CUSTOMEDIX CORP, SC 13E3/A, 1996-08-28

CUSTOMEDIX CORP
SC 13E3/A, 1996-08-28
DENTAL EQUIPMENT & SUPPLIES

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

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

AMENDMENT NO. 3

CUSTOMEDIX CORPORATION
(NAME OF THE ISSUER)

CUSTOMEDIX CORPORATION
CUS ACQUISITION, INC.
DR. GORDON S. COHEN

THE COHEN FAMILY TRUST PARTNERSHIP

(NAME OF PERSON(S) FILING STATEMENT)

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

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

<TABLE>

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

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

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

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

(b) / / The filing of a registration statement under the Securities Act of 1933.
(c) / / A tender offer.
(d) / / None of the above.

Check the following box if soliciting materials or information statement
referred to in checking box (a) are preliminary copies: / /

_______________

CALCULATION OF FILING FEE

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

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

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

Amount Previously Paid: $765.98

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

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

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

This Amendment No. 3 amends and restates the Rule 13e-3 Transaction
Statement (the "Statement") which was filed with the Securities and Exchange
Commission (the "Commission") on July 2, 1996, and amended on July 3, 1996, and
August 16, 1996, on behalf of Customedix Corporation, a Delaware corporation
and the issuer of the class of equity securities to which the Statement
relates (the "Company"), CUS Acquisition, Inc., a Delaware corporation (the
"Buyer"), Dr. Gordon S. Cohen and The Cohen Family Trust Partnership, a
Connecticut general partnership (the "Partnership"), and relates to the
Definitive Proxy Statement (the "Proxy Statement") of the Company concerning
the proposed merger (the "Merger") of the Buyer with and into the Company.
Upon consummation of the Merger, each share of Common Stock, par value $.01 per
share (the "Common Stock"), of the Company (other than shares (i) held in the
treasury of the Company, (ii) owned by the Buyer and (iii) held by stockholders
who have not voted in favor of the Merger and who have otherwise properly
exercised their rights for appraisal of such shares in accordance with Section
262 of the Delaware General Corporation Law) will be converted into the right
to receive $2.375 per share in cash, without interest, upon the terms and
subject to the conditions of the Agreement and Plan of Merger, dated as of
June 10, 1996, between the Company and the Buyer (the "Merger Agreement," a
copy of which is included as Annex A to the Proxy Statement which is attached
hereto as Exhibit (d)). This Amendment No. 3 to the Statement is being filed to
incorporate certain changes being made to the Proxy Statement included herewith
as Exhibit (d).

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

<PAGE> 3
CROSS REFERENCE SHEET

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

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

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

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

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

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

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

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

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

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

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

<PAGE> 4

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

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

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

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

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

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

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

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

Item 10(a)........................ "STOCK OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS"

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

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

<PAGE> 5
<TABLE>
<S> <C>
"THE MERGER--Terms of the Merger" and Annex A

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

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

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

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

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

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

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

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

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

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

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

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

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

(e) Not applicable.

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

ITEM 2. IDENTITY AND BACKGROUND.

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

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

ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS.

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

ITEM 4. TERMS OF THE TRANSACTION.

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

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

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

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

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

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

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

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

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

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

ITEM 8. FAIRNESS OF THE TRANSACTION.

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

(f) Not applicable.

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

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

ITEM 10. INTEREST IN SECURITIES OF THE ISSUER.

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

(b) Not applicable.

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

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

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

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

ITEM 13. OTHER PROVISIONS OF THE TRANSACTION.

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

(b) and (c) Not applicable.

ITEM 14. FINANCIAL INFORMATION.

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

(b) Not applicable.

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

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

(b) Not applicable.

7
<PAGE> 9
ITEM 16. ADDITIONAL INFORMATION.

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

ITEM 17. MATERIAL TO BE FILED AS EXHIBITS.

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

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

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

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

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

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

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

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

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

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

(f) None.

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

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

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

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

8
<PAGE> 10
SIGNATURE

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

Dated: August 28, 1996 CUSTOMEDIX CORPORATION

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

9
<PAGE> 11
SIGNATURE

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

Dated: August 28, 1996 CUS ACQUISITION, INC.

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

10
<PAGE> 12
SIGNATURE

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

Dated: August 28, 1996

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

11
<PAGE> 13

SIGNATURE

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

Dated: August 28, 1996 THE COHEN FAMILY TRUST PARTNERSHIP

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

<PAGE> 14
EXHIBIT INDEX

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

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

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

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

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

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

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

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

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

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

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

(f) None.

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

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

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

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

<PAGE> 1

CUSTOMEDIX CORPORATION

August 27, 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 30, 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 The Cohen Family Trust Partnership, a partnership comprised of trusts
established for the benefit of Dr. Cohen and certain members of Dr. Cohen's
family (the "Partnership").

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

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

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

<PAGE> 2

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

CUSTOMEDIX CORPORATION
------------------------

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

TO BE HELD ON SEPTEMBER 30, 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
30, 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 The Cohen Family Trust Partnership, a partnership
comprised of trusts established for the benefit of Dr. Cohen and certain
members of Dr. Cohen's family (the "Partnership"), pursuant to which, among
other things: (i) the Buyer will be merged with and into the Company (the
"Merger"), with the Company continuing as the surviving corporation of the
Merger (the "Surviving Corporation"); and (ii) each share of common stock,
par value $.01 per share (the "Common Stock"), of the Company (other than
shares held in the treasury of the Company, shares owned by the Buyer and
shares held by stockholders who have not voted in favor of the Merger and
who have otherwise properly exercised their rights for appraisal of such
shares in accordance with Section 262 of the Delaware General Corporation
Law (the "DGCL")) will be converted into the right to receive, upon
surrender of the certificate evidencing such share, $2.375 per share in
cash, without interest, all as more fully described in the accompanying
Proxy Statement (the "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 Proxy Statement.

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

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

Under the DGCL, stockholders of the Company have the right to dissent from
the Merger and demand appraisal rights for their shares of Common Stock,
provided that the Merger is consummated and such stockholders comply with the
requirements of Section 262 of the DGCL. See "THE MERGER--Appraisal Rights of
Dissenting Stockholders" in the Proxy Statement, and Annex B thereto, for a
description of the rights of dissenting stockholders and a discussion of the
procedures which must be followed by dissenting stockholders of the Company to
obtain appraisal of their shares of Common Stock.
<PAGE> 4

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

August 27, 1996

<PAGE> 5

CUSTOMEDIX CORPORATION
53 NORTH PLAINS INDUSTRIAL ROAD
WALLINGFORD, CONNECTICUT 06492

PROXY STATEMENT

SPECIAL MEETING OF STOCKHOLDERS TO BE HELD SEPTEMBER 30, 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 30, 1996, at 9:00 a.m., Eastern Daylight Time, at the Ramada Inn, 275
Research Parkway, Meriden, Connecticut, and at any and all adjournments and
postponements thereof (the "Special Meeting").

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

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

THE MEMBERS OF THE SPECIAL COMMITTEE (THE "SPECIAL COMMITTEE") OF THE BOARD
HAVE UNANIMOUSLY RECOMMENDED THAT THE BOARD APPROVE THE MERGER AGREEMENT, AND
THE BOARD HAS UNANIMOUSLY VOTED TO APPROVE THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE MERGER. THE BOARD HAS
DETERMINED THAT THE MERGER IS FAIR TO, AND IN THE BEST INTERESTS OF, THE HOLDERS
OF THE COMMON STOCK (OTHER THAN DR. COHEN AND THE PARTNERSHIP) AND RECOMMENDS
THAT THE STOCKHOLDERS OF THE COMPANY VOTE FOR THE AUTHORIZATION AND ADOPTION OF
THE MERGER AGREEMENT. The Special Committee's recommendation and the Board's
approval, determination and recommendation were based on a number of factors
more fully described in this Proxy Statement. Certain members of the Board have
conflicts of interest in connection with the Board's recommendation, including,
in the case of Dr. Cohen, who voted in favor of the Merger, his continuing
interest in the equity of the Surviving Corporation. Such conflicts of interest
are described in 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 the Record Date, Dr. Cohen and the Partnership owned
approximately 51.07% of the issued and outstanding shares of Common Stock. Dr.
Cohen has voting and dispositive power with respect to the shares of Common
Stock
<PAGE> 6

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 28, 1996. The information
herein concerning the Company and its advisors has been furnished by the
Company. The information herein concerning the Buyer, the Partnership and the
financing to be obtained in connection with the Merger has been furnished by the
Buyer and Dr. Cohen.

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

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

The date of this Proxy Statement is August 27, 1996.

<PAGE> 7

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SUMMARY............................................................................... 1
THE SPECIAL MEETING................................................................... 12
General............................................................................. 12
Purpose; Record Date; Voting at the Special Meeting................................. 12
Votes Required...................................................................... 12
Revocation and Use of Proxies; Solicitation......................................... 13
SPECIAL FACTORS....................................................................... 14
Background.......................................................................... 14
Recommendation of the Board......................................................... 16
Fairness of the Merger.............................................................. 17
Financial Advisors.................................................................. 21
Purpose and Structure of the Transaction; Plans for the Company..................... 25
Certain Effects of the Merger....................................................... 27
Conflicts of Interest; Interests of Certain Persons in the Merger................... 28
Certain Relationships and Related Transactions...................................... 29
Certain Litigation.................................................................. 31
Accounting Treatment................................................................ 35
Certain Tax Consequences of the Merger.............................................. 35
THE MERGER............................................................................ 37
Effective Time of the Merger........................................................ 37
Payment for Shares of Common Stock.................................................. 37
Regulatory Approvals................................................................ 37
Terms of the Merger................................................................. 38
Source and Amount of Funds.......................................................... 41
Appraisal Rights of Dissenting Stockholders......................................... 43
MARKET PRICES; DIVIDENDS.............................................................. 46
CERTAIN TRANSACTIONS IN THE COMMON STOCK.............................................. 47
SELECTED FINANCIAL DATA............................................................... 48
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.......................................................................... 49
STOCK OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS........................... 53
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY....................................... 53
BUSINESS OF THE COMPANY............................................................... 55
General............................................................................. 55
Dental Products..................................................................... 56
Medical Products.................................................................... 57
Marketing........................................................................... 57
Certain Legal Proceedings........................................................... 57
INFORMATION CONCERNING THE BUYER...................................................... 58
INFORMATION CONCERNING THE PARTNERSHIP................................................ 58
INDEPENDENT PUBLIC ACCOUNTANTS........................................................ 59
FEES AND EXPENSES..................................................................... 59
ADDITIONAL INFORMATION................................................................ 60
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE....................................... 60
OTHER MATTERS......................................................................... 60
STOCKHOLDER MEETING................................................................... 61
ANNEXES:
ANNEX A Agreement and Plan of Merger
ANNEX B Section 262 of the Delaware General Corporation Law
</TABLE>

<PAGE> 8

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.

CERTAIN CONFLICTS OF INTEREST AND RISK FACTORS

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

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

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

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

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

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

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

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

1
<PAGE> 9

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 established 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 a managing partner of the
Partnership and has voting and dispositive power with respect to the Common
Stock owned by the Partnership. For a description of the Common Stock owned by
Dr. Cohen and the Partnership, see "STOCK OWNERSHIP OF MANAGEMENT AND CERTAIN
BENEFICIAL OWNERS." The Buyer has no material assets, has no operating history
and has not engaged in any activities except in connection with the Merger
Agreement and the transactions pursuant thereto. Prior to or simultaneously with
the Merger, Dr. Cohen and the Partnership will transfer to the Buyer all of the
shares of Common Stock held by them in exchange for all of the issued and
outstanding common stock of the Buyer. Dr. Cohen and the Partnership will be the
sole stockholders of the Buyer. Upon the consummation of the Merger, the Buyer
will be merged with and into the Company, and the separate corporate existence
of the Buyer will cease. The mailing address of the Buyer's office is 53 North
Plains Industrial Road, Wallingford, Connecticut 06492, and its telephone number
is (203) 269-5534. See "INFORMATION CONCERNING THE BUYER" and "INFORMATION
CONCERNING THE PARTNERSHIP."

The Merger. The Merger Agreement provides that, subject to the adoption of
the Merger Agreement by the Company's stockholders and the satisfaction of
certain conditions contained therein, the Buyer will be merged with and into the
Company. In the Merger, each share of Common Stock (other than shares (i) held
in the treasury of the Company, (ii) owned by the Buyer and (iii) held by
stockholders who have not voted in favor of the Merger and who have otherwise
properly exercised their rights for appraisal of such shares in accordance with
Section 262 of the DGCL) will be converted into the right to receive, upon
surrender of the certificate evidencing such share, the Merger Consideration.
The Company will be the 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 30, 1996, at 9:00 a.m.,
Eastern Daylight Time, at the Ramada Inn, 275 Research Parkway, Meriden,
Connecticut. At the Special Meeting, stockholders of the Company will be asked
to consider and vote upon a proposal to authorize and adopt the Merger
Agreement. The Board has fixed the close of business on August 8, 1996, as the
Record Date for the determination of stockholders entitled to notice of and to
vote at the Special Meeting. Holders of Common Stock are entitled to one vote at
the Special Meeting for each share of Common Stock held of record on the Record
Date. See "THE SPECIAL MEETING -- Purpose; Record Date; Voting at the Special
Meeting."

VOTES REQUIRED

The presence, in person or represented by proxy, of the holders of a
majority of the shares of Common Stock entitled to vote at the Special Meeting
is necessary to constitute a quorum at the Special Meeting. Authorization and
adoption of the Merger Agreement and the Merger require, under Section 251 of
the DGCL, the affirmative vote of the holders of a majority of the shares of
Common Stock outstanding on the Record Date. Only stockholders of record at the
close of business on the Record Date are entitled to notice of and to vote at
the Special Meeting or any and all adjournments and postponements thereof. As of
the Record

2
<PAGE> 10

Date and August 19, 1996, 3,295,886 shares of Common Stock, held by
approximately 2,400 holders of record, were issued and outstanding. As of the
Record Date, Dr. Cohen and the Partnership owned an aggregate of 1,683,292
shares, or approximately 51.07%, of the Common Stock. See "STOCK OWNERSHIP OF
MANAGEMENT AND CERTAIN BENEFICIAL OWNERS." Dr. Cohen has voting and dispositive
power with respect to the shares of Common Stock owned by the Partnership.
Accordingly, Dr. Cohen owns or controls a sufficient number of shares of Common
Stock to cause the Merger Agreement and the Merger to be authorized and adopted
by the stockholders of the Company. SINCE DR. COHEN INTENDS TO VOTE ALL SHARES
OF COMMON STOCK THAT HE OWNS OR CONTROLS IN FAVOR OF THE AUTHORIZATION AND
ADOPTION OF THE MERGER AGREEMENT AND THE MERGER, THE APPROVAL AND ADOPTION OF
THE MERGER AGREEMENT AND THE MERGER BY THE COMPANY'S STOCKHOLDERS ARE ASSURED.
See "THE SPECIAL MEETING -- Votes Required."

BACKGROUND

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

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

3
<PAGE> 11

Dr. Cohen and the Partnership agreed to make a merger proposal to the Company
pursuant to which, subject to the approval of the Merger Agreement by Dr. Cohen,
the Board and the stockholders of the Company, and further subject to the
approval of the settlement of the Delaware Lawsuits by the Delaware Chancery
Court, a corporation to be formed and owned by Dr. Cohen and the Partnership
would be merged with and into the Company, and each share of Common Stock (other
than shares (i) held in the treasury of the Company, (ii) owned by the Buyer and
(iii) held by stockholders who had not voted in favor of the Merger and who had
otherwise properly exercised their rights for appraisal of such shares in
accordance with Section 262 of the DGCL) would be converted into the right to
receive, upon surrender of the certificate evidencing such share, $2.375 per
share in cash, without interest. Under the terms of the Memorandum of
Understanding, the parties agreed to use their best efforts to agree upon and
execute, by July 14, 1996, a formal Stipulation of Settlement and to obtain the
Delaware Chancery Court's approval of a settlement of the Delaware Lawsuits,
which have been consolidated for all purposes (such consolidated action is
referred to in this Proxy Statement as the "Stockholder Action"), upon
substantially the terms set forth in the Memorandum of Understanding. Pursuant
to the Memorandum of Understanding, on July 25, 1996, the parties to the
Stockholder Action, by and through their respective attorneys, entered into a
Stipulation of Settlement, subject to the approval of the Delaware Chancery
Court (the "Stipulation"). For a summary of certain of the terms of the
Memorandum of Understanding and the Stipulation, see "SPECIAL FACTORS -- Certain
Litigation." Consummation of the Merger is conditioned upon, among other things,
settlement of the Stockholder Action upon substantially the terms set forth in
the Memorandum of Understanding and approval of the settlement by the Delaware
Chancery Court. See "THE MERGER -- Terms of the Merger -- Conditions to
Consummation of the Merger."

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

RECOMMENDATION OF THE BOARD; FAIRNESS OF THE MERGER

On June 10, 1996, the Special Committee unanimously determined that the
Proposal was fair to, and in the best interests of, the stockholders of the
Company (other than Dr. Cohen and the Partnership), and unanimously voted to
recommend that the Board accept the Proposal and approve the Merger Agreement
and the Merger. Later on June 10, 1996, at a special meeting of the full Board,
which Dr. Cohen attended (the "June 10, 1996 Board Meeting"), the Special
Committee presented its report with respect to the Proposal and advised the
Board that it had unanimously determined that the Proposal was fair to, and in
the best interests

4
<PAGE> 12

of, the stockholders of the Company (other than Dr. Cohen and the Partnership),
and unanimously recommended that the Board accept the Proposal and approve the
Merger Agreement and the Merger. After the Special Committee's presentation, Dr.
Cohen and Martin L. Schulman (each of whom is an officer of the Company and an
employee of its major subsidiary), and Robert S. Cooper and David H. Leigh (each
of whom is a non-employee director whose employers have business dealings with
the Company) left the meeting. The remaining non-employee directors, Elry C.
Bird, William T. Fitch, Robert N. Thomas and Adraine J. Tom, unanimously
approved the Merger Agreement and the transactions contemplated thereby,
including the Merger, and determined that the Merger is fair to, and in the best
interests of, the holders of the Common Stock (other than Dr. Cohen and the
Partnership). After the vote of these non-employee directors, the full Board,
including Dr. Cohen, adopted the recommendation of the Special Committee as its
own; unanimously approved the Merger Agreement and the Merger; determined that
the Merger is fair to, and in the best interests of, the holders of the Common
Stock (other than Dr. Cohen and the Partnership); and resolved to recommend that
stockholders approve and adopt the Merger Agreement and the Merger. The Merger
Agreement was executed immediately thereafter by the Company and the Buyer, and
a press release was issued announcing the Board's approval of the Merger. See
"SPECIAL FACTORS -- Recommendation of the Board." 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, the Buyer
and the Partnership in reaching their belief with respect to the Merger, see
"SPECIAL FACTORS -- Fairness of the Merger." Certain members of the Board have
conflicts of interest in connection with the Board's recommendation, including,
in the case of Dr. Cohen, who voted in favor of the Merger, his continuing
interest in the equity of the Surviving Corporation. See "SPECIAL
FACTORS -- Conflicts of Interest; Interests of Certain Persons in the Merger"
and "-- Certain Relationships and Related Transactions."

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

FINANCIAL ADVISORS

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

5
<PAGE> 13

fairness of the Proposal price of $2.375 per share, see "SPECIAL
FACTORS -- Background" and "-- Financial Advisors."

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. Management of the
Company and the Buyer and Dr. Cohen believed that certain aspects of the Tucker
Anthony analysis were incorrect and that, as a result, the range of prices
suggested by the Tucker Anthony representative at the May 8, 1996 Meeting did
not present a reasonable valuation of the Company. See "SPECIAL
FACTORS -- Financial Advisors." Carter Capital was engaged on June 7, 1996, for
the limited purpose of assisting the Buyer and Dr. Cohen in analyzing the Tucker
Anthony Materials in preparation for negotiations with the Special Committee and
the Board prior to or at the June 10, 1996 Board Meeting. Carter Capital
reviewed public information with respect to the Company and the Tucker Anthony
Materials to assist the Buyer and Dr. Cohen in determining whether their
concerns regarding the Tucker Anthony analysis were legitimate. Carter Capital
was retained only for the purpose of assisting in the analysis of the Tucker
Anthony Materials, and was not retained to provide an opinion with respect to
the fairness, from a financial point of view, of the Proposal price of $2.375
per share. For a discussion of the analysis conducted by Carter Capital, see
"SPECIAL FACTORS -- Financial Advisors." In light of the limited time available
between its engagement and the June 10, 1996 Board Meeting, Carter Capital was
not asked to provide an oral or written report or an opinion as to the fairness,
from a financial point of view, of the Merger Consideration or to make a
presentation to the Board or the Special Committee. The analysis performed by
Carter Capital is not necessarily the same analysis, or as extensive an
analysis, as it might have performed had more time been available or had it been
engaged to provide a report or an opinion as to the fairness of the Merger
Consideration. See "SPECIAL FACTORS -- Background," "-- Fairness of the Merger"
and "-- Financial Advisors."

CONFLICTS OF INTERESTS; INTERESTS OF CERTAIN PERSONS IN THE MERGER

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

CERTAIN LITIGATION

The Delaware Lawsuits were filed in the Delaware Chancery Court in February
1996. The Delaware Lawsuits have been consolidated for all purposes by agreement
of the parties as the Stockholder Action. The Proposal has been made in
connection with the terms of a Memorandum of Understanding, setting forth an
agreement-in-principle with respect to the settlement of the Stockholder Action.
The settlement contemplated by the Memorandum of Understanding will not be
binding on any party until, and is otherwise subject to, consummation of the
Merger contemplated by the Proposal, final approval by the Delaware Chancery
Court of the settlement (and the exhaustion of possible appeals, if any) and
certain other conditions. Under the terms of the Memorandum of Understanding,
the parties agreed to use their best efforts to agree upon and execute, by July
14, 1996, a Stipulation of Settlement and to obtain approval by the Delaware
Chancery Court of a settlement of the Stockholder Action upon substantially the
terms set forth in the Memorandum of Understanding. Pursuant to the Memorandum
of Understanding, on July 25, 1996, the parties to the Stockholder Action, by
and through their respective attorneys, entered into the Stipulation, subject to
the approval of the Delaware Chancery Court. The Delaware Chancery Court has
scheduled a settlement hearing for August 27, 1996, at 11:00 a.m. However, there
can be no assurance that the Delaware Chancery Court will approve the proposed
settlement. See "SPECIAL FACTORS -- Certain Litigation." Counsel for the

6
<PAGE> 14

plaintiffs in the Stockholder Action are not acting on behalf of the public
stockholders of the Company for the purpose of negotiating the terms of the
Merger. Pursuant to the Stipulation, the parties to the Stockholder Action are
requesting the Delaware Chancery Court to approve the Settlement and adjudge the
terms of the Settlement to be fair, reasonable and adequate; however, the
Delaware Chancery Court will not make a finding, or otherwise determine or
render an opinion, as to the fairness, from a financial point of view, of the
Proposal price of $2.375 per share to be received by the stockholders (other
than Dr. Cohen and the Partnership) upon consummation of the Merger. Under the
terms of the Merger Agreement, the Buyer or the Company may elect not to
consummate the Merger if the Delaware Chancery Court has not approved the
settlement of the Stockholder Action on substantially the terms set forth in the
Memorandum of Understanding, or if other legal proceedings relating to the
Merger are pending. See "THE MERGER -- Terms of the Merger -- Conditions to
Consummation of the Merger."

CERTAIN TAX CONSEQUENCES OF THE MERGER

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

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

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

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

CONDITIONS TO CONSUMMATION OF THE MERGER

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

In addition, the obligation of the Buyer to effect the Merger is also
subject to the fulfillment at or prior to the Effective Time of certain other
conditions, including, among others, the following: the Company's

7
<PAGE> 15

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 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

8
<PAGE> 16

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

DISSENTERS' APPRAISAL RIGHTS

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

MARKET PRICES; DIVIDENDS

The principal market on which the Company's Common Stock is traded is the
American Stock Exchange (the "AMEX") under the symbol CUS. On June 3, 1996, the
last full trading day prior to the press release by the Company announcing
delivery to the Company of the Proposal, the high and low sales prices of the
Common Stock, as reported on the AMEX, were $2.13 and $2.00, respectively. As of
August 23, 1996, the high and low sales prices of the Common Stock, as reported
on the AMEX, were $____ and $____, respectively.

9
<PAGE> 17

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

<TABLE>
<CAPTION>
FISCAL YEAR HIGH LOW
--------------------------------------------------------------- ----- -----
<S> <C> <C>
1994
First Quarter.................................................. $3.00 $2.25
Second Quarter................................................. 2.94 2.25
Third Quarter.................................................. 3.13 2.38
Fourth Quarter................................................. 3.00 2.38
1995
First Quarter.................................................. 4.38 2.31
Second Quarter................................................. 3.56 2.56
Third Quarter.................................................. 3.06 2.38
Fourth Quarter................................................. 3.00 2.25
1996
First Quarter.................................................. 3.25 2.50
Second Quarter................................................. 2.88 1.75
Third Quarter.................................................. 2.25 1.88
Fourth Quarter................................................. 2.25 1.81
1997
First Quarter (through August 23, 1996)........................ ____ ____
</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.

SELECTED FINANCIAL DATA

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

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

10
<PAGE> 18

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.

(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.

11
<PAGE> 19

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 30, 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 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

12
<PAGE> 20

As of August 23, 1996, 3,295,886 shares of Common Stock, held by
approximately 2,400 holders of record, were issued and outstanding. As of the
Record Date, Dr. Cohen and the Partnership owned an aggregate of 1,683,292
shares, or approximately 51.07%, of the 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 Inspector 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.

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.

13
<PAGE> 21

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

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

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

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

14
<PAGE> 22

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

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

In response to the Proposal, the Board reconstituted the Special Committee,
consisting of Robert N. Thomas, as Chairman, William T. Fitch and Adraine J.
Tom, each a non-employee director of the Company, to, among other things,
represent the interests of the unaffiliated stockholders of the Company and take
any and all actions necessary or advisable in connection with the evaluation
and, if appropriate, the approval of the Proposal. The Special Committee
indicated that it intended to continue to engage Brody and Ober, P.C., as

15
<PAGE> 23

legal counsel. As a result of the discussions with Tucker Anthony at the May 8,
1996 Meeting, the Special Committee and the Company understood that any further
consideration by Tucker Anthony as to the fairness of the price offered pursuant
to the Proposal would require the Company to pay an additional $40,000 fee to
Tucker Anthony. Because the Company did not believe this condition to Tucker
Anthony's consideration of an increased offer was consistent with the terms of
Tucker Anthony's engagement, neither the Special Committee nor the Company
desired to ask Tucker Anthony to provide additional services in connection with
the Proposal. In addition, management of the Company, and the Buyer and Dr.
Cohen, believed that certain aspects of the Tucker Anthony analysis were
incorrect and that, as a result, the range of prices suggested by Tucker
Anthony's representative at the May 8, 1996 Meeting did not present a reasonable
valuation of the Company. See "SPECIAL FACTORS -- Financial Advisors." For these
reasons, Tucker Anthony was not asked to provide any services, or to render an
opinion with respect to the fairness of the Merger Consideration, in connection
with the Proposal.

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

RECOMMENDATION OF THE BOARD

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

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

16
<PAGE> 24

approve and adopt the Merger Agreement and the Merger. The Merger Agreement was
executed immediately thereafter by the Company and the Buyer and a press release
was issued announcing the Board's approval of the Merger.

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

FAIRNESS OF THE MERGER

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

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

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

(3) the Special Committee understood that management believed that the
Company's financial results for 1996 would likely be more indicative of the
Company's current valuation than the Company's historical performance.
Based on this information, the Special Committee performed an EBITDA
analysis applying Tucker Anthony's suggested multiple of 8x EBITDA for the
Company, based on the Company's actual and estimated fiscal 1996 results as
calculated by Tucker Anthony. The Tucker Anthony Materials provided an
estimated EBITDA of approximately $1,890,000 for the Company's 1996

17
<PAGE> 25

fiscal year. Applying an 8x multiple to this value yielded an enterprise
value of approximately $15,120,000. The Company's funded debt, including
its revolving credit facility, in the amount of approximately $7,306,000 as
of March 31, 1996, was subtracted from this enterprise value, yielding an
equity valuation of approximately $7,814,000, or a value of approximately
$2.36 per share based on approximately 3,314,000 shares outstanding as
reflected in the Tucker Anthony Materials. The Special Committee believed
that this analysis supported the Proposal price of $2.375 per share;

(4) the Special Committee's belief, based on the analysis in (2)
above, and the fact that the Tucker Anthony Materials reflected a median
multiple of 7.2x EBITDA for "remaining minority interest" transactions
similar to the Proposal, that the 8x multiple used in Tucker Anthony's
EBITDA analysis was unduly high for an entity with the Company's
profitability and revenue growth characteristics. The Tucker Anthony
Materials provided an estimated EBITDA of approximately $1,890,000 for the
Company's 1996 fiscal year. Using an estimate of $1,900,000 as roughly
accurate for computation purposes, the Special Committee applied the median
multiple of 7.2x EBITDA to arrive at an estimated enterprise value of
approximately $13,680,000. The Company's funded debt, including its
revolving credit facility, in the amount of approximately $7,200,000 as of
June 30, 1996, was subtracted from this enterprise value, yielding an
equity valuation for the Company of approximately $6,480,000, or a value of
approximately $1.96 per share based on approximately 3,314,000 shares
outstanding as reflected in the Tucker Anthony Materials. The Special
Committee believed this valuation supported the Proposal price of $2.375
per share;

(5) the Special Committee was aware that the Company had an unfunded
pension liability and noted that the Tucker Anthony analysis failed to
subtract the Company's unfunded pension liability from its EBITDA
calculation. The Special Committee believed this was one of the flaws in
Tucker Anthony's analysis. The Special Committee noted that the Special
Committee's EBITDA analyses described in paragraphs (2), (3) and (4) above,
which subtracted the Company's funded debt from its enterprise value,
supported the Proposal price of $2.375 per share. The Special Committee
believed that, had the Company's unfunded pension liability also been
subtracted from enterprise value in its analyses described in paragraphs
(2), (3) and (4) above, the results would have supported an even lower
equity and per share valuation for the Company;

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

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

(8) the Special Committee reviewed certain projections included in the
Tucker Anthony Materials. These projections were prepared by Tucker
Anthony; at the request of Tucker Anthony, the Company's management
reviewed and commented on drafts of the projections. While the Special
Committee believed that these projections generally supported the Proposal
price of $2.375 per share, the Special Committee had certain reservations
regarding the projections. The Special Committee took note of the fact that
the projections in the Tucker Anthony Materials had been prepared by Tucker
Anthony solely

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<PAGE> 26

for purposes of Tucker Anthony's analysis and that the Company had not
previously prepared projections of its future performance or earnings in
the ordinary course. As a result of these concerns, although the Special
Committee and the Board did not find it practicable to, and did not,
quantify or otherwise assign relative weights to the factors considered in
reaching their determinations, the Special Committee and the Board viewed
the projections as less persuasive than the other factors considered;

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

(10) the fact that the Common Stock is thinly traded, that there is a
limited market for the Common Stock and that, as a result, it is difficult
for the Company's stockholders to sell their shares when they so desire;
and further that a transaction such as the Merger would afford stockholders
the opportunity to receive a price for their shares of Common Stock which
they might not otherwise be able to obtain in market transactions;

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

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

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

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

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

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<PAGE> 27

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

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

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

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

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

The Special Committee, in making its recommendations to the Board, and the
full Board, in making its determination with respect to the Proposal, recognized
that (i) the Merger is not structured to require the approval of a majority of
the unaffiliated stockholders of the Company; (ii) Dr. Cohen owns or controls a
sufficient number of shares of Common Stock to approve and adopt the Merger
Agreement and the Merger without the affirmative vote of any other stockholder
of the Company; (iii) after the Merger, Dr. Cohen and the Partnership would own
the entire equity interest in the Company and the other holders of the Common
Stock would no longer have the opportunity to participate in the future growth
prospects of the Company (see "-- Certain Effects of the Merger"); and (iv)
certain members of the Board have conflicts of interest in connection with the
Board's recommendation, including, in the case of Dr. Cohen, who voted in favor
of the Merger, his continuing interest in the equity of the Surviving
Corporation, and certain members of management of the Company and certain other
individuals have certain interests in the Merger (see "-- Conflicts of Interest;
Interests of Certain Persons in the Merger" and "-- Certain Relationships and
Related Transactions").

In light of the wide variety of factors considered in connection with the
evaluation of the Proposal, the Special Committee and the Board did not find it
practicable to, and did not, quantify or otherwise assign

20
<PAGE> 28

relative weights to the individual factors considered in reaching their
determinations. In addition, individual members of the Special Committee or the
Board may have given different weights to different factors.

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

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

The Buyer, Dr. Cohen and the Partnership. The Buyer, Dr. Cohen and the
Partnership have concluded that the Merger is fair to the stockholders of the
Company (other than Dr. Cohen and the Partnership) and that the $2.375 per share
cash consideration to be received by the stockholders in the Merger is fair to
such holders from a financial point of view. In reaching their conclusion, the
Buyer, Dr. Cohen and the Partnership took into consideration the factors
referred to above as having been taken into account by the Board and the Special
Committee and have adopted as their own the conclusion and analysis of the
Special Committee and the Board. In addition, the Buyer, Dr. Cohen and the
Partnership have considered the measures taken by the Board to ensure the
procedural fairness of the transaction, including the formation of the Special
Committee, the retention of an independent legal advisor by the Special
Committee, and the terms and conditions of the Memorandum of Understanding,
including the requirement that the settlement be approved by the Delaware
Chancery Court, the agreement to provide plaintiffs with access to Company
records and, through depositions, the opportunity to question Dr. Cohen and a
member of the Special Committee with respect to the Proposal, and the
arm's-length nature of the negotiations between both the Special Committee and
the Buyer and plaintiffs' counsel and the Buyer. See "SPECIAL
FACTORS -- Background" and "-- Certain Litigation." The Buyer, Dr. Cohen and the
Partnership did not find it practicable to and did not quantify or otherwise
assign relative weights to the specific factors considered above, including the
factors considered by the Board and the Special Committee.

FINANCIAL ADVISORS

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

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<PAGE> 29

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

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

The Tucker Anthony Materials. The full text of the Tucker Anthony
Materials prepared by Tucker Anthony has been filed as an exhibit to the
Schedule 13E-3. Copies thereof will be made available for inspection and copying
at the 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 Original 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 Original Special Committee in connection
with its analysis of the Original Proposal and the transactions contemplated
thereby and by the Special Committee and the Board in connection with their
analysis of the Proposal and the transactions contemplated thereby.

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<PAGE> 30

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

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

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

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

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

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

- Dentsply and Sybron are two of the largest companies in the
industry (based on the Tucker Anthony Materials, the last twelve
months' net revenues of Dentsply and Sybron were

23
<PAGE> 31

approximately $572 million and $554 million, respectively, compared
to approximately $52 million for the Company). Company management
and the Buyer and Dr. Cohen believed that smaller companies like
the Company would have difficulty competing against either of these
large companies because of their size and influence; and that in
light of their greater size and resources, such large companies
could be expected to trade at higher multiples than the Company,
rendering a financial comparison of the Company to either Dentsply
or Sybron inappropriate.

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

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

(iii) Company management and the Buyer and Dr. Cohen believed that the
Company's actual 1996 performance, which reflects a reduction in
profitability resulting from, among other things, increased expenditures on
research and development, is more indicative of the Company's current
valuation, and its likely valuation for the next several years, than the
1995 historical performance underlying the Tucker Anthony analysis.

The above concerns of management of the Company and the Buyer and Dr. Cohen were
communicated to the Special Committee as part of the negotiations conducted by
the Special Committee and the Buyer and Dr. Cohen between June 4, 1996, and the
June 10, 1996 Board Meeting.

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

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

24
<PAGE> 32

due diligence and documentation; and raising debt and equity capital for
expansion, mergers, acquisitions and recapitalizations.

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

Analysis of Carter Capital. Carter Capital reviewed the Tucker Anthony
Materials and analyzed the information contained therein, and reviewed the
Company's publicly available financial statements and the employment agreements
for Dr. Cohen and Martin L. Schulman. Carter Capital conducted two analyses
based on the Tucker Anthony Materials and the public information available to
it: a leveraged buy-out analysis and a present value analysis of the Company's
future cash flows.

Leveraged Buy-Out Analysis. This analysis is based upon how a
leveraged buy-out investor would value the Company. The Company's 1996
EBITDA of approximately $1,900,000, as reflected in the Tucker Anthony
Materials, was adjusted to account for royalty payments, capital
expenditures and a reduction in executive compensation which a new owner
might seek to achieve, yielding an adjusted cash flow of approximately
$2,400,000. A multiple of 7x or 8x cash flow was considered appropriate
based on multiples frequently applied by financial investors in such
transactions. Using these multiples resulted in enterprise values ranging
from approximately $14,300,000 to $16,300,000. Subtracting the Company's
funded debt and long-term pension obligation and other long-term
liabilities as of March 31, 1996 (approximately $9,000,000 in the
aggregate), from these enterprise values yielded an equity value in the
range of approximately $5,200,000 to $7,200,000, or a range of
approximately $1.58 to $2.20 per share.

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

In light of the limited time available between its engagement and the June
10, 1996 Board Meeting, Carter Capital was not asked to provide an oral or
written report or an opinion as to the fairness, from a financial point of view,
of the Merger Consideration or to make a presentation to the Board or the
Special Committee. 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

25
<PAGE> 33

document that the defendants have denied, and continue to deny, that any of them
have committed or have threatened to commit any violations of law or breaches of
duty to anyone. For a discussion of the factors considered by the Special
Committee and the Board in determining to approve and recommend the Merger
Agreement, and in reaching its conclusion that the Merger is fair to, and in the
best interests of, the holders of the Common Stock (other than Dr. Cohen and the
Partnership), see "-- Fairness of the Merger." Certain members of the Board have
conflicts of interest in connection with the Board's recommendation, including,
in the case of Dr. Cohen, who voted in favor of the Merger, his continuing
interest in the equity of the Surviving Corporation. See "-- Conflicts of
Interest; Interests of Certain Persons in the Merger" and "-- Certain
Relationships and Related Transactions."

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

The Buyer, Dr. Cohen and the Partnership believe that it is in the best
interest of the Company for its ownership to be in the hands of a supportive,
long-term investor group and for its stockholders (other than Dr. Cohen and the
Partnership), many of whom may have shorter term goals with respect to their
holdings of Company stock, to be provided an opportunity to receive a cash
payment for their shares. In light of the limited trading market for the Common
Stock, the Buyer, Dr. Cohen and the Partnership believe that many of the
Company's stockholders who might wish to sell their Common Stock would be
unable, absent the Merger, to sell their stock without causing a material
reduction in the market price of the Common Stock. The Merger has been
structured as a cash merger in order to provide a prompt and orderly transfer of
ownership of the Company to the stockholders of the Buyer, Dr. Cohen and the
Partnership, and to provide the Company's stockholders (other than Dr. Cohen and
the Partnership) with cash for all of their shares of Common Stock.

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

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

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

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

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

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

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

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

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

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

CONFLICTS OF INTEREST; INTERESTS OF CERTAIN PERSONS IN THE MERGER

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

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

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

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

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

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

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

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

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with respect to his services during calendar year 1995 entitling him to receive
25,000 shares of Common Stock. Dr. Cohen's compensation from the Company for the
twelve months ended June 30, 1995, was approximately $574,000; the Company
currently estimates that Dr. Cohen's compensation from the Company for the
twelve months ended June 30, 1996, will be approximately $645,000.

Mr. Schulman's employment agreement (the "Schulman Employment Agreement")
provides for a term of employment ending on December 31, 2002. The Schulman
Employment Agreement provides for maximum annual payments of salary, assuming
all bonuses are earned, aggregating approximately $567,000, subject to reduction
in certain circumstances, through the term thereof. Under the Schulman
Employment Agreement, Mr. Schulman receives, among other benefits, (i) annual
compensation of not less than $291,122 (to be increased annually by the cost of
living adjustment provided generally to all Jeneric/Pentron employees), (ii) an
annual bonus of not less than $26,000, and (iii) an additional annual bonus
equal to 7% of the gross sales by Jeneric/Pentron, or its successors and/or
assigns, of dental related composite, porcelain and ceramic products in excess
of base gross sales of such products in the amount of $1,000,000, but in no
event in excess of $250,000 per annum. Pursuant to the Schulman Employment
Agreement, Mr. Schulman relinquished all rights to receive options for the
purchase of shares of Common Stock of the Company to which he was entitled under
his prior employment agreements with Jeneric/Pentron. The Schulman Employment
Agreement also contains provisions pursuant to which 394,328 shares of the
Common Stock held by Mr. Schulman were purchased by the Company at a price of
$1.50 per share. The purchase price of the shares was paid by delivery of the
Company's subordinated promissory note, which bears interest at 8% per annum
which accrues and is not compounded until principal and interest payments begin
in January 2003. Final maturity of the note is December 31, 2014.

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

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

Leases with Wallingford Property Associates. Jeneric/Pentron is party to
two lease agreements (the "Leases") with Wallingford Property Associates, a
Connecticut general partnership (the "WPA"), with respect to certain property
having an aggregate of approximately 54,000 square feet of rentable space
located at 53 and 125 North Plains Industrial Road, Wallingford, Connecticut.
This space is currently occupied by the Company and Jeneric/Pentron. Dr. Cohen,
an officer and director of the Company and the President, Secretary and sole
director of the Buyer, and Mr. Schulman, an officer and director of the Company,
are the general partners of WPA. The independent directors of the Company have
approved an Amendment and Renewal of the Leases to extend their terms to
December 31, 2006, on substantially the same terms and

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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 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(R) 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 & 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 &
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 & 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").

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

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

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

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

Under the terms of the Memorandum of Understanding, the parties to the
Stockholder Action agreed to use their best efforts to agree upon, execute and
present to the Delaware Chancery Court, on or before July 14, 1996, a
Stipulation of Settlement and other necessary documents to obtain prompt
approval of the settlement and dismissal with prejudice of the Stockholder
Action in the manner contemplated in the Memorandum of Understanding and by the
Stipulation of Settlement. There can be no assurance that the Delaware Chancery
Court will approve the proposed settlement.

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

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

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

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

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

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

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

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

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

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

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<PAGE> 41

Claims"), against any of the defendants in the Stockholder Action and all other
Released Persons (as defined in the Stipulation) are fully, finally and forever
compromised, extinguished, dismissed, discharged and released with prejudice,
subject only to compliance with the Settlement. The Settled Claims do not
include an action to enforce compliance with the terms of the Settlement or to
prosecute properly perfected appraisal rights relating to the Merger pursuant to
Section 262 of the DGCL.

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

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

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

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

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

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

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<PAGE> 42

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

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

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

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.

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.

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<PAGE> 43

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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<PAGE> 44

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 one year 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.

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

REGULATORY APPROVALS

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

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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 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

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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 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

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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.

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 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

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holders of the Common Stock (other than the Buyer) and no amendment may
materially adversely affect the rights of the holders of Common Stock of the
Company (other than a termination of the Merger Agreement pursuant to its
terms).

SOURCE AND AMOUNT OF FUNDS

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

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

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

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

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

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

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

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

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

Termination of the Commitment. The Bank may terminate the Commitment
prior to the loan closing if: (a) the Bank determines that any
representation made in connection with the loan application is false or
incorrect in any material respect; (b) any adverse change develops or is
identified by the Bank with respect to the Buyer or any guarantor or
indemnitor for the loan or with respect to any collateral for

41
<PAGE> 49

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).

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.

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>
<S> <C>
Sources of Funds:
Debt Facility(1)......................................... $3,000,000
Other Funds(2)........................................... 1,195,677
Total Sources of Funds......................... $4,195,677
==========
Uses of Funds:
Purchase of the Shares(3)................................ $3,829,911
Transaction Costs(4)..................................... 365,766
Total Uses of Funds............................ $4,195,677
==========
</TABLE>

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

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

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

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

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

42
<PAGE> 50

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.

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

43
<PAGE> 51

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 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 statement 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

44
<PAGE> 52

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
attorney's 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 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."

45
<PAGE> 53

MARKET PRICES; DIVIDENDS

The principal market on which the Company's Common Stock is traded is the
American Stock Exchange under the symbol CUS. As of June 3, 1996, the last full
trading day prior to the press release by the Company announcing delivery to the
Company of the Proposal, the high and low sales prices of the Common Stock, as
reported on the AMEX, were $2.13 and $2.00, respectively. As of August 23, 1996,
the high and low sales prices for the Common Stock, as reported on the AMEX,
were $ and $ , 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:

<TABLE>
<CAPTION>
FISCAL YEAR HIGH LOW
------------------------------------------------------------- ----- -----
<S> <C> <C>
1994
First Quarter.............................................. $3.00 $2.25
Second Quarter............................................. 2.94 2.25
Third Quarter.............................................. 3.13 2.38
Fourth Quarter............................................. 3.00 2.38
1995
First Quarter.............................................. 4.38 2.31
Second Quarter............................................. 3.56 2.56
Third Quarter.............................................. 3.06 2.38
Fourth Quarter............................................. 3.00 2.25
1996
First Quarter.............................................. 3.25 2.50
Second Quarter............................................. 2.88 1.75
Third Quarter.............................................. 2.25 1.88
Fourth Quarter............................................. 2.25 1.81
1997
First Quarter (through August 23, 1996)....................
</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.

46
<PAGE> 54

CERTAIN TRANSACTIONS IN THE COMMON STOCK

Since July 1, 1994, the Company has repurchased, and Dr. Cohen and the
Partnership have purchased, an aggregate of 546,178 shares of Common Stock at
the times and in the amounts summarized in the following schedule:

<TABLE>
<CAPTION>
RANGE OF
NUMBER OF PER SHARE
SHARES OF PURCHASE PRICES AVERAGE
COMMON STOCK --------------- PER SHARE
FISCAL YEAR PURCHASED HIGH LOW PURCHASE PRICE
---------------------------------------- ------------ ----- ----- --------------
<S> <C> <C> <C> <C>
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(a) 2.75 1.50 1.56
1996
First Quarter......................... 300 2.75 2.75 2.75
Second Quarter........................ -- -- -- --
Third Quarter......................... 100 2.25 2.25 2.25
Fourth Quarter........................ -- -- -- --
1997
First Quarter (through August 23,
1996).............................. -- -- -- --
</TABLE>

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

(a) Includes 394,328 shares purchased by the Company from 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.

47
<PAGE> 55

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:
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.

48
<PAGE> 56

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 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.

49
<PAGE> 57

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.

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.

50
<PAGE> 58

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
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
ended March 31, 1995. 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.

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 rates 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.

51
<PAGE> 59

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

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

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

52
<PAGE> 60

STOCK OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS

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

<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME BENEFICIAL OWNERSHIP(1) PERCENTAGE OF CLASS(2)
--------------------------------------------- ----------------------- ----------------------
<S> <C> <C>
Dr. Gordon S. Cohen(3)....................... 1,847,292 55.42%
53 North Plains Industrial Road
Wallingford, CT 06492
Elry C. Bird(4).............................. 40,792 1.24%
William T. Fitch............................. 1,200 *
All officers and directors as a group (9
persons)................................... 1,889,284 56.68%
</TABLE>

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

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

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

(3) Includes 435,262 shares held by the Partnership, whose partners are trusts
established 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 a 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.

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>

53
<PAGE> 61

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.

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.

54
<PAGE> 62

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):

<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.

55
<PAGE> 63

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:

<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.

56
<PAGE> 64

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
Caesarean section or to allow the birth to proceed normally. Transidyne recently
began 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.

CERTAIN LEGAL PROCEEDINGS

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

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

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

57
<PAGE> 65

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.

Dr. Cohen, the President and Secretary of the Buyer, is the Buyer's sole
officer and director. For information concerning Dr. Cohen's business address,
principal occupation or employment and citizenship, see "DIRECTORS AND EXECUTIVE
OFFICERS OF THE COMPANY."

The Partnership is comprised of trusts established 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 a managing
partner of the Partnership and has voting and dispositive power with respect to
the Common Stock owned by the Partnership. See "INFORMATION CONCERNING THE
PARTNERSHIP." For a description of the Common Stock owned by Dr. Cohen and the
Partnership, see "STOCK OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS."

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

INFORMATION CONCERNING THE PARTNERSHIP

The Partnership is a Connecticut general partnership. The principal
business of the Partnership is to acquire, own, build upon, alter, repair, rent,
lease, sell and otherwise deal with real and personal property. The address of
the Partnership is c/o Dr. Cohen S. Cohen, Trustee, Managing Partner, c/o
Customedix Corporation, 53 North Plains Industrial Road, Wallingford,
Connecticut 06492.

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

58
<PAGE> 66

among Leon Cohen, as grantor, and the trustees, F/B/O Lisa Michelle MacDougald,
formerly known as Lisa Michelle Cohen.

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

INDEPENDENT PUBLIC ACCOUNTANTS

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

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.

59
<PAGE> 67

ADDITIONAL INFORMATION

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

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

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

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

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

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

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

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

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

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

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.

60
<PAGE> 68

STOCKHOLDER MEETING

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

By Order of the Board of Directors

Barry L. Kosowsky
Secretary

Wallingford, Connecticut

August 27, 1996

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<PAGE> 69

ANNEX A
CONFORMED COPY

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

AGREEMENT AND PLAN OF MERGER
BETWEEN
CUSTOMEDIX CORPORATION
AND
CUS ACQUISITION, INC.
DATED AS OF JUNE 10, 1996

------------------------
<PAGE> 70

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.

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

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<PAGE> 71

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 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.

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."

A-2
<PAGE> 72

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 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.

A-3
<PAGE> 73

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 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

A-4
<PAGE> 74

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 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.

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.

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

ARTICLE VI

CONDITIONS OF MERGER

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

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

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

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

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

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

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

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

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

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

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

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

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

A-7
<PAGE> 77

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.

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 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.

A-8
<PAGE> 78

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.

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

A-9
<PAGE> 79

if to Buyer to:

53 N. Plains Industrial Road
Wallingford, Connecticut 06492
Attention: President

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

A-10
<PAGE> 80

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
sec.sec.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> 81

or the sale of all or substantially all of the assets of the corporation. If the
certificate of incorporation contains such a provision, the procedures of this
section, including those set forth in subsections (d) and (e) of this section,
shall apply as nearly as is practicable.

(d) Appraisal rights shall be perfected as follows:

(1) If a proposed merger or consolidation for which appraisal rights
are provided under this section is to be submitted for approval at a
meeting of stockholders, the corporation, not less than 20 days prior to
the meeting, shall notify each of its stockholders who was such on the
record date for such meeting with respect to shares for which appraisal
rights are available pursuant to subsections (b) or (c) hereof that
appraisal rights are available for any or all of the shares of the
constituent corporations, and shall include in such notice a copy of this
section. Each stockholder electing to demand the appraisal of his shares
shall deliver to the corporation, before the taking of the vote on the
merger or consolidation, a written demand for appraisal of his shares. Such
demand will be sufficient if it reasonably informs the corporation of the
identity of the stockholder and that the stockholder intends thereby to
demand the appraisal of his shares. A proxy or vote against the merger or
consolidation shall not constitute such a demand. A stockholder electing to
take such action must do so by a separate written demand as herein
provided. Within 10 days after the effective date of such merger or
consolidation, the surviving or resulting corporation shall notify each
stockholder of each constituent corporation who has complied with this
subsection and has not voted in favor of or consented to the merger or
consolidation of the date that the merger or consolidation has become
effective; or

(2) If the merger or consolidation was approved pursuant to sec.228 or
253 of this title, each constituent corporation, either before the
effective date of the merger or consolidation or within ten days
thereafter, shall notify each of the holders of any class or series of
stock of such constituent corporation who are entitled to appraisal rights
of the approval of the merger or consolidation and that appraisal rights
are available for any or all of the shares of such class or series of stock
of such constituent corporation, and shall include in such notice a copy of
this section, provided that, if the notice is given on or after the
effective date of the merger or consolidation, such notice shall be given
by the surviving or resulting corporation to all such holders of any class
or series of stock of a constituent corporation that are entitled to
appraisal rights. Such notice may, and, if given on or after the effective
date of the merger or consolidation, shall, also notify such stockholders
of the effective date of the merger or consolidation. Any stockholder
entitled to appraisal rights may, within twenty days after the date of
mailing of such notice, demand in writing from the surviving or resulting
corporation the appraisal of such holder's shares. Such demand will be
sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the
appraisal of such holder's shares. If such notice did not notify
stockholders of the effective date of the merger or consolidation, either
(i) each such constituent corporation shall send a second notice before the
effective date of the merger or consolidation notifying each of the holders
of any class or series of stock of such constituent corporation that are
entitled to appraisal rights of the effective date of the merger or
consolidation or (ii) the surviving or resulting corporation shall send
such a second notice to all such holders on or within 10 days after such
effective date; provided, however, that if such second notice is sent more
than 20 days following the sending of the first notice, such second notice
need only be sent to each stockholder who is entitled to appraisal rights
and who has demanded appraisal of such holder's shares in accordance with
this subsection. An affidavit of the secretary or assistant secretary or of
the transfer agent of the corporation that is required to give either
notice that such notice has been given shall, in the absence of fraud, be
prima facie evidence of the facts stated therein. For purposes of
determining the stockholders entitled to receive either notice, each
constituent corporation may fix, in advance, a record date that shall be
not more than 10 days prior to the date the notice is given; provided that,
if the notice is given on or after the effective date of the merger or
consolidation, the record date shall be such effective date. If no record
date is fixed and the notice is given prior to the effective date, the
record date shall be the close of business on the day next preceding the
day on with the notice is given.

(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder who has
complied with subsections (a) and (d) hereof and who is otherwise entitled to
appraisal rights, may file a petition in the Court of Chancery demanding a
determination of the

B-2
<PAGE> 82

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 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.

B-3
<PAGE> 83

(j) The costs of the proceeding may be determined by the Court and
taxed upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.

(k) From and after the effective date of the merger or consolidation,
no stockholder who has demanded his appraisal rights as provided in subsection
(d) of this section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date of the merger or consolidation); provided,
however, that if no petition for an appraisal shall be filed within the time
provided in subsection (e) of this section, or if such stockholder shall deliver
to the surviving or resulting corporation a written withdrawal of his demand for
an appraisal and an acceptance of the merger or consolidation, either within 60
days after the effective date of the merger or consolidation as provided in
subsection (e) of this section or thereafter with the written approval of the
corporation, then the right of such stockholder to an appraisal shall cease.
Notwithstanding the foregoing, no appraisal proceeding in the Court of Chancery
shall be dismissed as to any stockholder without the approval of the Court, and
such approval may be conditioned upon such terms as the Court deems just.

(l) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation.

B-4
<PAGE> 84

CUSTOMEDIX CORPORATION

PROXY FOR SPECIAL MEETING OF STOCKHOLDERS TO BE HELD SEPTEMBER 30, 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 on the reverse
side of this proxy card, all the 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 Monday, September 30, 1996 at 9:00 a.m., EDT, and at any
adjournments or postponements thereof.

(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE.)

<TABLE>
<S> <C> <C> <C> <C> <C>
PLEASE MARK YOUR THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
/X/ VOTE 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,
SIGN AND RETURN THIS PROXY PROMPTLY IN
THE ENVELOPE PROVIDED, WHICH REQUIRES
NO POSTAGE IF MAILED WITHIN THE UNITED
STATES.

SIGNATURE: SIGNATURE IF HELD JOINTLY: DATE:
---------------------------------------- ------------------------------- --------------
</TABLE>

NOTE: Please sign exactly as name appears 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.