CUSTOMEDIX CORP, PREM14A, 1996-07-02

CUSTOMEDIX CORP
PREM14A, 1996-07-02
DENTAL EQUIPMENT & SUPPLIES

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<PAGE> 1
SCHEDULE 14A (RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT

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

Filed by the Registrant /X/

Filed by a Party other than the Registrant / /

Check the appropriate box:

/X/ Preliminary Proxy Statement

/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))

/ / Definitive Proxy Statement

/ / Definitive Additional Materials

/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12

CUSTOMEDIX CORPORATION
(Name of Registrant as Specified in Its Charter)

Payment of Filing Fee (Check the appropriate box):

/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.

/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).

/X/ Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.

(1) Title of each class of securities to which transaction
applies:
Common Stock, $.01 par value

(2) Aggregate number of securities to which transaction applies:
1,612,594 (a)

(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on
which the filing fee is calculated and state how it was determined):
$2.375 per share (b)

(4) Proposed maximum aggregate value of transaction:
$3,829,910.75 (c)

(5) Total fee paid:
$765.98

/ / Fee paid previously with preliminary materials.

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

(1) Amount Previously Paid:

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

(3) Filing Party:

(4) Date Filed:

Notes:

(a) Aggregate number of securities equals the sum of the number of shares
held by stockholders other than the shares to be held by CUS
Acquisition, Inc.

(b) Determined pursuant to Rule 0-11(c)(1).

(c) For purposes of calculating amount of filing fee only. Maximum
aggregate value of transaction equals the product of the $2.375 per
share price multiplied by the maximum number of shares to which the
transaction applies. The amount of the filing fee calculated in
accordance with Rule 0-11 equals $765.98, which is one-50th of one
percent of the aggregate value of the transaction.
<PAGE> 2

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, 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 and determination
were based on a number of factors more fully 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> 3
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; 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 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.

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 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> 4
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 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 and determination were based on a number of factors more
fully described in this 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 June 30, 1996, 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 15, 1996. The
information herein concerning the Company and its advisors has been furnished
by the Company. The information herein concerning the Buyer 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> 5
PRELIMINARY PROXY

TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
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
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
INDEPENDENT PUBLIC ACCOUNTANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
FEES AND EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
ADDITIONAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
OTHER MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
STOCKHOLDER PROPOSALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
</TABLE>

ANNEXES:
ANNEX A Agreement and Plan of Merger
ANNEX B Section 262 of the Delaware General Corporation Law
<PAGE> 6
PRELIMINARY PROXY

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."

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
<PAGE> 7
PRELIMINARY PROXY

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 June 30, 1996, 3,295,886 shares of Common Stock, held by approximately
2,300 holders of record, were issued and outstanding. As of June 30, 1996, 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 an independent, 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. 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 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, 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 have agreed to use their
best efforts to agree upon and execute, by July 14, 1996, a formal Stipulation
of Settlement (the "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; however,
there can be no assurance that the parties will settle the Stockholder Action or
that the Delaware Chancery Court will approve the proposed settlement. For a
summary of the terms of the Memorandum of Understanding, 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 an independent, non-employee
director of the Company, and 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. 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 and the Memorandum of
Understanding, 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, 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, the independent directors of the Board
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 independent directors, the full
Board 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."

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."

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. Carter Capital was engaged on June 7, 1996, and
completed its analysis prior to the June 10, 1996, Board meeting. In light of
the limited time available, Carter Capital was not asked to provide a 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."

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 and of management of the Company have certain interests
which may present them with potential 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. See "SPECIAL
FACTORS--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 have 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; however,
there can be no assurance that the parties will settle the Stockholder Action or
that the Delaware Chancery Court will approve the proposed settlement. See
"SPECIAL FACTORS--Certain Litigation." 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 should not be
taxable to Dr. Cohen or the Partnership, and the Company, as a party to the
Merger, should 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 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

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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 June 28, 1996, the high and low sales prices of the Common
Stock, as reported on the AMEX, were $2.19 and $2.19, 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
</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 and Dr. Cohen 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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PRELIMINARY PROXY

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> 19
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 June 30, 1996, 3,295,886 shares of Common Stock, held by
approximately 2,300 holders of record, were issued and outstanding. As of June
30, 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.

14
<PAGE> 20
PRELIMINARY PROXY

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.

15
<PAGE> 21
PRELIMINARY PROXY

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 an independent, 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. 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.

16
<PAGE> 22
PRELIMINARY PROXY

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

17
<PAGE> 23
PRELIMINARY PROXY

of plaintiffs' counsel in an amount not to exceed $200,000. Under the terms of
the Memorandum of Understanding, the parties have 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; however, there can be no assurance that the parties will settle
the Stockholder Action or that the Delaware Chancery Court will approve the
proposed settlement. For a summary of the terms of the Memorandum of
Understanding, 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 an independent, 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 on May 8, 1996, and given the terms and conditions of the Memorandum of
Understanding and the role of plaintiffs' counsel in connection with the
settlement described therein as described more fully under "--Certain
Litigation," neither Tucker Anthony nor any other financial advisor has been
asked to deliver an opinion with respect to the fairness of the Merger
Consideration. 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. 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. In addition, the Special
Committee and the Buyer, through their legal advisors, had discussions
regarding, and agreed upon certain revisions to, the Merger Agreement.

18
<PAGE> 24
PRELIMINARY PROXY

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, 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, Robert S. Cooper
and David H. Leigh left the meeting, and the independent 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 independent directors, the full
Board reconvened and was advised of the vote of the independent directors. The
full Board then 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
and of management of the Company have certain interests which may present them
with potential conflicts of interest in connection with the Merger. See
"SPECIAL FACTORS--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, including the following:

(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") prepared by the Special
Committee. The Tucker Anthony Materials appeared

19
<PAGE> 25
PRELIMINARY PROXY

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 prepared an EBITDA analysis which arrived at a
blended multiple for the Company as a whole, by applying 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 the Special Committee's analysis, the
low margin portion of the Company's business would be valued at a
lower multiple than the higher margin portion of the Company's
business. Using this approach, the blended EBITDA multiple for the
Company was 6x, rather than the 8x multiple used by Tucker Anthony.
The Special Committee's analysis was applied to the Company's audited
financial statements for the year ended June 30, 1995. Applying the
6x multiple to determine total enterprise value, the Special Committee
then backed out the Company's funded debt, including the Company's
revolving debt as of March 1996, to determine the Company's equity
value. The Special Committee concluded that the application of a 6x
multiple to the Company's fiscal 1995 financials yielded a valuation
for the Company that supported the Proposal price of $2.375 per share;

(3) an EBITDA analysis performed by the Special Committee
using Tucker Anthony's multiple of 8x for the Company, based on the
Company's actual and estimated fiscal 1996 results as calculated by
Tucker Anthony. The Special Committee concluded that, after backing
out all of the Company's funded debt, including the Company's
revolving debt, this analysis supported the Proposal's offered price
of $2.375 per share.

(4) the Special Committee's belief, based on the analysis
in (2) and (3) 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.
Applying a 7.2x multiple to the Company's actual and estimated fiscal
1996 results also yielded a valuation for the Company that supported
the Proposal price of $2.375 per share;

(5) the Special Committee was aware that the Company had
a significant unfunded pension liability and noted that the Tucker
Anthony analysis failed to back out 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) and (3)

20
<PAGE> 26
PRELIMINARY PROXY

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

(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 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
Special Committee believed this premium was in line with the median
premiums for completed "remaining minority interest" transactions as
set forth in the Tucker Anthony Materials;

(8) the Special Committee reviewed the projections which
had been prepared by Tucker Anthony with input from the Company's
management and included in the Tucker Anthony Materials, and believed
that these projections generally supported the Proposal price of
$2.375 per share; however, the Special Committee took note of the fact
that the projections had been prepared solely for purposes of Tucker
Anthony's analysis and that the Company did not prepare projections of
its future performance or earnings in the ordinary course;

(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 discounted future cash flow analysis. These
analyses resulted in prices ranging from approximately $2.25 per share
to less than $1.75 per share;

(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

21
<PAGE> 27
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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 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 have 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 will approve the terms of the Stipulation of
Settlement contemplated under the Memorandum of Understanding;

(13) 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; and

(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.

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 assets of the Company.

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 and of management of the Company have certain interests, described in this
Proxy Statement under "--Interests of Certain Persons in the Merger" and
"--Certain Relationships and Related Transactions," which may present them with
potential conflicts of interest in connection with the Merger.

The foregoing discussion of factors considered by the Special
Committee and the Board is not intended to be exhaustive. 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 not affiliated with the Buyer; (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.

The Buyer and Dr. Cohen. The Buyer and Dr. Cohen 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 and Dr. Cohen took into
consideration the factors referred to above as having been taken into account by
the Board and the Special Committee. In addition, the Buyer and Dr. Cohen 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, the terms and
conditions of the Memorandum of Understanding, the requirement that the
settlement be approved by the Delaware Chancery Court, 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." The Buyer and Dr. Cohen did not find it practicable to
and did not quantify or otherwise assign relative weights to the specific
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.

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 $1.9575 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 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 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 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.

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.

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.

Carter Capital was engaged on June 7, 1996, and completed its analysis
prior to the June 10, 1996, Board meeting. See "--Background." In light of
the limited time available, Carter Capital was not asked to provide a 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
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." The purpose of the Buyer and Dr. Cohen 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 and Dr. Cohen 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 and Dr. Cohen 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 and Dr. Cohen 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 and Dr. Cohen believe that the elimination of
these expenses under private ownership would benefit the Company.

In addition, the Buyer and Dr. Cohen 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 and Dr. Cohen 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.

The Buyer and Dr. Cohen are of the opinion that the Company will
benefit if 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 its 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 will be

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PRELIMINARY PROXY

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."

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 and of management of the Company at the time of the
approval of the Merger Agreement and the Merger had, and currently have,
certain interests which may present them with potential conflicts of interest
in connection with the Merger. Certain of these matters as they related to the
Merger transaction are discussed below. Certain other of these relationships
are described under "--Certain Relationships and Related Transactions." The
members of the Special Committee and the Board were aware of these potential
conflicts 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%. 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 and Management of the Company. Each of the
directors of the Company owning shares of Common Stock of the Company as of June
30, 1996, 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 Mr. 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.

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 of dental related
composite, porcelain and ceramic products in excess 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 Company's 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; with respect to Mr. Schulman, he has
agreed to enter into a non-competition agreement having a term of 12 years
subsequent to the termination of his employment, conditioned upon his receipt of
all payments which are provided in his 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." Thereafter, the parties to the above actions engaged in
settlement discussions. 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). On June 3, 1996, Dr. Cohen
informed the plaintiffs' attorneys in the Stockholder Action that he was
willing to consider another merger proposal, provided the parties to the
Stockholder Action could reach an agreement-in-principle to settle the
Stockholder Action, and the parties conducted arm's-length negotiations to
settle the Stockholder Action.

The Memorandum of Understanding sets forth the agreement-in-principle
reached by the parties to the Stockholder Action. 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 (the "Settlement"); (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 have 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. However, there can be no assurance that the parties will settle
the Stockholder Action or that the Delaware Chancery Court will approve the
proposed Settlement.

The Memorandum of Understanding provides that the Stipulation of
Settlement will expressly provide, among other things, (i) for the
certification of the Stockholder Action, for settlement purposes only, as a
class action consisting of all record and beneficial holders of Common Stock
from and including February 5, 1996, the date the Original Proposal was
announced, through and including the date of consummation of the Merger
contemplated by the Proposal (the "Class"), and certifying plaintiffs and their
counsel as representative parties of the Class; (ii) for the full, final and
complete discharge, dismissal with prejudice, settlement and release of, and an
injunction barring, all claims which have been, could have been or in the
future can or might be asserted in the Stockholder Action or in any court or
proceeding by or on behalf of plaintiffs and/or any members of the Class, which
have arisen, arise now or may arise in the future out of or relate in any
manner whatsoever to the allegations, facts, events, transactions, occurrences,
acts, representations, misrepresentations, omissions or any other material
cause or thing whatsoever related in any way to any complaint in the
Stockholder Action, the Original Proposal, the Proposal or any agreements or
disclosures relating to the Proposal (collectively, the "Released Claims")
against any of the defendants in the Stockholder Action and all other Released
Persons (as defined in the Memorandum of Understanding); (iii) that defendants
in the Stockholder Action 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 the plaintiffs, the Class or anyone, and that such defendants have
asserted that they are entering into the Memorandum of Understanding solely
because the proposed Settlement would eliminate the distraction, burden and
expense of further litigation; (iv) subject to the order of the Delaware
Chancery Court, pending final determination of whether the Settlement provided
for in the Stipulation of Settlement should be approved, that plaintiffs and
all members of the Class are barred and enjoined from commencing, prosecuting,
instigating or in any way participating in the commencement or prosecution of
any action asserting any Released Claims against the defendants or any other
Released Person; and (v) that defendants shall have the option to terminate the
Settlement if, prior to the effective date of the Settlement, any action is
pending in any state or federal court which raises any Released Claims against
any of the defendants in the Stockholder Action or any of their respective
affiliates or associates.

The Settlement contemplated by the Memorandum of Understanding will
not be binding upon any party until, and is otherwise subject to, (i)
completion by plaintiffs in the Stockholder Action of such documentary
discovery and/or oral depositions as reasonably requested by them, (ii) a
formal Stipulation of Settlement (and other documentation as may be required to
obtain final approval by the Delaware Chancery Court of the Settlement) has
been executed by counsel for the parties to the Stockholder Action, (iii)
consummation of the Merger contemplated by the Proposal, and (iv) final
approval by the Delaware Chancery Court of the Settlement (and the exhaustion
of possible appeals, if any) and the dismissal of the Stockholder Action by the
Delaware Chancery Court with prejudice and without awarding costs to any party
except as provided in the Memorandum of Understanding.

The Memorandum of Understanding will be null and void and of no force
and effect if any of the conditions set forth in the preceding paragraph are
not met or if plaintiffs' counsel determine in good faith that, based upon
discovery pursuant to the Memorandum of Understanding, the proposed Settlement
is not

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fair, reasonable and adequate. In such event, the Memorandum of Understanding
will not be deemed to prejudice the positions of the parties with respect to
the Stockholder Action.

The Memorandum of Understanding provides that the effective date of
the Settlement shall be the date on which the order of the Delaware Chancery
Court approving the Settlement becomes final and no longer subject to appeal or
review.

The Company has agreed to provide notice of the Settlement to the
record owners of Common Stock who are members of the Class, and to bear all
reasonable costs and expenses in connection with providing such notice.

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."

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 holders 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").
The terms of certain portions of the Debt Facility are still being negotiated
and are subject to change, and 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.

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 "--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
May 31, 1996, the Company had recognized expenses of
approximately $162,000 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 June 30, 1996 (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 June
28, 1996, the high and low sales prices for the Common Stock, as reported on
the AMEX, were $2.19 and $2.19, 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
</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 -- -- -- --
</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

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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; in the defense of a suit filed against Jeneric/Pentron by Synspar &
Pentron Dental Products, s.r.l.; 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 June 30, 1996 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 56.05%
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 57.32%
</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 June 30, 1996.

(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:

Jeneric/Pentron has been summoned to appear in court in Italy in
response to litigation filed by Synspar & Pentron Dental Products, s.r.l.
("Synspar") in which money damages are claimed as a result of an alleged breach
by Jeneric/Pentron of a distributorship agreement. Previously, Jeneric/Pentron
obtained by default in the U.S. District Court in Connecticut, a declaratory
judgment against Synspar, to the effect that it has no obligation to Synspar.
The Company intends to contest jurisdiction in Italy and intends vigorously to
contest that it has any obligation to Synspar relating to the alleged
distributorship agreement. The parties are currently engaged in settlement
discussions.

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.

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. 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.

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 and Dr. Cohen 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

69
<PAGE> 75
PRELIMINARY PROXY

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 at the SEC's offices, without
charge, or copies thereof may be obtained from the SEC upon payment of
prescribed rates. 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, and June 10,
1996, respectively.

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 PROPOSALS

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> 78
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> 79
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

2
<PAGE> 80
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.

3
<PAGE> 81
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

4
<PAGE> 82
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.

5
<PAGE> 83
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

6
<PAGE> 84
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

7
<PAGE> 85
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.

8
<PAGE> 86
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

9
<PAGE> 87
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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<PAGE> 88
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

11
<PAGE> 89
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.

12
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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

13
<PAGE> 91
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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<PAGE> 92
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

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<PAGE> 93
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

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<PAGE> 94
PRELIMINARY PROXY

ANNEX B
<PAGE> 95

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> 96

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, the surviving or resulting corporation, either before
the effective date of the merger or consolidation or within 10 days
thereafter, shall notify each of the stockholders entitled to appraisal
rights of the effective date of the merger or consolidation and that
appraisal rights are available for any or all of the shares of the
constituent corporation, and shall include in such notice a copy of this
section. The notice shall be sent by certified or registered mail, return
receipt requested, addressed to the stockholder at his address as it
appears on the records of the corporation. Any stockholder entitled to
appraisal rights may, within 20 days after the date of mailing of the
notice, demand in writing from the surviving or resulting corporation the
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.

(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

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<PAGE> 97

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.

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<PAGE> 98
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.)

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<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.
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SIGNATURES: DATE:
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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.