure of the Transaction; Plans for the Company . . . . . . . . . . . . . . . . . . . . . 26
Certain Effects of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Conflicts of Interest; Interests of Certain Persons in the Merger. . . . . . . . . . . . . . . . . . . . . 29
Certain Relationships and Related Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Certain Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Certain Tax Consequences of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Effective Time of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Payment for Shares of Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Terms of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Source and Amount of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Appraisal Rights of Dissenting Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
MARKET PRICES; DIVIDENDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
CERTAIN TRANSACTIONS IN THE COMMON STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SELECTED FINANCIAL DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
STOCK OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
BUSINESS OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Dental Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Medical Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Certain Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
INFORMATION CONCERNING THE BUYER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
INFORMATION CONCERNING THE PARTNERSHIP. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
INDEPENDENT PUBLIC ACCOUNTANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
FEES AND EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
ADDITIONAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
OTHER MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
STOCKHOLDER MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
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ANNEXES:
ANNEX A Agreement and Plan of Merger
ANNEX B Section 262 of the Delaware General Corporation Law
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SUMMARY

The following is a brief summary of certain information contained
elsewhere in this Proxy Statement. This Summary does not purport to be
complete and should be read in conjunction with, and is qualified in its
entirety by reference to, the more detailed information appearing elsewhere or
incorporated by reference in this Proxy Statement and the Annexes hereto.
Stockholders are urged to read this Proxy Statement, including such Annexes, in
its entirety.

PARTIES TO THE MERGER AGREEMENT; THE MERGER

The Company. The Company is a Delaware corporation engaged in two
principal industry segments: dental health care products and medical health
care products. Dental products consist of a wide variety of precious and
non-precious metal casting alloys, amalgams, impression materials, porcelains
and composites and are manufactured, distributed and marketed primarily by the
Company's direct and indirect wholly-owned subsidiaries, Jeneric/Pentron,
Incorporated ("Jeneric/Pentron"), Technical Education, Inc. ("Technical
Education") and American Thermocraft Corporation ("American Thermocraft").
Medical disposables are assembled, distributed and marketed by the Company's
wholly-owned subsidiary, Transidyne General Corporation ("Transidyne"). The
mailing address of the Company's principal executive offices is 53 North Plains
Industrial Road, Wallingford, Connecticut 06492, and its telephone number is
(203) 284-9079. See "BUSINESS OF THE COMPANY."

The Buyer. The Buyer is a Delaware corporation recently organized by
Dr. Cohen and the Partnership for the purpose of effecting the Merger. Dr.
Cohen, the Chief Executive Officer of the Company and the Chairman of its Board
of Directors, is the President and Secretary, and the sole director, of the
Buyer. The Partnership is comprised of trusts for the benefit of Dr. Cohen and
certain members of Dr. Cohen's family. Dr. Cohen, in his capacity as trustee
of the trusts that are partners in the Partnership, is the managing partner of
the Partnership and has voting and dispositive power with respect to the Common
Stock owned by the Partnership. For a description of the Common Stock owned by
Dr. Cohen and the Partnership, see "STOCK OWNERSHIP OF MANAGEMENT AND CERTAIN
BENEFICIAL OWNERS." The Buyer has no material assets, has no operating history
and has not engaged in any activities except in connection with the Merger
Agreement and the transactions pursuant thereto. Prior to or simultaneously
with the Merger, Dr. Cohen and the Partnership will transfer to the Buyer all
of the shares of Common Stock held by them in exchange for all of the issued
and outstanding common stock of the Buyer. Dr. Cohen and the Partnership will
be the sole stockholders of the Buyer. Upon the consummation of the Merger,
the Buyer will be merged with and into the Company, and the separate corporate
existence of the Buyer will cease. The mailing address of the Buyer's office
is 53 North Plains Industrial Road, Wallingford, Connecticut 06492, and its
telephone number is (203) 269-5534. See "INFORMATION CONCERNING THE BUYER" and
"INFORMATION CONCERNING THE PARTNERSHIP."

The Merger. The Merger Agreement provides that, subject to the
adoption of the Merger Agreement by the Company's stockholders and the
satisfaction of certain conditions contained therein, the Buyer will be merged
with and into the Company. In the Merger, each share of Common Stock (other
than shares (i) held in the treasury of the Company, (ii) owned by the Buyer
and (iii) held by stockholders who have not voted in favor of the Merger and
who have otherwise properly exercised their rights for appraisal of such shares
in accordance with Section 262 of the DGCL) will be converted into the right to
receive, upon surrender of the certificate evidencing such share, the Merger
Consideration. The Company will be the
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Surviving Corporation of the Merger, and each outstanding share of common stock
of the Buyer will be converted into one share of common stock of the Surviving
Corporation. Common Stock held by the Buyer or by the Company in treasury will
be cancelled without further consideration. As a result of the Merger, Dr.
Cohen and the Partnership, as the sole stockholders of the Buyer, will have
acquired the entire equity interest in the Company, the Common Stock of the
Company will cease to be publicly traded and the former stockholders of the
Company will cease to share in the future earnings and growth, and will have no
further rights as stockholders, of the Company. See "SPECIAL FACTORS--Certain
Effects of the Merger" and "THE MERGER--Terms of the Merger."

DATE, TIME, PLACE AND PURPOSE OF THE SPECIAL MEETING; RECORD DATE; VOTING AT
THE SPECIAL MEETING

The Special Meeting will be held on September 19, 1996, at 9:00 a.m.,
Eastern Daylight Time, at the Ramada Inn, 275 Research Parkway, Meriden,
Connecticut. At the Special Meeting, stockholders of the Company will be asked
to consider and vote upon a proposal to authorize and adopt the Merger
Agreement. The Board has fixed the close of business on August 8, 1996, as the
Record Date for the determination of stockholders entitled to notice of and to
vote at the Special Meeting. Holders of Common Stock are entitled to one vote
at the Special Meeting for each share of Common Stock held of record on the
Record Date. See "THE SPECIAL MEETING--Purpose; Record Date; Voting at the
Special Meeting."

VOTES REQUIRED

The presence, in person or represented by proxy, of the holders of a
majority of the shares of Common Stock entitled to vote at the Special Meeting
is necessary to constitute a quorum at the Special Meeting. Authorization and
adoption of the Merger Agreement and the Merger require, under Section 251 of
the DGCL, the affirmative vote of the holders of a majority of the shares of
Common Stock outstanding on the Record Date. Only stockholders of record at
the close of business on the Record Date are entitled to notice of and to vote
at the Special Meeting or any and all adjournments and postponements thereof.
As of the Record Date, 3,295,886 shares of Common Stock, held by approximately
2,400 holders of record, were issued and outstanding. As of the Record Date,
Dr. Cohen and the Partnership owned an aggregate of 1,683,292 shares, or
approximately 51.07%, of the Common Stock. See "STOCK OWNERSHIP OF MANAGEMENT
AND CERTAIN BENEFICIAL OWNERS." Dr. Cohen has voting and dispositive power
with respect to the shares of Common Stock owned by the Partnership.
Accordingly, Dr. Cohen owns or controls a sufficient number of shares of Common
Stock to cause the Merger Agreement and the Merger to be authorized and adopted
by the stockholders of the Company. SINCE DR. COHEN INTENDS TO VOTE ALL SHARES
OF COMMON STOCK THAT HE OWNS OR CONTROLS IN FAVOR OF THE AUTHORIZATION AND
ADOPTION OF THE MERGER AGREEMENT AND THE MERGER, THE APPROVAL AND ADOPTION OF
THE MERGER AGREEMENT AND THE MERGER BY THE COMPANY'S STOCKHOLDERS ARE ASSURED.
See "THE SPECIAL MEETING--Votes Required."

BACKGROUND

On February 5, 1996, Dr. Cohen made an unsolicited proposal to acquire
all of the Common Stock held by stockholders of the Company (other than Dr.
Cohen and the Partnership) in a negotiated cash merger of a corporation to be
formed and owned by Dr. Cohen and the Partnership, with and into the Company,
for $1.9375 per share in cash (the "Original Proposal"). In response to the
Original Proposal, the Board

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appointed a special committee (the "Original Special Committee"), consisting of
William T. Fitch and Robert N. Thomas, each a non-employee director of the
Company, to, among other things, represent the interests of the unaffiliated
stockholders of the Company and to take any and all actions necessary or
advisable in connection with the evaluation and, if appropriate, the approval of
the Original Proposal. Dr. Cohen and the members of the Board, including the
members of the Original Special Committee, understood that the Board would not
consider the Original Proposal or the transactions contemplated thereby,
including the proposed merger, unless, after review and negotiation of the
Original Proposal, the Original Special Committee, as representative of the
interests of the Company's unaffiliated stockholders, determined that the
Original Proposal was fair to, and in the best interests of, the stockholders of
the Company (other than Dr. Cohen and the Partnership) and recommended that the
Board accept the Original Proposal. Following the February 5, 1996, Board
meeting, the Original Special Committee formally engaged Brody and Ober, P.C.,
as legal counsel, and Tucker Anthony Incorporated ("Tucker Anthony"), as
financial advisor, with respect to the Original Proposal and related matters.
After such appointment and prior to May 3, 1996, the Original Special Committee
met on several occasions with its advisors. Dr. Cohen did not participate in
the deliberations of the Original Special Committee. In February 1996, four
putative class action complaints relating to the Original Proposal (the
"Delaware Lawsuits") were filed in the Court of Chancery for the State of
Delaware in and for New Castle County (the "Delaware Chancery Court").

On May 8, 1996, the Original Special Committee, representatives of the
Buyer, their respective counsel and representatives of Tucker Anthony met (the
"May 8, 1996 Meeting") to discuss the Discussion Materials, dated May 1, 1996,
prepared by Tucker Anthony and on which Tucker Anthony was relying in rendering
advice to the Original Special Committee (the "Tucker Anthony Materials") and to
negotiate a price in connection with the Original Proposal. At that meeting,
Tucker Anthony reviewed the Tucker Anthony Materials and the parties discussed
pricing. After considerable discussion, both parties remained far apart on
pricing, with Tucker Anthony's representative indicating that he believed the
Tucker Anthony committee which would have to approve an opinion as to the
fairness of the price would certainly support a price of $3.25 per share,
probably support a price of $3.00 per share and perhaps a price as low as $2.90
per share. The meeting concluded without an agreement on price. Later that day,
Dr. Cohen advised the Company that he was withdrawing the offer under the
Original Proposal.

On June 3, 1996, counsel for Dr. Cohen and counsel for the plaintiffs
in the Delaware Lawsuits commenced settlement discussions. In connection with
those discussions, Dr. Cohen's attorneys informed the plaintiffs' attorneys that
Dr. Cohen was willing to consider another merger proposal, provided the parties
to the Delaware Lawsuits could reach an agreement-in-principle to settle such
litigation. After further arm's-length negotiations between counsel for Dr.
Cohen and the plaintiffs, such parties, by their respective attorneys, entered
into the Memorandum of Understanding, dated June 3, 1996 (the "Memorandum of
Understanding"), setting forth such an agreement-in-principle. Pursuant to the
Memorandum of Understanding, Dr. Cohen and the Partnership agreed to make a
merger proposal to the Company pursuant to which, subject to the approval of the
Merger Agreement by Dr. Cohen, the Board and the stockholders of the Company,
and further subject to the approval of the settlement of the Delaware Lawsuits
by the Delaware Chancery Court, a corporation to be formed and owned by Dr.
Cohen and the Partnership would be merged with and into the Company, and each
share of Common Stock (other than shares (i) held in the treasury of the
Company, (ii) owned by the Buyer and (iii) held by stockholders who had not
voted in favor of the Merger and who had otherwise properly exercised their
rights for appraisal of such shares in accordance with Section 262 of the DGCL)
would be converted into the right to receive, upon surrender of the certificate
evidencing such share, $2.375 per share in cash, without interest. Under the
terms of the Memorandum of Understanding, the parties agreed to use their best
efforts to agree upon and execute, by July 14, 1996, a formal Stipulation of
Settlement and to obtain the Delaware Chancery Court's approval of a settlement
of the Delaware

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Lawsuits, which have been consolidated for all purposes (such consolidated class
action is referred to in this Proxy Statement as the "Stockholder Action"), upon
substantially the terms set forth in the Memorandum of Understanding. Pursuant
to the Memorandum of Understanding, on July 25, 1996, the parties to the
Stockholder Action, by and through their respective attorneys, entered into a
Stipulation of Settlement, subject to the approval of the Delaware Chancery
Court (the "Stipulation"). The Delaware Chancery Court has scheduled a
settlement hearing on August 27, 1996, at 11:00 a.m. However, there can be no
assurance that the Delaware Chancery Court will approve the proposed settlement.
For a summary of certain of the terms of the Memorandum of Understanding and the
Stipulation, see "SPECIAL FACTORS--Certain Litigation." Consummation of the
Merger is conditioned upon, among other things, settlement of the Stockholder
Action upon substantially the terms set forth in the Memorandum of Understanding
and approval of the settlement by the Delaware Chancery Court. See "THE
MERGER--Terms of the Merger--Conditions to Consummation of the Merger."

On June 4, 1996, Dr. Cohen delivered to the Company the Proposal, and
the Board reconstituted the Special Committee, consisting of Robert N. Thomas as
Chairman, William T. Fitch and Adraine J. Tom, each a non-employee director of
the Company. Adraine J. Tom, a Chartered Financial Analyst who had served as an
analyst for several mutual fund and investment management companies, had been
elected to serve as a director of the Company at a regular meeting of the Board
on May 13, 1996. See "DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY." Ms. Tom
attended business school with an employee of the Company who is a relative of
Dr. Cohen, and was brought to the attention of the Board by such employee. The
Special Committee indicated that it intended to continue to engage Brody and
Ober, P.C., as legal counsel. As with the Original Proposal, Dr. Cohen and the
members of the Board, including the members of the Special Committee, understood
that the Board would not consider the Proposal or the transactions contemplated
thereby, including the proposed Merger, unless, after review and negotiation of
the Proposal, the Special Committee, as representative of the interests of the
Company's unaffiliated stockholders, determined that the Proposal was fair to,
and in the best interests of, the stockholders of the Company (other than Dr.
Cohen and the Partnership) and recommended that the Board accept the Proposal.
Tucker Anthony did not participate in the deliberations of the Special Committee
regarding the Proposal. See "SPECIAL FACTORS--Background" for a discussion of
the reasons Tucker Anthony was not asked to participate in such deliberations.
After its appointment, the Special Committee held several telephonic meetings
with its legal advisor and with counsel for the non-employee directors in the
Stockholder Action to evaluate the Proposal and the Memorandum of Understanding.
Dr. Cohen did not participate in the deliberations of the Special Committee.
Between June 4, 1996, and the June 10, 1996 Board Meeting, the Special Committee
and the Buyer negotiated with respect to the Merger Consideration and the
Special Committee and the Buyer, through their legal advisors, had discussions
regarding, and agreed upon certain revisions to, the Merger Agreement. See
"SPECIAL FACTORS--Background."

RECOMMENDATION OF THE BOARD; FAIRNESS OF THE MERGER

On June 10, 1996, the Special Committee unanimously determined that the
Proposal was fair to, and in the best interests of, the stockholders of the
Company (other than Dr. Cohen and the Partnership), and unanimously voted to
recommend that the Board accept the Proposal and approve the Merger Agreement
and the Merger. Later on June 10, 1996, at a special meeting of the full Board,
which Dr. Cohen attended ("the June 10, 1996 Board Meeting"), the Special
Committee presented its report with respect to the Proposal and advised the
Board that it had unanimously determined that the Proposal was fair to, and in
the best interests of, the stockholders of the Company (other than Dr. Cohen and
the Partnership), and unanimously recommended that the Board accept the Proposal
and approve the Merger Agreement and the Merger. After the Special Committee's
presentation, Dr. Cohen and Martin L. Schulman (each of whom is an officer of
the Company and an employee of its major subsidiary), and Robert S. Cooper and
David H. Leigh (each of whom is a non-employee director whose employers have
business dealings with the Company) left the meeting. The remaining non-employee
directors, Elry C. Bird, William T. Fitch, Robert N. Thomas and Adraine J. Tom,
unanimously approved the Merger Agreement and the transactions contemplated
thereby, including the Merger, and determined that the Merger is fair to, and in
the best interests of, the holders of the Common Stock (other than Dr. Cohen and
the Partnership). After the vote of these non-employee directors, the full
Board, including Dr. Cohen, adopted the recommendation of the Special Committee
as its own; unanimously approved the Merger Agreement and the Merger; determined
that the Merger is fair to, and in the best interests of, the holders of the
Common Stock (other than Dr. Cohen and the Partnership); and resolved to
recommend that stockholders approve and adopt the Merger Agreement and the
Merger. The Merger Agreement was executed immediately thereafter by the Company
and the Buyer, and a press release was

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issued announcing the Board's approval of the Merger. For a discussion of the
factors considered by the Special Committee and the Board in reaching their
determination and recommendation and those considered by Dr. Cohen and the Buyer
in reaching their belief, see "SPECIAL FACTORS--Recommendation of the Board" and
"--Fairness of the Merger." Certain members of the Board have conflicts of
interest in connection with the Board's recommendation, including, in the case
of Dr. Cohen, who voted in favor of the Merger, his continuing interest in the
equity of the Surviving Corporation. See "SPECIAL FACTORS--Conflicts of
Interest; Interests of Certain Persons in the Merger."

The Proposal price of $2.375 per share is below the range of prices
that at the May 8, 1996 Meeting, a representative of Tucker Anthony indicated
would be required for a Tucker Anthony committee to issue a fairness opinion in
connection with the Original Proposal. See "SPECIAL FACTORS--Background,"
"--Recommendation of the Board" and "--Fairness of the Merger." The Special
Committee and the Board, management of the Company, and the Buyer and Dr. Cohen
believed that certain aspects of the Tucker Anthony analysis were incorrect and
that, as a result, the range of prices suggested by the Tucker Anthony
representative at the May 8, 1996 Meeting did not present a reasonable
valuation of the Company. See "SPECIAL FACTORS--Financial Advisors."

CERTAIN CONFLICTS OF INTEREST AND RISK FACTORS

In considering the recommendations of the Special Committee and the
Board with respect to the Merger, stockholders should be aware of the following
factors:

(i) Based on the stated intention of the Buyer and Dr. Cohen not
to sell the Company, there has been no auction of the Company, and the
Special Committee and the Board did not consider alternatives to the
Proposal. It is possible that such an auction or such alternatives, if
pursued, could have resulted in a price higher than the Proposal price
of $2.375 per share. See "SPECIAL FACTORS--Fairness of the Merger."

(ii) There are numerous conflicts of interest inherent in the
Merger, including, in the case of Dr. Cohen, who voted in favor of the
Merger, his continuing interest in the equity of the Surviving
Corporation. See "SPECIAL FACTORS--Conflicts of Interest; Interests of
Certain Persons in the Merger" and "--Certain Relationships and Related
Transactions."

(iii) No fairness opinion has been rendered in connection with
the Proposal. See "SPECIAL FACTORS--Background" and "--Financial
Advisors."

(iv) Tucker Anthony was retained to act as financial advisor to
the Special Committee in connection with the Original Proposal, but was
not asked to render a fairness opinion with respect to the Original
Proposal or the Proposal. See "SPECIAL FACTORS--Background" and
"--Financial Advisors."

(v) The Proposal price of $2.375 per share is below the range of
prices a representative of Tucker Anthony indicated would be required
for a Tucker Anthony committee to issue a fairness opinion in connection
with the Original Proposal. See "SPECIAL FACTORS--Background"
"--Recommendation of the Board" and "--Fairness of the Merger." The
Special Committee and the Board, management of the Company, and the
Buyer and Dr. Cohen believed that certain aspects of the Tucker Anthony
analysis were incorrect and that, as a result, the range of prices
suggested by the Tucker Anthony representative did not present a
reasonable valuation of the Company. See "SPECIAL FACTORS--Financial
Advisors."

(vi) Carter Capital was retained by Dr. Cohen and the Company in
connection with the Proposal but was not asked to render an opinion as
to the fairness of the Merger Consideration. For a discussion of Carter
Capital's analysis and the reasons why Carter Capital was not asked to
render an opinion as to the fairness of the Merger Consideration, see
"SPECIAL FACTORS--Background," "--Fairness of the Merger" and
"--Financial Advisors."

FINANCIAL ADVISORS

Tucker Anthony was engaged by the Original Special Committee to act as
financial advisor in connection with the Original Proposal. Pursuant to the
terms of Tucker Anthony's engagement, the Company paid Tucker Anthony a fee of
$60,000 in connection with its analysis pursuant to the Original Proposal and
agreed to pay Tucker Anthony an additional $40,000 if Tucker Anthony rendered an
opinion, oral or written, as to the fairness, from a financial point of view, of
the merger consideration to be paid in the merger pursuant to the Original
Proposal. The Company agreed to reimburse Tucker Anthony for all of its
reasonable out-of-pocket expenses and disbursements, including outside database
and research services and fees and expenses of counsel, incurred in connection
with its engagement. In addition, if the Special Committee requested that
Tucker Anthony negotiate on its behalf with any party potentially interested in
consummating a sale, merger, tender offer or other form of business combination
or recapitalization involving the Company or its component businesses (a
"Transaction") with the Company, the Company agreed to pay Tucker Anthony a cash
fee at the closing of a Transaction in an amount equal to five percent of the
Transaction Amount (defined as the total consideration paid or contributed for
the Common Stock of the Company) in excess of the Transaction Amount calculated
based on $1.9375 per share of Common Stock. The Company also agreed to
indemnify Tucker Anthony against certain liabilities and to reimburse Tucker
Anthony for reasonable costs and expenses, including counsel fees, incurred in
connection therewith. Since Tucker Anthony has not been asked to deliver an
opinion as to the fairness of the Merger Consideration, it has not been paid the
additional $40,000 fee contemplated in its engagement agreement for delivery of
a fairness opinion. See "SPECIAL FACTORS--Background," "--Fairness of the
Merger" and "--Financial Advisors." For a discussion of the reasons Tucker
Anthony was not asked to render an opinion as to the fairness of the Proposal
price of $2.375 per share, see "SPECIAL FACTORS--Background" and
"--Financial Advisors."

Carter Capital Corporation ("Carter Capital"), an investment banking
firm, was retained by counsel to Dr. Cohen and the Company in June 1996, after
Dr. Cohen made the Proposal, to analyze certain financial information with
respect to the Company, including certain portions of the Tucker Anthony
Materials. Pursuant to the terms of Carter Capital's engagement, the Company
has agreed to pay Carter Capital a fee of $15,000. The Company agreed to
indemnify Carter Capital against certain liabilities and to reimburse Carter
Capital for reasonable costs and expenses, including counsel fees, incurred in
connection therewith. The Special Committee and the Board, management of the
Company, and the Buyer and Dr. Cohen believed that certain aspects of the Tucker
Anthony analysis were incorrect and that, as a result, the range of prices
suggested by the Tucker Anthony representative at the May 8, 1996 Meeting did
not present a reasonable valuation of the Company. See "SPECIAL FACTORS--
Financial Advisors." Carter Capital was engaged on June 7, 1996, for the
limited purpose of assisting the Buyer and Dr. Cohen in analyzing the Tucker
Anthony Materials in preparation for negotiations with the Special Committee and
the Board prior to or at the June 10, 1996 Board Meeting. Carter Capital
reviewed public information with respect to the Company and the Tucker Anthony
Materials to assist the Buyer and Dr. Cohen in determining whether their
concerns regarding the Tucker Anthony analysis were legitimate. Carter Capital
was retained only for the purpose of assisting in the analysis of the Tucker
Anthony Materials, and was not retained to provide an opinion with respect to
the fairness of the Proposal price of $2.375 per share. For a discussion of the
analysis conducted by Carter Capital, see "SPECIAL FACTORS--Financial Advisors."
In light of the limited time available between its engagement and the June 10
Board Meeting, Carter Capital was not asked to provide an oral or written report
or an opinion as to the fairness of the Merger Consideration or to make a
presentation to the Board or the Special Committee. Carter Capital reviewed the
Tucker Anthony Materials and analyzed the information contained therein. The
analysis performed by Carter Capital is not necessarily the same analysis, or as
extensive an analysis, as it might have performed had more time been available
or had it been engaged to provide a report or an opinion as to the fairness of
the Merger Consideration. See "SPECIAL FACTORS--Background," "--Fairness of the
Merger" and "--Financial Advisors."

CONFLICTS OF INTERESTS; INTERESTS OF CERTAIN PERSONS IN THE MERGER

In considering the recommendations of the Special Committee and the
Board with respect to the Merger, stockholders should be aware that certain
members of the Board have conflicts of interest in connection with the Merger,
including, in the case of Dr. Cohen, his continuing interest in the equity of
the Surviving Corporation after the Merger. In addition, certain members of
management and certain other individuals have certain interests in the Merger.
See "SPECIAL FACTORS--Conflicts of Interest; Interests of Certain Persons in
the Merger" and "--Certain Relationships and Related Transactions."

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CERTAIN LITIGATION

The Delaware Lawsuits were filed in the Delaware Chancery Court in
February 1996. The Delaware Lawsuits have been consolidated for all purposes by
agreement of the parties as the Stockholder Action. The Proposal has been made
in connection with the terms of a Memorandum of Understanding, setting forth an
agreement-in-principle with respect to the settlement of the Stockholder Action.
The settlement contemplated by the Memorandum of Understanding will not be
binding on any party until, and is otherwise subject to, consummation of the
Merger contemplated by the Proposal, final approval by the Delaware Chancery
Court of the settlement (and the exhaustion of possible appeals, if any) and
certain other conditions. Under the terms of the Memorandum of Understanding,
the parties agreed to use their best efforts to agree upon and execute, by July
14, 1996, a Stipulation of Settlement and to obtain approval by the Delaware
Chancery Court of a settlement of the Stockholder Action upon substantially the
terms set forth in the Memorandum of Understanding. Pursuant to the Memorandum
of Understanding, on July 25, 1996, the parties to the Stockholder Action, by
and through their respective attorneys, entered into the Stipulation, subject to
the approval the Delaware Chancery Court. The Delaware Chancery Court has
scheduled a settlement hearing for August 27, 1996, at 11:00 a.m. However, there
can be no assurance that the Delaware Chancery Court will approve the proposed
settlement. See "SPECIAL FACTORS--Certain Litigation." Counsel for the
plaintiffs in the Stockholder Action are not acting on behalf of the public
stockholders of the Company for the purpose of negotiating the terms of the
Merger. Pursuant to the Stipulation, the parties to the Stockholder Action are
requesting the Delaware Chancery Court to approve the Settlement and adjudge the
terms of the Settlement to be fair, reasonable and adequate; however, the
Delaware Chancery Court will not make a finding, or otherwise determine or
render an opinion, as to the fairness, from a financial point of view, of the
Proposal price of $2.375 per share to be received by the stockholders (other
than Dr. Cohen and the Partnership) upon consummation of the Merger. Under the
terms of the Merger Agreement, the Buyer or the Company may elect not to
consummate the Merger if the Delaware Chancery Court has not approved the
settlement of the Stockholder Action on substantially the terms set forth in the
Memorandum of Understanding, or if other legal proceedings relating to the
Merger are pending. See "THE MERGER-- Terms of the Merger--Conditions to
Consummation of the Merger."

CERTAIN TAX CONSEQUENCES OF THE MERGER

Under federal income tax laws, the transfer by Dr. Cohen and the
Partnership to the Buyer of all of their shares of Common Stock in exchange for
all of the issued and outstanding common stock of the Buyer will not be
taxable to Dr. Cohen or the Partnership, and the Company, as a party to the
Merger, will not recognize gain or loss as a result of the Merger. However,
the Surviving Corporation will be subject to the provisions of Section 382 of
the Internal Revenue Code, which will limit the ability of the Surviving
Corporation to use any available net operating loss and tax credit
carryforwards. The receipt of cash for the Common Stock in the Merger or
pursuant to the exercise of appraisal rights under the DGCL will be a taxable
transaction for United States federal income tax purposes and may also be a
taxable transaction for state, local, foreign and other tax purposes.
STOCKHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE PARTICULAR TAX
CONSEQUENCES TO THEM OF THE MERGER. See "SPECIAL FACTORS--Certain Tax
Consequences of the Merger."

EFFECTIVE TIME OF THE MERGER; PAYMENT FOR SHARES OF COMMON STOCK

The Merger will become effective (the "Effective Time") when a
certificate of merger (the "Certificate of Merger") is duly filed with the
Secretary of State of the State of Delaware in accordance with the DGCL. The
filing of the Certificate of Merger will be made after all conditions set forth
in the Merger Agreement have been satisfied or waived and provided that the
Merger Agreement has not been terminated. No such waiver or termination will
require the vote or consent of the Company's stockholders. See "THE
MERGER--Effective Time of the Merger."

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Detailed instructions with regard to the surrender of certificates,
together with a letter of transmittal, will be forwarded to record holders,
as of the Effective Time, of certificates formerly evidencing shares of Common
Stock as promptly as practicable following the Effective Time by American
Stock Transfer & Trust Company (the "Exchange Agent"). Payment will be made
to such former holders of Common Stock as promptly as practicable following
receipt by the Exchange Agent of certificates for their Common Stock and other
required documents. No interest will be paid or accrued on the cash payable
upon the surrender of certificates. STOCKHOLDERS SHOULD NOT SEND ANY STOCK
CERTIFICATES AT THIS TIME. See "THE MERGER--Payment for Shares of Common
Stock."

CONDITIONS TO CONSUMMATION OF THE MERGER

The obligations of the Company and the Buyer to effect the Merger are
subject to the fulfillment at or prior to the Effective Time of certain
conditions, including, among others, the approval and adoption by the Company's
stockholders of the Merger and the Merger Agreement in accordance with the
DGCL, that no legal impediment (e.g., injunction, suit, statute, etc.) to the
Merger shall have arisen, and the Delaware Chancery Court shall have approved
the settlement of the Stockholder Action on substantially the terms set forth
in the Memorandum of Understanding.

In addition, the obligation of the Buyer to effect the Merger is also
subject to the fulfillment at or prior to the Effective Time of certain other
conditions, including, among others, the following: the Company's
representations and warranties must be true and correct in all material
respects; the Company must comply with its obligations under the Merger
Agreement in all material respects; the number of shares of the Company Common
Stock as to which appraisal rights have been exercised shall not exceed 5% of
the total number of shares of Common Stock outstanding on the Effective Time;
and the commitment provided to Dr. Cohen for financing to be used to pay a
portion of the Merger Consideration to the stockholders of the Company (other
than the Buyer) shall remain in full force and effect as of the Effective Time.

The obligation of the Company to effect the Merger is also subject to
the fulfillment at or prior to the Effective Time of certain other conditions,
including, among others, the following: the representations and warranties of
the Buyer must be true and correct in all material respects; the Buyer must
comply with its obligations under the Merger Agreement in all material
respects; the Buyer's stockholders shall have duly approved and adopted the
Merger Agreement in accordance with the DGCL; the Company shall have received
the consent of all third parties whose consent may be required under any
agreement or instrument binding the Company or its properties; and the Company
shall have received an opinion of counsel to the Buyer with respect to certain
matters set forth in the Merger Agreement. See "THE MERGER--Terms of the
Merger--Conditions to Consummation of the Merger."

TERMINATION; AMENDMENTS

The Merger Agreement may be terminated and the Merger abandoned at any
time prior to the Effective Time, whether before or after approval of the
Merger Agreement and the Merger by the stockholders of the Company: (a) by
mutual consent of the respective Boards of Directors of the Buyer and the
Company; (b) by the Buyer or the Company, if (i) the Merger has not occurred
prior to December 31, 1996, but only if the party seeking to terminate the
Merger Agreement has not caused the delay and is not

7
<PAGE> 12
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in material breach of any of its obligations under the Merger Agreement or (ii)
a final, non-appealable order, decree or ruling has been issued or other action
has been taken permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated by the Merger Agreement; (c) by the Buyer if (i) the
Company shall have materially breached or failed to comply with its obligations
under the Merger Agreement, or (ii) any representation or warranty of the
Company was incorrect in any material respect when made or has ceased to be
correct in any material respect; or (d) by the Company, if (i) the Buyer has
materially breached or failed to comply with its obligations under the Merger
Agreement, or (ii) any representation or warranty of the Buyer was incorrect in
any material respect when made or has ceased to be true and correct in any
material respect.

The Merger Agreement may be amended by agreement of the Buyer and the
Special Committee and the Board of Directors of the Company, whether before or
after approval of the Merger by the stockholders of the Company; however, once
the Merger is approved by the Company's stockholders, no amendment may modify
the cash consideration of $2.375 per share of Common Stock to be given to the
holders of the Common Stock (other than the Buyer), and no amendment may
materially adversely affect the rights of the holders of Common Stock of the
Company (other than a termination of the Merger Agreement pursuant to its
terms). See "THE MERGER--Terms of the Merger--Termination" and "--Amendments."

EXPENSES

The Company and the Buyer will bear their respective expenses incurred
in connection with entering into the Merger Agreement, except that the Company
has agreed to bear all expenses related to the preparation, printing, filing
and mailing of this Proxy Statement, the conduct of the Special Meeting and the
solicitation of proxies in connection therewith. If the Merger is not
consummated as a result of the nonsatisfaction of any condition to the
obligations of the Buyer (other than nonsatisfaction, as a result of any action
taken or omitted to be taken by the Buyer or Dr. Cohen, of the condition that
the commitment provided to the Buyer for financing to be used to pay a portion
of the Merger Consideration shall remain in full force and effect as of the
Effective Time), and the Buyer has substantially performed its obligations
under the Merger Agreement up to the time of termination of the Merger
Agreement or abandonment of the Merger, the Company is obligated to reimburse
the Buyer, or pay directly for the Buyer's benefit, all documented
out-of-pocket expenses of the Buyer relating to the Merger Agreement, the
transactions contemplated thereby and any activities related thereto. See "THE
MERGER--Terms of the Merger--Expenses." For an itemized statement of expenses
incurred or estimated to be incurred in connection with the Merger Agreement,
the Merger and the related transactions, see "FEES AND EXPENSES."

SOURCE AND AMOUNT OF FUNDS

The total amount of funds required by the Buyer to pay the Merger
Consideration to holders of Common Stock (other than the Buyer) and to pay
related fees and expenses in connection with the Merger is estimated to be
approximately $4.2 million. See "THE MERGER--Source and Amount of Funds" and
"FEES AND EXPENSES." Dr. Cohen has obtained a commitment, dated March 22,
1996, as amended by letter agreement, dated June 10, 1996 (the "Commitment"),
from the Company's principal lender providing for a financing in an aggregate
amount of up to $3 million. The Buyer currently expects that the

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Merger Consideration and related fees and expenses will be paid from the
proceeds of such financing, and from the personal funds of Dr. Cohen and/or
working capital of the Surviving Corporation upon the consummation of the
Merger. For a summary of the term, interest rate, security and other principal
terms of the Commitment, see "THE MERGER--Source and Amount of Funds--Debt
Facility." It is a condition to the obligation of the Buyer to effect the
Merger that the Commitment shall remain in full force and effect as of the
Effective Time. See "THE MERGER--Terms of the Merger--Conditions to
Consummation of the Merger."

DISSENTERS' APPRAISAL RIGHTS

Company stockholders who do not vote to adopt the Merger Agreement may
dissent from the Merger and elect to have the fair value of their dissenting
shares, based on all relevant factors and excluding any element of value from
the accomplishment or expectation of the Merger, judicially appraised and paid
to them in lieu of the Merger Consideration. Holders of shares of Common Stock
are not required to vote such shares against the Merger in order to obtain such
rights of appraisal with respect to such shares. Such stockholders must
deliver a written demand for such appraisal to the Company prior to the taking
of a vote on the Merger Agreement in the manner provided in Section 262 of the
DGCL and otherwise comply with the requirements of Section 262 of the DGCL, the
full text of which is attached hereto as Annex B. Any deviation from such
requirements may result in the forfeiture of dissenters' rights. Holders of
shares of Common Stock who sign and return the proxy card included with this
Proxy Statement with instructions to vote in favor of the Merger or, since
proxy cards returned without instructions will be voted in favor of the Merger,
with no instruction to vote against or abstain from voting with respect to the
Merger, will not be entitled to rights of appraisal with respect to such
shares. See "THE MERGER--Appraisal Rights of Dissenting Stockholders" and Annex
B to this Proxy Statement. It is a condition to the obligation of the Buyer to
consummate the Merger that the number of shares of the Common Stock as to
which appraisal rights have been exercised by the holders thereof shall not
exceed 5% of the total number of shares of Common Stock outstanding on the
Effective Time. See "THE MERGER--Terms of the Merger--Conditions to
Consummation of the Merger."

MARKET PRICES; DIVIDENDS

The principal market on which the Company's Common Stock is traded is
the American Stock Exchange (the "AMEX") under the symbol CUS. On June 3,
1996, the last full trading day prior to the press release by the Company
announcing delivery to the Company of the Proposal, the high and low sales
prices of the Common Stock, as reported on the AMEX, were $2.13 and $2.00,
respectively. As of August 9, 1996, the high and low sales prices of the Common
Stock, as reported on the AMEX, were $2.13 and $2.06, respectively.

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The following table sets forth the high and low sales prices for the
Common Stock as reported by the AMEX Composite tape for the periods shown:

<TABLE>
<CAPTION>
Fiscal Year High Low
----------- ---- ---
<S> <C> <C>
1994
First Quarter....................................... $3.00 $2.25
Second Quarter .................................... 2.94 2.25
Third Quarter ...................................... 3.13 2.38
Fourth Quarter .................................... 3.00 2.38

1995
First Quarter....................................... 4.38 2.31
Second Quarter .................................... 3.56 2.56
Third Quarter ...................................... 3.06 2.38
Fourth Quarter .................................... 3.00 2.25

1996
First Quarter....................................... 3.25 2.50
Second Quarter .................................... 2.88 1.75
Third Quarter ...................................... 2.25 1.88
Fourth Quarter ..................................... 2.25 1.81

1997
First Quarter (through August 9, 1996) ............. 2.25 2.06
</TABLE>

The Company has not paid any dividends on the Common Stock. The
Company's loan agreement, as amended, with its principal lending bank prohibits
the payment of any cash dividends by the Company without such bank's prior
consent. The Company has no current plans to pay dividends on the Common
Stock. See "MARKET PRICES; DIVIDENDS."

STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE
COMMON STOCK.

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SELECTED FINANCIAL DATA

The following table presents selected historical consolidated
financial data for the Company and its subsidiaries. The data should be read
in conjunction with the financial information contained in the historical
Consolidated Financial Statements and Notes thereto of the Company which are
included in the Company's Annual Report on Form 10-K for the fiscal year ended
June 30, 1995, and the Company's Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 1996, which reports are incorporated by
reference elsewhere in this Proxy Statement. See "INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE." The balance sheet data as of March 31, 1995, is
derived from the historical Consolidated Financial Statements and Notes thereto
of the Company which are included in the Company's Quarterly Report on Form
10-Q for the quarterly period ended March 31, 1995. The interim information
for the nine months ended March 31, 1996, and 1995, reflects, in the opinion of
management of the Company, all adjustments necessary for a fair presentation of
results for such periods, and all such adjustments are of a normal recurring
nature. The results of operations for such interim periods are not necessarily
indicative of the results of operations for any other interim periods or for
the year as a whole.

Additional financial information regarding the Company has been
filed as an exhibit to the Rule 13e-3 Transaction Statement on Schedule 13E-3
of the Company, the Buyer, Dr. Cohen and the Partnership filed with the
Securities and Exchange Commission (the "SEC") in connection with the Merger
(the "Schedule 13E-3") and may be inspected and copies may be obtained in the
manner described in "ADDITIONAL INFORMATION."

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CUSTOMEDIX CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
(In thousands, except per share data)
<TABLE>
<CAPTION>
Nine Months Ended
March 31, Twelve Months Ended June 30,
----------------------------- -------------------------------------
1996 1995 1995 1994 1993 1992 1991
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>

INCOME STATEMENT DATA:

Revenues (a) $39,542 $37,507 $51,087 $47,307 $41,823 $ 37,342 $36,684
======= ======= ======= ======= ======= ======== =======
Income from continuing
operations (a) $ 90 $ 564 $ 888 $ 1,021 $ 738 $ 652 $1,230

Loss from discontinued operation -- -- -- -- -- (2,194) (387)
------- ------- ------- ------- ------- -------- -------

Net income (loss) $ 90 $ 564 $ 888 $ 1,021 $ 738 $(1,542) $ 843
======= ======= ======= ======= ======= ======== =======
Weighted average number of shares
outstanding (b) 3,334 3,719 3,646 3,735 3,726 3,431 3,280
======= ======= ======= ======= ======= ======== =======

Income (loss) per share:
Continuing operations (a) $ .03 $ .15 $ .24 $ .27 $ .20 $ .19 $ .38
Discontinued operation -- -- -- -- -- (.64) (.12)
------- ------- ------- ------- ------- -------- -------

Income (loss) per share $ .03 $ .15 $ .24 $ .27 $ .20 $ (.45) $ .26
======= ======= ======= ======= ======= ======== =======

Cash dividends declared per share $ -- $ -- $ -- $ -- $ -- $ -- $ --
======= ======= ======= ======= ======= ======== =======

BALANCE SHEET DATA:

Working capital $10,600 $10,357 $10,641 $ 9,726 $ 8,940 $ 8,438 $ 8,983

Total assets $23,872 $23,462 $23,396 $24,347 $22,641 $ 22,120 $25,648

Long-term debt and obligations
under capital leases, less current
portion $ 6,371 $ 6,540 $ 6,824 $ 6,988 $ 7,908 $ 9,050 $12,012

Total assets less excess of cost
over net assets of businesses
acquired $19,276 $18,552 $18,587 $19,136 $17,028 $ 16,105 $19,231

Stockholders' equity $10,491 $10,671 $10,402 $10,128 $ 9,074 $ 8,389 $ 9,229

Book value per share (c) $ 3.18 $ 2.89 $ 3.16 $ 2.74 $ 2.46 $ 2.26 $ 2.86

Tangible book value per share (d) $ 1.79 $ 1.56 $ 1.70 $ 1.33 $ .94 $ .64 $ .87
==============================================================================================================================
</TABLE>

(a) Does not include the operations of Automatic Injection Molding, Inc.,
which were discontinued effective December 31, 1991.
(b) As adjusted for the effect of the one-for-ten reverse stock split
declared by the Board of Directors of the Company in May 1991 for
stockholders of record on November 4, 1991.
(c) Based on the number of shares outstanding on last day of period.
(d) Tangible book value per share is computed by taking stockholders'
equity less the amount of cost over net assets of businesses acquired
divided by the number of shares outstanding on the last day of the
period.

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THE SPECIAL MEETING

GENERAL

This Proxy Statement is being furnished to holders of shares of Common
Stock in connection with the solicitation of proxies by and on behalf of the
Board for use at the Special Meeting to be held on the date, at the time and
place and for the purposes set forth below and in the accompanying Notice of
Special Meeting of Stockholders and at any adjournments or postponements
thereof.

The Special Meeting will be held on September 19, 1996, at 9:00 a.m.,
Eastern Daylight Time, at the Ramada Inn, 275 Research Parkway, Meriden,
Connecticut.

PURPOSE; RECORD DATE; VOTING AT THE SPECIAL MEETING

The purpose of the Special Meeting is to consider and vote upon a
proposal to authorize and adopt the Merger Agreement, dated as of June 10,
1996, between the Company and the Buyer. The Merger Agreement provides that,
subject to the adoption of the Merger Agreement by the Company's stockholders
and the satisfaction of certain conditions contained therein, the Buyer will be
merged with and into the Company. In the Merger, each share of Common Stock
(other than shares (i) held in the treasury of the Company, (ii) owned by the
Buyer and (iii) held by stockholders who have not voted in favor of the Merger
and who have otherwise properly exercised their rights for appraisal of such
shares in accordance with Section 262 of the DGCL) will be converted into the
right to receive, upon surrender of the certificate evidencing such share,
$2.375 per share in cash, without interest. The Company will be the Surviving
Corporation of the Merger, and each outstanding share of common stock of the
Buyer will be converted into one share of common stock of the Surviving
Corporation. Common Stock held by the Buyer or by the Company in treasury will
be cancelled without further consideration. As a result of the Merger, Dr.
Cohen and the Partnership, as the sole stockholders of the Buyer, will have
acquired the entire equity of the Company, the Common Stock of the Company will
cease to be publicly traded and the former stockholders of the Company will
cease to share in the future earnings and growth, and will have no further
rights as stockholders, of the Company. See "SPECIAL FACTORS--Certain Effects
of the Merger" and "THE MERGER--Terms of the Merger."

The Board has fixed the close of business on August 8, 1996, as the
Record Date for the determination of stockholders entitled to notice of and to
vote at the Special Meeting. Holders of Common Stock are entitled to one vote
at the Special Meeting for each share of Common Stock held of record on the
Record Date.

Stockholders have the right to dissent from the Merger Agreement and,
subject to certain conditions provided under the DGCL, to receive payment for
the fair value of their shares of Common Stock. See "THE MERGER--Appraisal
Rights of Dissenting Stockholders" and Annex B to this Proxy Statement.

The directors of the Company other than Dr. Cohen have advised the
Company that they intend to vote all shares of Common Stock (currently
approximately 1.27% of the outstanding Common Stock in the

13
<PAGE> 18
PRELIMINARY PROXY

aggregate) owned or held by them, including shares with respect to which they
hold proxies, in favor of the authorization and adoption of the Merger
Agreement. Dr. Cohen intends to vote all shares of Common Stock owned or
controlled by him, including the shares of Common Stock owned by the
Partnership, in favor of the authorization and adoption of the Merger
Agreement. See "--Votes Required" and "STOCK OWNERSHIP OF MANAGEMENT AND
CERTAIN BENEFICIAL OWNERS."

VOTES REQUIRED

As of August 9, 1996, 3,295,886 shares of Common Stock, held by
approximately 2,400 holders of record, were issued and outstanding. As of
August 9, 1996, Dr. Cohen and the Partnership owned an aggregate of 1,683,292
shares, or approximately 51.07%, of the issued and outstanding shares of Common
Stock. See "STOCK OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS." Dr.
Cohen has voting and dispositive power with respect to the shares of Common
Stock owned by the Partnership. Accordingly, Dr. Cohen owns or controls a
sufficient number of shares of Common Stock to cause the Merger Agreement and
the Merger to be authorized and adopted by the stockholders of the Company.
SINCE DR. COHEN INTENDS TO VOTE ALL SHARES OF COMMON STOCK THAT HE OWNS OR
CONTROLS IN FAVOR OF THE AUTHORIZATION AND ADOPTION OF THE MERGER AGREEMENT AND
THE MERGER, THE APPROVAL AND ADOPTION OF THE MERGER AGREEMENT AND THE MERGER BY
THE COMPANY'S STOCKHOLDERS ARE ASSURED.

Shares of Common Stock represented at the Special Meeting by a
properly executed, dated and returned proxy will be treated as present at the
Special Meeting for purposes of determining a quorum, without regard to whether
the proxy is marked as casting a vote or abstaining. Proxies relating to
"street name" shares that are properly executed and returned by brokers will be
counted as shares present for purposes of determining the presence of a quorum,
but will not be treated as shares having voted at the Special Meeting as to the
Merger Agreement and the Merger if authority to vote is withheld by the broker
(a "broker non-vote"). Abstentions will be recorded as such by the Inspectors
of Election for the Special Meeting. In light of the treatment of abstentions
and broker non-votes and the fact that the affirmative votes required to
authorize and adopt the Merger Agreement and the Merger are stated percentages
of the total number of outstanding shares of Common Stock on the Record Date,
abstentions and broker non-votes (as well as any other failure to vote shares
of Common Stock) will have the same effect as votes against the authorization
and adoption of the Merger Agreement and the Merger. STOCKHOLDERS WHO FAIL TO
PROPERLY EXECUTE AND RETURN A PROXY CARD OR OTHERWISE FAIL TO VOTE THEIR SHARES
OF COMMON STOCK AT THE SPECIAL MEETING WILL IN EFFECT BE VOTING AGAINST THE
AUTHORIZATION AND ADOPTION OF THE MERGER AGREEMENT AND THE MERGER.

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REVOCATION AND USE OF PROXIES; SOLICITATION

Shares of Common Stock which are represented by properly executed,
dated and returned proxies, unless such proxies shall have previously been
properly revoked, will be voted in accordance with the instructions indicated
in such proxies. If no contrary instructions are indicated, such shares will
be voted FOR authorization and adoption of the Merger Agreement and the Merger
and in the discretion of the proxy holder as to any other matter which may
properly come before the Special Meeting. Any other matter which may properly
come before the Special Meeting at which a quorum is present for such purpose
requires the affirmative vote of at least a majority of the shares of Common
Stock present, in person or by proxy. A stockholder who has given a proxy may
revoke it at any time prior to its exercise at the Special Meeting by
delivering a written notice of revocation of the proxy being revoked, or by
submission of a properly executed proxy bearing a later date than the proxy
being revoked, to the Secretary of the Company at 53 North Plains Industrial
Road, Wallingford, Connecticut 06492, or by attending the Special Meeting and
voting the Common Stock covered thereby in person (although attendance at the
Special Meeting will not in and of itself constitute a revocation of a proxy).

Proxies are being solicited by and on behalf of the Board. Any
questions or requests for assistance regarding proxies and related materials
may be directed in writing to Secretary, Customedix Corporation, 53 North
Plains Industrial Road, Wallingford, Connecticut 06492, (203) 284-9079. The
Company will bear the cost of the Special Meeting and of soliciting proxies
therefor, including the reasonable expenses incurred by brokerage houses,
custodians, nominees and fiduciaries in forwarding proxy material to the
beneficial owners of shares of Common Stock.

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SPECIAL FACTORS

BACKGROUND

At a regular meeting of the Board held on February 5, 1996, Dr. Cohen
delivered to the Company the Original Proposal to acquire all of the Common
Stock held by stockholders of the Company, other than Dr. Cohen and the
Partnership, in a negotiated cash merger of a corporation to be formed and
owned by Dr. Cohen and the Partnership, with and into the Company, for $1.9375
cash per share. In response to the Original Proposal, the Board appointed the
Original Special Committee, consisting of William T. Fitch and Robert N.
Thomas, each a non-employee director of the Company, to, among
other things, represent the interests of the unaffiliated stockholders of the
Company and take any and all actions necessary or advisable in connection with
the evaluation and, if appropriate, the approval of the Original Proposal. Dr.
Cohen and the members of the Board, including the members of the Original
Special Committee, understood that the Board would not consider the Original
Proposal or the transactions contemplated thereby, including the proposed
merger, unless, after review and negotiation of the Original Proposal, the
Original Special Committee, as representative of the interests of the Company's
unaffiliated stockholders, determined that the Original Proposal was fair to,
and in the best interests of, the stockholders of the Company (other than Dr.
Cohen and the Partnership) and recommended that the Board accept the Original
Proposal. Following the February 5, 1996, Board meeting, the Original Special
Committee formally engaged Brody and Ober, P.C., as legal counsel, and Tucker
Anthony, as financial advisor, with respect to the Original Proposal and
related matters. After such appointment and prior to May 3, 1996, the Original
Special Committee met on several occasions with its advisors, and Company
management provided Tucker Anthony with certain information with respect to the
Company to assist Tucker Anthony in its evaluation. Dr. Cohen did not
participate in the deliberations of the Special Committee. For a description of
the terms of Tucker Anthony's engagement by the Company, see "--Financial
Advisors." In February 1996, the Delaware Lawsuits were filed in the Delaware
Chancery Court. See "--Certain Litigation."

Prior to May 3, 1996, Tucker Anthony provided the Special Committee
with the Tucker Anthony Materials prepared by Tucker Anthony in connection with
its evaluation, from a financial point of view, of the fairness of the merger
consideration to be paid in the merger pursuant to the Original Proposal. On
May 3, 1996, the Original Special Committee and its counsel met with
representatives of the Buyer and its counsel to negotiate the terms of the
Original Proposal. At that meeting, the Buyer suggested that negotiations over
the proposed price might be more productive if the Buyer understood the
information on which the Original Special Committee was relying as well as the
analysis of that information by the Original Special Committee and/or its
financial advisor, Tucker Anthony, and the Original Special Committee furnished
the Tucker Anthony Materials to the Buyer and its counsel. The parties agreed
that they would engage in further discussion after the Buyer had an opportunity
to review the Tucker Anthony Materials, and that a representative of Tucker
Anthony should be present during such discussion. A meeting was scheduled for
May 8, 1996, the earliest date a representative of Tucker Anthony was available
to attend.

The full text of the Tucker Anthony Materials has been filed as an
exhibit to the Schedule 13E-3. See "--Financial Advisors" for further
information with respect to the Tucker Anthony Materials.

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On May 8, 1996, the Original Special Committee, representatives of the
Buyer, their respective counsel and representatives of Tucker Anthony met to
discuss the Tucker Anthony Materials and to negotiate a price in connection
with the Original Proposal. After a representative from Tucker Anthony
reviewed and the parties discussed the Tucker Anthony Materials, discussion on
pricing ensued. After considerable discussion, both parties remained far apart
on pricing, with Tucker Anthony's representative indicating that he believed
the Tucker Anthony committee which would have to approve an opinion as to the
fairness of the price would certainly support a price of $3.25 per share,
probably support a price of $3.00 per share and perhaps a price as low as $2.90
per share. The Buyer indicated that it could not reach a price within the
range suggested by the representative of Tucker Anthony, and the representative
of Tucker Anthony indicated that he did not believe it would be worthwhile to
seek to have Tucker Anthony consider rendering an opinion as to the fairness of
a price lower than that range. Since at this point the Original Special
Committee and the Buyer were unwilling to proceed without a fairness opinion
from Tucker Anthony, the meeting concluded without an agreement on price.
Following the meeting, the Tucker Anthony representative advised the Special
Committee's Chairman and its counsel that if Dr. Cohen wished to submit a price
to Tucker Anthony for consideration, Tucker Anthony would advise the Special
Committee as to its view of the fairness of such price. However, the
representative of Tucker Anthony stated that any such advice would require
payment by the Company of the $40,000 additional fee due to Tucker Anthony upon
rendering of an opinion. Dr. Cohen refused to accept Tucker Anthony's
condition for its consideration of an increased offer. Later that day, Dr.
Cohen advised the Company that he was withdrawing the offer under the Original
Proposal.

On May 13, 1996, at a regular meeting of the Board, Adraine J. Tom, a
Chartered Financial Analyst who had served as an analyst for several mutual
fund and investment management companies, was elected to serve as a director of
the Company. The directors believed that Ms. Tom's financial background and
experience would be a valuable addition to the Board. See "DIRECTORS AND
EXECUTIVE OFFICERS OF THE COMPANY." Ms. Tom attended business school with an
employee of the Company who is a relative of Dr. Cohen, and was brought to the
attention of the Board by such employee.

On June 3, 1996, counsel for Dr. Cohen and counsel for the plaintiffs
in the Delaware Lawsuits commenced settlement discussions. In connection with
those discussions, Dr. Cohen's attorneys informed the plaintiffs' attorneys that
Dr. Cohen was willing to consider another merger proposal, provided the parties
to the Delaware Lawsuits could reach an agreement-in-principle to settle such
litigation. After further arm's-length negotiations between counsel for Dr.
Cohen and the plaintiffs, such parties, by their respective attorneys, entered
into the Memorandum of Understanding setting forth such an
agreement-in-principle. Pursuant to the Memorandum of Understanding, Dr. Cohen
and the Partnership agreed to make a merger proposal to the Company pursuant to
which, subject to the approval of the Merger Agreement by Dr. Cohen, the Board
and the stockholders of the Company, and further subject to the approval of the
settlement of the Delaware Lawsuits by the Delaware Chancery Court, a
corporation to be formed and owned by Dr. Cohen and the Partnership would be
merged with and into the Company, and each share of Common Stock (other than
shares (i) held in the treasury of the Company, (ii) owned by the Buyer and
(iii) held by stockholders who had not voted in favor of the Merger and who had
otherwise properly exercised their rights for appraisal of such shares in
accordance with Section 262 of the DGCL) would be converted into the right to
receive, upon surrender of the certificate evidencing such share, $2.375 per
share in cash, without interest. The Memorandum of Understanding contemplates
the payment by the Company of the legal fees and expenses

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of plaintiffs' counsel in an amount not to exceed $200,000. Under the terms of
the Memorandum of Understanding, the parties agreed to use their best efforts to
agree upon and execute, by July 14, 1996, a Stipulation of Settlement and to
obtain the Delaware Chancery Court's approval of a settlement of the Delaware
Lawsuits, which have been consolidated for all purposes as the Stockholder
Action, upon substantially the terms of the Memorandum of Understanding.
Pursuant to the Memorandum of Understanding, on July 25, 1996, the parties to
the Stockholder Action, by and through their respective attorneys, entered into
the Stipulation, subject to the approval of the Delaware Chancery Court. The
Delaware Chancery Court has scheduled a settlement hearing for August 27, 1996,
at 11:00 a.m. However, there can be no assurance that the Delaware Chancery
Court will approve the proposed settlement. For a summary of certain of the
terms of the Memorandum of Understanding and the Stipulation, see "--Certain
Litigation." Consummation of the Merger is conditioned upon, among other things,
settlement of the Stockholder Action upon substantially the terms set forth in
the Memorandum of Understanding and approval of the settlement by the Delaware
Chancery Court. See "THE MERGER--Terms of the Merger--Conditions to Consummation
of the Merger."

On June 4, 1996, Dr. Cohen delivered to the Company the Proposal to
acquire all of the Common Stock held by stockholders of the Company, other than
Dr. Cohen and the Partnership, in a negotiated cash merger of a corporation to
be formed and owned by Dr. Cohen and the Partnership, with and into the
Company, for $2.375 per share.

In response to the Proposal, the Board reconstituted the Special
Committee, consisting of Robert N. Thomas, as Chairman, William T. Fitch and
Adraine J. Tom, each a non-employee director of the Company to,
among other things, represent the interests of the unaffiliated stockholders of
the Company and take any and all actions necessary or advisable in connection
with the evaluation and, if appropriate, the approval of the Proposal. The
Special Committee indicated that it intended to continue to engage Brody and
Ober, P.C., as legal counsel. As a result of the discussions with Tucker
Anthony May 8, 1996 at the Meeting, the Special Committee and the Company
understood that any further consideration by Tucker Anthony as to the fairness
of the price offered pursuant to the Proposal would require the Company to pay
an additional $40,000 fee to Tucker Anthony. Because the Company did not believe
this condition to Tucker Anthony's consideration of an increased offer was
consistent with the terms of Tucker Anthony's engagement, neither the Special
Committee nor the Company desired to ask Tucker Anthony to provide additional
services in connection with the Proposal. In addition, management of the
Company, and the Buyer and Dr. Cohen, believed that certain aspects of the
Tucker Anthony analysis were incorrect and that, as a result, the range of
prices suggested by Tucker Anthony's representative at the May 8, 1996 Meeting
did not present a reasonable valuation of the Company. See "SPECIAL
FACTORS--Financial Advisors." For these reasons, Tucker Anthony was not asked to
provide any services, or to render an opinion with respect to the fairness of
the Merger Consideration, in connection with the Proposal.

As with the Original Proposal, Dr. Cohen and the members of the
Board, including the members of the Special Committee, understood that the Board
would not consider the Proposal or the transactions contemplated thereby,
including the proposed Merger, unless, after review and negotiation of the
Proposal, the Special Committee, as representative of the interests of the
Company's unaffiliated stockholders, determined that the Proposal was fair to,
and in the best interests of, the stockholders of the Company (other than Dr.
Cohen and the Partnership) and recommended that the Board accept the Proposal.
After its appointment, the Special Committee held several telephonic meetings
with its legal advisor and with counsel for the independent directors in the
Stockholder Action to evaluate the Proposal, the Memorandum of Understanding,
the Tucker Anthony Materials and Dr. Cohen's analysis of the Tucker Anthony
Materials, reflecting, in part, discussions between the transaction proponents
and Carter Capital, an investment banking firm retained by counsel to Dr. Cohen
and the Company, which had performed a limited review of the Tucker Anthony
Materials. For a description of the services provided and the analysis
performed by Carter Capital, see "--Financial Advisors." Dr. Cohen did not
participate in the deliberations of the Special Committee. Between June 4,
1996, and the June 10, 1996 Board Meeting, the Special Committee and the Buyer
negotiated with respect to the Merger Consideration; and the Special Committee
and the Buyer, through their legal advisors, had discussions regarding, and
agreed upon certain revisions to, the Merger Agreement.

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RECOMMENDATION OF THE BOARD

On June 10, 1996, the Special Committee met to further consider the
Proposal. At the conclusion of that meeting, based on the Special Committee's
review and consideration of the Proposal, the members of the Special Committee
unanimously determined that the Proposal was fair to, and in the best interests
of, the stockholders of the Company (other than Dr. Cohen and the Partnership),
and unanimously voted to recommend that the Board accept the Proposal and
approve the Merger Agreement and the Merger.

Later on June 10, 1996, at a special meeting of the full Board, which
Dr. Cohen attended, the Special Committee presented its report with respect to
the Proposal and advised the Board that it had unanimously determined that the
Proposal was fair to, and in the best interests of, the stockholders of the
Company (other than Dr. Cohen and the Partnership), and unanimously recommended
that the Board accept the Proposal and approve the Merger Agreement and the
Merger. After the Special Committee's presentation, Dr. Cohen and Martin L.
Schulman (each of whom is an officer of the Company and an employee of its major
subsidiary), and Robert S. Cooper and David H. Leigh (each of whom is a
non-employee director whose employers have business dealings with the Company)
left the meeting. The remaining non-employee directors of the Board, Elry C.
Bird, William T. Fitch, Robert N. Thomas and Adraine J. Tom, unanimously
approved the Merger Agreement and the transactions contemplated thereby,
including the Merger, and determined that the Merger is fair to, and in the best
interests of, the holders of the Common Stock (other than Dr. Cohen and the
Partnership). After the vote of the non-employee directors, the full Board
reconvened and was advised of the vote of the non-employee directors. The full
Board, including Dr. Cohen, then adopted the recommendation of the Special
Committee as its own; considered, and unanimously approved, the Merger Agreement
and the Merger; determined that the Merger is fair to, and in the best interests
of, the holders of the Common Stock (other than Dr. Cohen and the Partnership);
and resolved to recommend that the Company's stockholders approve and adopt the
Merger Agreement and the Merger. The Merger Agreement was executed immediately
thereafter by the Company and the Buyer and a press release was issued
announcing the Board's approval of the Merger.

Certain members of the Board have conflicts of interest in connection
with the Board's recommendation, including in the case of Dr. Cohen, who voted
in favor of the Merger, his continuing interest in the equity of the Surviving
Corporation. See "SPECIAL FACTORS--Conflicts of Interest; Interests of Certain
Persons in the Merger" and "--Certain Relationships and Related Transactions."

FAIRNESS OF THE MERGER

The Company. The Special Committee, in determining to recommend
approval of the Merger Agreement and the Merger to the Board, and the full
Board, in approving the Merger Agreement and the Merger and recommending its
approval and adoption by stockholders of the Company, considered a number of
factors. The material factors considered by the Special Committee and the
Board are as follows:

(1) information with respect to the financial condition,
results of operations, business and prospects of the Company, as well
as current industry, economic and market conditions and risks involved
with the Company's business (see "MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS");

(2) an analysis of earnings before interest, taxes,
depreciation and amortization ("EBITDA") performed by the Special
Committee. The Tucker Anthony Materials appeared

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to support the application of a multiple of approximately 8x the
Company's EBITDA in order to arrive at a total enterprise value for the
Company. This 8x multiple was based on valuation multiples for a number
of companies which Tucker Anthony considered to be comparable to the
Company. However, the Tucker Anthony Materials also showed that the
Company had much lower operating and net income margins and revenue
growth than the companies considered "comparable" by Tucker Anthony. In
particular, the Special Committee noted that the Company's precious
metals business, which represented in excess of 50 percent of the
Company's revenues, was a very low margin business. In light of the
Special Committee's conclusion that the Company and the so-called
"comparable" companies identified in the Tucker Anthony Materials were
in fact not comparable in certain key respects, the Special Committee
performed an EBITDA analysis which applied a separate EBITDA multiple
to each segment of the Company's business, in contrast to the Tucker
Anthony Materials, which applied one EBITDA multiple to the Company as
a whole. Under this analysis, an EBITDA value was determined for each
of the Company's product lines identified in the Tucker Anthony
Materials, based on the Company's audited financial statements for the
year ended June 30, 1995. Because the Company's actual and estimated
1996 financial results indicated that the Company's results would be
less favorable in fiscal 1996 than fiscal 1995, fiscal 1995 financial
results were used to obtain as large an enterprise value as possible
based on the Company's recent financial performance. Each product line
was assigned a multiplier based on its growth prospects and
profitability potential; this method valued the low margin portion of
the Company's business at a lower multiple than the higher margin
portion of the Company's business. The multiplier for each product line
was applied to the product line's EBITDA value, and these values were
totaled to arrive at an enterprise value of approximately $15,086,000.
The Company's funded debt, including its revolving credit facility, in
the amount of approximately $7,306,000 as of March 31, 1996, was
subtracted from this enterprise value, yielding an equity valuation of
approximately $7,800,000, or a value of $2.35 per share based on
approximately 3,314,000 shares outstanding reflected in the Tucker
Anthony Materials. The Special Committee believed that this analysis
supported the Proposal price of $2.375 per share.

(3) the Special Committee understood that management
believed that the Company's financial results for 1996 would likely be
more indicative of the Company's current valuation than the Company's
historical performance. Based on this information, the Special
Committee performed an EBITDA analysis applying Tucker Anthony's
suggested multiple of 8x EBITDA for the Company, based on the Company's
actual and estimated fiscal 1996 results as calculated by Tucker
Anthony. The Tucker Anthony Materials provided an estimated EBITDA of
approximately $1,890,000 for the Company's 1996 fiscal year. Applying
an 8x multiple to this value yielded an enterprise value of
approximately $15,120,000. All of the Company's funded debt, including
the Company's revolving debt, as of March 31, 1996, equal to
approximately $7,306,000, was subtracted from this number, yielding an
equity valuation of approximately $7,814,000, or a value of
approximately $2.36 per share based on approximately 3,314,000 shares
outstanding as reflected in the Tucker Anthony Materials. The Special
Committee believed that this analysis supported the Proposal price of
$2.375 per share.

(4) the Special Committee's belief, based on the analysis
in (2) above, and the fact that the Tucker Anthony Materials reflected
a median multiple of 7.2x EBITDA for "remaining minority interest"
transactions similar to the Proposal, that the 8x multiple used in
Tucker Anthony's EBITDA analysis was unduly high for an entity with the
Company's profitability and revenue growth characteristics. Tucker
Anthony's projections reflected an estimated 1996 EBITDA for the
Company of approximately $1,900,000. Accepting this estimate as roughly
accurate for computation purposes, the Special Committee applied the
medium multiple of 7.2x EBITDA to arrive at an estimated enterprise
value of approximately $13,680,000. The Company's funded debt of
approximately $7.2 million as of June 30, 1996, was subtracted from
this enterprise value, yielding an equity valuation for the Company of
approximately $6,480,000, or a value of $1.96 per share, based on
approximately 3,314,000 shares outstanding as reflected in the Tucker
Anthony Materials. The Special Committee believed this valuation
supported the Proposal price of $2.375 per share;

(5) the Special Committee was aware that the Company had
an unfunded pension liability and noted that the Tucker Anthony
analysis failed to subtract the Company's unfunded pension liability
from its EBITDA calculation. The Special Committee believed this was
one of the flaws in Tucker Anthony's analysis. The Special Committee
noted that the Special Committee's EBITDA analyses described in
paragraphs (2), (3) and (4)

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above, which subtracted out the Company's funded debt from its
enterprise value, supported the Proposal price of $2.375 per share.
The Special Committee believed that, had the Company's unfunded pension
liability also been subtracted from enterprise value in its analyses
described in paragraphs (2), (3) and (4) above, the results would have
supported an even lower equity and per share valuation for the company;

(6) the Special Committee was aware that the Company's
price/earnings ratio at the Proposal price of $2.375 per share was in
excess of 26x, based on the Company's actual and estimated fiscal 1996
results (as reflected in the Tucker Anthony Materials). Using the
Company's audited financial statements for the year ended June 30,
1995, the price/earnings ratio at the Proposal price was approximately
10x. These ratios were within the range of price/earnings ratios for
companies considered "comparable" to the Company in the Tucker Anthony
Materials. For example, as of June 7, 1996, the price/earnings ratios
of Dentsply, Patterson Dental, Sullivan Dental and Sybron (companies
considered "comparable" by Tucker Anthony), as reported in The New York
Times on June 8, 1996, were 21x, 25x, 14x and 25x, respectively;

(7) the Special Committee analyzed the Proposal on a
premium-over-market basis, noting that the Proposal price represented
an 18.75% premium over the $2.00 closing price of the Common Stock on
June 3, 1996, the last full trading day prior to the press release by
the Company announcing delivery to the Company of the Proposal. The
Tucker Anthony Materials indicate that for 40% to 49.9% remaining
interest transactions like the Proposal, median premiums paid over
share price one day, one week and four weeks prior to announcement of
the transaction were 19.5%, 21.5% and 25.2%, respectively. The Special
Committee believed an 18.75% premium was in line with these median
premiums for completed "remaining minority interest" transactions;

(8) the Special Committee reviewed certain projections
included in the Tucker Anthony Materials. These projections were
prepared by Tucker Anthony; at the request of Tucker Anthony, the
Company's management reviewed and commented on drafts of the
projections. While The Special Committee believed that these
projections generally supported the Proposal price of $2.375 per share,
the Special Committee had certain reservations regarding the
projections. The Special Committee took note of the fact that the
projections in the Tucker Anthony Materials had been prepared by Tucker
Anthony solely for purposes of Tucker Anthony's analysis and that the
Company had not previously prepared projections of its future
performance or earnings in the ordinary course. As a result of these
concerns, although the Special Committee and the Board did not find it
practicable to, and did not, quantify or otherwise assign relative
weights to the factors considered in reaching their determinations, the
Special Committee and the Board viewed the projections as less
persuasive than the other factors considered;

(9) the Special Committee reviewed Dr. Cohen's analysis
of the Tucker Anthony Materials, reflecting, in part, discussions
between the transaction proponents and Carter Capital, an investment
banking firm retained by counsel to Dr. Cohen and the Company, which
performed a limited review of the Tucker Anthony Materials. Carter
Capital had analyzed the value of the Company's stock, relying on the
Tucker Anthony Materials, from the point of view of a leveraged buy-out
valuation and through a present value analysis of the Company's future
cash flows. These analyses resulted in valuations of less than $2.20
per share; For a discussion of the analysis conducted by Carter
Capital, see "--Financial Advisors;"

(10) the fact that the Common Stock is thinly traded, that
there is a limited market for the Common Stock and that, as a result,
it is difficult for the Company's stockholders to sell their shares
when they so desire; and further that a transaction such as

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the Merger would afford stockholders the opportunity to receive a
price for their shares of Common Stock which they might not otherwise
be able to obtain in market transactions;

(11) the fact that Dr. Cohen, who controls more than 50%
of the outstanding Common Stock, has advised the Board that he does
not intend to sell his interest in the Company or enter into a
transaction which might provide a premium for the minority
stockholders or liquidity for their holdings. The Special Committee
concluded that it would take a great deal of time for a price higher
than $2.375 per share to be available generally to the Company's
stockholders, and that a higher price might never be offered to the
minority stockholders;

(12) the terms and conditions of the Memorandum of
Understanding, including that under the terms thereof plaintiffs and
plaintiffs' counsel in the Stockholder Action conditionally recognized
the fairness of the $2.375 per share price offered under the Proposal.
The Special Committee noted that approval of the settlement of the
Stockholder Action on substantially the terms set forth in the
Memorandum of Understanding was a condition to the consummation of the
Merger and was aware that there is no assurance that the parties would
settle the Stockholder Action or that the Delaware Chancery Court
would approve the terms of the Stipulation of Settlement contemplated
under the Memorandum of Understanding.

(Stockholders should be aware that (i) counsel for the plaintiffs in
the Stockholder Action are not acting on behalf of the public stockholders of
the Company for the purpose of negotiating the terms of the Merger, and (ii)
while pursuant to the Stipulation the parties to the Stockholder Action are
requesting the Delaware Chancery Court to approve the Settlement and adjudge the
terms of the Settlement to be fair, reasonable and adequate, the Delaware
Chancery Court will not make a finding, or otherwise determine or render an
opinion, as to the fairness from a financial point of view, of the Proposal
price of $2.375 per share to be received by the stockholders (other than Dr.
Cohen and the Partnership) upon consummation of the Merger. For a description of
the Stockholder Action and a summary of certain of the terms of the Memorandum
of Understanding and the Stipulation, see "SPECIAL FACTORS--Certain
Litigation.");

(13) the Special Committee believed that the increase in
the price offered under the Proposal to $2.375 per share represents a
meaningful increase of $.4375 per share from the Original Proposal and
that acceptance of the Proposal by the Special Committee would provide
stockholders with an opportunity to receive the increased price. Based
on the Special Committee's negotiations with Dr. Cohen, the Committee
was satisfied that the Proposal represents the highest price Dr. Cohen
is willing to pay to acquire the outstanding shares of Common Stock
held by the Company's unaffiliated stockholders;

(14) the terms and conditions of the Merger Agreement,
including the fact that the consummation of the Merger is subject to
the Delaware Chancery Court's approval of the Stipulation of
Settlement; and

(15) the fact that any stockholder dissatisfied with the
Proposal price of $2.375 per share could exercise appraisal rights
pursuant to Section 262 of the DGCL upon consummation of the
proposed Merger.

The Special Committee and the Board did not consider alternatives to
the Proposal, such as a tender offer, a reverse stock split or a sale of the
Company, based on (i) the stated intention of the Buyer and Dr. Cohen not to
sell the Company or liquidate the Company in the immediate future, (ii) the fact
that the Proposal was made in response to and in the context of the Memorandum
of Understanding, which contemplated a Merger transaction with a price equal to
the Proposal price of $2.375 per share, and (iii) the fact that a transaction
like the Merger afforded any stockholder dissatisfied with the $2.375 per share
price offered in the Proposal the opportunity to exercise appraisal rights under
the DGCL upon consummation of the proposed Merger. It is possible that such
alternatives, if pursued, could have resulted in a price higher than the
Proposal price of $2.375 per share.

The Special Committee and the Board were aware that the Company has not
received any offers by third parties to acquire the Company, purchase a
substantial part of the assets of the Company or purchase all or a controlling
block of the securities of the Company. Based on the stated intention of the
Buyer and Dr. Cohen not to sell the Company in the immediate future, neither the
Special Committee nor the Board solicited any such offers. It is possible that
such an offer could have resulted in a price higher than the Proposal price of
$2.375 per share.

Based on the intention of the Buyer and Dr. Cohen not to sell the
assets of the Company or to liquidate the Company in the immediate future, the
Special Committee and the Board did not consider the liquidation value or the
sale value of assets of the Company to have significant weight or relevance in
its analysis as to whether the Proposal was fair to, and in the best interests
of, the stockholders of the Company (other than Dr. Cohen and the Partnership).
Accordingly, neither the Special Committee nor the Board sought to determine the
liquidation value or the sale value of the assets of the Company. It is possible
that if the liquidation value or the sale value of the assets of the Company had
been determined, such liquidation value or sale value could have resulted in a
per share valuation of the Company higher than the Proposal price of $2.375 per
share.

The Special Committee and the Board were aware that the price which
would be paid to stockholders (other than Dr. Cohen and the Partnership)
pursuant to the Proposal is below the range that, at the May 8, 1996 Meeting, a
representative of Tucker Anthony indicated would be required in order for a
Tucker Anthony committee to issue a fairness opinion in connection with the
Original Proposal. See "SPECIAL FACTORS--Background." The Special Committee and
the Board, along with management of the Company, and the Buyer and Dr. Cohen,
believed that certain aspects of the Tucker Anthony analysis were incorrect and
that, as a result, the range of prices suggested by the Tucker Anthony
representative at the May 8, 1996 Meeting did not present a reasonable valuation
of the Company. See "SPECIAL FACTORS--Financial Advisors."

The Special Committee, in making its recommendations to the Board, and
the full Board, in making its determination with respect to the Proposal,
recognized that (i) the Merger is not structured to require the approval of a
majority of the unaffiliated stockholders of the Company; (ii) Dr. Cohen owns
or controls a sufficient number of shares of Common Stock to approve and adopt
the Merger Agreement and the Merger

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without the affirmative vote of any other stockholder of the Company; (iii)
after the Merger, Dr. Cohen and the Partnership would own the entire equity
interest in the Company and the other holders of the Common Stock would no
longer have the opportunity to participate in the future growth prospects of the
Company (see "--Certain Effects of the Merger"); and (iv) certain members of the
Board have conflicts of interest in connection with the Board's recommendation,
including, in the case of Dr. Cohen, who voted in favor of the Merger, his
continuing interest in the equity of the Surviving Corporation, and certain
members of management of the Company and certain other individuals have certain
interests in the Merger (see "--Conflicts of Interest; Interests of Certain
Persons in the Merger" and "--Certain Relationships and Related Transactions").

In light of the wide variety of factors considered in connection with
the evaluation of the Proposal, the Special Committee and the Board did not find
it practicable to, and did not, quantify or otherwise assign relative weights to
the individual factors considered in reaching their determinations. In
addition, individual members of the Special Committee or the Board may have
given different weights to different factors.

Neither the Board nor the Special Committee believed it was necessary
to retain an unaffiliated representative, other than the Special Committee and
its legal advisors, to act solely on behalf of the public stockholders of the
Company for the purpose of negotiating the Merger Agreement with the Buyer,
based on the following factors: (i) the appointment of the Special Committee,
the members of which are non-employee directors of the Company; (ii) the
engagement of Brody and Ober, P.C. as independent legal advisor to the Special
Committee and the Board; (iii) the terms and conditions of the Memorandum of
Understanding, including, without limitation, the provision therein that the
Memorandum of Understanding shall be null and void and of no force and effect
if, among other things, plaintiffs' counsel determines in good faith that, based
on discovery conducted pursuant to the Memorandum of Understanding, the proposed
settlement (which includes the Merger as a condition thereto) is not fair,
reasonable and adequate (see "--Certain Litigation"); and (iv) the requirement
that the settlement be approved by the Delaware Chancery Court (see "--Certain
Litigation"). For a discussion of the stockholder vote requirements applicable
to the Merger Agreement, see "THE SPECIAL MEETING--Votes Required."

THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS THAT
STOCKHOLDERS VOTE FOR THE PROPOSAL TO APPROVE AND ADOPT THE MERGER AGREEMENT
AND THE MERGER. STOCKHOLDERS SHOULD BE AWARE THAT CERTAIN MEMBERS OF THE BOARD
HAVE CONFLICTS OF INTEREST IN CONNECTION WITH SUCH RECOMMENDATION, INCLUDING,
IN THE CASE OF DR. COHEN, WHO VOTED IN FAVOR OF THE MERGER, HIS CONTINUING
INTEREST IN THE EQUITY OF THE SURVIVING CORPORATION. SEE " --CONFLICTS OF
INTEREST; INTERESTS OF CERTAIN PERSONS IN THE MERGER."

The Buyer, Dr. Cohen and the Partnership. The Buyer, Dr. Cohen and
the Partnership have concluded that the Merger is fair to the stockholders of
the Company (other than Dr. Cohen and the Partnership) and that the $2.375 per
share cash consideration to be received by the stockholders in the Merger is
fair to such holders from a financial point of view. In reaching their
conclusion, the Buyer, Dr. Cohen and the Partnership took into consideration
the factors referred to above as having been taken into account by the Board and
the Special Committee and have adopted as their own the conclusion and analysis
of the Special Committee and the Board. In addition, the Buyer, Dr. Cohen and
the Partnership have considered the measures taken by the Board to ensure the
procedural fairness of the transaction, including the formation of the Special
Committee, the retention of an independent legal advisor by the Special
Committee, and the terms and conditions of the Memorandum of Understanding,
including the requirement that the settlement be approved by the Delaware
Chancery Court, the agreement to provide plaintiffs with access to Company
records and, through depositions, the opportunity to question Dr. Cohen and a
member of the Special Committee, with respect to the Proposal, and the
arm's-length nature of the negotiations between both the Special Committee and
the Buyer and plaintiffs' counsel and the Buyer. See "SPECIAL

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FACTORS--Background" and "--Certain Litigation." Dr. Cohen and the
Partnership did not find it practicable to and did not quantify or otherwise
assign relative weights to the specific factors considered above, including the
factors considered by the Board and the Special Committee.

FINANCIAL ADVISORS

Tucker Anthony Incorporated. In connection with its selection of a
financial advisor, the Original Special Committee contacted a number of
investment banking firms in February 1996. Tucker Anthony, a brokerage and
investment banking firm, was selected by the Original Special Committee based
on the Special Committee's judgment as to Tucker Anthony's experience and
expertise. The Original Special Committee retained Tucker Anthony in March
1996 to act as financial advisor in connection with the Original Proposal. In
connection with such engagement, the Original Special Committee requested that
Tucker Anthony evaluate the fairness, from a financial point of view, of the
merger consideration to be paid in the merger pursuant to the Original
Proposal.

Terms of Tucker Anthony's Engagement. Pursuant to the terms of Tucker
Anthony's engagement, the Company paid Tucker Anthony a fee of $60,000. Under
the terms of Tucker Anthony's engagement, the Company also agreed to pay Tucker
Anthony an additional $40,000 if Tucker Anthony rendered an opinion, oral or
written, as to the fairness, from a financial point of view, of the merger
consideration to be paid in the merger pursuant to the Original Proposal, and to
reimburse Tucker Anthony for all of its reasonable out-of-pocket expenses and
disbursements, including outside database and research services and fees and
expenses of counsel, incurred in connection with its engagement. In addition,
if the Special Committee requested that Tucker Anthony negotiate on its behalf
with any party potentially interested in consummating a Transaction with the
Company, the Company agreed to pay Tucker Anthony a cash fee at the closing of a
Transaction in an amount equal to five percent of the Transaction Amount
(defined as the total consideration paid or contributed for the Common Stock of
the Company) in excess of the Transaction Amount calculated based on $1.9375 per
share of Common Stock. The Company also agreed to indemnify Tucker Anthony and
its affiliates, the respective directors, officers, controlling persons, if any,
agents and employees of Tucker Anthony or any of its affiliates from and against
any claims, liabilities, losses, damages, proceedings or actions (whether
pending or threatened) related to or arising out of Tucker Anthony's engagement
or its role in connection therewith, and to reimburse Tucker Anthony and any
indemnified party described above for all reasonable costs and expenses,
including counsel fees, as they are incurred in connection with investigating,
preparing for and defending any such claim, proceeding or action (whether
pending or threatened), except for claims, liabilities, losses, damages or
expenses finally judicially determined to have resulted primarily from Tucker
Anthony's gross negligence or intentional or reckless misconduct. Since Tucker
Anthony has not been asked to deliver an opinion as to the fairness of the
Merger Consideration, see "--Background," it has not been paid the additional
$40,000 fee contemplated in its engagement agreement for delivery of a fairness
opinion.

In connection with its evaluation of the fairness, from a financial
point of view, of the merger consideration to be paid in the merger pursuant to
the Original Proposal, Tucker Anthony prepared and provided the Special
Committee with, the Tucker Anthony Materials. For a description of Tucker
Anthony's meeting with the Original Special Committee, Dr. Cohen and their
respective counsel to discuss the Tucker Anthony Materials and negotiate the
terms of the Original Proposal, and the results of the discussions among Tucker
Anthony, the Original Special Committee and Dr. Cohen, see "--Background." For
a discussion of the Special Committee's analysis, based in part on the Special
Committee's review of the Tucker Anthony Materials, see "--Background" and
"--Fairness of the Merger--The Company."

The Tucker Anthony Materials. The full text of the Tucker Anthony
Materials prepared by Tucker Anthony has been filed as an exhibit to the
Schedule 13E-3. Copies thereof will be made available for inspection and
copying at the

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principal executive offices of the Company during regular business hours by any
interested stockholder of the Company or his representative who has been so
designated in writing, and may be inspected and copies may be obtained in the
manner described in "ADDITIONAL INFORMATION." The discussion in this Proxy
Statement of the Tucker Anthony Materials is qualified in all respects by
reference to the full text of the Tucker Anthony Materials.

The Tucker Anthony Materials include certain financial projections of
the Company's future performance prepared by Tucker Anthony with input from
Company management. The Company does not as a matter of course prepare, or
make public, forecasts or estimates as to future performance or earnings.
However, during March and April 1996, Company management provided Tucker
Anthony with certain information and assumptions for use by Tucker Anthony in
the preparation of certain financial projections with respect to the Company
included in the Tucker Anthony Materials. The Tucker Anthony Materials,
including the projections therein, were prepared by Tucker Anthony solely for
review by the Special Committee and the Board in connection with their review
of the Proposal and the transactions contemplated thereby and not with a view
to public disclosure. The Tucker Anthony Materials, including the projections
therein, have been filed as an exhibit to the Schedule 13E-3 solely because the
Tucker Anthony Materials were reviewed by the Special Committee and the Board
in connection with their analysis of the Proposal and the transactions
contemplated thereby.

NEITHER THE COMPANY, THE SPECIAL COMMITTEE, THE BUYER, DR. COHEN,
THE PARTNERSHIP OR TUCKER ANTHONY, NOR ANY OF THEIR ADVISORS, AGENTS OR
REPRESENTATIVES, ASSUMES ANY RESPONSIBILITY FOR THE ACCURACY OF ANY OF THE
PROJECTIONS INCLUDED IN THE TUCKER ANTHONY MATERIALS. THE INCLUSION OF THE
PROJECTIONS IN THE TUCKER ANTHONY MATERIALS SHOULD NOT BE REGARDED AS AN
INDICATION THAT THE COMPANY, THE SPECIAL COMMITTEE, THE BUYER, DR. COHEN, THE
PARTNERSHIP OR TUCKER ANTHONY, OR ANY OF THEIR ADVISORS, AGENTS OR
REPRESENTATIVES, CONSIDER THEM AN ACCURATE PREDICTION. BECAUSE PROJECTIONS OF
THIS TYPE ARE BASED ON A NUMBER OF ESTIMATES AND ASSUMPTIONS AND ARE INHERENTLY
SUBJECT TO SIGNIFICANT UNCERTAINTIES AND CONTINGENCIES, ALL OF WHICH ARE
DIFFICULT TO PREDICT AND MOST OF WHICH WILL BE BEYOND THE CONTROL OF THE COMPANY
OR ANY OTHER COMPANY PREPARING FORECASTS, THERE CAN BE NO ASSURANCE THAT THE
FUTURE RESULTS PROJECTED IN THE TUCKER ANTHONY MATERIALS WILL BE REALIZED. TO
THE COMPANY'S KNOWLEDGE, THE PROJECTIONS INCLUDED IN THE TUCKER ANTHONY
MATERIALS WERE NOT PREPARED WITH A VIEW TOWARD COMPLIANCE WITH ANY RULES OR
PUBLISHED GUIDELINES OF THE SEC WITH RESPECT TO THE PREPARATION OR DISCLOSURE OF
PROJECTIONS OR FORECASTS OR ANY GUIDELINES ESTABLISHED BY THE AMERICAN INSTITUTE
OF CERTIFIED PUBLIC ACCOUNTANTS REGARDING PROJECTIONS.

Management of the Company and Dr. Cohen believed that certain aspects
of the Tucker Anthony Materials did not reflect a complete understanding of
the Company or its business and strategy, and believed that the resulting range
of prices discussed by the Tucker Anthony representative at the May 8, 1996
Meeting did not reflect a reasonable valuation of the Company. Management of
the Company and Dr. Cohen had the following material concerns with respect to
the Tucker Anthony analysis and the Tucker Anthony Materials:

(i) Tucker Anthony appeared to believe that the Company was
overspending, and projecting excessive expenditures, for research and
development. As the Company has reported in previous public filings,
Company management believes that it is, and in the future will be,
required to make substantial expenditures on research and development
and product introduction to ensure the long-term viability and growth
of the Company, and that the necessary levels of R&D expenditures will
adversely affect the Company's profitability. Company management
believes that the Company's failure to devote sufficient resources to
R&D would cause long-term damage to the Company.

(ii) Tucker Anthony's analyses based on selected "comparable"
companies was flawed, because the companies identified by the Tucker
Anthony Materials were in fact not comparable to the Company. The
Tucker Anthony Materials identified eight publicly-traded "selected
reference companies" (the "Selected Reference Companies") to be used as
a basis of comparison with the Company. The eight Selected Reference
Companies were: BioDental Technologies, Dentsply, Lancer Orthodontics,
Phoenix Shannon, Sybron, Henry Schein, Patterson Dental Co. and
Sullivan Dental Products.

- BioDental Technologies, Henry Schein, Patterson Dental
Co. and Sullivan Dental Products are distributors; the Company
and Dr. Cohen did not believe that the distribution business
is comparable to the Company's business. Lancer Orthodontics
appears to be in the orthodontics market, a market in which
the Company is not involved and which Company management
believed is not comparable to the Company's markets.

- Phoenix Shannon, Dentsply and Sybron all have product
lines similar to those of the Company. Of these:

-- Dentsply and Sybron are two of the largest
companies in the industry (based on the Tucker Anthony
Materials, the last twelve months' net revenues of Dentsply
and Sybron were $527 million and $554 million, respectively,
compared to approximately $52 million for the Company).
Company management and Dr. Cohen believed that smaller
companies like the Company would have difficulty competing
against either of these large companies because of their size
and influence. In light of their greater size and resources,
such large companies could be expected to trade at higher
multiples than the Company, rendering a financial comparison
of the Company to either Dentsply or Sybron inappropriate.

-- The most comparable of the companies in terms
of size is Phoenix Shannon (based on the Tucker Anthony
Materials, last twelve months' net revenues of approximately
$24 million). However, Company management and Dr. Cohen
believed there are significant differences between Phoenix
Shannon and the Company, including the following: Phoenix
Shannon is in the laboratory business only, specifically
alloys and machinery, and has only one overlapping product
line with the Company, alloys; Phoenix Shannon's J.M. Ney
subsidiary has a lucrative equipment division in California
which has a unique position in the industry and significant
brand equity; Phoenix Shannon sells products directly in
Europe, recognizing much higher margins than the Company,
which sells through distributors; Phoenix Shannon has a
different margin structure than the Company and different cash
demands, since, unlike the Company, it has few research and
development expenses; and as an Irish company, Phoenix Shannon
receives favorable tax treatment in Ireland, which the Company
does not receive in the United States.

Generally, Company management and Dr. Cohen believed that comparisons
to the Selected Reference Companies would give misleading results,
since these companies were more dissimilar than comparable to the
Company.

(iii) Company management and Dr. Cohen believed that the
Company's actual 1996 performance, which reflects a reduction in
profitability resulting from increased expenditures on research and
development, is more indicative of the Company's current valuation,
and its likely valuation for the next several years, than the 1995
historical performance underlying the Tucker Anthony analysis. As
part of the negotiations conducted by the Special Committee and the
Buyer and Dr. Cohen, the above names of management of the Company and
the Buyer and Dr. Cohen were communicated to the Special Committee
between June 4, 1996, and the June 10, 1996 Board Meeting.

Carter Capital Corporation. Carter Capital was retained by counsel to
Dr. Cohen and the Company in June 1996, after Dr. Cohen made the Proposal, to
analyze certain financial information with respect to the Company, including
certain portions of the Tucker Anthony Materials.

Terms of Carter Capital's Engagement. Pursuant to the terms of
Carter Capital's engagement, the Company has agreed to pay Carter Capital a fee
of $15,000. The Company has agreed to indemnify Carter Capital and its
affiliates, the respective directors, officers, controlling persons, if any,
agents and employees of Carter Capital or any of its affiliates from and against
any claims, liabilities, losses, damages, proceedings or actions (whether
pending or threatened) relating to or arising out of Carter Capital's services
pursuant to its engagement, and to reimburse Carter Capital and any indemnified
party described above for all reasonable costs and expenses, including counsel
fees, as they are incurred in connection with investigating, preparing for and
defending

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any such claim, proceeding or action (whether pending or threatened), except
for claims, liabilities, losses, damages or expenses finally judicially
determined to have resulted primarily from Carter Capital's gross negligence or
intentional or reckless misconduct.

Carter Capital is an investment banking firm located in Southport,
Connecticut. Carter Capital was retained because of its expertise and
experience in valuing businesses in connection with mergers, acquisitions,
fairness opinions, shareholder disputes, purchase and sale agreements and
estate planning; advising companies and management on buying and selling
businesses, including structuring the transaction, pricing, negotiations, due
diligence and documentation; and raising debt and equity capital for expansion,
mergers, acquisitions and recapitalizations.

Management of the Company, and the Buyer and Dr. Cohen believed that
certain aspects of the Tucker Anthony analysis were incorrect and that, as a
result, the range of prices suggested by the Tucker Anthony representative at
the May 8, 1996 Meeting did not present a reasonable valuation of the Company.
See "SPECIAL FACTORS--Financial Advisors." Carter Capital was engaged on June 7,
1996, for the limited purpose of assisting the Buyer and Dr. Cohen in analyzing
the Tucker Anthony Materials in preparation for negotiations with the Special
Committee and the Board prior to or at the special meeting of the Board
scheduled for June 10, 1996. Carter Capital reviewed public information with
respect to the Company and the Tucker Anthony Materials to assist the Buyer and
Dr. Cohen in determining whether their concerns regarding the Tucker Anthony
analysis were legitimate. Carter Capital was retained only for the purpose of
assisting in the analysis of the Tucker Anthony Materials, and was not retained
to provide an opinion with respect to the fairness of the Proposal price of
$2.375 per share. Carter Capital completed its analysis prior to the June 10
Board Meeting. See "--Background."

Analysis of Carter Capital. Carter Capital conducted two analyses
based on the Tucker Anthony Materials and the public information available to
it: a leveraged buy-out analysis and a present value analysis of the Company's
future cash flows.

Leveraged Buy-Out Analysis. This analysis is based upon how a
leveraged buy-out investor would value the Company. The Company's 1996 EBITDA of
$1.9 million, as reflected in the Tucker Anthony Materials, was adjusted to
account for royalty payments, capital expenditures and a reduction in executive
compensation which a new owner might seek to achieve, yielding an adjusted cash
flow of approximately $2.4 million. A multiple of 7x or 8x cash flow was
considered appropriate based on multiples frequently applied by financial
investors in such transactions. Using these multiples resulted in enterprise
values ranging from approximately $14.3 million to $16.3 million. Subtracting
the Company's funded debt and long-term pension obligation and other long-term
liabilities as of March 31, 1996 (approximately $9 million in the aggregate),
from these enterprise values yielded an equity value in the range of
approximately $5.2 million to $7.2 million, or a range of approximately $1.58 to
$2.20 per share.

Present Value Analysis. This analysis estimates the present value of
the Company's future cash flows. A discount rate of 15% was deemed reasonable
based on Carter Capital's estimates of the Company's cost of capital. To
determine a terminal value of future cash flows, terminal multiples in the range
of 8x to 9x were considered reasonable. The discount rate and terminal
multiples were applied to projections of the Company's future cash flows
contained in the Tucker Anthony Materials. These calculations yielded equity
values below $2.00 per share.

In light of the limited time available between its engagement and the
June 10 Board Meeting, Carter Capital was not asked to provide an oral or
written report or an opinion as to the fairness of the Merger Consideration or
to make a presentation to the Board or the Special Committee. Carter Capital
reviewed the Tucker Anthony Materials and analyzed the information contained
therein, and reviewed the Company's publicly available financial statements and
the employment agreements for Dr. Cohen and Martin L. Schulman. The analysis
performed by Carter Capital is not necessarily the same analysis, or as
extensive an analysis, as it might have performed had more time been available
or had it been engaged to provide a report or an opinion as to fairness of the
Merger Consideration. For a description of the Special Committee's review of
Dr. Cohen's analysis of the Tucker Anthony Materials, reflecting, in part,
discussions between the transaction proponents and Carter Capital, see
"--Fairness of the Merger."

PURPOSE AND STRUCTURE OF THE TRANSACTION; PLANS FOR THE COMPANY

Purpose and Structure of the Transaction. The Company's purpose in
submitting the Merger to the vote of its stockholders with a favorable
recommendation at this time is (i) to allow stockholders (other than Dr. Cohen
and the Partnership) an opportunity to receive a cash payment at a price that
has been determined by the Board to be fair to the Company's stockholders (other
than Dr. Cohen and the Partnership) with a minimum of conditions and
contingencies and (ii) to permit a settlement of the Stockholder Action in a
manner that would eliminate the distraction, burden and expense of further
litigation and that would document that the defendants have denied, and continue
to deny, that any of them have committed or have threatened to commit any
violations of law or breaches of duty to anyone. For a discussion of the
factors considered by the Special Committee and the Board in determining to
approve and recommend the Merger Agreement, and in reaching its conclusion that
the Merger is fair to, and in the best interests of, the holders of the Common
Stock (other than Dr. Cohen and the Partnership), see "--Fairness of the
Merger." Certain members of the Board have conflicts of interest in connection
with the Board's recommendation, including, in the case of Dr. Cohen, who voted
in favor of the Merger, his continuing interest in the equity of the Surviving
Corporation. See "-- Conflicts of Interest; Interests of Certain Persons in the
Merger."

The purpose of the Buyer, Dr. Cohen and the Partnership in proceeding
with the Merger at this time is to acquire the entire equity interest in the
Company in a transaction that provides fair value to the stockholders of the
Company (other than Dr. Cohen and the Partnership).

The Buyer, Dr. Cohen and the Partnership believe that it is in the best
interest of the Company for its ownership to be in the hands of a supportive,
long-term investor group and for its stockholders (other than Dr. Cohen and the
Partnership), many of whom may have shorter term goals with respect to their
holdings of Company stock, to be provided an opportunity to receive a cash
payment for their shares. In light of the limited

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trading market for the Common Stock, the Buyer, Dr. Cohen and the Partnership
believe that many of the Company's stockholders who might wish to sell their
Common Stock would be unable, absent the Merger, to sell their stock without
causing a material reduction in the market price of the Common Stock. The
Merger has been structured as a cash merger in order to provide a prompt and
orderly transfer of ownership of the Company to the stockholders of the Buyer,
Dr. Cohen and the Partnership, and to provide the Company's stockholders (other
than Dr. Cohen and the Partnership) with cash for all of their shares of Common
Stock.

The Buyer, Dr. Cohen and the Partnership further believe that under
private ownership significant amounts of management time currently spent on
public company matters, such as reporting obligations, investor relations and
financial statement requirements, can be devoted to operational matters,
resulting in increased effectiveness in the Company's ability to use its assets.
Upon consummation of the Merger, the Company estimates that it will eliminate
expenses of approximately $300,000 per year on matters related to its status as
a public company. The Buyer, Dr. Cohen and the Partnership believe that the
elimination of these expenses under private ownership would benefit the Company.

In addition, the Buyer, Dr. Cohen and the Partnership believe that
the Company operates in an industry in which most of the Company's competitors
do not publicly disclose information that the Company is required to make
available, either because these competitors are part of much larger public
companies, and information regarding these competitors is not separately
reported, or because they are privately owned. The Buyer, Dr. Cohen and the
Partnership believe that certain of the disclosures the Company is required to
make as a public company place the Company at a competitive disadvantage in the
industry segments in which it operates. The Company will be relieved of these
reporting obligations under private ownership.

As noted under "SPECIAL FACTORS--Financial Advisors," the Buyer, Dr. Cohen,
the Partnership and management of the Company believe that the Company must make
substantial expenditures on research and development and product introduction to
remain competitive in the long-term. The Buyer, Dr. Cohen and the Partnership
are of the opinion that the Company will benefit if these and other business
decisions can be made without concern for the effect of such decisions upon
short-term earnings and the consequent short-term effect of such earnings on the
market value of the Company's stock.

The Merger is not structured to require the approval of a majority of
the unaffiliated stockholders of the Company. Authorization and adoption of
the Merger Agreement and the Merger require, under Section 251 of the DGCL, the
affirmative vote of the holders of a majority of the shares of Common Stock
outstanding on the Record Date. Dr. Cohen owns or controls a sufficient number
of shares of Common Stock to cause the Merger Agreement and the Merger to be
authorized and adopted without the affirmative vote of any other stockholder of
the Company. See "THE SPECIAL MEETING--Votes Required."

Prior to or simultaneously with the Merger, Dr. Cohen and the
Partnership will transfer to the Buyer all of the shares of Common Stock held
by them in exchange for all of the issued and outstanding common stock of the
Buyer. Dr. Cohen and the Partnership will be the sole stockholders of the
Buyer. Upon the consummation of the Merger, the Buyer will be merged with and
into the Company, and the separate corporate existence of the Buyer will cease.
In the Merger, each share of Common Stock (other than shares (i) held in the
treasury of the Company, (ii) owned by the Buyer and (iii) held by stockholders
who have not voted in favor of the Merger and who have otherwise properly
exercised their rights for appraisal of such shares in accordance with Section
262 of the DGCL) will be converted into the right to receive, upon surrender of
the certificate evidencing such share, the Merger Consideration. The Company
will be the Surviving Corporation of the Merger, and each outstanding share of
common stock of the Buyer issued and outstanding immediately prior to the
Effective Time will be

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converted into one share of common stock of the Surviving Corporation. Common
Stock held by the Buyer or by the Company in treasury will be cancelled without
further consideration. As a result of the Merger, Dr. Cohen and the
Partnership, as the sole stockholders of the Buyer, will have acquired the
entire equity interest in the Company and the Company will cease to be
publicly-owned. For a description of the terms of the Merger Agreement, see
"THE MERGER--Terms of the Merger." For a discussion of certain effects of the
Merger on the Company, as the Surviving Corporation, see "--Certain Effects of
the Merger."

Plans for the Company. It is currently expected that, following the
Merger, except as described in this Proxy Statement, the business and operations
of the Company will be continued by the Company, as the Surviving Corporation,
substantially as they are currently being conducted. The Merger Agreement
provides that Dr. Cohen, the sole director of the Buyer, will be the initial
director of the Surviving Corporation of the Merger, and that the current
officers of the Company will be the officers of the Company after the Merger.

Except for the Merger, and as otherwise described in this Proxy
Statement, neither the Buyer nor Dr. Cohen has any current plans or proposals
to enter into material corporate transactions or to sell a substantial portion
of the Company's assets. After the Merger, the management of the Company will
continue from time to time to evaluate the business and operations of the
Company and may propose or develop new plans or proposals, and make such
changes, as are deemed appropriate.

CERTAIN EFFECTS OF THE MERGER

If the Merger is consummated, stockholders of the Company (other than
Dr. Cohen and the Partnership) will no longer have any equity interest in the
Company, and therefore, will not share in its future earnings (or losses) and
growth, if any, nor will they share in the risks associated with the continuing
operations of the Company. Instead, each such stockholder (other than such
stockholders who properly exercise their rights for appraisal in accordance
with Section 262 of the DGCL) will have the right to receive, upon surrender of
the certificate or certificates evidencing the shares, $2.375 per share in
cash, without interest, in exchange for each share of Common Stock owned
immediately prior to the Effective Time.

As a result of the Merger, the Company will be wholly-owned by Dr.
Cohen and the Partnership, and Dr. Cohen and the Partnership will have acquired
the full interest in the Company's net book value, net tangible book value
(computed by taking stockholders' equity less the amount of cost over net
assets of businesses acquired) and net earnings ($10,491,264, $5,895,285 and
$90,119, respectively, based on the unaudited financial statements of the
Company as of March 31, 1996, and for the nine months then ended), as well as
in the risks associated with the continuing operations of the Company. See
"--Interests of Certain Persons in the Merger." Currently, Dr. Cohen and the
Partnership have approximately a 51.07% interest in the net book value, net
tangible book value and net earnings of the Company ($5,357,889, $3,010,722 and
$46,024, respectively, based on the unaudited financial statements of the
Company as of March 31, 1996, and for the nine months then ended).

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The Merger Agreement provides that the Certificate of Incorporation of
the Company, as in effect immediately prior to the Effective Time, shall be the
certificate of incorporation of the Surviving Corporation after the Merger,
except that the Certificate of Incorporation shall be amended to provide that
the total number of shares of Common Stock which the Surviving Corporation
shall have authority to issue is 3,000 shares, with a par value of $.01 per
share. The Merger Agreement also provides that the By-Laws of the Company as
in effect immediately prior to the Effective Time shall be the By-Laws of the
Surviving Corporation after the Merger.

Pursuant to the Merger Agreement, Dr. Cohen, the sole director of the
Buyer, will be the initial director of the Surviving Corporation of the Merger,
and the current officers of the Company will be the officers of the Surviving
Corporation of the Merger.

If the Merger is consummated, the Company will cease to be
publicly-owned. Public trading of the Common Stock will cease, the Common
Stock will cease to be listed on the American Stock Exchange, and the
registration of the Common Stock under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), will be terminated. As a result, the Company,
after the Merger, will be relieved of the duty to file informational reports
under the Exchange Act, such as proxy statements, and its officers, directors
and holders of more than 10% of its stock will be relieved of the reporting
requirements under, and the "short-swing" profit recapture provisions of,
Section 16 of the Exchange Act. Accordingly, little or no public information
about the Company will be required to be made available.

As a result of the borrowing to be incurred to finance the Merger, the
consolidated indebtedness of the Company will be substantially increased
relative to current levels. The ratio of liabilities to stockholders' equity
as of March 31, 1996, and as of March 31, 1996, as adjusted to reflect the
consummation of the Merger, is estimated to be approximately 1.3 to 1 and
approximately 2.9 to 1, respectively. The capitalization of the Company will
be substantially altered in the Merger, resulting in a reduction in the number
of common shares outstanding. After the Merger, the Company will be required
to comply with certain financial covenants, and the Company's ability to effect
changes in stock ownership or management will be subject to certain
restrictions, to be contained in the financing agreements to be entered into in
connection with the Merger. See "THE MERGER--Source and Amount of Funds--Debt
Facility."

CONFLICTS OF INTEREST; INTERESTS OF CERTAIN PERSONS IN THE MERGER

In considering the recommendations of the Special Committee and the
Board with respect to the Merger, stockholders should be aware that certain
members of the Board at the time of the approval of the Merger Agreement and the
Merger had, and currently have, certain conflicts of interest in connection with
the Merger. In addition, certain members of management of the Company and
certain other individuals have certain interests in the Merger. Certain of these
matters as they relate to the Merger transaction are discussed below. Certain
other of these matters are described under "--Certain Relationships and Related
Transactions." The members of the Special Committee and the Board were aware of
these conflicts of interest and other interests and considered them along with
the other matters described under "SPECIAL FACTORS--Fairness of the Merger."

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Interests of Dr. Cohen and the Partnership. Dr. Cohen and the
Partnership will have a continuing interest in the equity of the Surviving
Corporation after the Merger. Prior to or simultaneously with the Merger, Dr.
Cohen and the Partnership will contribute to the Buyer all of the shares of
Common Stock held by them in exchange for all of the issued and outstanding
common stock of the Buyer. Dr. Cohen and the Partnership will be the sole
stockholders of the Buyer. If the Merger is consummated, the shares of the
Company's Common Stock contributed to the Buyer prior to the Merger will be
cancelled at the Effective Time, and each share of common stock of the Buyer
issued and outstanding immediately prior to the Effective Time will be
converted into one validly issued, fully paid and nonassessable share of Common
Stock of the Company, as the Surviving Corporation. At the conclusion of
the Merger, the equity ownership and percentage interest of Dr. Cohen and
the Partnership in the net earnings, net tangible book value and net book
value of the Company, as the Surviving Corporation, will have increased from
approximately 51.07% to 100%. Dr. Cohen plans to vote all shares which he owns
or controls in favor of the Merger. See "--Certain Effects of the Merger."

The Merger Agreement provides that Dr. Cohen, the sole director of the
Buyer, will be the initial director of the Surviving Corporation of the Merger.

Interests of Directors of the Company other than Dr. Cohen. Each of
Elry C. Bird and William T. Fitch, the directors of the Company other than Dr.
Cohen who own shares of Common Stock of the Company as of the Record Date, has
represented that such director plans to vote in favor of the Merger Agreement
and the Merger. See "STOCK OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL
OWNERS."

Elry C. Bird, a director of the Company, owns jointly with his wife
40,792 shares of Common Stock, and William T. Fitch, a director of the
Company and a member of the Original Special Committee and the Special
Committee, owns 1,200 shares of Common Stock. See "STOCK OWNERSHIP OF
MANAGEMENT AND CERTAIN BENEFICIAL OWNERS." Under the Merger Agreement, the
officers and directors of the Company, together with all other stockholders of
the Company (other than the Buyer and stockholders who have not voted in favor
of the Merger and who have otherwise properly exercised their rights for
appraisal of such shares in accordance with Section 262) will be entitled to
receive the Merger Consideration for each share of Common Stock owned by them
upon consummation of the Merger and the surrender of his shares.

The members of the Original Special Committee, Robert N. Thomas and
William T. Fitch, and the members of the Special Committee, Messrs. Thomas and
Fitch and Adraine J. Tom, were compensated at a rate of $130 per hour for the
time spent by such individuals in meetings and deliberations of the Original
Special Committee and the Special Committee, respectively. Outside directors
are currently paid $1,875 per meeting attended. Employee directors of the
Company are not compensated as such.

Interests of Management of the Company. The Merger Agreement provides
that the current officers of the Company will be the officers of the Surviving
Corporation of the Merger.

Interests of Certain Other Individuals. Certain emancipated adult
children of Dr. Cohen and their respective spouses hold an aggregate of 126,500
shares of Common Stock. Dr. Cohen disclaims beneficial ownership of these
shares. Under the Merger Agreement, such individuals, together with all other
stockholders of the Company (other than the Buyer and stockholders who have not
voted in favor of the Merger and who have otherwise properly exercised their
rights for appraisal of such shares in accordance

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with section 262 of the DGCL) will be entitled to receive the Merger
Consideration in cash for each share of Common Stock owned by them upon
consummation of the Merger and surrender of their shares.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Employment Agreements with Dr. Cohen and Mr. Schulman. Dr. Cohen and
Mr. Schulman are each party to employment agreements with Jeneric/Pentron,
pursuant to which Dr. Cohen serves as President, Treasurer and Chairman of the
Board of Directors of Jeneric/Pentron and Chairman of the Board of Directors
and Chief Executive Officer of the Company, and Mr. Schulman serves as
Executive Vice President, Secretary and a director of Jeneric/Pentron and
President, Chief Operating Officer and a director of the Company.

Dr. Cohen's employment agreement, as amended (the "Cohen Employment
Agreement"), provides for a term of employment ending on December 31, 2002.
Under the Cohen Employment Agreement, Dr. Cohen receives, among other benefits,
(i) annual compensation of not less than $250,000 (increased annually by the
cost of living adjustment provided generally to all Jeneric/Pentron employees
or by 5% if that amount exceeds the cost of living adjustment), (ii) an annual
bonus of not less than $130,000, and (iii) an additional annual bonus, not to
exceed $150,000 annually, equal to 2% of gross sales by Jeneric/Pentron, or its
successors and/or assigns, of products in its dental products division in
excess of base gross sales of such products in the amount of $6,585,000, such
bonus to be paid commencing with respect to the 1996 fiscal year of
Jeneric/Pentron. The Cohen Employment Agreement provides that on each January
1 through and including January 1, 2002, Dr. Cohen will receive an option to
acquire up to 25,000 restricted shares of Common Stock, exercisable at no cost
to Dr. Cohen, at any time from the date of receipt of the option through
December 31, 2002. If Dr. Cohen fails to exercise any such option on or before
December 31, 2002, such option expires. During fiscal year 1995, Dr. Cohen
received an option with respect to his services during calendar year 1994
entitling him to receive 12,500 shares of common stock; on January 1, 1996, Dr.
Cohen received an option with respect to his services during calendar year 1995
entitling him to receive 25,000 shares of Common Stock.

Mr. Schulman's employment agreement (the "Schulman Employment
Agreement") provides for a term of employment ending on December 31, 2002. The
Schulman Employment Agreement provides for maximum annual payments of salary,
assuming all bonuses are earned, aggregating approximately $567,000, subject to
reduction in certain circumstances, through the term thereof. Under the
Schulman Employment Agreement, Mr. Schulman receives, among other benefits, (i)
annual compensation of not less than $291,122 (to be increased annually by the
cost of living adjustment provided generally to all Jeneric/Pentron employees),
(ii) an annual bonus of not less than $26,000, and (iii) an additional annual
bonus equal to 7% of the gross sales by Jeneric/Pentron, or its successor
and/or assigns, of dental related composite, porcelain and ceramic products
in excess of base gross sales of such products in the amount of $1,000,000,
but in no event in excess of $250,000 per annum. Pursuant to the Schulman
Employment Agreement, Mr. Schulman relinquished all rights to receive options
for the purchase of shares of Common Stock of the Company to which he was
entitled under his prior employment agreements with Jeneric/Pentron. The
Schulman Employment Agreement also contains provisions pursuant to which
394,328 shares of the Common Stock held by Mr. Schulman were purchased by
the Company at a price of $1.50 per share. The purchase price of the shares
was paid by delivery of the Company's subordinated

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promissory note, which bears interest at 8% per annum which accrues and is not
compounded until principal and interest payments begin January 2003. Final
maturity of the note is December 31, 2014.

Each of the Cohen Employment Agreement and the Schulman Employment
Agreement provides that if Dr. Cohen's or Mr. Schulman's employment is
terminated by Jeneric/Pentron without cause (defined to include the placement of
such individual in a position of less responsibility or prestige, whether as a
result of a sale, merger or consolidation of Jeneric/Pentron or otherwise),
Jeneric/Pentron will continue to pay such individual his full compensation for
the remainder of the term of employment without any adjustment or offset, and
will employ Dr. Cohen as a consultant for a period of 10 years and will employ
Mr. Schulman as a consultant for a period of 12 years. In addition to the
compensation described in the first sentence of this paragraph, during the first
year of Dr. Cohen's consulting term, he will receive the minimum compensation,
with bonus, to which he would be entitled under the Cohen Employment Agreement
as of the date of termination; during the remainder of Dr. Cohen's consulting
term, he will be compensated at the rate of $1,000 per day for services
rendered, but in no event less than $2,000 per month. In addition to the
compensation described in the first sentence of this paragraph, during Mr.
Schulman's consulting term, Mr. Schulman will be compensated at the rate of
$6,000 per year (to be increased annually by 50% of the cost of living
adjustment provided generally to all Jeneric/Pentron employees). In addition,
in the event of wrongful termination, Dr. Cohen and Jeneric/Pentron will enter
into a non-competition agreement having a term of 10 years during which he will
receive an additional $40,000 per annum; Mr. Schulman and Jeneric/Pentron will
enter into a non-competition agreement having a term of 12 years subsequent to
the termination of Mr. Schulman's employment, conditioned upon Mr. Schulman's
receipt of all payments which are provided in the Schulman Employment Agreement.

The obligations of Jeneric/Pentron under the Cohen Employment
Agreement and the Schulman Employment Agreement are guaranteed by the Company.
The employment arrangements under the Cohen Employment Agreement and the
Schulman Employment Agreement will continue after the Merger.

Leases with Wallingford Property Associates. Jeneric/Pentron is party
to two lease agreements (the "Leases") with Wallingford Property Associates, a
Connecticut general partnership (the "WPA"), with respect to certain property
having an aggregate of approximately 54,000 square feet of rentable space
located at 53 and 125 North Plains Industrial Road, Wallingford, Connecticut.
This space is currently occupied by the Company and Jeneric/Pentron. Dr. Cohen,
an officer and director of the Company and the President, Secretary and sole
director of the Buyer, and Mr. Schulman, an officer and director of the Company,
are the general partners of WPA. The independent directors of the Company have
approved an Amendment and Renewal of the Leases to extend their terms to
December 31, 2006, on substantially the same terms and conditions set forth in
the Leases. The independent directors believed that it was possible that more
favorable rental rates might have been available from third parties for
comparable properties. However, in light of the cost of leasehold improvements
previously made, having a net book value at that time of approximately
$1,059,400, the substantial anticipated costs of relocating the business
conducted at these facilities, more favorable rate of amortization of leasehold
improvements and the loss of production during the period of any such move, the
independent directors also believed it was in the best interests of the Company
to renew the Leases for the

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extended terms. The aggregate annual rental under the Leases for the 1995
fiscal year was $388,500; the Company currently estimates that the aggregate
annual rental under the Leases for the 1996 fiscal year will be approximately
$408,000. Rental on the Leases is to be increased annually by the greater of
5% or the increase in a designated consumer price index. The Leases are "net
leases" and all real estate taxes, utilities, insurance costs and ordinary
repairs are paid by the tenant. The obligations of Jeneric/Pentron under the
Leases are guaranteed by the Company. The Leases will continue after the
Merger.

License Agreement to use the names Jeneric(R) and Rexillium(R).
Pursuant to a license agreement (the "License Agreement") between
Jeneric/Pentron and a trust (the "Trust") of which Dr. Cohen is a beneficiary,
Jeneric/Pentron was granted a worldwide license to use the names Jeneric(R) and
Rexillium(R). Under the License Agreement, Jeneric/Pentron is obligated to pay
annually to the Trust an amount equal to the sum of 1% of Jeneric/Pentron's net
sales of products sold under the name Rexillium and 0.25% of Jeneric/Pentron's
net sales of all products and services. During the twelve months ended June
30, 1995, Jeneric/Pentron paid to the Trust approximately $145,000 under the
License Agreement; the Company estimates that for the twelve months ended June
30, 1996, Jeneric/Pentron will pay to the Trust approximately $157,000 under
the License Agreement. Management believes that the License Agreement is on
terms as favorable as those available from unaffiliated third parties. The
License Agreement will continue after the Merger.

Relationship with Mr. Cooper. Robert S. Cooper, a director of the
Company, is a member of the firm of Zeldes, Needle & Cooper, which renders
legal services to the Company and its subsidiaries. During the past fiscal
year, fees for legal services rendered by Zeldes, Needle & Cooper amounted to
less than 5% of the Company's consolidated gross revenues and less than 5% of
the gross revenues of Zeldes, Needle & Cooper.

Relationship with Mr. Leigh. David H. Leigh, a director of the
Company, is a member of the firm of Bailey, Moore, Glazer, Schaefer and Proto,
which renders accounting services to the Company and its subsidiaries. During
the past fiscal year, fees for accounting services rendered by Bailey, Moore,
Glazer, Schaefer and Proto amounted to less than 5% of the Company's
consolidated gross revenues and less than 5% of the gross revenues of Bailey,
Moore, Glazer, Schaefer and Proto.

CERTAIN LITIGATION

In conjunction with the Company's receipt of the Proposal, in February
1996, four putative class action complaints were filed in the Delaware Chancery
Court, which suits are styled as follows: Moise Katz v. Gordon S. Cohen,
Martin L. Schulman, William T. Fitch, Elry C. Bird, Robert S. Cooper, David H.
Leigh, Robert N. Thomas and Customedix Corporation, Civil Action No. 14812;
Frederick Manillo v. Gordon S. Cohen, Martin L. Schulman, William T. Fitch,
Elry C. Bird, Robert S. Cooper, David H. Leigh, Robert N. Thomas and Customedix
Corporation, Civil Action No. 14813; Thomas Torre v. Gordon S. Cohen, Martin
L. Schulman, William T. Fitch, Elry C. Bird, Robert S. Cooper, David H. Leigh,
Robert N. Thomas and Customedix Corporation, Civil Action No. 14814; and
Sylvia Torre v. Gordon S. Cohen, Martin L. Schulman, William T. Fitch, Elry C.
Bird, Robert S. Cooper, David H. Leigh, Robert N. Thomas and Customedix
Corporation, Civil Action No. 14818 (collectively, the "Complaints").

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All of the above actions were brought on behalf of the plaintiffs and
all other stockholders of the Company and seek to enjoin the proposed merger
pursuant to the Original Proposal or, alternatively, to recover damages. The
Complaints name the Company and its directors as of the date of the Original
Proposal (including Dr. Cohen) as defendants. The Complaints generally allege
that the course of conduct taken by Dr. Cohen in proposing, and by the Company
and the other directors in responding to, the Original Proposal has been in
violation of the Board's fiduciary duty to the Company's stockholders. The
Company believed that the course of conduct taken by the Board and the Original
Special Committee in response to the Original Proposal was and is in compliance
with the directors' fiduciary duties and that these allegations are therefore
without merit (although no assurance can be made that the Delaware Chancery
Court would agree with the Company) and had instructed legal counsel to
vigorously defend each such action.

On May 8, 1996, Dr. Cohen withdrew the Original Proposal. See
"--Background." On June 3, 1996, counsel for Dr. Cohen and counsel for the
plaintiffs in the Delaware lawsuits commenced settlement discussions. In
connection with these discussions, Dr. Cohen's attorneys informed the
plaintiffs' attorneys in the Stockholder Action that Dr. Cohen was
willing to consider another merger proposal, provided the parties to the
Delaware lawsuits could reach an agreement-in-principle to settle such
litigation. After further arm's-length negotiations between counsel for Dr.
Cohen and the plaintiffs, such parties, by their respective attorneys, entered
into the Memorandum of Understanding, dated June 3, 1996, setting forth such an
agreement-in-principle. By agreement of the parties dated June 3, 1996, the
Complaints were consolidated for all purposes under the caption In Re
Customedix Corporation Shareholders Litigation, Cons. Civil Action No. 14812
(this consolidated action has been, and is hereinafter, referred to in this
Proxy Statement as the Stockholder Action).

Memorandum of Understanding. The following is a summary of certain
provisions of the Memorandum of Understanding, a copy of which is filed as an
exhibit to the Schedule 13E-3 and can be obtained in the manner described in
"ADDITIONAL INFORMATION." Such summary is qualified in its entirety by
reference to the full text of the Memorandum of Understanding.

Pursuant to the Memorandum of Understanding, (i) Dr. Cohen agreed to
make the Proposal to the Company, subject to approval of the Merger Agreement
by Dr. Cohen, the Board and the stockholders of the Company, and further
subject to the approval by the Delaware Chancery Court of the settlement on the
terms and subject to the conditions set forth in the Memorandum of
Understanding; (ii) plaintiffs' counsel were given the right to review
preliminary stockholder disclosure materials relating to the Proposal, including
a preliminary draft of this Proxy Statement, and the parties have agreed to
negotiate and seek to resolve any issues raised by plaintiffs' counsel
concerning the adequacy of such disclosure materials; and (iii) plaintiffs'
counsel have stated that if the Delaware Chancery Court approves the settlement
and the dismissal of the Stockholder Action with prejudice, plaintiffs' counsel
intend to petition the Delaware Chancery Court for a total award of, and
defendants have agreed not to object to an application for, reasonable
attorneys' fees and expenses (including expert expenses) not to exceed $200,000.

Under the terms of the Memorandum of Understanding, the parties to the
Stockholder Action agreed to use their best efforts to agree upon, execute
and present to the Delaware Chancery Court, on or before July 14, 1996, a
Stipulation of Settlement and other necessary documents to obtain prompt
approval of the settlement and dismissal with prejudice of the Stockholder
Action in the manner contemplated in the Memorandum of Understanding and by the
Stipulation of

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Settlement. There can be no assurance that the Delaware Chancery Court will
approve the proposed settlement.

In accordance with the terms of the Memorandum of Understanding, on
June 4, 1996, Dr. Cohen delivered the Proposal to the Company. On June 10,
1996, the Special Committee and the Board approved the Merger Agreement and the
Merger, and the Company and the Buyer executed the Merger Agreement. For a
description of the deliberations of the Special Committee and the Board with
respect to the Proposal and such approval, see "--Background," "--Recommend-
ation of the Board," "--Fairness of the Merger."

Thereafter, pursuant to the Memorandum of Understanding, plaintiffs'
counsel reviewed defendants' document production in the Stockholder Action,
conducted depositions of Ms. Tom, a director and a member of the Special
Committee, and Dr. Cohen, and reviewed preliminary stockholder disclosure
materials relating to the Merger, including the preliminary proxy statement of
the Company filed with the SEC on July 2, 1996.

Stipulation of Settlement and Scheduling Order. The parties to the
Stockholder Action, by and through their respective attorneys, entered into the
Stipulation on July 25, 1996, and on July 31, 1996, the Delaware Chancery Court
entered an order (the "Scheduling Order") pursuant to the Stipulation.

The following is a summary of certain provisions of the Stipulation and
Scheduling Order. A copy of the Stipulation and the exhibits thereto, comprised
of (a) the Scheduling Order, (b) the Notice of Pendency of Class Action,
Proposed Settlement of Class Action and Settlement Hearing (the "Notice"), and
(c) the proposed Final Order and Judgment to be entered if the Settlement is
approved by the Delaware Chancery Court (the "Order and Final Judgment"), has
been filed as an Exhibit to the Schedule 13E-3 and can be obtained in the
manner described in "ADDITIONAL INFORMATION." Such summary is qualified in its
entirety by reference to the full text of the Stipulation and the exhibits
thereto.

In accordance with the terms of the Scheduling Order, a copy of the
Notice and proposed Order and Final Judgment have been enclosed with this Proxy
Statement.

Scheduling Order. Pursuant to the Scheduling Order, the Delaware
Chancery Court, among other things: (i) determined, solely for purposes of the
terms and conditions of the settlement provided for in the Stipulation (the
"Settlement"), that the Stockholder Action shall be maintained as a class
action on behalf of a class composed of all record and beneficial owners of
Common Stock from and including February 5, 1996, through and including the
date of consummation of the Merger, as contemplated in the Merger Agreement,
including their successors-in-interest, predecessors, legal representatives,
trustees, heirs, assigns or transferees, immediate and remote, and excluding
defendants and their affiliates (the "Class"), and the plaintiffs, on whose
behalf the Stipulation has been executed, shall serve as representative parties
for the Class; (ii) directed that a hearing shall be held on August 27, 1996,
at 11:00 a.m., in the Court of Chancery in the Daniel L. Herrmann Courthouse,
10th & King Streets, Wilmington, Delaware (the "Settlement Hearing") (a) to
determine whether the proposed Settlement on the terms and conditions set forth
in the Stipulation is fair, reasonable, and adequate, (b) to determine whether
the Stipulation and the Settlement should be approved by the Delaware Chancery
Court and an Order and Final Judgment as provided in the Stipulation entered
thereon, and (c) to hear and determine any objections to the Settlement; and
(iii) sets forth the procedure which must be followed by any Class member who
objects to the Stipulation, the Settlement, the class action determination, the
judgment to be entered, and/or the application for attorneys' fees and expenses
by Class counsel, or who otherwise wishes to be heard at the Settlement Hearing.

Pursuant to the Scheduling Order, on or immediately after the days on
which the Delaware Chancery Court enters the Order and Final Judgment and the
Order and Final Judgment becomes Final (as defined below), the Company will
file a Form 8-K with the SEC and issue a press release summarizing the effect
of the action occurring on that day.

Stipulation of Settlement. The Stipulation provides, among other
things, as follows:

General. In light of the events, negotiations and agreements described
in the Stipulation, analysis of applicable law, and based on the discovery taken
in the Stockholder Action, and after consultation with their financial expert,
Howard, Lawson & Co., plaintiffs' counsel have concluded that the terms and
conditions of the Settlement are fair, reasonable, and adequate to the
plaintiffs and the class of stockholders represented in the Stockholder Action.

Release. The parties stipulate and agree, subject to the approval of
the Delaware Chancery Court, that any and all claims, rights, demands, actions,
causes of action, suits, damages, losses, obligations, judgments, matters and
issues of any kind or nature whatsoever, which have been, could have been, or
in the future can or might be asserted in the Stockholder Action or in any
court, tribunal or proceeding (including, but not limited to, any claims
arising under state or federal law relating to any alleged fraud, breach of
any duty, negligence, violations of federal securities laws or otherwise)
(collectively, "Claims") by or on behalf of plaintiffs in the Stockholder
Action and/or any member of the Class, which have arisen, arise now, or
hereafter arise out of or relate in any matter whatsoever, directly or
indirectly, to the allegations, facts, events, transactions, occurrences, acts,
statements, representations, misrepresentations, omissions, or any other
matter, thing or cause whatsoever, or any series thereof, involved, embraced,
set forth, referenced in, or otherwise referred or related to, in any way,
directly or indirectly, any of the Complaints, the Merger Agreement, the
Original Proposal, the Merger Proposal, the Merger Agreement, the Merger, any
agreements or disclosures relating to the Original Proposal, the Merger
Proposal, the Merger Agreement or the Merger, including but not limited to
this Proxy Statement, or the Stipulation excepting only such rights created
under the Stipulation (collectively, the "Settled Claims") against any of the
defendants in the Stockholder Action and all other Released Persons (as defined
in the Stipulation) are fully, finally and forever compromised, extinguished,
dismissed, discharged and released with prejudice subject only to compliance
with the Settlement. The Settled Claims do not include an action to enforce
compliance with the terms of the Settlement or to prosecute properly perfected
appraisal rights relating to the Merger pursuant to Section 262 of the DGCL.

Finality of Settlement. The Stipulation shall be considered final
("Final") upon the later of: (a) the entry of the Order and Final Judgment
approving the Settlement and the expiration of any applicable appeal period
(which is 30 days from the date of entry of the Order and Final Judgment)
without an appeal having been filed or, if an appeal is taken, upon entry of an
order affirming the Order and Final Judgment appealed from and the expiration
of any applicable period for the reconsideration, rehearing or appeal of such
affirmance without any motion for reconsideration or rehearing or further appeal
having been filed; or (b) the consummation of the Merger in accordance with the
terms of the Merger Agreement.

Defendants' Denial of Liability. Defendants specifically disclaim any
liability whatsoever relating to any of the Settled Claims, expressly deny
having engaged in any wrongful or illegal activity, or having violated or
threatened to violate any law or regulation or duty and expressly deny that any
person or entity has suffered any harm or damages as a result of the Settled
Claims. The Stipulation provides that the Delaware Chancery Court has made no
finding that defendants engaged in any wrongdoing or wrongful conduct or
otherwise acted improperly or in violation of any law or regulation or duty in
any respect, that the defendants believe they have acted with the utmost care,
candor and honesty, and have at all times acted in the best interests of the
Company stockholders, and that, without conceding any infirmity in their
defenses against the Settled Claims, the defendants are agreeing to the
Settlement solely to avoid the substantial burden, expense, distraction and
inconvenience of continued litigation.

Attorneys' Fees. Defendants agree not to object to plaintiffs'
application for an award of attorneys' fees, expenses and costs (including
expert's fees and expenses) in an aggregate amount not to exceed $200,000. Any
fee award to plaintiffs' attorneys shall be paid exclusively by the Company for
the benefit of the individual defendants in the event the Settlement becomes
Final. Defendants retain the right to oppose any other application for fees or
disbursements by plaintiffs, plaintiffs' counsel or any other person.

Stipulation not an Admission. The provisions in the Stipulation and
all negotiations, statements and proceedings in connection therewith shall not
be deemed a presumption, concession or admission by any defendant of any fault,
liability or wrongdoing as to any fact or claim alleged or asserted in the
Stockholder Action or any other actions or proceedings and shall not be
interpreted, construed, deemed, invoked, offered or received in evidence or
otherwise used by any person except in a proceeding to enforce the terms or
conditions of the Stipulation.

Right to Withdraw from the Settlement. Each of the parties has the
option to withdraw from and terminate the Settlement in the event that: (i)
either the Scheduling Order or the Order and Final Judgment are not entered
substantially in the forms specified in the Stipulation, including such
modifications as may be ordered by the Delaware Chancery Court with the consent
of the parties; (ii) the Settlement is not approved by the Delaware Chancery
Court or is disapproved or substantially modified upon appeal; or (iii) the
Merger Agreement is not consummated in accordance with its terms. In addition,
defendants have the option to withdraw from and terminate the Settlement in the
event that, prior to the time the Settlement becomes Final, any action is
pending in any state or federal court which raises any Settled Claims against
any of the Released Persons.

In the event the Settlement proposed in the Stipulation is not approved
by the Delaware Chancery Court, or the Delaware Chancery Court approves the
Settlement but such approval is reversed or vacated on appeal, reconsideration
or otherwise and the order reversing or vacating the Settlement becomes final by
lapse of time or otherwise, or if any of the conditions to the Settlement are
not fulfilled, then the Settlement proposed in the Stipulation will be of no
further force and effect, and the Stipulation and all negotiations, proceedings
and statements relating thereto and any amendment thereof will be null and void
and without prejudice to any party thereto, and each party shall be restored to
his, her or its respective position as it existed prior to execution of the
Stipulation.

There can be no assurance that any of the events described in the first
paragraph of this subsection will not occur or that, if one or more of such
events does occur, that a party will not exercise its right to withdraw from
the Settlement. In addition, there can be no assurance that one of the events
described in the preceding paragraph will not occur, rendering the Stipulation
of no further force and effect.

Counsel for the plaintiffs in the Stockholder Action are not acting on
behalf of the public stockholders of the Company for the purpose of negotiating
the terms of the Merger. Pursuant to the Stipulation, the parties to the
Stockholder Action are requesting the Delaware Chancery Court to approve the
Settlement and adjudge the terms of the Settlement to be fair, reasonable and
adequate; however, the Delaware Chancery Court will not make a finding, or
otherwise determine or render an opinion, as to the fairness of the Proposal
price of $2.375 per share to be received by the stockholders (other than Dr.
Cohen and the Partnership) upon consummation of the Merger.

Under the terms of the Merger Agreement, the Buyer or the Company may
elect not to consummate the Merger if the Delaware Chancery Court has not
approved the Settlement of the Stockholder Action on substantially the terms
set forth in the Memorandum of Understanding, or if other legal proceedings
relating to the Merger are pending. See "THE MERGER--Terms of the
Merger--Conditions to Consummation of the Merger."

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ACCOUNTING TREATMENT

Because both the Company and the Buyer are controlled by Dr. Cohen,
either through direct ownership or by virtue of his voting and dispositive
power with respect to shares of Common Stock of the Company owned by the
Partnership, the Merger will be accounted for similar to a pooling of interests
as required by generally accepted accounting principles. As a result, the
Surviving Corporation will not be permitted to revalue the assets and
liabilities acquired as a result of the Merger. In addition, since the Buyer
has no assets or operations other than its holdings of Common Stock of the
Company, the financial statements of the Surviving Corporation after the Merger
will be the same as those of the Company prior to the Merger, except that the
amounts borrowed by the Buyer, including amounts borrowed under the Debt
Facility (described under "THE MERGER--Source and Amount of Funds--Debt
Facility"), to finance the purchase of the shares of Common Stock of the
Company and the related transaction costs will be reflected as additional debt
and a reduction in stockholders' equity in the Surviving Corporation's
financial statements.

Since the Buyer has no significant assets or operations prior to the
Merger, no historical financial information of the Buyer or pro forma financial
information reflecting the Merger is presented in this Proxy Statement.

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CERTAIN TAX CONSEQUENCES OF THE MERGER

The receipt of cash for shares of Common Stock in the Merger or
pursuant to the exercise of dissenters' appraisal rights under the DGCL will be
a taxable transaction for United States federal income tax purposes and may
also be a taxable transaction under applicable state, local, foreign or other
tax laws. Generally, a stockholder will recognize gain or loss for such
purposes equal to the difference between the cash received and such
stockholder's tax basis for the shares of Common Stock such stockholder sells
in the Merger. For federal income tax purposes, any such gain or loss will be
a capital gain or loss if the shares of Common Stock are held as a capital
asset, and a long-term capital gain or loss if the stockholder's holding period
is more than one year as of the Effective Time. There are limitations on the
deductibility of capital losses.

The summary of tax consequences set forth above is for general
information only. The tax treatment of the Merger with respect to each
stockholder will depend in part upon such stockholder's particular situation.
Special tax consequences not described herein may be applicable to particular
classes of taxpayers, such as financial institutions, broker-dealers,
tax-exempt organizations, persons who are not citizens or residents of the
United States, stockholders who acquired the shares of Common Stock through the
exercise of an employee stock option or otherwise as compensation, and persons
who received payments in respect of options to acquire shares of Common Stock.
ALL STOCKHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE PARTICULAR TAX
CONSEQUENCES OF THE MERGER TO THEM, INCLUDING THE APPLICABILITY AND EFFECT OF
ANY STATE, LOCAL AND FOREIGN LAWS.

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THE MERGER

EFFECTIVE TIME OF THE MERGER

The Effective Time will occur when the Certificate of Merger is duly
filed with the Secretary of State of the State of Delaware in accordance with
the DGCL or at such other time as may be specified in the Certificate of Merger
so filed. The filing of the Certificate of Merger will be made after all
conditions set forth in the Merger Agreement have been satisfied or waived and
provided that the Merger Agreement has not been terminated. No such waiver or
termination will require the vote or consent of the Company's stockholders.
See "--Terms of the Merger--Conditions to Consummation of the Merger" and
"--Termination."

PAYMENT FOR SHARES OF COMMON STOCK

As a result of the Merger, holders of certificates formerly evidencing
shares of Common Stock will cease to have any equity interest in the Company.
After consummation of the Merger, all certificates formerly evidencing shares
of Common Stock (other than shares (i) held in the treasury of the Company,
(ii) owned by the Buyer and (iii) held by stockholders who have not voted in
favor of the Merger and who have otherwise properly exercised their rights for
appraisal of such shares in accordance with Section 262 of the DGCL) (the
"Shares") will be deemed to represent only the right to receive the Merger
Consideration for each Share represented thereby and will be required to be
surrendered to the Exchange Agent in order to receive the Merger Consideration.
No interest will be paid or accrued on the cash payable upon the surrender of
such certificates.

From time to time following the Effective Time, the Buyer shall
deposit or cause to be deposited in trust with the Exchange Agent, as agent for
the holders of Shares, the cash to which holders of Shares who have surrendered
their Shares to the Exchange Agent shall be entitled pursuant to the Merger.
If payment of any Merger Consideration is to be made to a person other than the
person in whose name a surrendered certificate is registered, it shall be a
condition to such payment that the surrendered certificate shall be endorsed or
shall be otherwise in proper form for transfer and that the person requesting
such payment shall have paid any transfer and other taxes required by reason of
such payment to a person other than the registered holder of the surrendered
certificate or shall have established to the satisfaction of the Surviving
Corporation or the Exchange Agent that such tax either has been paid or is not
payable. If any Merger Consideration deposited with the Exchange Agent for
purposes of payment in exchange for Shares remains unclaimed following the
expiration of six months after the Effective Time, such Merger Consideration
shall be delivered to the Surviving Corporation by the Exchange Agent, and
thereafter any person claiming any Merger Consideration shall effect the
surrender of Shares directly with the Surviving Corporation, subject to
applicable abandoned property laws. No interest for the benefit of any such
holder shall accrue or be payable with respect to any Merger Consideration.

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Detailed instructions with regard to the surrender of certificates,
together with a letter of transmittal, will be forwarded to record holders, as
of the Effective Time, of certificates formerly evidencing shares of Common
Stock by the Exchange Agent as promptly as practicable following the Effective
Time. Holders of shares of Common Stock should not submit their certificates to
the Exchange Agent until they have received such materials. Upon surrender of
certificates and other required documents to the Exchange Agent, the Exchange
Agent will distribute to the holder of certificates formerly evidencing shares
of Common Stock by bank check the cash price of $2.375 per share for each share
represented by such certificates. No interest will be paid or accrued on the
cash payable upon the surrender of certificates. STOCKHOLDERS SHOULD NOT SEND
ANY STOCK CERTIFICATES AT THIS TIME.

REGULATORY APPROVALS

The Company is not aware of any approval or other action by any
federal, state or local governmental authority that would be required for
consummation of the Merger. Should any such approval or other action be
required, it is presently contemplated that such approval or action would be
sought.

TERMS OF THE MERGER

The following is a summary of certain provisions of the Merger
Agreement, a conformed copy of which is included as Annex A to this Proxy
Statement. Such summary is qualified in its entirety by reference to the
Merger Agreement.

General. The Merger Agreement sets forth the terms and conditions
upon and subject to which the Merger is to be effected. If the Merger
Agreement is authorized and adopted by the stockholders in accordance with the
DGCL, and the other conditions contained in the Merger Agreement are satisfied
or waived, the Buyer will be merged with and into the Company, with the Company
as the Surviving Corporation of the Merger. Upon the terms and subject to the
conditions of the Merger Agreement, each share of the Common Stock (other than
shares held in the treasury of the Company, shares owned by the Buyer and
shares held by stockholders who have not voted in favor of the Merger and who
have otherwise properly exercised their rights for appraisal of such shares in
accordance with Section 262 of the DGCL) will be converted into the right to
receive, upon surrender of the certificate evidencing such share, $2.375 per
share in cash, without interest.

Conditions to Consummation of the Merger. Under the Merger Agreement,
the obligations of the Company and the Buyer to effect the Merger are subject
to the fulfillment at or prior to the Effective Time of the following
conditions, any of which can be waived by the parties: (a) the approval and
adoption by the Company's stockholders of the Merger and the Merger Agreement
in accordance with the DGCL; (b) no injunction or restraining or other order
issued by a court of competent jurisdiction or governmental authority that
prohibits the consummation of the Merger shall be in effect, and, except as
provided in (c) below, no action or proceeding which seeks or would seek to
prohibit, restrain or invalidate consummation of the Merger, or which
challenges the legality or validity of the Merger, or which seeks to recover
damages from the Company, the Buyer or any of their respective officers,
directors, stockholders or any other person

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in connection with the Merger Agreement or the transactions contemplated
thereby shall be pending or overtly threatened; (c) the Delaware Chancery Court
shall have approved the settlement of the Stockholder Action on substantially
the terms set forth in the Memorandum of Understanding; (d) no government or
governmental agency shall have taken any action or enacted any statute, rule or
regulation that would render the consummation of the Merger illegal; and (e)
all governmental permits, approvals and consents which counsel for the Buyer or
the Company may reasonably deem necessary or appropriate so that consummation
of the transactions contemplated by the Merger Agreement will be in compliance
with all applicable laws shall have been obtained.

In addition, the obligation of the Buyer to effect the Merger is also
subject to the fulfillment at or prior to the Effective Time of each of the
following conditions, any one or more of which can be waived by the Buyer: (a)
the representations and warranties of the Company set forth in the Merger
Agreement shall have been true and correct in all material respects at the date
of the Merger Agreement and shall be true and correct in all material respects
at and as of the Effective Time, as if made at and as of such time; (b) the
Company shall have complied with, performed and fulfilled in all material
respects all terms, agreements and conditions of the Merger Agreement to be
complied with or performed or fulfilled by the Company at or prior to the
Effective Time; (c) the Company shall have furnished a certificate of its
President or Chief Financial Officer to evidence compliance with the conditions
described in (a) and (b) above; (d) the number of shares of the Company Common
Stock as to which appraisal rights have been exercised by the holders thereof
shall not exceed 5% of the total number of shares of the Company Common Stock
outstanding on the Effective Time; and (e) the Commitment shall remain in full
force and effect as of the Effective Time.

Under the Merger Agreement, the obligation of the Company to effect
the Merger is also subject to the fulfillment at or prior to the Effective Time
of the following conditions, any one or more of which can be waived by the
Company: (a) the representations and warranties of the Buyer set forth in the
Merger Agreement shall have been true and correct in all material respects at
the date of the Merger Agreement and shall be true and correct in all material
respects at and as of the Effective Time, as if made at and as of such time;
(b) the Buyer shall have complied with, performed and fulfilled in all material
respects all terms, agreements and conditions of the Merger Agreement to be
complied with or performed or fulfilled by it at or prior to the Effective
Time; (c) the Buyer shall have furnished a certificate of its President to
evidence compliance with the conditions described in (a) and (b) above; (d) the
Buyer's stockholders shall have duly approved and adopted the Merger and the
Merger Agreement in accordance with the DGCL; (e) the Company shall have
received the consent of all third parties, including, without limitation, the
Company's lenders, whose consent may be required under any agreement or
instrument binding the Company or its properties; and (f) the Company shall
have received an opinion of counsel to the Buyer with respect to certain
matters set forth in the Merger Agreement.

Representations and Warranties. The Merger Agreement contains various
representations and warranties of the Buyer and the Company, including
representations and warranties of each such party as to (i) its corporate power
and authority to execute and deliver the Merger Agreement and, subject, in the
case of the Company, to obtaining the necessary stockholder approval of the
Merger, to carry out its obligations under the Merger Agreement and (ii) the
due authorization of the execution and delivery of the Merger Agreement and,
subject to obtaining the necessary stockholder approval of the Merger, the

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performance of its obligations under the Merger Agreement and the consummation
by it of the transactions contemplated by the Merger Agreement.

Certain Covenants. The Company and the Buyer covenant to certain
matters in the Merger Agreement, including, among others, the following:

Conduct of Business of the Company. The Company agrees that,
except as contemplated by the Merger Agreement or as agreed to in
writing by the Buyer, prior to the Effective Time: (a) the business of
the Company and its subsidiaries shall be conducted only in its
ordinary and usual course and in a manner consistent with past
practice; (b) the Company will use its best efforts to preserve intact
the business organization of the Company and its subsidiaries, to keep
available the services of its and their officers and key employees and
to preserve the goodwill of those having business relationships with
the Company and its subsidiaries; (c) the Company shall not, and shall
ensure that each Company subsidiary shall not, (i) sell or pledge or
agree to sell or pledge any capital stock of any Company subsidiary;
(ii) amend its Certificate of Incorporation or By-Laws; (iii) split,
combine or reclassify the outstanding shares of its capital stock or
declare, set aside or pay any dividend payable in cash, stock or
property or make any other distributions with respect to its capital
stock, except for dividends declared and paid by any wholly-owned
subsidiary in the ordinary course of business and in a manner
consistent with past practices; (iv) redeem, purchase or otherwise
acquire or offer to redeem, purchase or otherwise acquire any shares
of capital stock; (v) form any new subsidiary or, except in the
ordinary course of business and consistent with past practice,
transfer any assets or liabilities to any Company subsidiary; or (vi)
authorize or propose any of the foregoing, or enter into any contract,
agreement, commitment or arrangement to do any of the foregoing; and
(d) the Company shall not, and shall ensure that each Company
subsidiary shall not, (i) issue or agree to issue any additional
shares of, or rights of any kind to acquire any shares of, its capital
stock of any class other than, in the case of the Company, shares
issuable upon exercise of options existing on the date of the Merger
Agreement; (ii) acquire any material assets other than in the ordinary
course of business; (iii) dispose of any material assets other than in
the ordinary course of business or encumber any of its material
assets; (iv) incur any indebtedness for borrowed money or enter into
any other material transaction other than in the ordinary course of
business; (v) amend any of its material contracts except in the
ordinary course of business; (vi) make any payments to any employee of
the Company or any Company subsidiary except in the ordinary course of
business, and in amounts and in a manner consistent with past
practice, or grant or establish any new programs or arrangements, or
any new employee benefit plan or employment, severance or consulting
agreement (except as agreed to in writing by the Buyer), amend any
existing employee benefit plan, program or arrangement or any existing
employment, severance or consulting agreement or grant any increases
in compensation or benefits (other than actions taken in the ordinary
course of business and consistent with past practice or as otherwise
provided in the Merger Agreement); (vii) settle or compromise any
litigation involving the payment of, or an agreement to pay over time,
an amount, in cash, notes or other property, in excess of $25,000
singly or $100,000 in the aggregate, unless a liability equal to or in
excess of the amount of any settlement or compromise has been reserved
for such litigation in the interim financial statements of the Company
most recently filed with the SEC, other than the Stockholder Action;
or (viii) enter into any contract, agreement, commitment or
arrangement with respect to any of the foregoing.

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Stockholders' Meetings. The Company agrees to promptly take
all actions required under the DGCL and its Certificate of
Incorporation and By-Laws to convene a meeting of its stockholders.
The Company agrees to use its best efforts to solicit from its
stockholders proxies in favor of the transactions contemplated by the
Merger Agreement and to take all other actions necessary or, in the
reasonable judgment of the Buyer, advisable to secure the vote or
consent of stockholders required by the DGCL to effect the Merger.

Actions to be Taken. Each of the Company and the Buyer agrees
to use its best efforts to take all actions and do all things
necessary, proper or advisable to consummate the transactions
contemplated by the Merger Agreement and use its best efforts to
obtain all necessary waivers, consents and approvals and to effect all
necessary registrations and filings, including without limitation
filings under the Exchange Act.

No Solicitation. Subject to applicable law, the Company has
agreed that neither the Company nor any Company subsidiaries nor any
of its or their directors, officers, employees, representatives or
agents will encourage, solicit or initiate inquiries or proposals
(other than from the Buyer, its affiliates or associates, or an
officer, employee or authorized representative thereof) concerning any
merger, sale of substantial assets, purchase or sale of shares of
capital stock or similar transactions involving the Company or any
Company subsidiary or division of the Company other than the
transactions contemplated by the Merger Agreement.

Termination. The Merger Agreement may be terminated and the Merger
abandoned at any time prior to the Effective Time, whether before or after
approval of the Merger Agreement and the Merger by the stockholders of the
Company: (a) by mutual consent of the respective Boards of Directors of the
Buyer and the Company; (b) by the Buyer or the Company, if (i) the Merger has
not occurred prior to December 31, 1996, but only if the party seeking to
terminate the Merger Agreement has not caused the delay and is not in material
breach of any of its obligations under the Merger Agreement or (ii) a court or
governmental, regulatory or administrative agency or commission has issued a
final, non-appealable order, decree or ruling or taken other action, in each
case permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated by the Merger Agreement; (c) by the Buyer if (i) the
Company shall have materially breached or failed to comply with its obligations
under the Merger Agreement, or (ii) any representation or warranty of the
Company was incorrect in any material respect when made or has ceased to be
correct in any material respect; or (d) by the Company, if (i) the Buyer has
materially breached or failed to comply with its obligations under the Merger
Agreement, or (ii) any representation or warranty of the Buyer was incorrect in
any material respect when made or has ceased to be true and correct in any
material respect.

Expenses. Pursuant to the Merger Agreement, the Company and the Buyer
each bears its own costs and expenses in connection with entering into the
Merger Agreement; provided, that the Company agrees to bear all expenses
related to the preparation, printing, filing and mailing of this Proxy
Statement, the conduct of the Special Meeting and the solicitation of proxies
in connection therewith. If the Merger is not consummated as a result of the
nonsatisfaction of any condition to the obligations of the Buyer (other than
nonsatisfaction, as a result of any action taken or omitted to be taken by the
Buyer or Dr. Cohen, of the condition that the Commitment shall remain in full
force and effect as of the Effective Time), and the Buyer

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has substantially performed its obligations under the Merger Agreement up to
the time of termination of the Merger Agreement or abandonment of the Merger,
the Company is obligated to reimburse the Buyer, or pay directly for the
Buyer's benefit, all documented out-of-pocket expenses of the Buyer relating to
the Merger Agreement, the transactions contemplated thereby and any activities
related thereto.

Amendments. The Merger Agreement may be amended by agreement of the
Buyer and the Special Committee and the Board of Directors of the Company,
whether before or after approval of the Merger by the stockholders of the
Company; however, once the Merger is approved by the Company's stockholders, no
amendment may modify the cash consideration of $2.375 per share of Common Stock
to be given to the holders of the Common Stock (other than the Buyer) and no
amendment may materially adversely affect the rights of the holders of Common
Stock of the Company (other than a termination of the Merger Agreement pursuant
to its terms).

SOURCE AND AMOUNT OF FUNDS

The total amount of funds required by the Buyer to pay the Merger
Consideration to holders of Common Stock (other than the Buyer) and to pay
related fees and expenses in connection with the Merger is estimated to be
approximately $4.2 million. See "FEES AND EXPENSES." The Buyer currently
expects that the Merger Consideration and funds to pay related fees and
expenses will be paid from the proceeds of the financing described below, and
from the personal funds of Dr. Cohen and/or working capital of the Surviving
Corporation upon the consummation of the Merger.

Debt Facility. Dr. Cohen has obtained the Commitment from the
Company's principal lending bank (the "Bank"), providing for borrowings under a
debt facility in an aggregate amount of up to $3 million (the "Debt Facility").
Definitive financing agreements have not yet been negotiated. The Debt
Facility will close simultaneously with the Merger. Immediately upon the
consummation of the Merger, the Company, as the Surviving Corporation, will
become, by operation of law, the obligor of the indebtedness under the Debt
Facility.

Pursuant to the Commitment, the consummation of the Merger and the
agreement of five wholly-owned subsidiaries of the Company, including
Jeneric/Pentron, American Thermocraft and Transidyne, to assume repayment of the
obligations to be created under the Commitment, are conditions precedent to the
Bank's funding of the Debt Facility. The Buyer currently has no specific plans
or arrangements for the repayment of the Debt Facility, but it currently expects
to repay such indebtedness primarily from cash flow from operations of the
Surviving Corporation. It is a condition to the obligation of the Buyer to
effect the Merger that the Commitment shall remain in full force and effect as
of the Effective Time. See "--Terms of the Merger--Conditions to Consummation
of the Merger."

The following is a summary of certain provisions of the Commitment, a
copy of which is filed as an exhibit to the Schedule 13E-3 and can be obtained
in the manner described in "ADDITIONAL INFORMATION." Such summary is qualified
in its entirety by reference to the full text of the Commitment.

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Term. The Debt Facility will mature seven years from closing.

Principal and Interest. Advances under the Debt Facility
will accrue interest at the Bank's prime rate as announced from time to time
at the Bank's main office. Interest will be payable monthly on the principal
balance outstanding. Commencing with the first month of the third year of
the term of the Debt Facility, principal will be payable monthly in an amount
equal to 1/60th of the principal amount outstanding at the end of the second
year of the term of the Debt Facility.

Security. Advances under the Debt Facility will be secured by
a first priority security interest, on a parity with the security for existing
loans from the Bank to the Company, in all assets of the Company, as the
Surviving Corporation, including but not limited to accounts receivable and
inventory, now existing and hereafter acquired, equipment, contracts and
contract rights and any other property of the Company, together with proceeds
and products of the foregoing, including proceeds of insurance. As additional
collateral, the Company will assign to the Bank for the term of the Debt
Facility all policies of life insurance owned by the Company on the life of Dr.
Cohen.

Guarantor. Borrowings under the Debt Facility up to $1
million will be guaranteed by Dr. Cohen.

Prepayments. The Company will be permitted to prepay
principal in part or in full at any time without penalty.

Termination of the Commitment. The Bank may terminate the
Commitment prior to the loan closing if: (a) the Bank determines that any
representation made in connection with the loan application is false or
incorrect in any material respect; (b) any adverse change develops or is
identified by the Bank with respect to the Buyer or any guarantor or indemnitor
for the loan or with respect to any collateral for the loan or other source of
repayment of the loan at any time prior to the closing of the Debt Facility;
(c) on or before the closing of the Debt Facility, litigation has been
commenced against the Buyer or any guarantor or indemnitor for the loan which
the Bank regards as adversely affecting any such party's credit or ability to
perform; or (d) at the time of closing of the Debt Facility, the Buyer or any
guarantor or indemnitor for the loan shall be insolvent, or shall be involved
in any arrangement, bankruptcy, reorganization or insolvency proceeding or
shall have failed to pay such party's obligations on a current basis as
determined by the Bank.

Covenants. The Debt Facility will include certain financial
covenants, including: (a) maintenance of tangible net worth at or exceeding
$2.3 million; (b) stockholders' equity of at least $7 million; (c) consolidated
current ratio of at least 2 to 1; and (d) maintenance of the ratio of cash flow
(defined as net profits plus depreciation and amortization plus interest
expense) to current maturities of long term debt plus interest of at least 1 to
1. These financial covenants will be tested annually at the Company's fiscal
year end and will be effective at June 30, 1996. Changes in these covenants
for years subsequent to fiscal 1996 will be negotiated. The Debt Facility will
include certain additional covenants, including that, without the Bank's
approval, the stock ownership or management of the Surviving Corporation, as
successor-in-interest by merger to the Buyer, may not change and the Surviving
Corporation may not enter into secondary financing or convey any encumbrances
or security interests in any of its assets (other than those securing existing
loans and leases).

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Additional Provisions. The loan documentation will include
appropriate representations and warranties, covenants and events of default
with respect to compliance with environmental laws and regulations and the
absence of contamination. The Surviving Corporation, as successor-in-interest
by merger to the Buyer, will agree to indemnify and hold the Bank harmless in
the event any environmental claim is asserted against the Bank for any reason
whatsoever.

Expiration of the Commitment. The Commitment will expire on
October 31, 1996, if the loan is not consummated before such date.

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Source and Use of Funds. The estimated sources and uses of funds in
connection with the Merger are as follows:

SOURCE AND USE OF FUNDS

<TABLE>
<CAPTION>
SOURCES OF FUNDS:
<S> <C>

Debt Facility (1) $3,000,000
Other Funds (2) 1,195,677

Total Sources of Funds $4,195,677
==========

USES OF FUNDS:

Purchase of the Shares (3) $3,829,911
Transaction Costs (4) 365,766

Total Uses of Funds $4,195,677
==========
</TABLE>

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

(1) The Debt Facility, in an aggregate principal amount of up to
$3 million, as contemplated by the Commitment. See "-- Source
and Amount of Funds--Debt Facility."

(2) Other Funds consist of personal funds of Dr. Cohen and/or
working capital of the Surviving Corporation upon the
consummation of the Merger. Prior to the consummation of the
Merger, the Company will be responsible for paying certain
legal and other expenses in connection with the Merger. As of
June 30, 1996, the Company had recognized expenses of
approximately $300,000 with respect to costs relating to the
Merger.

(3) Based on the acquisition of 1,612,594 shares of Common Stock
outstanding as of the Record Date (other than 1,683,292
shares which will be owned by the Buyer), at a purchase price
of $2.375 per share, in cash, without interest (assuming no
stockholders seek appraisal rights). See "Terms of the
Merger."

(4) See "FEES AND EXPENSES" for a description of such transaction
costs.

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APPRAISAL RIGHTS OF DISSENTING STOCKHOLDERS

Record holders of shares of Common Stock are entitled to appraisal
rights under Section 262 of the DGCL ("Section 262") in connection with the
Merger. The following discussion is not a complete statement of the law
pertaining to appraisal rights under the DGCL and is qualified in its entirety
by reference to the full text of Section 262, which is reprinted in its
entirety as Annex B to this Proxy Statement. Except as set forth herein and in
Annex B, holders of shares of Common Stock will not be entitled to appraisal
rights in connection with the Merger.

Under the DGCL, if the Merger is consummated, record holders of shares
of Common Stock who follow the procedures set forth in Section 262 and who have
not voted in favor of the Merger will be entitled to have their shares of
Common Stock appraised by the Court of Chancery of the State of Delaware (the
"Court") and to be paid, in lieu of the Merger Consideration, the "fair value"
of such shares, exclusive of any element of value arising from the
accomplishment or expectation of the Merger, together with a fair rate of
interest, as determined by such Court.

Under Section 262, where a merger agreement for which appraisal rights
are provided under Section 262 is to be submitted for approval at a meeting of
stockholders, as in the case of the Special Meeting, not less than 20 days
prior to such meeting, the Company must notify each of the holders of Common
Stock at the close of business on the record date for such meeting that such
appraisal rights are available and include in each such notice a copy of
Section 262. This Proxy Statement constitutes such notice for purposes of the
Special Meeting. Any stockholder of record who wishes to exercise appraisal
rights should review the following discussion and Annex B carefully because
failure timely and properly to comply with the procedures specified in Section
262 may result in the loss of appraisal rights under the DGCL. Each
stockholder having questions in respect of his rights under Section 262 should
consult with his legal counsel.

Stockholders of record who desire to exercise their appraisal rights
must satisfy all of the following conditions. Holders of shares of Common
Stock are not required to vote such shares against the Merger in order to
obtain rights of appraisal with respect to such shares. A holder of shares of
Common Stock wishing to exercise appraisal rights must deliver to the Company,
before the vote on the authorization and adoption of the Merger Agreement and
the Merger at the Special Meeting, a written demand for appraisal of such
holder's shares of Common Stock. This written demand for appraisal of shares
must be in addition to and separate from any proxy or vote against, or
abstention from voting with respect to, the Merger. Voting against, abstaining
from voting on, failing to return a proxy with respect to, or failing to vote
on the Merger will not constitute a demand for appraisal within the meaning of
Section 262.

A stockholder must not vote for adoption of the Merger Agreement and
the Merger if he intends to preserve his appraisal rights. A vote in favor of
adoption of the Merger Agreement and the Merger will constitute a waiver of any
previously filed demand for appraisal. Thus, holders of shares of Common Stock
who sign and return the proxy card included in this Proxy Statement with
instructions to vote in favor of the Merger or, since proxy cards returned
without instructions will be voted in favor of the Merger, with no instruction
to vote against or abstain from voting with respect to the Merger, will not be
entitled to appraisal rights with respect to such shares. A stockholder's
failure to vote against the adoption of the Merger Agreement and the Merger
will not constitute a waiver of his appraisal rights.

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A holder of shares of Common Stock wishing to exercise appraisal
rights must hold such shares of record on the date the written demand for
appraisal is made and must continue to hold such shares through the Effective
Time. Only a holder of record of shares of Common Stock is entitled to assert
appraisal rights for the shares of Common Stock registered in that holder's
name. A demand for appraisal should be executed by or on behalf of the holder
of record fully and correctly, as the holder's name appears on the stock
certificate(s).

If shares of Common Stock are owned of record in a fiduciary capacity,
such as by a trustee, guardian or custodian, execution of the demand for
appraisal should be made in that capacity, and if the shares of Common Stock
are owned of record by more than one person, as in a joint tenancy or tenancy
in common, the demand should be executed by or for all joint owners. However,
absent an indication to the contrary, the Company will consider a demand
executed by or for one joint owner to be effective with respect to all joint
owners. An authorized agent, including one for two or more joint owners, may
execute the demand for appraisal on behalf of a stockholder of record; however,
the agent must identify the record owner or owners and expressly disclose the
fact that, in executing the demand, he or she is acting as agent for such owner
or owners. A record holder such as a broker who holds Common Stock as nominee
for several beneficial owners may exercise appraisal rights with respect to the
Common Stock held for one or more beneficial owners while not exercising such
rights with respect to the Common Stock held for other beneficial owners. In
such case, the written demand should set forth the number of shares as to which
appraisal is sought. Where no number of shares is expressly mentioned, the
demand will be presumed to cover all Common Stock held in the name of the
record owner. Holders of Common Stock who hold their shares in brokerage
accounts or other nominee forms and who wish to exercise appraisal rights are
urged to consult with their brokers to determine the appropriate procedures for
the making of a demand for appraisal by such nominee.

All written demands for appraisal of Common Stock should be sent or
delivered to Customedix Corporation, 53 North Plains Industrial Road,
Wallingford, Connecticut 06492, Attention: Secretary, so as to be received
before the vote on the authorization and adoption of the Merger Agreement and
the Merger at the Special Meeting.

Within 10 days after the Effective Time, the Company, as the Surviving
Corporation, must send a notice as to the effectiveness of the Merger to each
person who has satisfied the appropriate provisions of Section 262. Within 120
days after the Effective Time, but not thereafter, the Company, as the
Surviving Corporation, or any holder of shares of Common Stock entitled to
appraisal rights under Section 262 who has complied with the foregoing
procedures, may file a petition in the Court demanding a determination of the
value of the Common Stock held by all such stockholders. The Company is not
under any obligation, and has no present intention, to file a petition with
respect to the appraisal of the value of the shares of Common Stock.
Accordingly, it is the obligation of the stockholders to initiate all necessary
action to perfect their appraisal rights within the time prescribed in Section
262. If no stockholder were to file such petition within the period specified,
all rights to appraisal would cease, and all holders of Common Stock (other
than the Buyer) would thereupon be entitled to receive the Merger
Consideration.

Within 120 days after the Effective Time, any record holder of shares
of Common Stock who has complied with the requirements for exercise of
appraisal rights will be entitled, upon written request, to

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receive from the Company, as the Surviving Corporation, a statement setting
forth the aggregate number of shares of the Common Stock not voted in favor of
the Merger and with respect to which demands for appraisal have been received
and the aggregate number of holders of such shares. Such written statements
must be mailed within 10 days after a written request therefor has been
received by the Company or within 10 days after expiration of the period for
delivery of appraisal demands, whichever is later.

Upon the filing of any petition by a stockholder in the Court, service
of a copy thereof must be made upon the Company, and the Company must, within
20 days after such service, file in the office of the Register in Chancery of
the State of Delaware (the "Register in Chancery") in which the petition was
filed a duly verified list containing the names and addresses of all
stockholders who have demanded payment for the Common Stock and with whom
agreements as to the value of their Common Stock have not been reached by the
Company. If a petition for appraisal is timely filed, the Court will fix a
time and place for the hearing of such petition, and, if so ordered by the
Court, the Register in Chancery will give notice of such hearing to the Company
and the stockholders shown on the verified list provided by the Company. Such
notice shall also be given by one or more publications at least one week before
the day of the hearing, in a newspaper of general circulation published in the
City of Wilmington, Delaware or such publication as the Court deems advisable.
At the hearing on such petition, the Court will determine the holders of shares
of Common Stock who have complied with Section 262 and who have become entitled
to appraisal rights. The Court may require such stockholders to submit the
certificates evidencing their Common Stock to the Register in Chancery for
notation thereon of the pendency of the appraisal proceedings. If any
stockholder fails to comply with this direction, the Court may dismiss the
proceedings as to him.

After determining the stockholders entitled to an appraisal, the Court
will appraise the Common Stock, determining the "fair value" of the shares of
Common Stock, exclusive of any element of value arising from the accomplishment
or expectation of the Merger, together with a fair rate of interest, if any, to
be paid upon the amount determined to be the fair value. In determining such
fair value, the Court is to take into account all relevant factors. In
determining the rate of interest, if any, to be paid upon the amount determined
to be the fair value, the Court may consider all relevant factors, including
the rate of interest which the Company would have had to pay to borrow money
during the pendency of the proceeding. The Company will be required to make
payment of the appraised value of the Common Stock, together with interest, if
any, to the stockholders entitled thereto upon the surrender to it of the
certificate or certificates evidencing the Common Stock. Holders considering
seeking appraisal should be aware that the fair value of their shares of Common
Stock as determined under Section 262 could be more than, the same as or less
than the value of the Merger Consideration that they would otherwise receive if
they did not seek appraisal of their shares of Common Stock. The Company
reserves the right to assert in any appraisal proceeding that, for purposes of
Section 262, the "fair value" of the Common Stock is less than the Merger
Consideration.

The costs of the appraisal proceeding may be determined by the Court
and taxed upon the parties as the Court deems equitable. Upon application of a
stockholder entitled to appraisal, the Court may also order that all or a
portion of the expenses incurred by any holder of shares of Common Stock in
connection with an appraisal, including, without limitation, reasonable
attorneys' fees and the fees and expenses of experts utilized in the appraisal
proceeding, be charged pro rata against the value of all of the shares of
Common Stock entitled to appraisal. No appraisal proceeding in the Court will
be dismissed with respect

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to any stockholder without the approval of the Court, and such approval may be
conditioned upon such terms as the Court deems just.

Any holder of shares of Common Stock who has duly demanded an
appraisal in compliance with Section 262 will not, after the Effective Time, be
entitled to vote the shares of Common Stock subject to such demand for any
purpose or be entitled to receive payment of dividends or other distributions
on those shares (except dividends or other distributions payable to holders of
record of shares of Common Stock as of a date prior to the Effective Time).

If any holder of Common Stock who demands appraisal of shares under
Section 262 fails to perfect, or effectively withdraws or loses, the right to
appraisal, as provided in the DGCL, the shares of Common Stock of such holder
will be converted into the right to receive the Merger Consideration in
accordance with the Merger Agreement. A holder of shares of Common Stock
entitled to appraisal will fail to perfect, or effectively lose, the right to
appraisal if no petition for appraisal is filed within 120 days after the
Effective Time. A holder may withdraw a demand for appraisal by delivering to
the Company a written withdrawal of the demand for appraisal and acceptance of
the Merger at any time within 60 days after the Effective Time or after such
60-day period with the written approval of the Company.

FAILURE TO FOLLOW THE STEPS REQUIRED BY SECTION 262 OF THE DGCL FOR
PERFECTING APPRAISAL RIGHTS MAY RESULT IN THE LOSS OF SUCH RIGHTS.

The foregoing is a summary of certain of the provisions of Section 262
of the DGCL and is qualified in its entirety by reference to the full text of
such Section, a copy of which is included as Annex B to this Proxy Statement.

It is a condition to the obligation of the Buyer to consummate the
Merger that the number of shares of the Company Common Stock as to which
appraisal rights have been exercised by the holders thereof shall not exceed 5%
of the total number of shares of Common Stock outstanding on the Effective Time.
See "--Terms of the Merger--Conditions to Consummation of the Merger."

MARKET PRICES; DIVIDENDS

The principal market on which the Company's Common Stock is traded is
the American Stock Exchange under the symbol CUS. As of June 3, 1996, the last
full trading day prior to the press release by the Company announcing delivery
to the Company of the Proposal, the high and low sales prices of the Common
Stock, as reported on the AMEX, were $2.13 and $2.00, respectively. As of
August 9, 1996, the high and low sales prices for the Common Stock, as reported
on the AMEX, were $2.13 and $2.06, respectively.

The following table sets forth the high and low sales prices for the
Common Stock as reported by the AMEX Composite tape for the periods shown:

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<TABLE>
<CAPTION>
Fiscal Year High Low
----------- ---- ---
<S> <C> <C>

1994
First Quarter....................................... $ 3.00 $ 2.25
Second Quarter...................................... 2.94 2.25
Third Quarter....................................... 3.13 2.38
Fourth Quarter...................................... 3.00 2.38

1995
First Quarter....................................... 4.38 2.31
Second Quarter...................................... 3.56 2.56
Third Quarter....................................... 3.06 2.38
Fourth Quarter...................................... 3.00 2.25

1996
First Quarter....................................... 3.25 2.50
Second Quarter...................................... 2.88 1.75
Third Quarter....................................... 2.25 1.88
Fourth Quarter...................................... 2.25 1.81

1997
First Quarter (through August 9, 1996).............. 2.25 2.06
</TABLE>

The Company has not paid any dividends on the Common Stock. The
Company's loan agreement, as amended, with the Bank prohibits the payment of
any cash dividends by the Company without the Bank's prior consent. The
Company has no current plans to pay dividends on the Common Stock.

STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE
COMMON STOCK.

CERTAIN TRANSACTIONS IN THE COMMON STOCK

Since July 1, 1993, the Company has repurchased, and Dr. Cohen and the
Partnership have purchased, an aggregate of 778,340 shares of Common Stock at
the times and in the amounts summarized in the following schedule:

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<TABLE>
<CAPTION>
Number of Range of
Shares of Per Share Average
Common Stock Purchase Prices Per Share
Fiscal Year Purchased High Low Purchase Price
----------- --------------- ---- --- --------------------
<S> <C> <C> <C> <C>
1994
First Quarter 26,400 $3.00 $2.56 $ 2.69
Second Quarter 156,662 2.63 2.25 2.46
Third Quarter 23,300(a) 2.75 2.38 2.48
Fourth Quarter 25,800 2.81 2.44 2.63

1995
First Quarter 15,200 2.50 2.38 2.44
Second Quarter 53,000 2.98 2.56 2.72
Third Quarter 53,800 2.75 2.38 2.64
Fourth Quarter 423,778(b) 2.75 1.50 1.56

1996
First Quarter 300 2.75 2.75 2.75
Second Quarter -- -- -- --
Third Quarter 100 2.25 2.25 2.25
Fourth Quarter -- -- -- --

1997
First Quarter -- -- -- --

</TABLE>

(a) Does not include 12,500 shares of Common Stock received by Dr. Cohen
pursuant to the Cohen Employment Agreement, which Dr. Cohen received
in January 1994.

(b) Includes 394,328 shares purchased by the Company from Mr. Martin L.
Schulman at a purchase price of $1.50 per share pursuant to the
Schulman Employment Agreement. The purchase price of the shares has
been paid by delivery of the Company's subordinated promissory note
which bears interest at a rate of 8% per annum; interest under the
note accrues and is not compounded until principal and interest
payments begin in January 2003. Final maturity of the note is
December 31, 2014. See "SPECIAL FACTORS--Certain Relationships and
Related Transactions." Without giving effect to the shares purchased
from Mr. Schulman, the number of shares of Common Stock purchased
during this quarter was 29,450, with a high and low purchase price
per share of $2.75 and $2.25, respectively, and an average per share
purchase price of $2.44.

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SELECTED FINANCIAL DATA

Additional financial information regarding the Company has been
filed as exhibits to the Schedule 13E-3 and may be inspected and copies may be
obtained in the manner described in "ADDITIONAL INFORMATION."

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CUSTOMEDIX CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
(In thousands, except per share data)

<TABLE>
<CAPTION>
Nine Months Ended Twelve Months Ended
March 31, June 30,
---------------------------- ------------------------------
1996 1995 1995 1994 1993 1992 1991
---- ---- ---- ---- ---- ---- ----

<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:

Loss from discontinued operation -- -- -- -- -- (2,194) (387)
------- ------- ------- ------- ------- -------- -------

Net income (loss) $ 90 $ 564 $ 888 $ 1,021 $ 738 $ (1,542) $ 843
======= ======= ======= ======= ======= ======== =======
Weighted average number of shares
outstanding (b) 3,334 3,719 3,646 3,735 3,726 3,431 3,280
======= ======= ======= ======= ======= ======== =======

Income (loss) per share:
Continuing operations (a) $ .03 $ .15 $ .24 $ .27 $ .20 $ .19 $ .38
Discontinued operation -- -- -- -- -- (.64) (.12)
------- ------- ------- ------- ------- -------- -------

Income (loss) per share $ .03 $ .15 $ .24 $ .27 $ .20 $ (.45) $ .26
======= ======= ======= ======= ======= ======== =======

Cash dividends declared per share $ -- $ -- $ -- $ -- $ -- $ -- $ --
======= ======= ======= ======= ======= ======== =======

BALANCE SHEET DATA:

Working capital $10,600 $10,357 $10,641 $ 9,726 $ 8,940 $ 8,438 $ 8,983

Total assets $23,872 $23,462 $23,396 $24,347 $22,641 $ 22,120 $25,648

Long-term debt and obligations
under capital leases, less current
portion $ 6,371 $ 6,540 $ 6,824 $ 6,988 $ 7,908 $ 9,050 $12,012

Total assets less excess of cost
over net assets of businesses
acquired $19,276 $18,552 $18,587 $19,136 $17,028 $ 16,105 $19,231

Stockholders' equity $10,491 $10,671 $10,402 $10,128 $ 9,074 $ 8,389 $ 9,229

Book value per share (c) $ 3.18 $ 2.89 $ 3.16 $ 2.74 $ 2.46 $ 2.26 $ 2.86

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FISCAL YEARS

Operations.

Comparison of Fiscal Year Ended June 30, 1995 vs. June 30,
1994. Sales for the fiscal year ended June 30, 1995, were $50,568,600 versus
$46,742,900 for the fiscal year ended June 30, 1994, an increase of $3,825,700,
or 8.2%. Approximately $2,100,000 of this increase resulted from an increase
in the average cost of certain precious metals found in a significant
percentage of the Company's products which increased the selling prices of
these products. The balance of the increase was largely attributable to higher
sales, both domestic and foreign, of most of the Company's dental products.
These increases offset a $387,000 decrease in sales of custom kits by the
Company's subsidiary, Transidyne.

Other income for the fiscal year ended June 30, 1995, was
$518,500 versus $564,100 for the fiscal year ended June 30, 1994. This
decrease of $45,600 was entirely attributable to an $86,000 settlement of a
lawsuit received by the Company in the fiscal year ended June 30, 1994, offset
in part by a reduction in royalty income.

Gross profit as a percentage of sales was 26.5% for fiscal
year ended June 30, 1995, versus 28.5% for fiscal year ended June 30, 1994.
This decrease of 2.0% was partially attributable to the increase in the average
cost of certain precious metals compared to the prior year, which reduced gross
profit as a percentage of sales. This decrease was also caused in part by the
write-off of obsolete inventory.

Selling, general and administrative expenses as a percentage
of sales for the fiscal year ended June 30, 1995, was 23.7% compared to 25.5%
for the fiscal year ended June 30, 1994. This decrease of 1.8% was primarily
attributable to the increased sales caused by the increase in the average cost
of certain precious metals. In total, selling, general and administrative
expenses increased $49,500 in fiscal 1995 compared to fiscal 1994. The
increase was due primarily to increases in advertising expenses and royalty
payments which were partially offset by a decrease in legal fees, net of
reimbursements.

Interest expense for the fiscal year ended June 30, 1995, was
$903,000 versus $851,400 for the fiscal year ended June 30, 1994, an increase
of $51,600. This increase was attributable to an increase in interest rates
and was partially offset by a reduction in long-term debt.

Provision for income taxes was $165,000 for the fiscal year
ended June 30, 1995, versus $90,000 for the year ended June 30, 1994. This
increase of $75,000 was primarily attributable to an increase in required
alternative minimum tax provisions, which was partially offset by a reversal of
valuation allowances related to deferred tax assets of $170,000 which was
recorded in the year ended June 30, 1995.

Net income for the fiscal year ended June 30, 1995, was
$887,900 versus $1,020,900 for the year ended June 30, 1994. This decrease of
$133,000 is primarily due to the increase in provision for

55
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income taxes discussed above, and the nonrecurring legal settlement of $86,000
in the fiscal year ended June 30, 1994.

Net income per share for the fiscal year ended June 30, 1995,
was $.24 versus $.27 for the fiscal year ended June 30, 1994. Per share
earnings were based upon the weighted average number of common stock and common
stock equivalent shares outstanding of 3,646,200 and 3,734,700 for the fiscal
years ended June 30, 1995 and 1994, respectively.

Comparison of Fiscal Year Ended June 30, 1994 vs. June 30,
1993. Sales from continuing operations for the fiscal year ended June 30,
1994, were $46,742,900 versus $41,084,400 for the fiscal year ended June 30,
1993, an increase of $5,658,500, or 13.8%. This increase was primarily
attributable to an increase in the average cost of certain precious metals
found in a significant percentage of the Company's products. This increased
the selling prices of such products and increased sales approximately
$3,200,000 for the fiscal year ended June 30, 1994. Approximately $1,123,700
of the increase in sales was due to a higher level of dental sales as a result
of an acquisition in February 1993. In addition, approximately $875,200 of
this increase in sales was due to additional medical sales of the Company's
subsidiary, Transidyne.

Other income for the fiscal year ended June 30, 1994, was
$564,100 versus $738,700 for the fiscal year ended June 30, 1993. This
decrease of $174,600 was entirely attributable to a difference in litigation
settlement amounts. In the fiscal year ended June 30, 1993, the Company
received settlements of approximately $275,000, net of associated expenses,
from the favorable resolution of two lawsuits, as compared to the fiscal year
ended June 30, 1994, where the Company received $86,000 in settlement of a
lawsuit.

Gross profits as a percentage of sales was 28.5% for fiscal
year ended June 30, 1994, versus 30.4% for fiscal year ended June 30, 1993.
This decrease of 1.9% was primarily attributable to the increase in the average
cost of certain precious metals compared to the prior year, which reduced gross
profit as a percentage of sales.

Selling, general and administrative expenses as a percentage
of sales for the fiscal year ended June 30, 1994, was 25.5% compared to 27.3%
for the fiscal year ended June 30, 1993. This decrease of 1.8% was entirely
attributable to the increased sales caused by the increase in the average cost
of certain precious metals. In total, selling, general and administrative
expenses increased $699,500 in fiscal year 1994, compared to fiscal 1993.
Approximately $143,500 of this increase was due to the inclusion of expenses
associated with the Company's new dental subsidiary for the entire year ended
June 30, 1994, versus five months for the year ended June 30, 1993. The
balance of this increase was due primarily to increases in legal fees, net of
reimbursements, payroll and rent expenses.

Interest expense for the fiscal year ended June 30, 1994, was
$851,400 versus $951,400 for the fiscal year ended June 30, 1993, a decrease of
$100,000. This decrease was attributable to reductions in both long-term debt
and lower interest rates that prevailed during most of the period, a portion of
which related to the Company's retirement in fiscal 1994 of the 15% convertible
subordinated debentures which were outstanding at June 30, 1993.

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Provision for income taxes was $90,000 for the fiscal year
ended June 30, 1994, versus $362,000 for the year ended June 30, 1993. This
decrease of $272,000 was primarily attributable to reduced state tax provisions
upon obtaining a favorable resolution of a State of Connecticut tax assessment.

Net income for the fiscal year ended June 30, 1994, was
$1,020,900 versus $738,100 for the year ended June 30, 1993. This increase of
$282,800 is primarily due to the decrease in provision for income taxes
discussed above.

Net income per share for the fiscal year ended June 30, 1994,
was $.27 versus $.20 for the fiscal year ended June 30, 1993. Per share
earnings were based upon the weighted average number of common stock and common
stock equivalent shares outstanding of 3,734,700 and 3,726,000 for the fiscal
years ended June 30, 1994 and 1993, respectively.

Impact of Inflation and Changing Prices. Except for changes in
precious metal costs as discussed above, the Company experienced only minor
inflation-related cost increases which were not a material factor in the
comparison of expenses with respect to the periods presented. Inflation has
not had a material impact on the Company's results of operations since most of
the increases in material costs have been passed through to customers.

Liquidity and Capital Resources. Working capital increased by
$914,500 to $10,640,600 at June 30, 1995, as compared to $9,726,100 at June 30,
1994. This increase was primarily due to earnings of the Company.

For the fiscal year ended June 30, 1995, cash generated by operations
totaling $1,140,500 and cash on hand at the beginning of the year were used
primarily as follows: (i) to reduce debt by approximately $1,106,100, and (ii)
to purchase property and equipment totaling $323,400.

Based on current plans, which are subject to change depending on
business conditions, capital expenditures in fiscal year 1996 are expected to
total approximately $500,000, of which approximately $250,000 will be funded by
capital leases and the balance through cash provided by operations. The
Company also anticipates spending approximately $1,100,000 on research and
development activities. The source of funds for these expenditures is expected
to be cash generated by operations.

INTERIM PERIODS

Operations. Sales for the nine months ended March 31, 1996, were
$39,168,200 compared to $37,124,600 for the nine months ended March 31, 1995,
an increase of $2,043,600 or 5.5%. Sales for the quarter ended March 31, 1996,
were $14,216,300 compared to $12,909,900 for the quarter ended March 31, 1995,
an increase of $1,306,400 or 10.1%. The increases were attributable to higher
unit sales, both domestic and foreign, of many of the Company's products. The
increase in unit sales was offset by reductions in fiscal 1996 in the average
cost of certain precious metals found in a significant percentage of the
Company's products, which decreased the selling prices of such products. These
decreases reduced sales by approximately $640,000 for the nine months ended
March 31, 1996, and $240,000 for the quarter ended March 31, 1996, compared
with the corresponding periods of the prior year. Unit sale increases were
also

57
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offset by decreases in medical sales by the Company's subsidiary, Transidyne,
of approximately $252,200 and $78,400 for the nine and three months ended March
31, 1996, respectively, compared to the same periods of the prior year.

Gross profit as a percentage of sales was 27.2% for the nine months
ended March 31, 1996, compared to 27.1% for the nine months ended March 31,
1995. Gross profit as a percentage of sales was 29.0% for the quarter ended
March 31, 1996, compared to 27.3% for the quarter ended March 31, 1995. These
increases of .1% and 1.7%, respectively, were attributable in part to a change
in product mix to higher margin products and in part to the decrease in the
cost of certain precious metals compared to the prior year, which increased
gross profit as a percentage of sales. These increases were partially offset
by an increase in the reserve for possibly unsalable inventory in fiscal 1996
and the write-off of obsolete inventory. Gross profit as a percentage of sales
was 26.5% for the fiscal year ended June 30, 1995.

Selling, general and administrative expenses were $10,073,500 for the
nine months ended March 31, 1996, compared to $8,926,400 for the nine month
period last year. Selling, general and administrative expenses were $3,822,400
for the quarter ended March 31, 1996, as compared to $3,055,600 for the prior
year quarter. These increases of $1,147,100 and $766,800, respectively, were
due primarily to increases in professional fees; salaries; advertising
expenses; expenses of the Special Committee; and expenses associated with an
alleged employee misappropriation of funds at Transidyne. The increases were
partially offset by decreases in pension expenses and amortization of goodwill.

Income before income taxes was $265,100 for the nine months ended
March 31, 1996, compared to $849,200 for the nine months ended March 31, 1995.
Income before income taxes was $178,000 for the quarter ended March 31, 1996,
compared to $389,400 for the quarter ended March 31, 1995. These decreases of
$584,100 and $211,400, respectively, were primarily attributable to increased
selling, general and administrative expenses as discussed above and were
partially offset by increased gross profits.

Provision for income taxes was $175,000 for the nine months ended
March 31, 1996, compared to $285,000 for the nine months ended March 31, 1995.
Provision for income taxes was $145,000 for the quarter ended March 31, 1996,
compared to $100,000 for the quarter ended March 31, 1995. The increased
effective tax rate was due to the Company using the balance of its available
net operating loss carryforwards in fiscal 1995 and due to an increase in
non-deductible expenses incurred in fiscal 1996.

Impact of Inflation. The Company experienced only minor
inflation-related cost increases which were not a material factor in the
comparison of expenses with respect to the periods compared.

Liquidity and Capital Resources. Working capital decreased by
approximately $40,700 to $10,599,900 at March 31, 1996, from June 30, 1995.

For the nine months ended March 31, 1996, cash generated by operations
and cash on hand were primarily used as follows: (i) to reduce debt by
approximately $605,400, and (ii) to purchase property and equipment totaling
approximately $392,800.

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As of March 31, 1996, the Company was in compliance with all of the
financial covenants contained in the loan agreement, as amended, with the Bank.
The loan is scheduled to mature on January 2, 2000. The interest rate on the
term loan and the $1,000,000 revolving line of credit were reduced from 1/4%
above the Bank's index rate to the Bank's index rate, effective November 8,
1995.

The Company expects significant demands on cash during the next twelve
months as a result of anticipated advertising expenses, salaries, continuing
litigation expenses, facilities expansion, increased costs associated with
regulatory compliance relating to sales of the Company's products, federal
alternative minimum taxes and state income taxes. In addition, because of the
Company's substantial debt burden, a significant portion of cash flow will
continue to be used to repay debt. This substantial use of cash limits the
funds available for general working capital purposes, product research and
marketing, as well as funds that can be expended on new facilities and capital
equipment. Furthermore, the ability of the Company to expand operations
through mergers or acquisitions is limited by the lack of available cash with
which to fund such activities.

Future Outlook. The Company expects to continue to incur high
expenses in the areas of new product development and research and product
introduction. The Company expects these efforts will focus primarily on dental
products, and the associated expenses could contribute to reduced earnings. In
addition, the dental products market faces increasing competition and
profitability pressures, both in domestic and foreign markets. Accordingly,
the Company may experience further reduction in its margins on certain dental
products. The Company is highly leveraged and any significant increase in
interest rates could materially and adversely affect the Company's
profitability and cash flow.

The Company's profitability could be adversely affected in fiscal 1996
and 1997 if it incurs significant legal costs in connection with the
prosecution of a suit filed by its subsidiary, Jeneric/Pentron, against two
former employees and business entities with which they are affiliated for
unfair trade practices, breach of contract and breach of common law duties of
loyalty; and in connection with a recently instituted proceeding in Germany
and an arbitration proceeding in the United States, all of which are described
under "BUSINESS OF THE COMPANY--Certain Legal Proceedings." An adverse outcome
in some or all of these matters, or protracted litigation, could have a material
adverse effect on the Company's financial condition and results of operations.

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STOCK OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS

Set forth below is certain information, to the Company's knowledge, as
of the Record Date, regarding beneficial ownership of Common Stock by (i) each
person who beneficially owns more than 5% of the Common Stock, (ii) any
pension, profit sharing or similar plan of the Company or any affiliate, (iii)
each director and executive officer of the Company, and (iv) all directors and
executive officers of the Company as a group. To the Company's knowledge, each
person holds sole voting and/or investment power over the shares shown unless
otherwise indicated.

<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME BENEFICIAL OWNERSHIP (1) PERCENTAGE OF CLASS (2)
---- ------------------------ -----------------------

<S> <C> <C>
Gordon S. Cohen (3) 1,847,292 55.42%
53 North Plains Industrial Road
Wallingford, CT 06492

Elry C. Bird (4) 40,792 1.24%

William T. Fitch 1,200 *

All officers and directors as a
group (9 persons) 1,889,284 56.68%
</TABLE>

- ----------------------
* Less than one percent

(1) The figures in the table represent record and beneficial ownership,
which includes voting and investment power, except as otherwise
indicated in the notes to the table.

(2) Based upon 3,295,886 shares of Customedix's Common Stock issued and
outstanding at the Record Date. With respect to Dr. Cohen and all
officers and directors as a group, the number of shares of Common
Stock deemed outstanding includes 37,500 shares which Dr. Cohen
has the right to receive within 60 days of the Record Date as a
result of options granted pursuant to the Cohen Employment
Agreement.

(3) Includes 435,262 shares held by the Partnership, whose partners are
trusts for the benefit of Dr. Cohen and certain members of his family.
Dr. Cohen, in his capacity as trustee of the trusts that are partners
in the Partnership, is the managing partner of the Partnership. Also
includes 126,500 shares held jointly by emancipated adult children of
Dr. Cohen and their respective spouses, as to which shares Dr. Cohen
disclaims beneficial ownership. Also includes 37,500 unissued shares
which Dr. Cohen has the right to receive as a result of options granted
under the Cohen Employment Agreement. Prior to or simultaneously with
the Merger, Dr. Cohen and the Partnership will transfer to the Buyer an
aggregate of 1,683,292 of such shares, representing all of the shares
of Common Stock held by them, in exchange for all of the issued and
outstanding shares of common stock of the Buyer. Dr. Cohen and the
Partnership will be the sole stockholders of the Buyer. See "SPECIAL
FACTORS--Purpose and Structure of the Transaction; Plans for the
Company."

(4) All of such shares are owned jointly by Mr. Bird and his wife.

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DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

The directors and executive officers of the Company are as follows:

<TABLE>
<CAPTION>
NAME POSITION
---- --------
<S> <C>

Gordon S. Cohen Chairman of the Board, Chief Executive Officer and Director

Martin L. Schulman President, Chief Operating Officer and Director

Barry L. Kosowsky Treasurer, Chief Financial Officer and Secretary

Elry C. Bird Director

Robert S. Cooper Director

William T. Fitch Director

David H. Leigh Director

Robert N. Thomas Director

Adraine J. Tom Director
</TABLE>

Dr. Gordon S. Cohen. Dr. Cohen was elected to the Board in 1987 and,
at the same time, was also elected Chairman of the Company. Dr. Cohen was
elected Chief Executive Officer in May 1989. Dr. Cohen has been Chairman,
President and Treasurer of the Company's subsidiary, Jeneric/Pentron, since
1975. From 1968 to 1976, Dr. Cohen served in various positions at Yale
University School of Medicine, including Assistant Professor of Pathology and
Assistant Clinical Professor of Pathology.

Martin L. Schulman. Mr. Schulman was elected to the Board in 1987 and
was appointed a Vice President of the Company at that time. In May 1989, Mr.
Schulman was elected President and Chief Operating Officer. Mr. Schulman has
been Executive Vice President and Secretary of Jeneric/Pentron since 1977.

Barry L. Kosowsky. Mr. Kosowsky has been Treasurer since 1993 and
Secretary since 1992. He served as Assistant Treasurer from 1989 to 1993 and
was Assistant Secretary of the Company from 1990 to 1992. Mr. Kosowsky has
also served as Assistant Treasurer of Jeneric/Pentron since 1990 and Controller
since 1988.

Dr. Cohen, Mr. Schulman and Mr. Kosowsky also serve as directors
and/or officers of various Company subsidiaries.

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Elry C. Bird. Mr. Bird has been a director since 1982 and served as
President of the Company's former oilfield subsidiaries from 1980 until his
retirement in 1985.

Robert S. Cooper. Mr. Cooper has been a director since 1987 and has,
for more than five years, been a partner in the law firm of Zeldes, Needle &
Cooper, which is general counsel to Jeneric/Pentron. The address of Zeldes,
Needle & Cooper is 1000 Lafayette Boulevard, Bridgeport, Connecticut 06601.

William T. Fitch. Mr. Fitch has been a director of the Company since
1981. Mr. Fitch is Chairman, and from 1982 until 1994 was President, of Star
Dynamics Company, Inc., a manufacturer of hydraulic cylinders. The address of
Star Dynamics Company, Inc. is 529 Washington Trust Bldg., Washington,
Pennsylvania 15301.

David H. Leigh. Mr. Leigh has been a director since 1992 and is a
certified public accountant. Mr. Leigh has been a partner, for more than five
years, at the accounting firm of Bailey, Moore, Glazer, Schaefer & Proto, which
provides regular accounting services to the Company and its subsidiaries. The
address of Bailey, Moore, Glazer, Schaefer & Proto is 16 Lunar Drive,
Woodbridge, Connecticut 06525.

Robert N. Thomas. Mr. Thomas has been a director since 1995. Mr.
Thomas has been a Senior Vice President, for more than five years, of William
B. Meyer, a company specializing in household goods relocation, transportation
of special commodities, public warehousing, electrical contracting and various
real estate enterprises. Mr. Thomas has responsibility for labor, public
warehousing, real estate, record retention and special commodities. The
address of William B. Meyer is 255 Long Beach Blvd., Stratford, Connecticut
06497.

Adraine J. Tom. Ms. Tom was elected a director of the Company on May
13, 1996. Ms. Tom is currently a securities analyst and Vice President of
Trust Company of the West. Prior to assuming this position, Ms. Tom was a
securities analyst and Vice President, for more than five years, of Evergreen
Asset Management. The address of Trust Company of the West is 200 Park Avenue,
New York, New York 10166.

All of the persons listed above are citizens of the United States of
America.

Except with respect to Messrs. Cooper, Fitch, Leigh and Thomas and Ms.
Tom, the business address of each of the above individuals is c/o Customedix
Corporation, 53 North Plains Industrial Road, Wallingford, Connecticut 06492.

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BUSINESS OF THE COMPANY

GENERAL

The Company is a Delaware corporation incorporated in 1968. The
mailing address and telephone number of the Company's principal executive
offices are 53 North Plains Industrial Road, Wallingford, Connecticut 06492,
(203) 284-9079.

The Company is engaged in two principal industry segments: dental
health care products and medical health care products. Dental products consist
of a wide variety of precious and non-precious metal casting alloys, amalgams,
impression materials, porcelains and composites and are manufactured,
distributed and marketed primarily by the Company's direct and indirect
wholly-owned subsidiaries, Jeneric/Pentron, Technical Education and American
Thermocraft.

Medical disposables are assembled, distributed and marketed by the
Company's wholly-owned subsidiary, Transidyne.

Operating income (loss) consists of sales less cost of goods sold and
selling, general and administrative expenses directly attributable to the
industry segments. Corporate expenses consist of administrative costs not
directly attributable to a specific industry segment. Intersegment sales are
insignificant. Identifiable assets are those used in the specific industry
segment. Corporate assets are principally cash and excess of cost over net
assets of businesses acquired. Capital expenditures include purchases of
property and equipment, property and equipment financed through capital lease
financing transactions and property and equipment acquired in connection with
business acquisitions. Summarized financial information is as follows (in
thousands):

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<TABLE>
<CAPTION>
Fiscal Year Dental Medical Corporate Consolidated
----------- ------ ------- --------- ------------
<S> <C> <C> <C> <C>
1995
Sales $49,290 $1,279 $ -- $50,569
Operating income (loss) 2,455 (233) (785) 1,437
Identifiable assets 17,728 648 5,020 23,396
Depreciation and amortization 581 39 405 1,025
Capital expenditures 436 6 1 443

1994
Sales $45,077 $1,666 $ -- $46,743
Operating income (loss) 2,206 98 (911) 1,393
Identifiable assets 18,303 994 5,050 24,347
Depreciation and amortization 609 40 401 1,050
Capital expenditures 757 31 14 802

1993
Sales $40,293 $791 $ -- $41,084
Operating income (loss) 2,500 (92) (1,132) 1,276
Identifiable assets 16,706 581 5,354 22,641
Depreciation and amortization 563 38 404 1,005
Capital expenditures 651 87 -- 738
</TABLE>

No one customer accounted for 10% or more of the Company's sales in
1995, 1994 or 1993.

Foreign sales, primarily dental products, by geographic area,
consisted of the following (in thousands):

<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Europe $6,471 $5,697 $6,549
Asia 1,806 1,878 1,085
Canada 725 695 565
Other 438 419 420
----- ----- -----
Total $9,440 $8,689 $8,619
====== ====== ======
</TABLE>

The Company's net sales, gross profit, net income and earnings per
share, for each full quarterly period within the fiscal years ended June 30,
1995, and 1994, and for the quarterly periods ended September 30, 1995, December
31, 1995, and March 31, 1996, respectively, are as follows:

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<TABLE>
<CAPTION>
Earnings
Fiscal Year Net Sales Gross Profit Net Income Per Share
----------- --------- ------------ ---------- ---------
(Unaudited)

<S> <C> <C> <C> <C>
1996
First Quarter $11,977,499 $3,255,048 $24,803 $0.01
Second Quarter 12,974,419 3,277,992 32,343 0.01
Third Quarter 14,216,310 4,117,583 32,473 0.01

1995
First Quarter $11,384,289 $3,082,954 $ 77,410 $0.02
Second Quarter 12,830,389 3,504,644 197,299 0.05
Third Quarter 12,909,888 3,559,004 289,448 0.08
Fourth Quarter 13,443,993 3,259,368 323,780 0.09
---------- --------- ------- ----

Total Fiscal Year $50,568,559 $13,405,970 $887,937 $0.24
========== ========== ======= ====

1994
First Quarter $10,075,937 $3,056,487 $112,379 $0.03
Second Quarter 11,885,767 3,501,018 187,128 0.05
Third Quarter 11,851,882 3,597,571 261,750 0.07
Fourth Quarter 12,929,268 3,157,246 459,661 0.12
---------- --------- ------- ----

Total Fiscal Year $46,742,854 $13,312,322 $1,020,918 $0.27
========== ========== ========= ====
</TABLE>

DENTAL PRODUCTS

Jeneric/Pentron is engaged in the development, manufacture,
distribution and sale of products to the dental health care market. After
first establishing itself as a supplier of casting alloys to dentists and
dental laboratories, Jeneric/Pentron extended its marketing and sales programs
to include other materials such as composites and porcelains as well as the
sale of related equipment used in applying these materials. Jeneric/Pentron
now also distributes porcelain furnaces and titanium casting equipment and
related products for dental restorations.

Jeneric/Pentron's principal product line is casting alloys for
bridges, crowns, inlays and other items used in the restoration and
reconstruction of teeth and for tooth support structures. Jeneric/Pentron
currently offers approximately 100 mixtures of precious metals made by vacuum
induction melting and pouring processes. A wide variety of alloys using
non-precious metals such as high purity nickel/chrome blends is also offered.
Jeneric/Pentron also supplies amalgams as well as composite and porcelain
products which are used extensively for cosmetic applications and for
reconstruction and restoration of teeth. Composites, in many instances, are
now being substituted for amalgam (metal blend) fillings and replacing cast
alloys in inlays. Porcelains are also being used extensively as a replacement
for amalgams in fillings and caps and in the construction of bridgework.

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Jeneric/Pentron also produces a line of dental impression materials and
dental bonding agents as well as proprietary and non-proprietary composite and
porcelain products used for repair and reconstruction of teeth and for cosmetic
applications, including Synspar(R), a synthetic porcelain, and OPC(TM) and
Optec(TM), its high strength porcelains.

The Company's subsidiary, American Thermocraft, is the manufacturer of
Synspar(R), OPC(TM) and Optec(TM), as well as a manufacturer of other high
quality ceramic materials for dental health care applications.

MEDICAL PRODUCTS

Transidyne is engaged in the assembly and sale of medical disposables.
Transidyne's main products are custom kits and a sterile, disposable fetal
blood collection kit used to collect a blood sample from the fetus during
delivery. This sample is used for pH measurements, and the resulting
diagnostic information is used by the obstetrician in determining whether to
proceed with a Cesarean section or to allow the birth to proceed normally. In
the near future, Transidyne expects to begin the packaging of single-use
laundry detergents, a pre-packaged consumer good, for a new customer.

Transidyne entered into a license agreement pursuant to which it
granted an exclusive world-wide license for the technical know-how, trade
secrets and patents relating to Transidyne's fetal blood monitor device and
accessory products. The license provides for a royalty of 5% of sales through
June 28, 1997 (the date the design patent expires), at which time the license
becomes irrevocable and royalty free. Transidyne received approximately
$130,000, $159,000, and $181,000 in such royalties during fiscal 1995, 1994 and
1993, respectively. The Company currently estimates that the royalties for
fiscal 1996 will be approximately $134,000.

MARKETING

The Company's dental products are sold to approximately 21,000
customers throughout the United States, Canada and foreign countries. Domestic
sales are primarily through telemarketing, direct mail and solicitations.
Foreign sales are primarily through distributors. Foreign sales for dental
products increased to approximately 18.7% of consolidated sales in fiscal 1995
from approximately 18.6% of sales in 1994. Foreign sales for dental products
decreased to approximately 18.6% of consolidated sales in fiscal 1994 from
approximately 21.0% of sales in 1993. For the three fiscal years ended June
30, 1995, 1994 and 1993, foreign sales were approximately $9,440,000,
$8,689,000, and $8,619,000, respectively. Operating income from foreign sales
of dental products, before interest, taxes, and corporate administrative fees,
was approximately $443,000, $444,000 and $539,000, respectively. Operating
income percentages on foreign sales are substantially the same as for domestic
sales. Most foreign sales are made to Europe and Asia. See "--General."

Medical products are marketed directly and through selected
representatives, telemarketing and direct mail solicitations to health care
suppliers and hospitals. Currently, there are no significant foreign sales of
medical products.

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CERTAIN LEGAL PROCEEDINGS

Certain legal proceedings are currently pending against the Company,
as described below:

The Company's subsidiary, Jeneric/Pentron, has filed suit in
Connecticut Superior Court against two former employees and business entities
with which they are affiliated for unfair trade practices, breach of contract
and breach of common law duties of loyalty in connection with the alleged sale
of dental products through companies in competition with Jeneric/Pentron. The
Company is seeking injunctive relief and damages. The Company's claims against
its former employees, asserted in the Superior Court action, have been
submitted to arbitration; however, the Superior Court action remains pending.

Ivoclar A.G. ("Ivoclar") has sued Jeneric/Pentron and its German
distributor for unfair competition in connection with sales of porcelain pellets
used for manufacturing dental restorations. The action was brought in
Landgericht Regional Court in Cologne, Germany. Potential damages, if any, are
uncertain; however, an adverse decision in this action could preclude
Jeneric/Pentron from selling such porcelain pellets in Germany. Jeneric/Pentron
believes it has meritorious defenses to Ivoclar's claim and has instructed its
attorneys to vigorously defend this action.

Ivoclar North America, Inc. ("Ivoclar North America") recently filed a
demand for arbitration with the American Arbitration Association against
Jeneric/Pentron alleging that Jeneric/Pentron made false, misleading and harmful
statements to certain of Ivoclar North America's customers and potential
customers in breach of the confidentiality provision in a settlement agreement
between Ivoclar North America and Jeneric/Pentron concerning a prior lawsuit.
Jeneric/Pentron denies Ivoclar North America's claims, believes it has
meritorious defenses and intends to vigorously defend this proceeding.

For a discussion of the possible effect of the foregoing legal
proceedings on the Company's future outlook, see "MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS."

INFORMATION CONCERNING THE BUYER

The Buyer is a Delaware corporation recently organized by Dr. Cohen
and the Partnership for the purpose of effecting the Merger. The mailing
address and telephone number of the Buyer's office are 53 North Plains
Industrial Road, Wallingford, Connecticut 06492, (203) 269-5534.

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Dr. Cohen, the President and Secretary of the Buyer, is the Buyer's
sole officer and director. Dr. Cohen's business address is c/o Customedix
Corporation, 53 North Plains Industrial Road, Wallingford, Connecticut 06492.
Dr. Cohen's principal occupation or employment, on the date hereof and during
the last five years, is and has been Chairman of the Board and Chief Executive
Officer of the Company, the principal business of which is dental and medical
health care products. See "BUSINESS OF THE COMPANY." Dr. Cohen is a citizen
of the United States of America.

The Partnership is comprised of trusts for the benefit of Dr. Cohen and
certain members of Dr. Cohen's family. Dr. Cohen, in his capacity as trustee of
the trusts that are partners in the Partnership, is the managing partner of the
Partnership and has voting and dispositive power with respect to the Common
Stock owned by the Partnership. See "INFORMATION CONCERNING THE PARTNERSHIP."
For a description of the Common Stock owned by Dr. Cohen and the Partnership,
see "STOCK OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS."

The Buyer has no material assets, has no operating history and has not
engaged in any activities except in connection with the Merger Agreement and
the transactions pursuant thereto. Dr. Cohen, the sole director of the Buyer,
has approved the Merger Agreement and the Merger. Prior to or simultaneously
with the Merger, Dr. Cohen and the Partnership will transfer to the Buyer all
of the shares of Common Stock held by them in exchange for all of the Buyer's
issued and outstanding stock. Upon becoming the sole stockholders of the
Buyer, Dr. Cohen and the Partnership will approve the Merger Agreement and the
Merger. Upon the consummation of the Merger, the Buyer will be merged with and
into the Company and the separate corporate existence of the Buyer will cease.

INFORMATION CONCERNING THE PARTNERSHIP

The Partnership is a Connecticut general partnership. The principal
business of the Partnership is to acquire, own, build upon, alter, repair,
rent, lease, sell and otherwise deal with real and personal property. The
address of the Partnership is 3 Silo Hill, Madison, Connecticut 06443.

The partners of the Partnership are: Dr. Cohen and Stanley N. Bergman,
as trustees for each of the following trusts: the Irene Cohen Revocable Trust,
dated April 27, 1996, among Irene Cohen, as grantor, and the trustees, F/B/O
Terri S. Alpert, formerly known as Terri Susan Cohen; the Irene Cohen Revocable
Trust, dated April 27, 1976, among Irene Cohen, as grantor, and the trustees,
F/B/O Bonnie Lynne Cohen; the Irene Cohen Revocable Trust, dated April 27, 1976,
among Irene Cohen, as grantor, and the trustees, F/B/O Lisa Michelle MacDougald,
formerly known as Lisa Michelle Cohen; the Leon Cohen Revocable Trust, dated
April 27, 1976, among Leon Cohen, as grantor, and the trustees, F/B/O Terri S.
Alpert, formerly known as Terri Susan Cohen; the Leon Cohen Revocable Trust,
dated April 27, 1976, among Leon Cohen, as grantor, and the trustees, F/B/O
Bonnie Lynne Cohen; and the Leon Cohen Revocable Trust, dated April 27, 1976,
among Leon Cohen, as grantor, and the trustees, F/B/O Lisa Michelle MacDougald,
formerly known as Lisa Michelle Cohen.

The managing partners of the Partnership are Dr. Cohen and Stanley N.
Bergman in their capacity as trustees of the various trusts that are partners
in the Partnership. For information with respect to Dr. Cohen, see "DIRECTORS
AND EXECUTIVE OFFICERS OF THE COMPANY" AND "INFORMATION CONCERNING THE BUYER."
Mr. Bergman is and has, for more than five years, been a principal in the law
firm of Bergman, Horowitz & Reynolds, P.C., 157 Church Street, New Haven,
Connecticut 06502. Mr. Bergman is a citizen of the United States of America.

INDEPENDENT PUBLIC ACCOUNTANTS

Arthur Andersen LLP, independent auditors, audited and reported on the
consolidated financial statements of the Company and its subsidiaries for its
fiscal year ended June 30, 1995. Such financial statements have been
incorporated by reference in this Proxy Statement. A representative of Arthur
Andersen is expected to be present at the Special Meeting, will have an
opportunity to make a statement if such representative so desires and will be
available to respond to appropriate questions.

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FEES AND EXPENSES

The Merger Agreement provides that the Buyer and the Company will bear
their respective costs and expenses in connection with entering into the Merger
Agreement, except that the Company shall bear all expenses related to the
preparation, printing, filing and mailing of this Proxy Statement, the conduct
of the Special Meeting and the solicitation of proxies in connection therewith,
and except in the event the Merger is not consummated in certain circumstances
specified in the Merger Agreement. See "THE MERGER AGREEMENT--Terms of the
Merger--Expenses." The expenses incurred and to be incurred by the Company and
the Buyer in connection with the Merger Agreement, the Merger and the related
transactions are estimated as follows:

<TABLE>
<S> <C>
Filing fees $ 766
Legal fees (1) 170,000
Accounting fees 45,000
Financial Advisors (2) 75,000
Printing and mailing fees 40,000
Miscellaneous 35,000
-------

Total $365,766
=======
</TABLE>

----------------
(1) Includes the fees and estimated expenses of counsel to the
Board, the Original Special Committee and the Special
Committee (see "SPECIAL FACTORS--Background") and counsel to
the Buyer; does not include fees and expenses in connection
with the litigation described in "SPECIAL FACTORS--Certain
Litigation" or any other litigation that may arise in
connection with the Merger. The Company currently estimates
that legal fees and expenses in connection with the litigation
described in "SPECIAL FACTORS--Certain Litigation," will be
approximately $255,000. The Company anticipates that a
portion of these fees and expenses will be covered by the
Company's directors and officers liability insurance policy.
The aggregate amount of legal fees to be paid to all legal
advisors may vary from the amount indicated; however, the
amount of such legal fees ultimately paid will not affect the
amount of Merger Consideration to be paid to the stockholders
of the Company (other than the Buyer) pursuant to the Merger.

(2) Includes $60,000 paid to Tucker Anthony, financial advisor to
the Original Special Committee, and $15,000 paid to Carter
Capital.

ADDITIONAL INFORMATION

The Company, the Buyer, Dr. Cohen and the Partnership have filed a
Schedule 13E-3 with the SEC with respect to the Merger. As permitted by the
rules and regulations of the SEC, this Proxy Statement omits certain information
contained in the Schedule 13E-3. The Company is subject to the informational
requirements

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of the Exchange Act and in accordance therewith files periodic reports, proxy
statements and other information with the SEC. The Schedule 13E-3 and the
respective exhibits thereto, as well as such reports, proxy statements and other
information, may be inspected and copied, without charge, or copies thereof may
be obtained from the SEC upon payment of prescribed rates at the public
reference facilities maintained by the SEC at Judiciary Plaza, 450 Fifth Street,
N.W., Room 1024, Washington, D.C. 20549, and at the following Regional Office of
the SEC: Seven World Trade Center, 13th Floor, New York, New York 10048. The
Schedule 13E-3 and the respective exhibits thereto, as well as such reports,
proxy statements and other information filed through the Electronic Data,
Gathering, Analysis and Retrieval system are publicly available through the
SEC's web site (http://www.sec.gov). Statements contained in this Proxy
Statement concerning documents filed with the SEC as exhibits to the Schedule
13E-3 or included with this Proxy Statement as annexes are necessarily not
complete and, in each instance, reference is made to the copy of the document
filed as an exhibit to the Schedule 13E-3 or such annexes. Each such statement
is qualified in its entirety by such reference.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents filed by the Company with the SEC are
incorporated herein by reference:

1. Annual Report on Form 10-K for the fiscal year ended June 30,
1995.

2. Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 1995.

3. Quarterly Report on Form 10-Q for the quarterly period ended
December 31, 1995.

4. Quarterly Report on Form 10-Q for the quarterly period ended
March 31, 1996.

5. Current Reports on Form 8-K dated June 4, 1996, June 10 and
August 6, 1996, respectively.

All documents and reports filed by the Company pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Proxy
Statement and prior to the date of the Special Meeting shall be deemed
incorporated by reference into this Proxy Statement and to be a part hereof
from the date of filing of such documents or reports. Any statement contained in
a document or report incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this Proxy
Statement to the extent that a statement contained herein, or in any
subsequently filed document or report which is or is deemed to be incorporated
by reference herein, modifies or supersedes such previous statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Proxy Statement.

A copy of the documents incorporated herein by reference (without
exhibits, unless such exhibits are specifically incorporated by reference into
the information incorporated by reference herein) that are not delivered
herewith will be provided, without charge, to each person to whom a copy of
this Proxy Statement is delivered, upon written or oral request of such person
and by first class mail or other equally prompt means within one business day
of receipt of request. Requests should be directed to Customedix Corporation,
53 North Plains Industrial Road, Wallingford, Connecticut 06492, attention:
Office of the Secretary, telephone number (203) 284-9079. In order to ensure
timely delivery of the documents, any request should be made by __________,
1996.

OTHER MATTERS

The Board does not intend to bring any other matters before the
Special Meeting and does not know of any other matters that may be brought
before the Special Meeting by others. If any other matter should come before
the Special Meeting, the persons named in the enclosed proxy will have
discretionary authority to vote the shares of Common Stock thereby represented
in accordance with their best judgment.

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STOCKHOLDER MEETING

If the Merger is not consummated, the Company will hold its 1996
Annual Meeting of the stockholders of the Company in accordance with the
Company's By-Laws and the DGCL.

By Order of the
Board of Directors

Barry L. Kosowsky
Secretary

Wallingford, Connecticut
, 1996
- -------------------

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ANNEX A
CONFORMED COPY

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

AGREEMENT AND PLAN OF MERGER

BETWEEN

CUSTOMEDIX CORPORATION

AND

CUS ACQUISITION, INC.

DATED AS OF JUNE 10, 1996

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

<PAGE> 77
ANNEX A

AGREEMENT AND PLAN OF MERGER

AGREEMENT AND PLAN OF MERGER, dated as of June 10, 1996, between CUS
Acquisition, Inc., a Delaware corporation ("Buyer"), and Customedix Corporation,
a Delaware corporation (the "Company").

WHEREAS, the Boards of Directors of Buyer and the Company deem it
advisable and in the best interests of their respective shareholders that Buyer
shall merge into the Company (the "Merger") in accordance with the Delaware
General Corporation Law, such law being referred to herein as the "Corporation
Law," upon the terms and subject to the conditions set forth herein, and the
Buyer and the Company have directed that the principal terms of the Merger be
submitted to their respective stockholders for approval;

NOW, THEREFORE, the parties hereto agree as follows:

ARTICLE I

THE MERGER

1.1. The Merger. At the Effective Time (as hereinafter defined), Buyer
shall be merged with and into the Company in accordance with the provisions of
this Agreement and the Corporation Law and the separate existence of Buyer shall
thereupon cease, and the Company, as the surviving corporation in the Merger
(the "Surviving Corporation"), shall continue its corporate existence under the
Delaware General Corporation Law.

1.2. Effective Time of the Merger. As soon as practicable after
satisfaction or waiver of the conditions set forth in Article VI, the Company
and Buyer (collectively, the "Constituent Corporations") will cause the Merger
to be consummated by the filing with the Secretary of State of Delaware of a
Certificate of Merger in such form or forms as may be required by the
Corporation Law (the time of such filing with the Secretary of State of Delaware
being the "Effective Time").

1.3. Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as provided in the applicable provisions of the Delaware General
Corporation Law. Without limiting the generality of the foregoing, at the
Effective Time all the property, rights, privileges, powers and franchises of
each of the Constituent Corporations so merged shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Constituent
Corporations shall become the debts, liabilities and duties of the Surviving
Corporation.
<PAGE> 78
1.4. Conversion of Shares. At the Effective Time, and without any
action on the part of Buyer, the Company or the holder of any of the following
securities:

1.4.1. Each share of Common Stock, par value $.01 per
share, of the Company issued and outstanding immediately prior
to the Effective Time (other than Dissenting Shares (as
defined in Section 1.7) and shares to be canceled pursuant to
Section 1.4.2) (collectively, the "Shares") shall
automatically be converted into the right to receive $2.375 of
cash (the "Merger Consideration").

1.4.2. Each share of Common Stock held in the
treasury of the Company and each Share owned by Buyer
immediately prior to the Effective Time shall automatically be
canceled and extinguished, and no payment or other
consideration shall be made in respect thereof.

1.4.3. Each share of Common Stock, par value $.01 per
share, of Buyer issued and outstanding immediately prior to
the Effective Time shall thereafter be converted into one
validly issued, fully paid and nonassessable share of Common
Stock, par value $.01 per share, of the Surviving Corporation.

1.5. Surrender of Shares. From time to time following the Effective
Time, Buyer shall deposit or cause to be deposited in trust with a disbursing
agent to be designated by the Company (the "Disbursing Agent"), as agent for the
holders of Shares, the cash to which holders of Shares who have surrendered
their Shares to the Disbursing Agent shall be entitled pursuant to Section
1.4.1. Each holder of a certificate or certificates representing Shares
converted upon the Merger pursuant to Section 1.4.1 may, following the Merger,
surrender each such certificate to the Disbursing Agent, as agent for such
holder, to effect the surrender of such certificate on such holder's behalf. The
Surviving Corporation shall, promptly after the Effective Time, distribute to
such holders appropriate materials to facilitate such surrender. Each such
holder shall be entitled, promptly upon surrender of one or more certificates
representing such converted Shares and of such properly completed transmittal
materials as the Surviving Corporation shall require, to receive in exchange
therefor a check for the amount of cash to which such holder is entitled
pursuant to Section 1.4.1 in respect of the converted Shares represented by such
certificate or certificates. Until so surrendered and exchanged, each such
certificate shall, after the Effective Time, be deemed to represent only the
right to receive the Merger Consideration for each Share represented thereby and
until such surrender and exchange no Merger Consideration shall be delivered to
the holder of such certificate in respect

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thereof. If payment of any Merger Consideration is to be made to a person other
than the person in whose name a surrendered certificate is registered, it shall
be a condition to such payment that the surrendered certificate shall be
endorsed or shall be otherwise in proper form for transfer and that the person
requesting such payment shall have paid any transfer and other taxes required by
reason of such payment to a person other than the registered holder of the
surrendered certificate or shall have established to the satisfaction of the
Surviving Corporation or the Disbursing Agent that such tax either has been paid
or is not payable. If any Merger Consideration deposited with the Disbursing
Agent for purposes of payment in exchange for Shares remains unclaimed following
the expiration of six months after the Effective Time, such Merger Consideration
shall be delivered to the Surviving Corporation by the Disbursing Agent, and
thereafter the Disbursing Agent shall not be liable to any person claiming any
Merger Consideration and the surrender and exchange shall be effected directly
with the Surviving Corporation (subject to applicable abandoned property laws).
No interest for the benefit of any such holder shall accrue or be payable with
respect to any Merger Consideration. The Surviving Corporation or the Disbursing
Agent shall be authorized to deliver Merger Consideration attributable to any
certificate for Shares which has been lost or destroyed upon receipt of
satisfactory evidence of ownership of the Shares represented thereby and of
appropriate indemnification. From and after the Effective Time, the holders of
certificates evidencing Shares outstanding immediately prior to the Merger shall
cease to have any rights with respect to such Shares except as otherwise
provided herein or by law.

1.6. Stock Transfer Books. At the Effective Time, the stock transfer
books of the Company shall be closed and there shall be no further registration
of transfers of Shares thereafter on the records of the Company.

1.7. Appraisal Rights. If, but only if, the holders of any Shares
issued and outstanding immediately prior to the Effective Time shall, in
accordance with the applicable provisions of the Corporation Law, become
entitled to receive payment for the fair value of such Shares (the "Dissenting
Shares"), such payment shall be made by the Surviving Corporation; provided,
however, that if any holder of Dissenting Shares shall have forfeited his right
or is otherwise no longer entitled to receive payment of the fair value of his
Shares under the Corporation Law, such Dissenting Shares shall thereupon be
deemed to have been converted into and to have become exchangeable for the
Merger Consideration.

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ARTICLE II

CERTIFICATE OF INCORPORATION; BY-LAWS

2.1. Certificate of Incorporation. Unless otherwise determined by Buyer
prior to the Effective Time, at the Effective Time the certificate of
incorporation of the Company, as in effect immediately prior to the Effective
Time, shall be the certificate of incorporation of the Surviving Corporation
until thereafter amended as provided by law and such certificate of
incorporation, except that Article Fourth, Paragraph (A) of the certificate of
incorporation shall be amended to read in its entirety as follows: "The total
number of shares of Common Stock which the Corporation shall have authority to
issue is Three Thousand (3,000) shares with a par value of $.01 per share."

2.2. By-Laws. The by-laws of the Company, as in effect immediately
prior to the Effective Time, shall be the by-laws of the Surviving Corporation
until thereafter amended as provided by law, the certificate of incorporation of
the Surviving Corporation and such by-laws.

2.3. Directors and Officers. The directors of Buyer immediately prior
to the Effective Time shall be the initial directors of the Surviving
Corporation, each to hold office in accordance with the certificate of
incorporation and by-laws of the Surviving Corporation, and the officers of the
Company immediately prior to the Effective Time shall be the initial officers of
the Surviving Corporation, in each case until their respective successors are
duly elected or appointed and qualified.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company represents and warrants to Buyer as follows:

3.1. Authorization. The Company has the necessary corporate power and
authority to enter into this Agreement and, subject to obtaining the necessary
stockholder approval of the Merger, to carry out its obligations hereunder. The
execution and delivery of this Agreement by the Company, the performance by the
Company of its obligations hereunder and the consummation by the Company of the
transactions contemplated hereby have been duly authorized by the Company's
Board of Directors and no other corporate proceeding on the part of the Company
is necessary for the execution and delivery of this Agreement by the Company
and, subject to obtaining the necessary stockholder approval of the Merger, the
performance by the Company of its obligations hereunder and the consummation by
the Company of the transactions

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contemplated hereby. This Agreement has been duly executed and delivered by the
Company and (assuming the due authorization, execution and delivery by Buyer) is
a legal, valid and binding obligation of the Company, enforceable against it in
accordance with its terms subject to the approval of the Merger by the
stockholders of the Company.

3.2. Board Recommendation. The Special Committee of the Board of
Directors of the Company constituted for the purpose of considering the Merger
(the "Special Committee") and the entire Board of Directors of the Company have,
by resolutions duly adopted by a vote at separate meetings of such Special
Committee and of such Board, approved and adopted this Agreement and the
transactions contemplated hereby and recommended that the stockholders of the
Company approve and adopt this Agreement and the transactions contemplated
hereby and determined that the Merger is in the best interests of the
stockholders of the Company.

3.3. Required Filings and Consents. Except for applicable requirements,
if any, of the Securities Act of 1933, the Securities Exchange Act of 1934 (the
"Exchange Act") and the securities laws of the various states, and filing and
recordation of appropriate merger documents as required by the Corporation Law,
it is not required to submit any notice, report or other filing with any
governmental authority in connection with the execution or delivery by it of
this Agreement or the consummation of the transactions contemplated hereby.

3.4. Disclosure. The proxy statement relating to the Special Meeting of
Stockholders called to approve the Merger (the "Proxy Statement"), as corrected
pursuant to Section 5.2, or in any amendments thereof or supplements thereto,
will, on the date the Proxy Statement is first mailed to stockholders, at the
time of the Company Stockholders' Meeting or at the Effective Time, contain any
statement which, at such time and in light of the circumstances under which it
will be made, will contain any untrue statement of a material fact or will omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein not false or misleading or necessary to correct
any statement in any earlier communication with respect to the Company
Stockholders' Meeting which has become false or misleading. Notwithstanding the
foregoing, the Company makes no representation or warranty with respect to any
information that has been supplied by the Buyer or the Buyer's accountants,
counsel, financial advisors or other authorized representatives for use in any
of the foregoing documents.

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ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer represents and warrants to the Company as follows:

4.1. Organization. It is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware, with full
corporate power and authority to enter into this Agreement and to carry out its
obligations hereunder. The execution and delivery of this Agreement by it, the
performance by it of its obligations hereunder and the consummation by it of the
transactions contemplated hereby have been duly authorized by its Board of
Directors and no other corporate proceeding on the part of the Buyer is
necessary for the execution and delivery of this Agreement by the Buyer and,
subject to obtaining the necessary stockholder approval of the Merger, the
performance by the Buyer of its obligations hereunder and the consummation by
the Buyer of the transactions contemplated hereby. This Agreement has been duly
executed and delivered by it and (assuming the due authorization, execution and
delivery hereof by the Company) is a legal, valid and binding obligation of
Buyer, enforceable against it in accordance with its terms subject to the
approval of the Merger by the stockholders of the Buyer.

4.2. No Violation. It is not subject to or obligated under its
certificate of incorporation or by-laws, or any law, or rule or regulation of
any governmental authority, or any material contract to which it is a party or
by which it is bound, that would be breached or violated by the execution,
delivery or performance of this Agreement or the transactions contemplated
hereby.

4.3. Required Filings and Consents. Except for applicable requirements,
if any, of the Securities Act of 1933, the Exchange Act and the securities laws
of the various states, and filing and recordation of appropriate merger
documents as required by the Corporation Law, it is not required to submit any
notice, report or other filing with any governmental authority in connection
with the execution or delivery by it of this Agreement or the consummation of
the transactions contemplated hereby.

4.4. Disclosure. None of the information supplied by Buyer for
inclusion in the proxy statement relating to the Special Meeting of Stockholders
called to approve the Merger (the "Proxy Statement"), as corrected pursuant to
Section 5.2, or in any amendments thereof or supplements thereto, will, on the
date the Proxy Statement is first mailed to stockholders, at the time of the
Company Stockholders' Meeting or at the Effective Time, contain any statement
which, at such time and in light of the

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circumstances under which it will be made, will contain any untrue statement of
a material fact or will omit to state any material fact required to be stated
therein or necessary in order to make the statements therein not false or
misleading or necessary to correct any statement in any earlier communication
with respect to the Company Stockholders' Meeting which has become false or
misleading. Notwithstanding the foregoing, Buyer makes no representation or
warranty with respect to any information that has been supplied by the Company
or the Company's accountants, counsel, financial advisors or other authorized
representatives or by any party other than Buyer for use in any of the foregoing
documents.

ARTICLE V

COVENANTS

5.1. Conduct of Business by the Company Pending the Merger. Prior to
the Effective Time, unless Buyer shall otherwise agree in writing or as
otherwise contemplated by this Agreement:

5.1.1. The business of the Company and its subsidiaries shall
be conducted only in the ordinary and usual course and in a manner
consistent with past practice.

5.1.2. The Company shall not, and shall ensure that each
subsidiary shall not, (a) sell or pledge or agree to sell or pledge any
capital stock of any Company subsidiary; (b) amend its certificate of
incorporation or by-laws; (c) split, combine or reclassify the
outstanding shares of its capital stock or declare, set aside or pay
any dividend payable in cash, stock or property or make any other
distributions with respect to its capital stock, except for dividends
declared and paid by any wholly-owned subsidiary in the ordinary course
of business and in a manner consistent with past practices; (d) redeem,
purchase or otherwise acquire or offer to redeem, purchase or otherwise
acquire any shares of capital stock; (e) form any new subsidiary or,
except in the ordinary course of business and consistent with past
practice, transfer any assets or liabilities to any Company subsidiary;
or (f) authorize or propose any of the foregoing, or enter into any
contract, agreement, commitment or arrangement to do any of the
foregoing.

5.1.3. The Company shall not, and shall ensure that each
Company subsidiary shall not, (a) issue or agree to issue any
additional shares of, or rights of any kind to acquire any shares of,
its capital stock of any class other than, in the case of the Company,
shares issuable upon exercise of options existing on the date hereof;
(b) acquire

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any material assets other than in the ordinary course of business; (c)
dispose of any material assets other than in the ordinary course of
business or encumber any of its material assets; (d) incur any
indebtedness for borrowed money or enter into any other material
transaction other than in the ordinary course of business; (e) amend
any of its material contracts except in the ordinary course of
business; (f) make any payments to any employee of the Company or any
Company subsidiary except in the ordinary course of business, and in
amounts and in a manner consistent with past practice, or grant or
establish any new programs or arrangements, or any new employee benefit
plan or employment, severance or consulting agreement (except as agreed
to in writing by Buyer), amend any existing employee benefit plan,
program or arrangement or any existing employment, severance or
consulting agreement or grant any increases in compensation or benefits
(other than actions taken in the ordinary course of business and
consistent with past practice or as otherwise provided in this
Agreement); (g) settle or compromise any litigation involving the
payment of, or an agreement to pay over time, an amount, in cash, notes
or other property, in excess of $25,000 singly or $100,000 in the
aggregate, unless a liability equal to or in excess of the amount of
any settlement or compromise has been reserved for such litigation in
the interim financial statements of the Company most recently filed
with the Securities and Exchange Commission (the "SEC"), other than the
litigation described in paragraph 6.1.2(b) hereof; or (h) enter into
any contract, agreement, commitment or arrangement with respect to any
of the foregoing.

5.1.4. The Company shall use its best efforts to preserve
intact the business organization of the Company and the Company
subsidiaries, to keep available the services of its and their current
officers and key employees, and to preserve the goodwill of those
having business relationships with the Company and the Company
subsidiaries.

5.2. Proxy Statement. The Company shall promptly file with the SEC, and
shall use all reasonable efforts to have cleared by the SEC, and promptly
thereafter shall mail to its stockholders, the Proxy Statement. Buyer and the
Company each agree promptly to correct any information provided by it for use in
the Proxy Statement which shall have become false or misleading in any material
respect. The Proxy Statement shall contain the recommendation of the Special
Committee and of the Board of Directors of the Company in favor of the Merger
and the Special Committee and the Board of Directors shall recommend that the
stockholders of the Company vote for and adopt the Merger and this Agreement.

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5.3. Stockholders' Meetings. The Company shall promptly take all
actions as are required under the Corporation Law and its certificate of
incorporation and by-laws to convene a meeting of its stockholders. The Company
shall use its best efforts (i) to solicit from its stockholders proxies in favor
of the transactions contemplated hereby and (ii) to take all other actions
necessary or, in the reasonable judgment of Buyer, advisable to secure the vote
or consent of stockholders required by the Corporation Law to effect the Merger.

5.4. Actions To Be Taken. Upon the terms and subject to the conditions
hereof, each of the parties hereto agrees to use its 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 to consummate the transactions contemplated by
this Agreement and shall use its best efforts to obtain all necessary waivers,
consents and approvals and to effect all necessary registrations and filings,
including without limitation filings under the Exchange Act.

5.5. Public Announcements. Buyer and the Company will consult with each
other before issuing any press release or otherwise making any public statements
with respect to the Merger and shall not issue any such press release or make
any such public statement prior to such consultation, except as may be required
by law.

5.6. No Solicitation. Subject to applicable law, neither the Company
nor any of the Company subsidiaries, nor any of its or their directors,
officers, employees, representatives or agents, shall, directly or indirectly,
encourage, solicit or initiate any inquiry or proposal, from any corporation,
partnership, agent, financial adviser, person, or other entity or group (other
than Buyer or an affiliate or an associate of Buyer or an officer, employee or
other authorized representative of Buyer or such affiliate or associate)
concerning any merger, sale of substantial assets, purchase or sale of shares of
capital stock or similar transactions involving the Company or any Company
subsidiary or division of the Company other than the transactions contemplated
by this Agreement.

5.7. Notification of Certain Matters. The Company and Buyer each agrees
to give prompt notice to the other of (i) the occurrence, or failure to occur,
of any event which occurrence or failure would be likely to cause any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect at any time from the date hereof to the
Effective Time, (ii) any communication which it receives from any governmental
agency, dissenting stockholder or other third party relating to the Merger or
any action or transaction relating thereto, or (iii) any material failure on its
part to comply with or satisfy any covenant, condition or agreement to be
complied

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with or satisfied by it hereunder; provided, however, that the delivery of any
notice pursuant to this Section shall not limit or otherwise affect the remedies
available hereunder to the party receiving such notice.

ARTICLE VI

CONDITIONS OF MERGER

6.1. General Conditions. The obligation of each party hereto to effect
the Merger shall be subject to fulfillment at or prior to the Effective Time of
the following conditions:

6.1.1. The Company's stockholders shall have duly approved and
adopted the Merger and this Agreement in accordance with the Delaware
General Corporation Law.

6.1.2. (a) No injunction, restraining order or other order
issued by a court of competent jurisdiction or governmental authority
that prohibits the consummation of the Merger shall be in effect, and,
except as provided in paragraph 6.1.2(b), no action or proceeding shall
be pending or overtly threatened which seeks or would seek to prohibit,
restrain or invalidate consummation of the Merger, or which challenges
in any respect the legality or validity of the Merger, or which seeks
to recover damages from the Company, the Buyer or any of their
respective officers, directors, stockholders or any other person in
connection with this Agreement or the transactions contemplated hereby.

(b) The Delaware Court of Chancery (the "Court") shall
have approved the settlement of four putative class action lawsuits
pending against the Company and its directors on the date hereof, which
have been consolidated under the caption In re Customedix Corporation
Shareholders Litigation, Cons. C.A. No. 14812, on substantially the
terms set forth in the Memorandum of Understanding, dated June 3, 1996
(the "Memorandum of Understanding"), executed by counsel for the
plaintiffs and counsel for Dr. Gordon Cohen.

6.1.3. There shall not have been taken any action, and no
statute, rule or regulation shall have been enacted, by any state or
federal government or governmental agency that would render the
consummation of the Merger illegal.

6.1.4. There shall have been obtained any and all permits,
approvals and consents of any governmental body or agency which counsel
for Buyer or the Company may reasonably deem necessary or appropriate
so that consummation of the transactions contemplated by this Agreement
will be in compliance with all applicable laws.

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6.2. Conditions to Obligations of Buyer to Effect the Merger. The
obligations of Buyer to effect the Merger shall be subject to the fulfillment at
or prior to the Effective Time of the following conditions (in addition to those
specified in Section 6.1):

6.2.1. All the terms, agreements and conditions of this
Agreement to be complied with or performed or fulfilled by the Company
at or prior to the Effective Time shall have been complied with,
performed and fulfilled in all material respects.

6.2.2. The representations and warranties of the Company
contained herein shall have been true and correct in all material
respects at the date of this Agreement and shall be true and correct in
all material respects at and as of the Effective Time as if made at and
as of such time.

6.2.3. The Company shall have furnished a certificate of its
President or Chief Financial Officer to evidence compliance with the
conditions set forth in Sections 6.2.1 and 6.2.2.

6.2.4. The number of shares of the Company Common Stock as to
which dissenting rights have been exercised by the holders thereof
shall not exceed 5% of the total number of shares of the Company Common
Stock outstanding on the Effective Time. Prior to the Effective Time,
the Company shall deliver to Buyer a list certified by its Secretary of
all stockholders who have exercised such dissenters' rights and the
number of shares of the Company Common Stock owned by each such
stockholder in respect of which such dissenters' rights have been
exercised. The Company will not, except with the prior written consent
of Buyer, voluntarily make any payment with respect to, or settle or
offer to settle, any demands by the Company stockholders exercising
dissenters' rights for payment of the fair value of their shares of the
Company Common Stock. The Company shall afford to Buyer the opportunity
to participate in all discussions and negotiations with stockholders
exercising dissenters' rights.

6.2.5. The commitment heretofore provided to Buyer for
financing to be used to pay the Merger Consideration, a copy of which
has heretofore been provided to the Company, as it may be amended or
modified from time to time with the consent of the Buyer, shall remain
in full force and effect as of the Effective Time.

6.3. Conditions to Obligation of the Company to Effect the Merger. The
obligation of the Company to effect the Merger shall be subject to the
fulfillment at or prior to the Effective Time

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of the following conditions (in addition to those specified in Section 6.1):

6.3.1. All the terms, agreements and conditions of this
Agreement to be complied with or performed or fulfilled by Buyer at or
prior to the Effective Time shall have been complied with, performed
and fulfilled in all material respects.

6.3.2. The representations and warranties of Buyer contained
herein shall have been true and correct in all material respects at the
date of this Agreement and shall be true and correct in all material
respects at and as of the Effective Time as if made at and as of such
time.

6.3.3. The Buyer shall have furnished a certificate of its
President to evidence compliance with the conditions set forth in
Sections 6.3.1 and 6.3.2.

6.3.4. The Buyer's stockholders shall have duly approved and
adopted the Merger and this Agreement in accordance with the Delaware
General Corporation Law.

6.3.5. The Company shall have received the consent of all
third parties, including without limitation the Company's lenders,
whose consent may be required under any agreement or instrument binding
the Company or its properties.

6.3.6. The Company shall have received an opinion of counsel
for the Buyer to the effect that (i) the Buyer is duly organized,
validly existing and in good standing under the laws of the State of
Delaware, (ii) this Agreement has been duly authorized, executed and
delivered by the Buyer and constitutes the Buyer's valid and binding
obligation, enforceable against Buyer in accordance with its terms, and
(iii) the execution and delivery of this Agreement by Buyer, and the
consummation of the transactions contemplated hereby, do not (x)
violate any provision of the certificate of incorporation or by-laws of
Buyer, (y) violate any statute, rule, regulation, judgment, order or
decree binding upon the Buyer or any of its assets, or (z) result in a
violation or breach of, or constitute (with or without notice and/or
the passage of time) a default under, any license, franchise, agreement
or instrument to which the Buyer or any of its properties is bound.

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ARTICLE VII

TERMINATION, AMENDMENT AND WAIVER

7.1. Termination. This Agreement may be terminated and the Merger
contemplated hereby may be abandoned at any time prior to the Effective Time,
whether before or after approval of the Merger by the stockholders of the
Company:

(a) By mutual consent of the Boards of Directors of Buyer and the
Company;

(b) By either Buyer or the Company

(i) if the Effective Time shall not have occurred by
December 31, 1996, but only if the party terminating has not
caused the delay through action or inaction and is not in
material breach of any of its obligations hereunder; or

(ii) if a court of competent jurisdiction or
governmental, regulatory or administrative agency or
commission shall have issued a final, non-appealable order,
decree or ruling or taken any other action, in each case
permanently restraining, enjoining or otherwise prohibiting
the transactions contemplated by this Agreement;

(c) By Buyer, if the Company shall have breached or failed to comply in
any material respect with any of its obligations under the Agreement, or any
representation or warranty of the Company shall have been incorrect in any
material respect when made or shall have since ceased to be true and correct in
any material respect.

(d) By the Company, if Buyer shall have breached or failed to comply in
any material respect with any of its obligations under the Agreement or any
representation or warranty of the Buyer shall have been incorrect in any
material respect when made or shall have ceased to be true and correct in any
material respect.

Upon the termination of this Agreement pursuant to this Section, this
Agreement shall forthwith become null and void, except that nothing herein shall
relieve any party from liability for any breach of this Agreement prior to such
termination.

7.2. Amendment. This Agreement may be amended by the parties hereto at
any time prior to the Effective Time, by action taken by Buyer and by the
Special Committee and the Board of Directors of the Company, whether before or
after approval of the Merger by the stockholders of the Company, but after such
approval no

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amendment shall be made that modifies the consideration to be given to the
holders of the Common Stock of the Company or in any other way materially
adversely affects the rights of such stockholders (other than a termination of
this Agreement pursuant to its terms). This Agreement may not be amended except
by an instrument in writing signed by the parties hereto.

7.3. Waiver. At any time prior to the Effective Time, any party hereto
may (a) extend the time for the performance of any of the obligations or other
acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any documents delivered
pursuant hereto and (c) waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid if set forth in an instrument in writing
signed by such party.

ARTICLE VIII

MISCELLANEOUS

8.1. Nonsurvival of Representations, Warranties and Agreements. No
representations, warranties or agreements in this Agreement or in any instrument
delivered pursuant to this Agreement, other than the provisions of Section 8.4
hereof, shall survive the Effective Time.

8.2. Closing. The closing of the transactions contemplated by this
Agreement shall take place at the offices of the Company, or at such other place
as shall be agreed upon by the parties hereto, as promptly as practicable after
approval of the Merger by the stockholders of the Company.

8.3. Expenses. Each of the parties hereto shall bear its own costs and
expenses in connection with entering into this Agreement; provided, however,
that the Company shall bear all expenses related to the preparation, printing,
filing and mailing of the Proxy Statement, the conduct of the Company
Stockholders' Meeting and the solicitation of proxies in connection therewith.
In the event that the Merger is not consummated as a result of the
nonsatisfaction of any condition to the obligations of the Buyer (other than the
nonsatisfaction of the condition contained in Section 6.2.5 which results from
any action taken or omitted to be taken by the Buyer or Dr. Gordon Cohen), and
the Buyer has substantially performed its obligations under this Agreement
required to be performed up to the time of termination of this Agreement or
abandonment of the Merger, then the Company will reimburse the Buyer, or pay
directly for the benefit of the Buyer, all documented out-of-pocket expenses of
the Buyer relating to this Agreement, the transactions contemplated hereby and
any activities related thereto.

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8.4. Indemnification. (a) Buyer and the Surviving Corporation agree
that (i) all rights to indemnification or reimbursement of expenses now existing
in favor of persons who were directors of the Company at any time on or prior to
the Effective Date or were officers of the Company immediately prior to the
Effective Date, as provided in the certificate of incorporation or by-laws of
the Company in effect on the date hereof, will continue in full force and
effect, and be honored by Buyer and the Surviving Corporation and (ii) Buyer and
the Surviving Corporation shall neither cause to be amended nor permit any
change in or amendment of any provision of the Company's certificate of
incorporation or by-laws relating to the right to indemnification or
reimbursement of expenses in a manner that would have the effect of restricting
or limiting such rights.

(b) The covenants and agreements in this Section 8.4 shall
survive the Merger and the Effective Date, shall continue without time limit,
and are intended to benefit each of the parties entitled to indemnification
pursuant to paragraph 8.4(a).

8.5. Notices. Any notices or other communications required or permitted
hereunder or otherwise in connection herewith shall be in writing, shall be
addressed as provided below and shall be deemed to have been duly given and
received (i) if delivered in person, (ii) if sent by overnight delivery service,
(iii) if mailed by first class United States mail, postage prepaid, registered
or certified with return receipt requested, or (iv) if sent by confirmed
facsimile transmission.

The addresses of the parties are as follows:

if to the Company to:

53 N. Plains Industrial Road
Wallingford, Connecticut 06492
Attention: President

with a copy to:

Brody & Ober
P.O. Box 572
135 Rennell Drive
Southport, Connecticut 06490
Attention: James M. Thorburn

if to Buyer to:

53 N. Plains Industrial Road
Wallingford, Connecticut 06492
Attention: President

15
<PAGE> 92
with a copy to:

Levett, Rockwood & Sanders
Professional Corporation
33 Riverside Avenue
Westport, Connecticut 06880
Attention: John Sanders

or to such other address as either party shall advise the other party in a
writing given in accordance with this Section.

8.6. Headings. The headings of the Articles and Sections of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.

8.7. Applicable Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Delaware, without regard to its
principles of conflicts of law.

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

8.9. Entire Agreement. This Agreement constitutes the entire agreement
and supersedes all other prior agreements and understandings, both written and
oral, among the parties with respect to the subject matter hereof and, except as
otherwise expressly provided herein, is not intended to confer upon any other
person any rights or remedies hereunder.

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

CUS ACQUISITION, INC.

By /s/ Gordon S. Cohen
-----------------------------
Its President

CUSTOMEDIX CORPORATION

By /s/ Martin L. Schulman
-----------------------------
Its President

16
<PAGE> 93
PRELIMINARY PROXY

ANNEX B
<PAGE> 94

ANNEX B

GENERAL CORPORATION LAW OF DELAWARE
SECTION 262 APPRAISAL RIGHTS

(a) Any stockholder of a corporation of this State who holds shares of
stock on the date of the making of a demand pursuant to subsection (d) of this
section with respect to such shares, who continuously holds such shares through
the effective date of the merger or consolidation, who has otherwise complied
with subsection (d) of this section and who has neither voted in favor of the
merger or consolidation nor consented thereto in writing pursuant to sec. 228 of
this title shall be entitled to an appraisal by the Court of Chancery of the
fair value of his shares of stock under the circumstances described in
subsections (b) and (c) of this section. As used in this section, the word
"stockholder" means a holder of record of stock in a stock corporation and also
a member of record of a nonstock corporation; the words "stock" and "share" mean
and include what is ordinarily meant by those words and also membership or
membership interest of a member of a nonstock corporation; and the words
"depository receipt" mean a receipt or other instrument issued by a depository
representing an interest in one or more shares, or fractions thereof, solely of
stock of a corporation, which stock is deposited with the depository.

(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to sec. 251 (other than a merger effected pursuant to
subsection (g) of Section 251), 252, 254, 257, 258, 263 or 264 of this title:

(1) Provided, however, that no appraisal rights under this section
shall be available for the shares of any class or series of stock, which
stock, or depository receipts in respect thereof, at the record date fixed
to determine the stockholders entitled to receive notice of and to vote at
the meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or (ii) held
of record by more than 2,000 holders; and further provided that no
appraisal rights shall be available for any shares of stock of the
constituent corporation surviving a merger if the merger did not require
for its approval the vote of the holders of the surviving corporation as
provided in subsection (f) of sec. 251 of this title.

(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series
of stock of a constituent corporation if the holders thereof are required
by the terms of an agreement of merger or consolidation pursuant to
sections 251, 252, 254, 257, 258, 263 and 264 of this title to accept for
such stock anything except:

a. Shares of stock of the corporation surviving or resulting
from such merger or consolidation, or depository receipts in respect
thereof;

b. Shares of stock of any other corporation, or depository
receipts in respect thereof, which shares of stock or depository
receipts at the effective date of the merger or consolidation will be
either listed on a national securities exchange or designated as a
national market system security on an interdealer quotation system by
the National Association of Securities Dealers, Inc. or held of record
by more than 2,000 holders;

c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or

d. Any combination of the shares of stock, depository receipts
and cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a., b. and c. of this
paragraph.

(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under sec. 253 of this title is not owned by the
parent corporation immediately prior to the merger, appraisal rights shall
be available for the shares of the subsidiary Delaware corporation.

(c) Any corporation may provide in its certificate of incorporation
that appraisal rights under this section shall be available for the shares of
any class or series of its stock as a result of an amendment to its certificate
of incorporation, any merger or consolidation in which the corporation is a
constituent corporation
<PAGE> 95

or the sale of all or substantially all of the assets of the corporation. If the
certificate of incorporation contains such a provision, the procedures of this
section, including those set forth in subsections (d) and (e) of this section,
shall apply as nearly as is practicable.

(d) Appraisal rights shall be perfected as follows:

(1) If a proposed merger or consolidation for which appraisal rights
are provided under this section is to be submitted for approval at a
meeting of stockholders, the corporation, not less than 20 days prior to
the meeting, shall notify each of its stockholders who was such on the
record date for such meeting with respect to shares for which appraisal
rights are available pursuant to subsections (b) or (c) hereof that
appraisal rights are available for any or all of the shares of the
constituent corporations, and shall include in such notice a copy of this
section. Each stockholder electing to demand the appraisal of his shares
shall deliver to the corporation, before the taking of the vote on the
merger or consolidation, a written demand for appraisal of his shares. Such
demand will be sufficient if it reasonably informs the corporation of the
identity of the stockholder and that the stockholder intends thereby to
demand the appraisal of his shares. A proxy or vote against the merger or
consolidation shall not constitute such a demand. A stockholder electing to
take such action must do so by a separate written demand as herein
provided. Within 10 days after the effective date of such merger or
consolidation, the surviving or resulting corporation shall notify each
stockholder of each constituent corporation who has complied with this
subsection and has not voted in favor of or consented to the merger or
consolidation of the date that the merger or consolidation has become
effective; or

(2) If the merger or consolidation was approved pursuant to sec.228 or
253 of this title, each constituent corporation, either before the
effective date of the merger or consolidation or within ten days
thereafter, shall notify each of the holders of any class or series of
stock of such constituent corporation who are entitled to appraisal rights
of the approval of the merger or consolidation and that appraisal rights
are available for any or all of the shares of such class or series of stock
of such constituent corporation, and shall include in such notice a copy of
this section, provided that, if the notice is given on or after the
effective date of the merger or consolidation, such notice shall be given
by the surviving or resulting corporation to all such holders of any class
or series of stock of a constituent corporation that are entitled to
appraisal rights. Such notice may, and, if given on or after the effective
date of the merger or consolidation, shall, also notify such stockholders
of the effective date of the merger or consolidation. Any stockholder
entitled to appraisal rights may, within twenty days after the date of
mailing of such notice, demand in writing from the surviving or resulting
corporation the appraisal of such holder's shares. Such demand will be
sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the
appraisal of such holder's shares. If such notice did not notify
stockholders of the effective date of the merger or consolidation, either
(i) each such constituent corporation shall send a second notice before the
effective date of the merger or consolidation notifying each of the holders
of any class or series of stock of such constituent corporation that are
entitled to appraisal rights of the effective date of the merger or
consolidation or (ii) the surviving or resulting corporation shall send
such a second notice to all such holders on or within 10 days after such
effective date; provided, however, that if such second notice is sent more
than 20 days following the sending of the first notice, such second notice
need only be sent to each stockholder who is entitled to appraisal rights
and who has demanded appraisal of such holder's shares in accordance with
this subsection. An affidavit of the secretary or assistant secretary or of
the transfer agent of the corporation that is required to give either
notice that such notice has been given shall, in the absence of fraud, be
prima facie evidence of the facts stated therein. For purposes of
determining the stockholders entitled to receive either notice, each
constituent corporation may fix, in advance, a record date that shall be
not more than 10 days prior to the date the notice is given; provided that,
if the notice is given on or after the effective date of the merger or
consolidation, the record date shall be such effective date. If no record
date is fixed and the notice is given prior to the effective date, the
record date shall be the close of business on the day next preceding the
day on which the notice is given.

(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder who has
complied with subsections (a) and (d) hereof and who is otherwise entitled to
appraisal rights, may file a petition in the Court of Chancery demanding a
determination of the value of the stock of all such stockholders.
Notwithstanding the foregoing, at any time within 60 days after the effective
date of the merger or consolidation, any stockholder shall have the right to
withdraw his demand for appraisal and to accept the terms offered upon the
merger or consolidation. Within 120 days after the effective date of the merger
or consolidation, any stockholder who has complied with the requirements of
subsections (a) and (d) hereof, upon written request, shall be entitled to
receive from the corporation surviving the merger or resulting from the
consolidation a statement setting forth the aggregate number of shares not voted
in favor of the merger or consolidation and with respect to which demands for
appraisal have been received and the aggregate number of holders of such shares.
Such written statement shall be mailed to the stockholder within 10 days after
his written request for such a statement is received by the surviving or
resulting corporation or within 10 days after expiration of the period for
delivery of demands for appraisal under subsection (d) hereof, whichever is
later.

(f) Upon the filing of any such petition by a stockholder, service of a
copy thereof shall be made upon the surviving or resulting corporation, which
shall within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown

B-2
<PAGE> 96

on the list at the addresses therein stated. Such notice shall also be given by
1 or more publications at least 1 week before the day of the hearing, in a
newspaper of general circulation published in the City of Wilmington, Delaware
or such publication as the Court deems advisable. The forms of the notices by
mail and by publication shall be approved by the Court, and the costs thereof
shall be borne by the surviving or resulting corporation.

(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled to
appraisal rights. The Court may require the stockholders who have demanded an
appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as to
such stockholder.

(h) After determining the stockholders entitled to an appraisal, the
Court shall appraise the shares, determining their fair value exclusive of any
element of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair rate
of interest, the Court may consider all relevant factors, including the rate of
interest which the surviving or resulting corporation would have had to pay to
borrow money during the pendency of the proceeding. Upon application by the
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion, permit discovery
or other pretrial proceedings and may proceed to trial upon the appraisal prior
to the final determination of the stockholder entitled to an appraisal. Any
stockholder whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has submitted his
certificates of stock to the Register in Chancery, if such is required, may
participate fully in all proceedings until it is finally determined that he is
not entitled to appraisal rights under this section.

(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.

(j) The costs of the proceeding may be determined by the Court and
taxed upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.

(k) From and after the effective date of the merger or consolidation,
no stockholder who has demanded his appraisal rights as provided in subsection
(d) of this section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date of the merger or consolidation); provided,
however, that if no petition for an appraisal shall be filed within the time
provided in subsection (e) of this section, or if such stockholder shall deliver
to the surviving or resulting corporation a written withdrawal of his demand for
an appraisal and an acceptance of the merger or consolidation, either within 60
days after the effective date of the merger or consolidation as provided in
subsection (e) of this section or thereafter with the written approval of the
corporation, then the right of such stockholder to an appraisal shall cease.
Notwithstanding the foregoing, no appraisal proceeding in the Court of Chancery
shall be dismissed as to any stockholder without the approval of the Court, and
such approval may be conditioned upon such terms as the Court deems just.

(l) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation.

B-3
<PAGE> 97
PRELIMINARY PROXY

CUSTOMEDIX CORPORATION

PROXY FOR SPECIAL MEETING OF STOCKHOLDERS TO BE HELD SEPTEMBER 19, 1996

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints BARRY L. KOSOWSKY and MARTIN L.
SCHULMAN, or either of them, as Proxies, each with full power of subtitution,
and hereby authorizes them to represent and vote, as designated below, all
shares of Common Stock of the undersigned in CUSTOMEDIX CORPORATION (the
"Company") at the Special Meeting of Stockholders of the Company to be held at
the Ramada Inn, 275 Research Parkway, Meriden, Connecticut, on Thursday,
September 19, 1996 at 9:00 a.m. EDT, and at any adjournments or postponements
thereof.

(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)

<TABLE>
<S> <C> <C> <C> <C> <C>
PLEASE MARK YOUR THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
/X/ VOTES AS IN THIS PROPOSAL 1.
EXAMPLE.

FOR AGAINST ABSTAIN
1. The authorization and adoption / / / / / /
of the Agreement and Plan of
Merger, dated as of June 10,
1996, between the Company and
CUS Acquisition, Inc.

2. In their discretion, the proxies
are authorized to vote upon such
other matters as may properly
come before the Special Meeting
or any postponement or adjournment
thereof.

THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS. THIS PROXY,
IF PROPERLY EXECUTED, WILL BE VOTED AS
DIRECTED. IN THE ABSENCE OF DIRECTION,
THIS PROXY WILL BE VOTED FOR PROPOSAL 1.

STOCKHOLDERS ARE URGED TO DATE, MARK,
SIGN AND RETURN THIS PROXY PROMPTLY IN
THE ENVELOPE PROVIDED, WHICH REQUIRES
NO POSTAGE IF MAILED WITHIN THE UNITED
STATES.
</TABLE>

SIGNATURES: DATE:
---------------------------------- -------------------------
NOTE: Please sign exactly as name or names appear on stock certificates (as
indicated hereon). Joint owners should each sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as such.