BESICORP LTD, DEF 14A, 2000-03-31

BESICORP LTD
DEF 14A, 2000-03-31
COGENERATION SERVICES & SMALL POWER PRODUCERS

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

SCHEDULE 14A
(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. 3)

Filed by the Registrant /X/
Filed by a Party other than the Registrant / /

Check the appropriate box:

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

Besicorp Ltd.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

-------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):

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

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

77,919 shares of common stock
- --------------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:

The value of the transaction is $4,587,316, calculated as follows: the Cash
Merger Consideration for the 77,919 shares of Besicorp Ltd. Common Stock to be
acquired by the Buyer (i.e., all of the shares of Besicorp's common stock
excluding the 57,967 shares of Common Stock owned as of the Record Date (as
defined in the Revised Preliminary Proxy Materials (the "Materials") filed
contemporaneously herewith by the Buyer)) equals the aggregate cash merger
consideration of $X,000,000 divided by 135,086 (the Total Shares (as defined in
the Materials)) multiplied by 77,919. No value is ascribed to the Combined
Deferred Payment Rights, as such term is defined in the Materials.

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

$4,587,316
- --------------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:

$917.44
- --------------------------------------------------------------------------------
5) Total fee paid:

/ / Fee paid previously with preliminary materials:

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

1) Amount previously paid: $917.93

2) Form, Schedule or Registration Statement No.: Schedule 14A-Preliminary
Proxy Statement

3) Filing Party: Besicorp Ltd.

4) Date Filed: December 6, 1999

<PAGE>

BESICORP LTD.
1151 FLATBUSH ROAD
KINGSTON, NEW YORK 12401

March 31, 2000

To Our Shareholders:

You are cordially invited to attend a Special Meeting of Shareholders of
Besicorp Ltd. ("Besicorp") to be held at 10:00 a.m. local time on April 25,
2000 at the offices of Robinson Brog Leinwand Greene Genovese & Gluck, P.C.,
located on the 31st Floor at 1345 Avenue of the Americas, New York, New York.

At this important meeting, you will be asked to consider and vote upon an
Amended and Restated Agreement and Plan of Merger (the "Plan of Merger"), by
and among Besicorp, Besicorp Holdings, Ltd. ("Parent") and Besi Acquisition
Corp. ("Acquisition Corp."), a wholly owned subsidiary of Parent. Michael F.
Zinn, the Chairman of the Board, President and Chief Executive Officer of
Besicorp, and members of his immediate family own Parent.

If the merger (the "Merger") contemplated by the Plan of Merger is
completed, Besicorp will be owned by Parent and you will receive for each share
of Besicorp's Common Stock you own (i) a cash payment and (ii) a right to
deferred cash payments. The cash payment will equal at least $58.87. Deferred
cash payments will be made with respect to the proceeds, if any, Besicorp or,
after the Merger, the surviving corporation from the Merger (the "Surviving
Corporation"), receives with respect to, with certain exceptions, the
following: (a) amounts released from the $6.5 million escrow fund established
in connection with the merger of Besicorp's former parent, Besicorp Group Inc.
("Old Besicorp"), (b) amounts received with respect to the sale of interests of
Besicorp (or the Surviving Corporation) in each of its foreign development
projects pursuant to agreements entered into on or before the first anniversary
of the day the Merger is effectuated (the "Effective Date"), (c) amounts
distributed to Besicorp (or the Surviving Corporation) as a result of
partnerships in existence as of October 7, 1999 or the Effective Date, (d)
amounts distributed as a result of hydro-credits and (e) amounts received with
respect to litigation claims concerning matters arising before the Effective
Date. The exact amount to be received by you in excess of $58.87 per share is
currently not determinable and will not be determinable until after the Merger
and it is possible that the cash payment of $58.87 may be the only
consideration you will receive.

Immediately before the Merger, Besicorp will distribute (the "Spin-Off")
to its shareholders on a pro rata basis all of the shares of common stock of
WOM, Inc. ("WOM"), a subsidiary of Besicorp. WOM will own the interests in a
shareholder derivative action that Besicorp had received from Old Besicorp as a
result of a court order in connection with Old Besicorp's merger last year. We
will send you an Information Statement containing information regarding the
Spin-Off and WOM before the Spin-Off. The Spin-Off does not require your
approval.

See the Proxy Statement and the Plan of Merger for a more detailed
description of the Merger and the Spin-Off. The Plan of Merger is attached as
Annex A to the Proxy Statement.

The Plan of Merger will be adopted only if approved by the Requisite Vote
(as defined in the Plan of Merger) which requires that the holders of at least
50% of the outstanding shares of Besicorp vote in its favor.

THE SPECIAL COMMITTEE (CONSISTING OF THE THREE OUTSIDE (I.E., INDEPENDENT)
DIRECTORS) AND THE BOARD OF DIRECTORS BELIEVE THAT THE MERGER IS FAIR TO, AND
IN THE BEST INTERESTS OF, BESICORP AND ITS SHAREHOLDERS (OTHER THAN PARENT AND
ACQUISITION CORP). THE BOARD OF DIRECTORS (OTHER THAN MR. ZINN, WHO ABSTAINED
BECAUSE HE AND MEMBERS OF HIS IMMEDIATE FAMILY OWN PARENT) HAS ADOPTED THE PLAN
OF MERGER AND RECOMMENDS THAT YOU VOTE FOR THE ADOPTION OF THE PLAN OF MERGER.

Josephthal & Co., Inc., the financial advisor to the Special Committee and
Board of Directors of Besicorp, has delivered a written opinion to the Special
Committee and Board of Directors of Besicorp that as of September 22, 1999 the
consideration to be received by each shareholder of Besicorp (other than Parent
and Acquisition Corp.) in connection with the Merger is fair from a financial
point of view to Besicorp's shareholders (other than Parent and Acquisition
Corp.). You should read a copy of this opinion which is attached as Annex B to
the Proxy Statement.
<PAGE>

The enclosed Proxy Statement contains important information regarding
Besicorp and the proposed Merger. We urge you to read the Proxy Statement
carefully.

Your vote is important. Whether or not you plan to attend the Special
Meeting, please complete, sign and date your proxy card and return it in the
enclosed envelope or by facsimile transmission to Continental Stock Transfer &
Trust Company ("Continental"). To return this card by fax, you must photocopy
both sides of the signed card so that they appear on the same page and fax the
photocopy to Continental at (212) 509-5152, Attn: Proxy Department. If you do
attend, you will be entitled to vote in person, and such vote will revoke your
proxy.

Shares of Besicorp Common Stock represented by properly executed proxies
that do not contain instructions to the contrary will be voted for adoption of
the Plan of Merger.

Sincerely,

/s/ Michael F. Zinn
-----------------------------------
Michael F. Zinn
Chairman of the Board,
President and Chief Executive Officer
<PAGE>

BESICORP LTD.
1151 FLATBUSH ROAD
KINGSTON, NEW YORK 12401

NOTICE IS HEREBY GIVEN that a special meeting of the shareholders (the
"Special Meeting") of Besicorp Ltd., a New York corporation ("Besicorp"), will
be held at the offices of Robinson Brog Leinwand Greene Genovese & Gluck, P.C.,
located on the 31st Floor at 1345 Avenue of the Americas, New York, New York on
April 25, 2000 at 10:00 a.m. (local time) to:

(i) consider and vote upon a proposal to adopt the Amended and Restated
Agreement and Plan of Merger dated as of November 24, 1999 (the "Plan of
Merger") (a copy of which is attached as Annex A to the accompanying Proxy
Statement), by and among Besicorp, Besicorp Holdings, Ltd. ("Parent"), and Besi
Acquisition Corp. ("Acquisition Corp."), a wholly owned subsidiary of Parent,
and

(ii) transact such other business as may properly be brought before the
Special Meeting or any adjournment or postponement thereof.

Michael F. Zinn, the Chairman of the Board, President and Chief Executive
Officer of Besicorp, and members of his immediate family own Parent. As a
result, the Board of Directors appointed a Special Committee consisting of the
three outside independent directors to negotiate with Parent.

THE SPECIAL COMMITTEE AND THE BOARD OF DIRECTORS (OTHER THAN MR. ZINN, WHO
ABSTAINED BECAUSE HE AND MEMBERS OF HIS IMMEDIATE FAMILY OWN PARENT) OF
BESICORP HAVE DETERMINED THAT THE PLAN OF MERGER IS FAIR TO, AND IN THE BEST
INTERESTS OF, BESICORP AND ITS SHAREHOLDERS, OTHER THAN PARENT AND ACQUISITION
CORP., AND THE BOARD OF DIRECTORS RECOMMENDS ADOPTION OF THE PLAN OF MERGER.

All shareholders are cordially invited to attend the Special Meeting. Only
shareholders of record at the close of business on March 6, 2000 are entitled
to notice of and to vote at the Special Meeting or any adjournment thereof. The
Plan of Merger will be adopted only if approved by the Requisite Vote (as
defined in the Plan of Merger) which requires that the holders of at least 50 %
of the outstanding shares of Besicorp vote in its favor. PLEASE COMPLETE, SIGN
AND DATE THE ENCLOSED PROXY CARD AND MAIL IT IN THE ENCLOSED ENVELOPE WHETHER
OR NOT YOU EXPECT TO ATTEND THE SPECIAL MEETING. YOU MAY ALSO RETURN THE PROXY
CARD BY FACSIMILE TRANSMISSION TO CONTINENTAL STOCK TRANSFER & TRUST COMPANY
("CONTINENTAL"). TO RETURN THE CARD BY FAX, YOU MUST PHOTOCOPY BOTH SIDES OF
THE SIGNED PROXY CARD SO THAT THEY APPEAR ON THE SAME PAGE AND FAX THE
PHOTOCOPY TO CONTINENTAL AT (212) 509-5152, Attn: Proxy Department. Shares of
Besicorp Common Stock represented by properly executed proxies that do not
contain instructions to the contrary will be voted for adoption of the Plan of
Merger.

BY ORDER OF THE BOARD OF DIRECTORS

/s/ Michael F. Zinn
---------------------------------------
Michael F. Zinn, Chairman of the Board,
President and Chief Executive Officer

Dated: March 31, 2000
<PAGE>

BESICORP LTD.
1151 FLATBUSH ROAD
KINGSTON, NEW YORK 12401

---------------------
PROXY STATEMENT
FOR
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 25, 2000

---------------------
This Proxy Statement is furnished to the holders of Besicorp Common Stock
in connection with the solicitation of proxies by the Board for use at the
Special Meeting of the shareholders of Besicorp to be held at 10:00 a.m., local
time, on April 25, 2000 at the offices of Robinson Brog Leinwand Greene
Genovese & Gluck, P.C., located on the 31st Floor at 1345 Avenue of the
Americas, New York, New York, and at any adjournment or postponement thereof.
CERTAIN CAPITALIZED TERMS USED IN THIS PROXY STATEMENT ARE DEFINED IN APPENDIX
1 HERETO.

The purpose of the Special Meeting is to consider and vote upon the
adoption of the Plan of Merger (a copy of which is annexed hereto as Annex A)
by and among Besicorp, Parent and Acquisition Corp. Parent is a New York
corporation, all of whose stock is owned beneficially by Michael F. Zinn, the
Chairman of the Board, President and Chief Executive Officer of Besicorp, and
members of his immediate family. Acquisition Corp. is a New York corporation
and a wholly owned subsidiary of Parent. The Plan of Merger provides for the
Merger, in which Acquisition Corp. will be merged with and into Besicorp, with
Besicorp being the Surviving Corporation and wholly owned by Parent. If the
Merger is effectuated, each of Besicorp's shareholders (except for Parent,
Acquisition Corp. and Dissenters) will be entitled to receive for each share of
Besicorp Common Stock owned by such shareholder (i) the Cash Merger
Consideration and (ii) a Combined Deferred Payment Right.

The Cash Merger Consideration is at least $58.87. See "Plan of Merger --
Merger Consideration."

The Combined Deferred Payment Right is the right to receive deferred cash
payments with respect to the proceeds, if any, that Besicorp receives after
October 7, 1999 (i.e., the date of the Initial Plan of Merger), or that the
Surviving Corporation or Continental receives after the Merger, in each case,
with certain exceptions, from the following: (a) amounts released to Besicorp
(or the Surviving Corporation) or pursuant to the Instructions from the Escrow
Fund, other than reimbursements for Litigation Costs and WOM Costs, (b) amounts
received with respect to the sale of the interests of Besicorp (or the
Surviving Corporation) in each of its foreign development projects pursuant to
agreements entered into on or before the first anniversary of the Effective
Date, (c) amounts distributed to Besicorp (or the Surviving Corporation) as a
result of partnerships in existence as of October 7, 1999 or the Effective
Date, (d) amounts distributed as a result of Hydro-Credits and (e) amounts
received with respect to litigation claims concerning matters arising before
the Effective Date. The Combined Deferred Payments are based upon the proceeds,
if any, net of corporate taxes and certain expenses, received by Besicorp (or
the Surviving Corporation) during a period which will end on the Deferred
Payment Termination Date, which is no earlier than March 22, 2004.

The Combined Deferred Payment with respect to each share of Besicorp
Common Stock is the sum of the amounts described in the previous paragraph
divided by the Total Shares (which is expected to be 135,886). Because of the
uncertainty associated with the Combined Deferred Payments, we have not
predicted how much money, if any, will be received as a result of the Combined
Deferred Payment Rights, or, if money is received, when it will be received.
See "Summary -- Merger Consideration" and "Plan of Merger -- Merger
Consideration" for a description of the Combined Deferred Payment Rights.

Because of the uncertainty associated with the Combined Deferred Payment
Right, the exact amount to be received by you in excess of $58.87 per share is
currently not determinable and will not be determinable until after the Merger
and it is possible that the Cash Merger Consideration of $58.87 may be the only
Merger Consideration you will receive. You should base your decision on whether
to adopt the Plan of Merger on a Merger

1
<PAGE>

Consideration of $58.87 per share, although it is probable (but not certain)
that you will receive additional monies on account of the Combined Deferred
Payment. If you think the Merger Consideration is insufficient, you have the
right to have a court determine the cash value of your shares, if the Merger
occurs, provided you follow certain statutory procedures. See "Voting at the
Special Meeting -- Rights of Dissenting Shareholders."

The Merger Consideration payable for each share would decrease if shares
of Besicorp Common Stock were issued prior to the Effective Date. However, we
do not intend to issue any additional shares. If Besicorp issues any additional
shares that would cause the Cash Merger Consideration to be less than $58.87,
we will inform you of the effect of the issuance on the Merger Consideration
prior to the Special Meeting. Accordingly, this Proxy Statement assumes that no
additional shares of Besicorp Common Stock will be issued.

In order to fund its obligations pursuant to the Plan of Merger, including
the payment of the Cash Merger Consideration, Parent intends to borrow
approximately $4.6 million from Avalon Funding, which has been granted the HSBC
Credit Facility by HSBC Bank.. The HSBC Credit Facility is a discretionary line
of credit with a maximum of $10 million principal amount of borrowing. Each
borrowing under the HSBC Credit Facility requires the approval of HSBC Bank and
all borrowings under the HSBC Credit Facility are payable on demand, or in any
event, on December 31, 2000. See "Information Regarding Parent and Acquisition
Corp."

Prior to the consummation of the Merger, Besicorp will distribute to its
shareholders on a pro rata basis all of the shares of WOM Common Stock pursuant
to the Spin-Off. At the time of the Spin-Off WOM will be assigned the interests
in the Bansbach Litigation that Besicorp had received from Old Besicorp as a
result of the Prior Merger Order. See "Spin-Off -- The Contribution." The
Bansbach Litigation is a shareholder derivative action that was commenced in
August 1997 in which Old Besicorp was named as a nominal defendant and the
other named defendants were various officers and directors of Old Besicorp.
Before the Spin-Off, we will send you an Information Statement containing
additional information regarding the Spin-Off and WOM. The Spin-Off does not
require your approval; however, the Spin-Off will not occur unless all the
conditions to the Merger (other than the Spin-Off) have been satisfied or
waived. See "Spin-Off."

The effectuation of the Merger is subject to the satisfaction (or waiver)
of various conditions, including the shareholders' adopting the Plan of Merger
by the Requisite Vote. See "Plan of Merger -- Conditions to the Merger."

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 Besicorp Common Stock is not listed on any Exchange and is not quoted
on NASDAQ or any other automated quotation system. Accordingly, no trading
prices are available. See "Market Information Regarding Besicorp Common Stock."

Based on information provided to us by the Buyer, we have assumed in
preparing this Proxy Statement that no Substitute Restricted Shares will be
issued by Parent and that 13,450 Management Restricted Shares will be
outstanding immediately prior to the Merger.

This Proxy Statement is dated March 31, 2000 and is, along with the
accompanying form of proxy, first being distributed to the shareholders of
Besicorp on or about such date.

2
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AVAILABLE INFORMATION

Besicorp is required by the Exchange Act to file certain reports and
documents with the SEC. These reports and documents may be inspected and copied
at the public reference facilities maintained by the SEC at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and are
available for inspection and copying at the public reference facilities
maintained by the regional offices of the SEC located at 7 World Trade Center,
Suite 1300, New York, New York 10048 and Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such information
can be obtained by mail from the Public Reference Section of the SEC, Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.

The SEC maintains a World Wide Web site that contains reports and
documents regarding Besicorp. The address of the SEC's web site is
http:[\]www.sec.gov.

3
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TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
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<S> <C>
AVAILABLE INFORMATION .................................................. 3

CERTAIN QUESTIONS AND ANSWERS ABOUT VOTING AND THE MERGER .............. 7

SUMMARY ................................................................ 11
THE PARTIES ........................................................... 11
THE SPECIAL MEETING ................................................... 11
MERGER CONSIDERATION .................................................. 11
RECORD DATE; QUORUM; VOTE REQUIRED .................................... 13
BACKGROUND OF THE MERGER .............................................. 14
RECOMMENDATION OF BESICORP'S BOARD OF DIRECTORS AND THE SPECIAL
COMMITTEE ........................................................... 18
OPINION OF FINANCIAL ADVISOR .......................................... 18
INTERESTS OF EXECUTIVE OFFICERS AND DIRECTORS IN THE MERGER ........... 18
CONDITIONS TO THE MERGER .............................................. 20
TERMINATION ........................................................... 21
EFFECTIVE DATE; CANCELLATION OF STOCK CERTIFICATES; AND RECEIPT OF
MERGER CONSIDERATION ................................................ 21
DISSENTERS' RIGHTS .................................................... 21
MATERIAL FEDERAL INCOME TAX CONSEQUENCES .............................. 22
SPIN-OFF .............................................................. 22
TRADING MARKET FOR AND MARKET PRICE OF BESICORP COMMON STOCK .......... 23

VOTING AT THE SPECIAL MEETING .......................................... 23
INTRODUCTION .......................................................... 23
TIME, DATE AND PLACE OF MEETING ....................................... 23
QUORUM ................................................................ 23
RECORD DATE; VOTE REQUIRED ............................................ 23
SOLICITATION, REVOCATION AND USE OF PROXIES ........................... 25
RIGHTS OF DISSENTING SHAREHOLDERS ..................................... 25

FACTORS TO BE CONSIDERED ............................................... 28
PURPOSES, EFFECTS AND BACKGROUND OF THE MERGER ........................ 28
RECOMMENDATION OF THE SPECIAL COMMITTEE AND THE BOARD OF DIRECTORS;
FAIRNESS OF THE MERGER .............................................. 37
RECOMMENDATION OF THE BUYER; FAIRNESS OF THE MERGER ................... 41
OPINION OF FINANCIAL ADVISOR .......................................... 42
REPORTS OF COMMERCIAL ASSOCIATES ...................................... 49
INTERESTS OF EXECUTIVE OFFICERS AND DIRECTORS IN THE MERGER ........... 49
CERTAIN EFFECTS OF THE MERGER ......................................... 53
MATERIAL FEDERAL INCOME TAX CONSEQUENCES .............................. 54
REGULATORY AND OTHER APPROVALS ........................................ 56

PLAN OF MERGER ......................................................... 56
GENERAL ............................................................... 56
MERGER CONSIDERATION .................................................. 57
Cash Merger Consideration ........................................... 57
Combined Deferred Payment Right ..................................... 58
Disputed Shares ..................................................... 63
REPRESENTATIONS AND WARRANTIES ........................................ 64
Representations and Warranties by Besicorp .......................... 64
Representations by Parent and Acquisition Corp. ..................... 64
PRINCIPAL COVENANTS ................................................... 64
Conduct of Business Pending the Merger .............................. 64
Acquisition Proposals ............................................... 65
</TABLE>

4
<PAGE>

<TABLE>
<CAPTION>
<S> <C>
Parent Loans ......................................................... 65
Indemnification ...................................................... 66
Guaranty ............................................................. 67
Spin-Off ............................................................. 67
Other Covenants ...................................................... 67
CONDITIONS TO THE MERGER ............................................... 68
Conditions to Each Party's Obligations ............................... 68
Additional Conditions to Obligations of Besicorp ..................... 68
Additional Conditions to Obligations of Buyer ........................ 68
TERMINATION ............................................................ 69
Right to Terminate ................................................... 69
Remedies ............................................................. 69
Damages .............................................................. 69
SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS ................. 70
FEES AND EXPENSES ...................................................... 70

INDEMNIFICATION AGREEMENT ............................................... 70

ESCROW AGREEMENT ........................................................ 72

SPIN-OFF ................................................................ 73
BACKGROUND ............................................................. 73
THE CONTRIBUTION ....................................................... 74
THE DISTRIBUTION ....................................................... 74
CONDITIONS TO THE SPIN-OFF ............................................. 75

SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA ........................ 76

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS .................................................. 83

BUSINESS OF BESICORP .................................................... 88
BACKGROUND ............................................................. 88
PHOTOVOLTAIC ACTIVITIES ................................................ 88
Suppliers ............................................................ 89
Sales and Distribution ............................................... 89
Prices for Products and Systems ...................................... 89
Customers and Backlog ................................................ 89
Competition .......................................................... 89
POWER DEVELOPMENT ACTIVITIES ........................................... 89
RISKS OF INTERNATIONAL OPERATIONS ...................................... 92
POTENTIAL NON-RECURRING FUNDS .......................................... 92
RESEARCH AND DEVELOPMENT ............................................... 94
INTELLECTUAL PROPERTY .................................................. 94
GOVERNMENT REGULATION AND ENVIRONMENTAL MATTERS ........................ 94
EMPLOYEES .............................................................. 94
PROPERTIES ............................................................. 95
LEGAL PROCEEDINGS ...................................................... 96
CERTAIN RELATED PARTY TRANSACTIONS ..................................... 100
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT ......... 101

MARKET INFORMATION REGARDING BESICORP COMMON STOCK ...................... 102

INFORMATION REGARDING PARENT AND ACQUISITION CORP. ...................... 102
MERGER CONSIDERATION, FEES AND EXPENSES ................................ 102
SOURCE OF FUNDS ........................................................ 103

SOURCES AND USES OF FUNDS ............................................... 103
</TABLE>

5
<PAGE>

<TABLE>
<CAPTION>
<S> <C>
OTHER MATTERS ........................................................................ 103

ANNUAL MEETING OF SHAREHOLDERS ....................................................... 104

INDEPENDENT PUBLIC ACCOUNTANTS ....................................................... 104

ADDITIONAL INFORMATION ............................................................... 104

INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS OF BESICORP LTD ....................... F-1

Appendix 1 -- Certain Defined Terms

Annex A -- Amended and Restated Agreement and Plan of Merger dated November 24, 1999

Annex B -- Fairness Opinion of Josephthal & Co., Inc.

Annex C -- Dissenter's Rights Provisions

</TABLE>

6
<PAGE>

CERTAIN QUESTIONS AND ANSWERS ABOUT VOTING AND THE MERGER

Q. Why am I receiving these materials?

A. We want to give you information to help you determine how to vote in
connection with a Special Meeting of shareholders which will take place on
April 25, 2000 at 10:00 a.m., local time at the offices of Robinson Brog
Leinwand Greene Genovese & Gluck, P.C., located on the 31st Floor at 1345
Avenue of the Americas, New York, New York.

Q. What will be voted on at the meeting?

A. Whether to adopt a Plan of Merger pursuant to which the Buyer will buy
Besicorp.

Q. Who is attempting to buy Besicorp?

A. Besicorp Holdings, Ltd. is attempting to buy Besicorp. Michael F. Zinn, the
Chairman of the Board, President and Chief Executive Officer of Besicorp,
and members of his immediate family beneficially own Besicorp Holdings, Ltd.

Q. What will I receive in the Merger?

A. You will receive for each share of Besicorp Common Stock the Cash Merger
Consideration and a Combined Deferred Payment Right.

Q. What is the Cash Merger Consideration?

A. The Cash Merger Consideration is a cash payment of at least $58.87. See
"Plan of Merger -- Merger Consideration."

Q. What is a Combined Deferred Payment Right?

A. A Combined Deferred Payment Right is the right to receive deferred cash
payments with respect to, with certain exceptions, net of Besicorp's taxes,
the following:

(a) amounts released from the Escrow Fund (which, as of March 7, 2000,
consists of approximately $6.10 million but which will be reduced to the
extent necessary to indemnify BGI Parent, to reimburse Besicorp for
Litigation Costs and to reimburse WOM and Besicorp for WOM Costs);

(b) amounts received with respect to the sale of Besicorp's interests in any
of its foreign development projects pursuant to agreements entered into
on or before the first anniversary of the Effective Date, less
Besicorp's expenses directly related to such foreign development
projects;

(c) distributions to Besicorp from partnerships in existence as of October
7, 1999 (i.e., the date of the Initial Plan of Merger) or the Effective
Date; as of December 31, 1999, the partnerships' principal assets
consist of cash held in escrow (of which Besicorp's share is
approximately $1.47 million);

(d) amounts, net of expenses, distributed as a result of Hydro-Credits; and

(e) amounts received with respect to litigation claims concerning matters
arising before the Effective Date less expenses directly related to any
such claims. See "Plan of Merger -- Merger Consideration."

Q. What is the value of the Combined Deferred Payment Right?

A. The Combined Deferred Payment with respect to each share of Besicorp Common
Stock is the sum of the amounts described above divided by the Total Shares
(which is expected to be 135,886). Because of the uncertainties associated
with the amount of these proceeds, we have not predicted how much the
Combined Deferred Payment Right is worth. See "Plan of Merger -- Merger
Consideration."

Q. If you are not predicting the value of the Combined Deferred Payment Right,
how should I decide whether the Merger Consideration is a fair price for my
shares?

A. It is possible that the Cash Merger Consideration of $58.87 may be the only
Merger Consideration you will receive. Therefore, you should assume that you
will not receive any funds as a result of your Combined

7
<PAGE>

Deferred Payment Rights. As a result, you should base your decision on a
price of $58.87 per share, although it is probable (but not certain) that
you will receive additional money on account of the Combined Deferred
Payment Rights. See "Plan of Merger -- Merger Consideration."

Q. What are the U.S. federal income tax consequences of the Merger to me?

A. Your receipt of cash in exchange for your shares in the Merger generally
will be taxable for U.S. federal income tax purposes in the same manner as
if you sold your shares for such an amount per share in cash. This applies
to both the Cash Merger Consideration and any payments you may receive in
the future as a result of Combined Deferred Payment Rights. For additional
information see "Factors to Be Considered -- Material Federal Income Tax
Consequences" and consult with your tax advisor.

Q. What is the Board's recommendation?

A. The Board recommends that you vote your shares FOR adoption of the Plan of
Merger.

Q. Why is the Board recommending that I vote to adopt the Plan of Merger?

A. The Special Committee of the Board and the Board (except for Mr. Zinn who
abstained because he and members of his immediate family own Parent), based
on a number of factors, including a Fairness Opinion received from
Josephthal, concluded that the Plan of Merger is fair to, and in the best
interests of, Besicorp and the Outside Shareholders. You should review the
background and reasons for the Merger which are described in greater detail
under the captions "Factors to Be Considered -- Purposes, Effects and
Background of the Merger" and "Factors to be Considered -- Recommendation of
the Special Committee and the Board of Directors; Fairness of the Merger."

Q. Can I have my shares valued through a mechanism other than the Merger if I
don't like the Merger Consideration being offered?

A. Yes. You have the right, if the Merger is effectuated, to dissent and to
have the value of your shares determined (i.e. "appraised") by a court and
to have such value paid to you by the Surviving Corporation in cash. If you
want to have your shares appraised, you must carefully follow the statutory
procedure set forth in Sections 623 and 910 of the NYBCL. See "Voting at the
Special Meeting -- Rights of Dissenting Shareholders" and Annex C to this
Proxy Statement.

Q. What do I need to do to have my shares appraised?

A. Among other things, you must:

o submit a Notice of Dissent before a vote is taken on the Merger;

o either abstain, not vote or vote against the Plan of Merger; and

o with the Notice of Dissent or within one month after submitting your
Notice of Dissent, submit your stock certificates to Besicorp or
Continental for the purpose of having a notation affixed to such
Certificates indicating that a demand for payment has been made.

If you want to have your shares appraised, you should read the section
captioned "Voting at the Special Meeting -- Rights of Dissenting
Shareholders" and Annex C to this Proxy Statement and you should consult
your lawyer.

Q. If I exercise my appraisal rights will I also get the Merger Consideration?

A. No, if you exercise your appraisal rights you lose your right to receive
both the Cash Merger Consideration and the Combined Deferred Payment Right.
If a court determines that the appraised value of your shares is less than
the Merger Consideration you will receive the value the court determines,
not the Merger Consideration.

8
<PAGE>

Q. If I exercise my appraisal rights, will there be U.S. federal income tax
consequences to me?

A. Your receipt of cash for your shares generally will be taxable for U.S.
federal income tax purposes in the same manner as if you sold your shares
for such an amount per share in cash. For additional information see
"Factors to Be Considered -- Material Federal Income Tax Consequences" and
consult with your tax advisor.

Q. What is the Spin-Off?

A. The Spin-Off is the distribution to you of one share of WOM Common Stock for
each of your shares of Besicorp Common Stock. If the Plan of Merger is
adopted by the Requisite Vote, and if the Prior Merger Order is still in
effect at such time, the Spin-Off will take place following the Special
Meeting and before the Merger.

Q. What is WOM?

A. WOM is a wholly owned subsidiary of Besicorp. Before the Distribution takes
place, Besicorp will contribute its interests in the Bansbach Litigation
that Besicorp had received from Old Besicorp as a result of the Prior Merger
Order to WOM.

Q. Why is the Spin-Off taking place?

A. The Spin-Off is intended to permit the Bansbach Litigation to proceed
following the Merger. The Bansbach Litigation is a shareholder derivative
action which, if the plaintiff prevails, may result in a payment of
approximately $1 million to Besicorp, excluding interest and punitive
damages. Ordinarily a transaction such as the Merger would make it difficult
or even impossible for the plaintiff to continue his action. The Spin-Off
enables the Bansbach Litigation to continue.

Q. Will there be a vote by the shareholders to approve the Spin-Off?

A. No. However, the Spin-Off will not occur if the shareholders do not adopt
the Plan of Merger.

Q. If I exercise my appraisal rights, will I still get shares of WOM Common
Stock.

A. Yes.

Q. What are the U.S. federal income tax consequences of the Spin-Off to me?

A. You will recognize dividend income equal to the value of the shares of WOM
Common Stock you receive pursuant to the Spin-Off; however, since Besicorp
is valuing the shares of WOM Common Stock at $0.00 per share, you should
recognize no dividend income. Additional information concerning the tax
consequences of the Spin-Off will be provided in the Information Statement
that will be sent you before the Effective Date of the Merger.

Q. Who can vote on adopting the Plan of Merger?

A. All shareholders of record as of the close of business on March 6, 2000.

Q. What does it mean if I receive more than one proxy or voting instruction
card?

A. It probably means your shares are registered differently or are held in more
than one account. If this is the case, you should provide voting
instructions for each proxy card that you receive.

Q. How can I vote shares held in my broker's name?

A. If your broker holds your shares in its name (or in what is commonly called
"street name"), then you should give your broker instructions on how to
vote. Otherwise your shares will not be voted. See "Voting at the Special
Meeting -- Solicitation, Revocation and Use of Proxies."

Q. Can I change my vote?

A. You may change your voting instructions (i.e. your proxy) at any time prior
to the vote at the Special Meeting. If your shares are held directly in your
name, you may change your instructions by completing and

9
<PAGE>

returning a new proxy or by voting at the Special Meeting. If your shares
are held in "street name," you may change your instructions by submitting
new voting instructions to your broker or nominee. See "Voting at the
Special Meeting -- Solicitation, Revocation and Use of Proxies."

Q. What vote is required to adopt the Plan of Merger?

A. For the Plan of Merger to be adopted, two approvals are required. First, at
least 50% of all outstanding shares of Besicorp Common Stock must approve
the Plan of Merger. Second, the Plan of Merger requires a second approval by
at least 50% of all outstanding shares of Besicorp Common Stock; however, in
this second approval the Management Restricted Shares will be retabulated as
if the holders of such shares had abstained, not voted or voted for and
against the Plan of Merger in the same proportions that the shares of
Besicorp Common Stock (other than Management Restricted Shares) are voted
(or not voted) with respect to the Plan of Merger. This special treatment of
the Management Restricted Shares is sometimes referred to as "neutralized
voting." There will be only one vote even though the votes will be tabulated
twice. The Buyer, Michael F. Zinn, and the Trust hold enough shares to
ensure that both approvals are obtained and they have indicated that they
intend to vote in favor of the adoption of the Plan of Merger. See "Voting
at the Special Meeting -- Record Date; Vote Required."

Q. How are the votes counted?

A. You may vote "FOR," "AGAINST" or "ABSTAIN." If you ABSTAIN or do not vote,
it has the same effect as a vote AGAINST the Plan of Merger. If you provide
specific voting instructions, your shares will be voted as you instruct. If
you sign your proxy card or broker voting instruction card with no further
instructions, your shares will be voted in accordance with the
recommendation of the Board.

Q. When will the Merger take place?

A. We expect that the Merger will take place promptly following the Special
Meeting. However, the Merger may be delayed if other closing conditions have
not been then satisfied.

Q. Should I send in my stock certificates now?

A. No. After the Merger is consummated, we will send you written instructions
that will tell you how to surrender your stock certificates for the Merger
Consideration. Please do not send in your certificates now or with your
proxies. Hold your certificates until you receive our instructions. See
"Plan of Merger -- General."

Q. When will I receive the Merger Consideration?

A. If the Merger is consummated, you will receive the Cash Merger Consideration
after you surrender your Certificates. You will receive Deferred Payments
annually each June, commencing in June of 2000, if the monies in the
Deferred Payment Fund at such time amount to at least $90,000. If the amount
is less than $90,000, the Deferred Payment will be deferred until the next
year. In addition, you will receive a Deferred Payment on the Deferred
Payment Termination Date if there are any monies in the Deferred Payment
Fund at such time even if the amount in the Deferred Payment Fund is less
than $90,000. You will receive Escrow Fund Payments as they are distributed
to Continental. We cannot determine for how long you will receive Deferred
Payments and Escrow Fund Payments but you will receive them at least until
March 22, 2004. See "Plan of Merger -- General" and "Plan of Merger --
Merger Consideration."

Q. Will I receive a certificate for my Combined Deferred Payment Right?

A. No, there will be no certificates for Combined Deferred Payment Rights. In
addition, such Payment Rights will not be transferable, except as required
by law. Therefore you will not be able to sell your Combined Deferred
Payment Rights. However, if you die, your Payment Rights may be transferred
to your heirs. See "Plan of Merger -- Merger Consideration."

Q. Will I receive a certificate for my shares of WOM Common Stock?

A. Yes, you will receive a certificate from Continental shortly after the
Spin-Off.

10
<PAGE>

SUMMARY

We are summarizing below certain information contained in this Proxy
Statement (including the annexes). Because this is a summary, it does not
contain all the information that may be important to you. You should read the
entire Proxy Statement and its annexes carefully before you decide whether to
vote your shares in favor of the Plan of Merger. Certain capitalized terms are
defined in Appendix 1 hereto; capitalized terms used without being defined in
Appendix 1 or this Proxy Statement have the meanings ascribed to such terms in
the Plan of Merger.

THE PARTIES

Besicorp Ltd. (or Besicorp), a New York corporation, develops, assembles,
manufactures, markets and resells photovoltaic products and systems and
develops independent power and newspaper recycling plants. Besicorp's principal
executive offices are located at 1151 Flatbush Road, Kingston, New York 12401,
(914) 336-7700. See "Business of Besicorp."

Besicorp Holdings, Ltd. (or Parent) is a New York corporation. Besi
Acquisition Corp. (or Acquisition Corp.) is a New York corporation and a wholly
owned subsidiary of Parent. Parent holds 57,967 shares of Besicorp Common
Stock, representing approximately 42.7% of the issued and outstanding shares of
Besicorp Common Stock. Acquisition Corp. is a transitory, special-purpose
corporation that was formed solely to implement the Merger. Parent and
Acquisition Corp. have not carried on any activities other than (i) activities
relating to their organization, (ii) Parent's receipt of such 57,967 shares of
Besicorp Common Stock and (iii) in connection with the Merger. Approximately
94.5% of the shares of Parent's common stock is owned by Avalon, a limited
liability company, and the remaining approximately 5.5% of the shares of
Parent's common stock is owned by immediate relatives of Michael F. Zinn, who
is the Chairman of the Board, President and Chief Executive Officer of
Besicorp. The only members of Avalon are Mr. Zinn and his wife, Valerie Zinn,
who owns a nominal interest in Avalon. See "Information Regarding Parent and
Acquisition Corp."

THE SPECIAL MEETING

The Special Meeting of the shareholders of Besicorp will be held at 10:00
a.m. (local time) on April 25, 2000, at the offices of Robinson Brog Leinwand
Greene Genovese & Gluck, P.C., located on the 31st Floor at 1345 Avenue of the
Americas, New York, New York.

The Special Meeting will be held to permit you to vote upon a proposal to
adopt the Plan of Merger, a copy of which is attached hereto as Annex A. The
Plan of Merger provides for Parent to acquire Besicorp as a result of the
merger of Acquisition Corp. with and into Besicorp.

MERGER CONSIDERATION

If the Merger is effectuated, each share of Besicorp Common Stock (other
than shares held by the Buyer and Dissenters' Shares) issued and outstanding
immediately prior to the Effective Date will be converted into the right to
receive (i) the Cash Merger Consideration and (ii) one Combined Deferred
Payment Right. The Cash Merger Consideration will be at least $58.87 in cash.
It will increase if shares of Besicorp Common Stock are cancelled prior to the
Effective Date (other than the cancellation of Management Restricted Shares in
connection with the issuance of Substitute Restricted Shares (and the Buyer has
informed us that no Substitute Restricted Shares will be issued and thus no
Substituted Management Restricted Shares will be cancelled). No interest will
be payable on the Cash Merger Consideration.

The Combined Deferred Payment Right is the right to receive Combined
Deferred Payments, which are the Deferred Payments and the Escrow Fund
Payments, in cash with respect to the proceeds, if any, net of corporate taxes,
Besicorp, the Surviving Corporation or Continental receives with respect to,
with certain exceptions, the sum of the five amounts described below, divided
by the Total Shares.

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<PAGE>

The five amounts generally consist of the following:

<TABLE>
<CAPTION>
ELEMENTS OF THE INFORMATION ABOUT
COMBINED DEFERRED PAYMENTS THESE ELEMENTS
- ------------------------------------------------------------------------------------------------------------
<S> <C>
(1) amounts, if any, released from the Escrow Fund The Escrow Fund as of March 7, 2000, consists of
other than amounts released by the Escrow Agent to approximately $6.10 million as a result of the
cover BGI Indemnity Claims, BGI Monitoring release of approximately $583,065 and interest
Costs, Litigation Costs and WOM Costs. income of approximately $187,394 through such
date. In addition, WOM Costs of approximately
$57,526 have been incurred (but not reimbursed
from the Escrow Fund) through February 29, 2000.
All or a portion of such funds will be used to cover
BGI Indemnity Claims, BGI Monitoring Costs,
Litigation Costs and WOM Costs. If Besicorp does
not effectuate the Spin-Off because the Prior Merger
Order is reversed, no WOM Costs would be
incurred and there would most likely be no further
costs associated with the Bansbach Litigation
(assuming that the Bansbach Litigation is dismissed
as a result of the Prior Merger Order being
reversed); as a result, more money would be
available for distribution to Outside Participating
Shareholders as Combined Deferred Payments.
Because we do not know how much of the Escrow
Fund will be used to cover BGI Indemnity Claims,
BGI Monitoring Costs, Litigation Costs and WOM
Costs, we cannot predict how much of the Escrow
Fund will be available for distribution to
shareholders as Combined Deferred Payments.
- ------------------------------------------------------------------------------------------------------------
(2) amounts received with respect to the sale of We have not predicted how much, if any, money
Besicorp's interests in its foreign development will be received with respect to the sale of
projects pursuant to agreements entered into on or Besicorp's interests in its foreign development
before the first anniversary of the Effective Date, projects. The Buyer has informed us that it has no
less certain of Besicorp's expenses incurred and plans to sell any of these interests and there are no
paid following October 7, 1999 (i.e., the date of the discussions at present with any unaffiliated third
Initial Plan of Merger) directly related to such party regarding the sale of these interests.
foreign development projects.
- ------------------------------------------------------------------------------------------------------------
(3) distributions as a result of partnership interests The partnerships' principal assets (excluding the
in existence as of October 7, 1999 or the Effective Anticipated Partnership Distribution) consist of cash
Date (other than the Anticipated Partnership held in escrow to satisfy their potential liabilities.
Distribution). As of December 31, 1999, Besicorp's share of the
escrows is approximately $1.47 million. We have
not predicted how much will be distributed as
Combined Deferred Payments.
- ------------------------------------------------------------------------------------------------------------
</TABLE>

12
<PAGE>

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
<S> <C>
(4) amounts distributed as a result of Hydro- The maximum amount that Besicorp may receive as
Credits (other than the distribution with respect to distributions as a result of Hydro-Credits (excluding
Glen Park Associates scheduled for on or about the distribution Besicorp has received with respect
September 30, 1999, which distribution has been to Glen Park Associates) is approximately $750,000
received), net of certain expenses incurred and paid and it is likely that there will be no expenses, but
following October 7, 1999 directly related to such we have not predicted how much money, if any,
Hydro-Credits distributions. will be distributed as a result of the Hydro-Credits.
- ------------------------------------------------------------------------------------------------------------
(5) amounts received with respect to Besicorp's We have not predicted how much money will be
claims against third parties with respect to matters received with respect to these claims (of which the
arising before the Effective Date, less certain of principal claim is the RICO Action) or how much
Besicorp's expenses incurred and paid following the expenses will be. See "Business of Besicorp --
October 7, 1999 directly related to any such claim Legal Proceedings."
for which amounts have been received.
- ------------------------------------------------------------------------------------------------------------
</TABLE>

See "Plan of Merger -- Merger Consideration." The Combined Deferred Payments
Rights are based upon the proceeds, if any, received by Besicorp on or before
the Deferred Payment Termination Date which will occur on March 22, 2004 (or
later if at that time there still are funds in the Escrow Fund or if the RICO
Action has not been resolved). The Combined Deferred Payment with respect to
each share of Besicorp Common Stock is the sum of the five amounts described
above divided by the Total Shares (which is expected to be 135,886 (if no
shares of Besicorp Common Stock are issued or cancelled prior to the Effective
Date)). Because of the uncertainties regarding the five amounts described
above, we have not estimated how much, if any, money (or when money) will be
received as a result of the Combined Deferred Payment Rights. As a result of
the combined deferred payment provisions, the exact amount to be received by
Besicorp's shareholders in excess of $58.87 per share is currently not
determinable and will not be determinable until after the effectuation of the
Merger. It is possible that the Cash Merger Consideration of $58.87 may be the
only Merger Consideration you will receive. Therefore, you should base your
decision on whether to adopt the Plan of Merger on a price of $58.87 per share,
although it is probable (but not certain) that you will receive additional
monies on account of the Combined Deferred Payment Rights.

The Merger Consideration with respect to the 13,450 Management Restricted
Shares will be held in escrow by the Surviving Corporation as Restricted Merger
Consideration until such time as the Management Restricted Shares would have
vested and to the extent that it is forfeited before it vests will become
property of the Surviving Corporation.

The Buyer will pay approximately $4.6 million as the Cash Merger
Consideration for all of the Outside Participating Shareholders' Shares
(including approximately $800,000 as Restricted Merger Consideration which will
be held in escrow by the Surviving Corporation until it vests, or, to the
extent that such Restricted Merger Consideration is forfeited before it vests,
which will revert to the Surviving Corporation) assuming that (i) no shares of
Besicorp Common Stock are issued or cancelled prior to the Merger and (ii)
there are no Dissenters. This amount may change as described under "Plan of
Merger -- Merger Consideration."

In order to fund its obligations pursuant to the Plan of Merger, including
the payment of the Cash Merger Consideration, Parent intends to borrow
approximately $4.6 million from Avalon Funding, which has been granted the HSBC
Credit Facility by HSBC Bank. The HSBC Credit Facility is a discretionary line
of credit with a maximum of $10 million principal amount of borrowing. Each
borrowing under the HSBC Credit Facility requires the approval of HSBC Bank and
all borrowings under the HSBC Credit Facility are payable on demand, or in any
event, on December 31, 2000. See "Information Regarding Parent and Acquisition
Corp."

RECORD DATE; QUORUM; VOTE REQUIRED

Only holders of record of Besicorp Common Stock as of the close of
business on the Record Date which is March 6, 2000 will be entitled to notice
of and to vote at the Special Meeting. On the Record Date, 135,886 shares of
Besicorp Common Stock were issued and outstanding.

13
<PAGE>

To have a quorum at the Special Meeting the holders of a majority of the
shares of Besicorp Common Stock outstanding on the Record Date must be present
in person or by proxy. Shareholders of record on the Record Date are entitled
to one vote per share on matters which properly come before the Special
Meeting. Abstentions and broker non-votes will have the effect of votes against
the Plan of Merger. Abstentions, but not broker non-votes, will be counted in
determining the presence of a quorum. See "Voting at the Special Meeting --
Quorum" and "Voting at the Special Meeting -- Record Date; Vote Required."

Under the NYBCL, the affirmative vote of holders of at least 50% of the
shares of Besicorp Common Stock outstanding as of the Record Date is required
to adopt the Plan of Merger. In addition, the Plan of Merger contains special
provisions regarding the tabulation of the votes of the Management Restricted
Shares, which were issued to employees and officers (including officers who are
also directors) of Besicorp as of May 3, 1999. To prevent these shares from
affecting the outcome of the vote, the Plan of Merger provides that the shares
of Besicorp Common Stock will be tabulated twice, first, as they actually were
voted and second as they were voted except for the Management Restricted Shares
which will in the second tabulation be tabulated as if the holders of such
shares had abstained, not voted or voted for and against the Plan of Merger in
the same proportions that the shares of Besicorp Common Stock (other than
Management Restricted Shares) are voted (or not voted) with respect to the Plan
of Merger.

As of the Record Date, the Buyer owned 57,967 shares of Besicorp Common
Stock, representing 42.7% of the outstanding shares of Besicorp Common Stock.
The Buyer is required to vote all of its shares of Besicorp Common Stock in
favor of adopting the Plan of Merger. In addition, as of the Record Date, Mr.
Zinn owned 3,000 Management Restricted Shares and the Trust established by Mr.
Zinn owned 10,000 shares of Besicorp Common Stock. Mr. Zinn disclaims
beneficial ownership of the Trust's shares. The trustee for the Trust and Mr.
Zinn have indicated that they intend to vote all of such shares in favor of
adopting the Plan of Merger. Accordingly, if the Buyer, Mr. Zinn and the Trust
vote all of their 70,967 shares in favor of the Plan of Merger, the Plan of
Merger will be adopted even if no other shares vote in favor of adoption of the
Plan of Merger. See "Factors to be Considered -- Interests of Executive
Officers and Directors in the Merger," "Voting at the Special Meeting -- Record
Date; Vote Required" and "Plan of Merger -- Principal Covenants."

If the shareholders do not adopt the Plan of Merger, the Merger, in its
current form, will not be effectuated. See "Plan of Merger -- Conditions to the
Merger."

BACKGROUND OF THE MERGER

Prior to March 22, 1999, Besicorp was a wholly owned subsidiary of Old
Besicorp. Old Besicorp had held ownership interests in five Power Plants which,
pursuant to Power Purchase Agreements, provided capacity and electrical power
to Niagara Mohawk. In October 1995, Niagara Mohawk announced its intention to
renegotiate the Power Purchase Agreements and similar agreements it had with
other independent power producers. As a result of these negotiations, the
Partnerships which owned the Power Plants, Niagara Mohawk and certain other
independent power producers entered into the MRA in July 1997, which became
effective on June 30, 1998, and which provided for, among other things, the
termination or restructuring of the Power Purchase Agreements.

Five months after the consummation of the MRA, Old Besicorp entered into
the Prior Plan of Merger pursuant to which Old Besicorp was acquired by BGI
Parent. The Prior Plan of Merger required the sale of the Power Plants to third
parties, the Prior Contribution of Old Besicorp's photovoltaic and independent
power development businesses to Besicorp and the Prior Distribution of
Besicorp's shares to Old Besicorp's shareholders as a condition to the
effectuation of the Prior Merger. Before March 22, 1999, the sale of the Power
Plants was completed and on March 22, 1999, Old Besicorp effectuated the Prior
Contribution and the Prior Distribution and then Old Besicorp effectuated the
Prior Merger. As a result of the Prior Contribution and Prior Distribution,
Besicorp became an independent publicly held company. The following description
contains historical information about the subsidiaries of Besicorp when they
were subsidiaries of Old Besicorp.

14
<PAGE>

revenues of $5.7 million and $4.4 million, respectively. Therefore, without
additional funds, Besicorp might not be able to pay its obligations as they
became due. The failure of Besicorp to obtain additional funds or otherwise
reduce its short term obligations would materially adversely affect Besicorp
and require it to curtail operations.

Besicorp addressed its liquidity and capital resource problems by reducing
its overhead. Specifically, certain employees were asked to accept salary
deferrals ranging from approximately 15% to 67% of their prior salary effective
as of July 5, 1999. These reductions reduced expenses by approximately $35,000
to $40,000 per month. This stop gap measure, as Management realized at the time
it was implemented, could not eliminate these problems and Besicorp continued
to lose money and its available funds continued to decline. In May, Management
refined its earlier estimate and projected that Besicorp had sufficient funds
to continue operations only until November 30, 1999.

The Board, on May 10, 1999, appointed a Special Committee consisting of
all of the Independent Directors to investigate and obtain information
regarding financing options available to Besicorp, including on the feasibility
of raising money by issuing additional shares or borrowing funds, and other
alternatives such as selling all or a part of Besicorp.

On May 17, 1999 and May 21, 1999, Mr. Zinn sent the Special Committee the
Memoranda in which he indicated that he believed (i) it was very unlikely that
Besicorp would be able to raise capital without significantly diluting the
equity of the existing shareholders or requiring personal guarantees from Mr.
Zinn, which he would not provide, and (ii) the costs of being a public company
were unsustainable. In Mr. Zinn's opinion, the best alternative would be to
sell Besicorp to management for cash, which would enable the shareholders to
immediately realize cash without incurring the risk of an unknown future or the
effects of substantial dilution. In the Memoranda he stated that he was willing
to purchase all of the shares of Besicorp Common Stock for cash and would pay a
25% premium over the $5.5 million value of Besicorp (based on an appraisal of
Besicorp at the time of the Prior Spin-Off) adjusted for cash, excluding the
Escrow Fund.

Because of the informal nature of the Memoranda, the Special Committee did
not view them as constituting a formal offer and the Special Committee so
advised Mr. Zinn.

On June 17, 1999 Mr. Zinn submitted to the Board and the Special Committee
his Initial Offer to acquire Besicorp for approximately $45.46 per share of
Besicorp Common Stock (based on the number of shares then outstanding) in cash.
The Initial Offer valued Besicorp at $6.2 million. In addition under the terms
of the Initial Offer all of the shares of Besicorp Common Stock would receive a
right to participate pro rata in the release of funds from the Escrow Fund. In
his Initial Offer, Mr. Zinn indicated that he believed that Besicorp would be
unable to continue operations, and that its prospects would be extinguished,
without a significant reorganization. He noted that Besicorp's businesses
(i.e., Old Besicorp's Distributed Businesses) had a history of operating
losses, and it was anticipated that Besicorp would continue to experience
operating losses in the indeterminate future. He also noted that Besicorp's
cash reserves were insufficient to fund ongoing operations after November 30,
1999 and that Besicorp's auditors expressed concern as to the ability of
Besicorp to continue as a going concern without an infusion of additional
capital. He indicated that he expected Besicorp to gain various benefits from
his purchase. For example, as Besicorp would only have one shareholder,
Besicorp could deregister from the Exchange Act which would permit Besicorp to
reduce its expenses. Once Besicorp deregistered, it would no longer be required
to prepare annual and quarterly reports, and comply with the proxy solicitation
provisions of the Exchange Act, and would not be required to distribute such
materials to shareholders. Mr. Zinn also noted that access to capital markets
had been severely limited and indicated that he would not guarantee Besicorp's
debt.

15
<PAGE>

funds. Based upon the experiences of Old Besicorp, the Special Committee
suspected that banks, lending institutions and other potential lenders would
require a guarantee by Mr. Zinn in connection with advancing a loan to cover
operating expenses. Mr. Zinn was not willing to act as a guarantor. Therefore,
under the Special Committee's direction, Management contacted a bank to confirm
that lenders would not be willing to consider advancing a loan to cover
operating expenses unless it was guaranteed by Mr. Zinn. In addition,
Management did not believe that any asset-based lender would be interested in
funding the money-losing operations of an entity that did not have significant
assets with which to secure the funding. The Special Committee also considered
that even though Besicorp might be able to raise equity, there was no guarantee
that the proceeds would be sufficient to fund on-going needs. The Special
Committee noted that the photovoltaic business had historically incurred losses
and Management estimated that it was not likely to become profitable before
March 31, 2001. Since independent power development businesses generally
generate significant revenues and profits only after plants become operational,
and all of Besicorp's power project initiatives were in very early stages, it
was, in Management's estimate, unlikely that Besicorp would be profitable
during the next several years. Moreover, since issuing additional shares would
dilute the current shareholders' holdings, the Special Committee recognized
that an equity offering might result in shareholders finding the value of their
shares in the future to be significantly less than what Mr. Zinn was then
offering. The Special Committee also considered whether there would be any
advantage to Besicorp's voluntarily commencing a bankruptcy proceeding, but
decided it would not solve Besicorp's need for additional capital.
Consequently, Besicorp had only two realistic options: liquidation and sale.

Old Besicorp had attempted to sell the Distributed Business before the
Prior Merger as part of a sale of all of Old Besicorp. However, every
prospective purchaser of Old Besicorp except for one had insisted that Old
Besicorp either sell or distribute the Distributed Businesses prior to their
purchasing Old Besicorp. One prospective purchaser had been willing to acquire
the Distributed Businesses together with the rest of Old Besicorp but the terms
were unacceptable. Old Besicorp's limited attempts to sell the Distributed
Businesses without the rest of Old Besicorp proved to be unsuccessful. In
addition, since the Prior Spin-Off, Besicorp had not been able to identify any
potential purchasers (other than Mr. Zinn). Moreover, since Mr. Zinn and the
Trust held approximately 44.9% and 7.4%, respectively of the shares of Besicorp
Common Stock (based on the shares currently outstanding), it was highly
unlikely that the sale of Besicorp, which was likely to require shareholder
approval, could occur without Mr. Zinn's voting in favor of such a sale and Mr.
Zinn had not indicated that he would so vote. In these circumstances,
especially since Besicorp's available cash declined daily and Management
projected that Besicorp's funds were only sufficient to continue operations for
two to six months, the Special Committee could not justify spending substantial
sums in efforts to find another possible purchaser, or deferring consideration
of Mr. Zinn's Initial Offer while waiting to see if another potential purchaser
would emerge.

Shortly after Mr. Zinn submitted his Initial Offer to Besicorp, Besicorp
issued a press release describing the Initial Offer. Besicorp expected the
press release to alert potential purchasers that the Special Committee was
considering offers; by issuing the press release, Besicorp hoped that the
Initial Offer would lead others to make offers to acquire Besicorp. No one then
or subsequently expressed any interest in acquiring Besicorp. Therefore, unless
Besicorp negotiated with Mr. Zinn, Besicorp's only alternative might be
liquidation. The Special Committee decided to negotiate with Mr. Zinn while
continuing to evaluate the other possibilities.

Negotiations between the Special Committee and Mr. Zinn initially focused
on the consideration to be paid for Besicorp. In order for the Special
Committee to be satisfied that a fair and best possible price was being paid,
the Special Committee attempted, with the assistance of Josephthal, to value
Besicorp. However, while it was possible to attempt to value Besicorp's two
principal businesses -- its photovoltaic business and its independent power
development business -- certain residual interests that Besicorp had received
from Old Besicorp pursuant to the Prior Contribution or as a result of the
Prior Merger were difficult to evaluate with any precision since they
represented uncertain amounts of cash that Besicorp might realize in the
future; moreover the receipt of certain of these amounts did not depend upon
on-going activities by Besicorp: instead such monies would be the result of the
efforts of third parties, such as Niagara Mohawk, and the release of monies
held in escrow. Consequently, the parties agreed that additional payments to be
derived from the Escrow Fund and certain other residual interests would be made
after the consummation of the sale to preserve for the shareholders the benefit
from these residual interests.

16
<PAGE>

On August 10, 1999, Mr. Zinn submitted his Revised Offer in which he
offered to increase the amount he would pay for Besicorp, which amount was
based on a valuation of Besicorp of $8 million, which is the amount Parent has
agreed to pay as the Aggregate Cash Merger Consideration pursuant to the Plan
of Merger. This $8 million valuation, after giving effect to his ownership
position in Besicorp (other than his Management Restricted Shares), would
result in a price to be paid by Mr. Zinn of approximately $4.6 million in cash
(including approximately $800,000 as Restricted Merger Consideration which will
be held in escrow by the Surviving Corporation until it vests, or, to the
extent that it is forfeited before it vests, which will revert to the Surviving
Corporation) based on the number of shares currently outstanding.

In his Revised Offer, Mr. Zinn confirmed in writing that he would oppose,
and that the Independent Trustee for the Trust had indicated that the Trust
would oppose, the sale of Besicorp to anyone other than Mr. Zinn. As Mr. Zinn
and the Trust beneficially owned more than 50% of the outstanding shares of
Besicorp Common Stock they would be able to veto a sale of Besicorp. Mr. Zinn
also indicated in the Revised Offer that he would not guarantee any loans "in a
public company," which guarantee lenders were likely to require prior to
lending funds to Besicorp. These statements made it still less likely that
Besicorp would be able to either borrow funds or attract any potential
purchasers other than Mr. Zinn and provided the first written suggestion that
Mr. Zinn would be prepared to guarantee a loan if he acquired Besicorp.

By the time of the Revised Offer, Mr. Zinn had agreed to provide a right
to payments from (1) funds released from the Escrow Fund, (2) recoveries as a
result of Besicorp's litigation claims, (3) certain distributions from
partnerships, and (4) certain distributions as a result of Hydro-Credits.
However, the Special Committee was concerned with the valuation of the foreign
projects and initiatives. Management and the Special Committee had been unable
to obtain current information about the potentially biggest project, the
Krishnapatnam Project, from the partner in charge of its development and some
of the other projects had only been initiated recently and therefore their
prospects were difficult to evaluate. Partners for project initiatives in
Brazil and Mexico were more optimistic about the success of such initiatives
than Management. As a result the parties agreed to provide shareholders with
payments from amounts received from the sale of the foreign development
projects pursuant to agreements entered into within one year of the Effective
Date. In addition, the parties agreed in principal that if a purchase agreement
were signed, the buyer would provide temporary financing for Besicorp. The
parties decided that the purchase would be structured as a merger. The first
draft of an agreement and plan of merger was circulated at the end of August.
The terms of the Initial Plan of Merger were negotiated thereafter.

On September 22, 1999, Josephthal delivered its written opinion to the
Special Committee to the effect that, as of the date of such opinion and based
upon and subject to certain matters stated therein, the Merger Consideration
was fair, from a financial point of view, to the holders of Besicorp Common
Stock (other than the Buyer). See "Factors to be Considered -- Opinion of
Financial Advisor."

On October 7, 1999, a meeting of the Special Committee was held and the
Special Committee decided to recommend adoption of the Initial Plan of Merger.
Immediately afterwards, a meeting of the Board was held. Josephthal made a
presentation of its Fairness Opinion to the Board, the Special Committee
recommended adoption of the Initial Plan of Merger, and then, with Mr. Zinn
abstaining because he and members of his immediate family own Parent, the Board
determined, based upon its discussions, that in light of the current
circumstances and future prospects of Besicorp, the Merger and the Initial Plan
of Merger were fair to and in the best interest of Besicorp and its
shareholders (other than the Buyer). The Board (other than Mr. Zinn, who
abstained because he and members of his immediate family own Parent) adopted
the Initial Plan of Merger. The Initial Plan of Merger was signed on October 7,
1999.

On November 24, 1999, a meeting of the Special Committee was held to
discuss the effects of the Merger on the Bansbach Litigation. In order to
ensure that the Bansbach Litigation was not terminated as a result of the
Merger, the Special Committee decided to recommend a spin-off which would
permit the Bansbach Litigation to continue. The Special Committee then
proceeded to discuss whether the Plan of Merger, which had been previously
circulated and which would supercede the Initial Plan of Merger, was in the
best interest of Besicorp and its shareholders. Based upon its discussions, the
Special Committee determined that in light of the current circumstances and
future prospects of Besicorp, the Merger, the Plan of Merger and the Merger
Consideration were fair to and in the best interest of Besicorp and its
shareholders (other that the Buyer). The Special Committee unanimously
recommended that the Board adopt the Plan of Merger.

17
<PAGE>

Immediately afterwards a meeting of the Board was convened. The Board,
with Mr. Zinn abstaining because he and members of his immediate family own
Parent, decided to effectuate a spin-off and determined, that in light of the
current circumstances and future prospects of Besicorp, the Merger, the Plan of
Merger and the Merger Consideration were fair to and in the best interest of
Besicorp and its shareholders (other that the Buyer). The Board (other than Mr.
Zinn, who abstained because he and members of his immediate family own Parent)
adopted the Plan of Merger. On November 24, 1999 the Plan of Merger was signed.
See "Factors to be Considered -- Purposes, Effects and Background of the
Merger."

RECOMMENDATION OF BESICORP'S BOARD OF DIRECTORS AND THE SPECIAL COMMITTEE

THE SPECIAL COMMITTEE AND THE BOARD OF DIRECTORS OF BESICORP (OTHER THAN
MR. ZINN, WHO ABSTAINED BECAUSE HE AND MEMBERS OF HIS IMMEDIATE FAMILY OWN
PARENT) HAVE DETERMINED THAT THE PLAN OF MERGER IS FAIR TO, AND IN THE BEST
INTERESTS OF, BESICORP AND ITS SHAREHOLDERS (OTHER THAN THE BUYER). THE SPECIAL
COMMITTEE AND THE BOARD OF DIRECTORS OF BESICORP (OTHER THAN MR. ZINN, WHO
ABSTAINED BECAUSE HE AND MEMBERS OF HIS IMMEDIATE FAMILY OWN PARENT) RECOMMEND
ADOPTION OF THE PLAN OF MERGER BY BESICORP'S SHAREHOLDERS. For a discussion of
the factors considered by the Special Committee and the Board in determining to
recommend adoption of the Plan of Merger, see "Factors to be Considered --
Recommendation of the Special Committee and the Board of Directors, Fairness of
the Merger."

In addition, the Buyer and Michael F. Zinn believe that the procedures by
which the Merger was negotiated and the Merger Consideration was determined are
fair to the Outside Participating Shareholders of Besicorp. The Buyer and Mr.
Zinn believe that the Merger, Merger Consideration and Plan of Merger are fair
and in the best interests of, Besicorp's shareholders (other than the Buyer)
and recommends adoption of the Plan of Merger by Besicorp's shareholders. For a
discussion of the factors considered by the Buyer and Mr. Zinn in determining
to recommend adoption of the Plan of Merger, see "Factors to be Considered --
Recommendation of the Buyer; Fairness of the Merger."

OPINION OF FINANCIAL ADVISOR

Josephthal delivered to the Special Committee and the Board a written
Fairness Opinion dated September 22, 1999, to the effect that, as of the date
of such opinion, the Merger Consideration was fair, from a financial point of
view, to the holders of Besicorp Common Stock (other than the Buyer). The full
text of the written Fairness Opinion of Josephthal which sets forth the
assumptions made, matters considered and limitations on the review undertaken,
is attached as Annex B to this Proxy Statement and should be read carefully in
its entirety. THE OPINION OF JOSEPHTHAL IS DIRECTED TO THE SPECIAL COMMITTEE
AND THE BOARD OF DIRECTORS OF BESICORP AND RELATES ONLY TO THE FAIRNESS OF THE
MERGER CONSIDERATION FROM A FINANCIAL POINT OF VIEW, DOES NOT ADDRESS ANY OTHER
ASPECT OF THE MERGER, AND DOES NOT CONSTITUTE A RECOMMENDATION TO SHAREHOLDERS
AS TO HOW TO VOTE AT THE SPECIAL MEETING. A PORTION OF JOSEPHTHAL'S
COMPENSATION IS CONTINGENT UPON THE EFFECTUATION OF THE MERGER. See "Factors to
Be Considered -- Opinion of Financial Advisor."

INTERESTS OF EXECUTIVE OFFICERS AND DIRECTORS IN THE MERGER

No officers or directors will be paid bonuses by Besicorp in connection
with the Merger nor will the consummation of the Merger give rise to any
termination or severance payments. .

Pursuant to the Incentive Plan, Besicorp issued Restricted Shares of
Besicorp Common Stock to its employees, officers and directors. At present,
14,500 Restricted Shares are issued and outstanding, consisting of 13,450
Management Restricted Shares which are held by employees, officers and
directors (but not by Independent Directors), and 1,050 Independent Directors'
Restricted Shares, all of which are held by Independent Directors.

18
<PAGE>

Certain executive officers and directors, including Michael F. Zinn, own 8,575
Management Restricted Shares. See "Business of Besicorp -- Security Ownership
of Certain Beneficial Owners and Management." Besicorp has not granted any
other Rights, including Rights to acquire Restricted Shares, and does not
anticipate granting any Rights between now and the Effective Date.

The following table summarizes the outstanding Restricted Shares, what
will happen to them upon the effectuation of the Merger, when they will vest
and what would happen if any of the Restricted Shares become forfeit prior to
their vesting:

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
What the Holder
Type of Restricted Will Receive at Effect of Post-
Share Time of Merger When it Vests(1) Merger Forfeiture(2)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Independent Directors' Restricted Merger Consideration Upon the occurrence Not applicable
Shares of Merger
- --------------------------------------------------------------------------------------------------------------
Management Restricted Shares. Restricted Merger The Restricted The Restricted
Consideration (which Merger Consideration Merger Consideration
is identical to the will vest according to will become property
Merger Consideration the terms of the of the Surviving
but will be held in issuance of the Corporation(3) (and
escrow until it vests) Management will benefit those
Restricted Shares persons who are
(generally 1/3 on May shareholders at such
2, 2002, 1/3 on May time(4))
2, 2003, and 1/3 on
May 2, 2004)
- --------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Unless the administrator for the Incentive Plan accelerates the vesting (and
such administrator has indicated that it will not accelerate the vesting.

(2) If any Restricted Shares are forfeited and cancelled before the Merger,
assuming no Substitute Restricted Shares are issued in connection with such
cancellation, the per share Merger Consideration will increase. See "Plan of
Merger -- Merger Consideration."

(3) Restricted Merger Consideration will generally be forfeited, to the extent
it has not vested, if the employee entitled to such Merger Consideration
ceases to be employed by the Surviving Corporation.

(4) Presumably, the Surviving Corporation will be a wholly owned subsidiary of
Parent, which will be owned beneficially by Mr. Zinn and members of his
immediate family.

Michael F. Zinn's ownership interest in Besicorp will increase while the
Outside Shareholders' interest will be eliminated as a result of the Merger. At
present Mr. Zinn beneficially owns approximately 44.9% of the shares of
Besicorp. Following the Merger, he and immediate relatives will indirectly own
100% of the stock of the parent of the Surviving Corporation.

Officers and directors of Besicorp, with respect to their ownership of
Management Restricted Shares or the Buyer's shares, may have different federal
income tax consequences resulting from the Merger than the holders of Outside
Participating Shareholders' Shares (other than Management Restricted Shares).
The table below shows these differences:

19
<PAGE>

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
What Holder Will Receive in
Type of Shares Merger Tax Consequences
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
Outside Participating Shareholders' Merger Consideration Taxable event
Shares (other than Management
Restricted Shares), including
Independent Directors' Restricted
Shares
- -------------------------------------------------------------------------------------------------
Dissenters' Shares Appraisal value Taxable event
- -------------------------------------------------------------------------------------------------
Management Restricted Shares Restricted Merger Consideration No taxable event(1)
- -------------------------------------------------------------------------------------------------
Buyer's shares All of Parent's shares of Besicorp No taxable event
Common Stock are cancelled and
Parent's shares of Acquisition
Corp. are converted into all of the
issued and outstanding shares of
the Surviving Corporation
- -------------------------------------------------------------------------------------------------
</TABLE>

- ------------
(1) However, a taxable event is likely to occur upon the vesting of the
Restricted Merger Consideration.

See "Factors to be Considered -- Material Federal Income Tax Consequences."

The Surviving Corporation (and any successor) is required to maintain
officers' and directors' liability insurance covering, among others, the
current officers and directors of Besicorp until the sixth anniversary of the
Effective Date and is required to indemnify such officers and directors for
certain losses they sustain if such insurance is not available throughout such
period. In addition, Mr. Zinn has agreed to guarantee, subject to certain
limitations, the Surviving Corporation's obligations to provide this insurance
and indemnification and in connection with his guaranty he has agreed to put
$100,000 in escrow. See "Plan of Merger -- Principal Covenants --
Indemnification" and "Plan of Merger -- Principal Covenants -- Guaranty."

The effectuation of the Merger ordinarily would adversely affect the
Derivative Litigation pending against certain of Besicorp's officers and
directors; however, by assigning Besicorp's interests in the pending Bansbach
Litigation to WOM pursuant to the Spin-Off, the named plaintiff should be able
to maintain the Bansbach Litigation. The Lichtenberg Litigation is not being
assigned to WOM because the complaint has been dismissed and the dismissal of
such complaint was upheld by the Appellate Division, Third Department. The New
York Court of Appeals, the State of New York's highest court, declined to hear
an appeal of this dismissal.

It is anticipated that the executive officers of Besicorp will serve the
Surviving Corporation in the capacities in which they currently serve Besicorp
and Michael F. Zinn and Frederic Zinn will be named the only directors of the
Surviving Corporation; they may be compensated for the services they render as
employees on behalf of the Surviving Corporation.

It is anticipated that certain of the executive officers of Besicorp will
serve WOM in capacities in which they currently serve Besicorp and that Michael
F. Zinn and Frederic Zinn will be named the only directors of WOM; they will
not be compensated for the services they render on behalf of WOM. Aside from
the foregoing, and the shares of WOM Common Stock that the executive officers
and directors will be entitled to receive in the Spin-Off as holders of
Besicorp Common Stock, the executive officers and directors will receive no
benefits as a result of the Spin-Off.

CONDITIONS TO THE MERGER

Besicorp and the Buyer are obligated to complete the Merger only, if, among
other things, the Plan of Merger is adopted by the shareholders of Besicorp by
the Requisite Vote. The Merger also is subject to other closing conditions,
including the occurrence of the Spin-Off, that may be waived by the parties,
subject to applicable law. Besicorp does not presently intend to waive any such
conditions (except for that requirement that Parent use its best efforts to
enter into agreements with the holders of the Management Restricted Shares
whereby the holders will receive Substitute Restricted Shares in substitution
for their Management Restricted Shares, which condition it has waived) although
it reserves the right to do so. See "Plan of Merger -- Conditions to the
Merger."

20
<PAGE>

TERMINATION

The Plan of Merger may be terminated and the Merger abandoned at any time
prior to the Effective Date by mutual written consent of Besicorp and the
Buyer, or by either Besicorp or the Buyer in certain other circumstances in
accordance with the Plan of Merger. Upon termination of the Plan of Merger,
depending upon the circumstances surrounding the termination, Besicorp may be
obligated to reimburse the Buyer for its Covered Expenses, up to $150,000, and
the Buyer may be obligated to reimburse Besicorp for its Covered Expenses up to
$500,000. See "Plan of Merger -- Termination."

EFFECTIVE DATE; CANCELLATION OF STOCK CERTIFICATES; AND RECEIPT OF
MERGER CONSIDERATION

Under the Plan of Merger, the required filing of a Certificate of Merger
is expected to be made promptly after the satisfaction or waiver of all
conditions to the Merger, including the shareholders' adopting the Plan of
Merger by the Requisite Vote at the Special Meeting. The Merger will be
effective as of the date of filing of the Certificate of Merger with the
Secretary of State of the State of New York in accordance with the NYBCL or at
such later date as provided in such Certificate of Merger.

As a result of the Merger the shares of Besicorp Common Stock (other than
Dissenters' Shares and those held by the Buyer) will be converted into the
right to receive the Merger Consideration. Promptly thereafter, Continental
will notify Besicorp's shareholders (other than the Buyer and Dissenters) of
the effectuation of the Merger and will provide such shareholders with, among
other things, the form of the Letter of Transmittal needed to exchange their
shares of Besicorp Common Stock for the Merger Consideration. DO NOT SURRENDER
YOUR CERTIFICATES OF BESICORP COMMON STOCK UNTIL YOU RECEIVE AND COMPLETE SUCH
LETTER OF TRANSMITTAL.

Shares of Besicorp Common Stock held by the Buyer will be cancelled
without the payment of any Merger Consideration. Dissenters' Shares will not be
converted and instead Dissenters will receive the fair value of such shares
determined in accordance with the appraisal procedure. See "Voting at the
Special Meeting -- Rights of Dissenting Shareholders" and Annex C to this Proxy
Statement. The shares of Acquisition Corp. will be converted into shares of the
Surviving Corporation. See "Plan of Merger -- The Merger."

DISSENTERS' RIGHTS

Sections 623 and 910 of the NYBCL give to any shareholder of record who
wishes to object to the Merger the right to receive the court determined value
of his shares from Besicorp in cash, if the Merger is effectuated. To dissent,
the statutory procedure set forth in Sections 623 and 910 must be carefully
followed. The Dissenters' Shares will not be converted into Merger
Consideration and the Dissenters will only receive the cash to which they are
entitled pursuant to the statutory procedure (but Dissenters will still receive
shares of WOM Common Stock pursuant to the Spin-Off). Among other things,
Dissenters:

o must submit a Notice of Dissent before a vote is taken on the Merger;

o must either abstain, not vote or vote against the Plan of Merger; and

o must submit their Certificates to Besicorp or Continental with the Notice
of Dissent or within one month thereafter for the purpose of having a
notation affixed to such Certificates indicating that a demand for
payment has been made.

Merely abstaining, not voting or voting against the Plan of Merger is
insufficient to satisfy the requirements under the NYBCL regarding the
submission of a Notice of Dissent. Dissenters who vote in favor of adopting the
Plan of Merger will be deemed to have withdrawn their dissent and will receive
the Merger Consideration, not the appraisal value, for their shares. In
addition under the NYBCL if Besicorp fails to institute a special proceeding to
determine the rights of the Dissenters in the period set forth in Section 623,
Dissenters must institute such a special proceeding within 30 days. Besicorp
does not intend to furnish any notifications with respect to any of these
deadlines. However, Besicorp will notify Dissenters of the adoption of the Plan
of Merger by its shareholders within ten days after the date of the Special
Meeting.

21
<PAGE>

WE URGE YOU TO CONTACT YOUR OWN ATTORNEY IF YOU ARE INTERESTED IN
DISSENTING. Beneficial holders who wish to object to the Merger should instruct
their nominees and fiduciaries to dissent on their behalf. See "Voting at the
Special Meeting -- Rights of Dissenting Shareholders" and Annex C to this Proxy
Statement.

MATERIAL FEDERAL INCOME TAX CONSEQUENCES

As a general rule, each Outside Participating Shareholder will recognize
at the time of receipt of the Cash Merger Consideration and Combined Deferred
Payments gain or loss, for federal income tax purposes, in an amount equal to
the difference between the aggregate Cash Merger Consideration (plus payments,
if any, pursuant to Combined Deferred Payment Rights) received by such
shareholder for his or her shares of Besicorp Common Stock (other than
Management Restricted Shares) pursuant to the Merger and the adjusted tax basis
in such shares.

Generally, each Dissenter will recognize at the time of receipt gain or
loss, for federal income tax purposes, in an amount equal to the difference
between the monies he or she receives from Besicorp (as the Surviving
Corporation) for his or her shares of Besicorp Common Stock and the adjusted
tax basis in such shares.

Each holder of Management Restricted Shares will receive Restricted Merger
Consideration, the receipt of which will not be taxed until the Restricted
Merger Consideration vests.

The Merger will not be a taxable event for the Buyer and Michael F. Zinn
(except with respect to the Restricted Merger Consideration received with
respect to his Management Restricted Shares, the receipt of which will not be
taxed until the Restricted Merger Consideration vests).

In addition, holders of Besicorp Common Stock at the Spin-Off Record Date
will receive dividend income equal to the value of the shares of WOM Common
Stock; however, since Besicorp is valuing the shares of WOM Common Stock at
$0.00 per share, holders of Besicorp Common Stock should receive no dividend
income. Additional information concerning the tax consequences of the Spin-Off
will be provided in the Information Statement that will be sent to shareholders
of Besicorp at or about the Effective Date of the Merger.

You should read carefully the discussion under "Factors to Be Considered
- -- Material Federal Income Tax Consequences" and we urge you to consult your
own tax advisors as to the tax consequences to you of the Merger and the
Spin-Off.

SPIN-OFF

Prior to the Merger, Besicorp will assign to WOM the interests in the
Bansbach Litigation that Besicorp had received from Old Besicorp as a result of
the Prior Merger Order. The Bansbach Litigation is a shareholder derivative
action that was commenced in August 1997 in which Old Besicorp was named as a
nominal defendant and the other named defendants were various officers and
directors of Old Besicorp. See "Business of Besicorp -- Legal Proceedings." In
addition, prior to the Merger, Besicorp will authorize the distribution of the
WOM Common Stock to persons who are shareholders of Besicorp as of the Spin-Off
Record Date, which is expected to be the same day as the Effective Date.

Besicorp is effectuating the Spin-Off solely in order to comply with the
intent of the Prior Merger Order (which resulted in the assignment of the
Bansbach Litigation by Old Besicorp to Besicorp so that the Bansbach Litigation
could be maintained following the Prior Merger). The Plan of Merger requires
Besicorp to effectuate the Spin-Off before effectuating the Merger unless a
Prior Merger Order Reversal has occurred by such time. Therefore Besicorp will
effectuate the Spin-Off only if (i) all of the other conditions to the Merger
have then been satisfied or waived and (ii) the Prior Merger Order has not been
reversed.

As part of the Spin-Off, the Escrow Agreement has been amended, effective
as of the Spin-Off Record Date, to permit WOM to receive the WOM Costs.
Therefore, (i) Besicorp will be reimbursed from the Escrow Fund for the cost of
effectuating the Spin-Off, including the expenses of preparing a registration
statement (which will contain an information statement) pursuant to the
Exchange Act, the distribution of an information statement and certificates for
shares of WOM Common Stock and (ii) WOM will be reimbursed from the Escrow Fund
for (1) its reasonable operating expenses (up top $35,000 per year) and (2)
WOM's costs and expenses relating to (a)

22
<PAGE>

the Bansbach Litigation and (b) litigation arising out of or relating to the
Bansbach Litigation, the Spin-Off and WOM's existence. None of these expenses
would be incurred if the Merger were effectuated without Besicorp's
effectuating the Spin-Off. These reimbursements will reduce the monies
available to you as Deferred Payments.

The Information Statement that will be sent to Besicorp's shareholders in
conjunction with the Spin-Off will contain additional information regarding the
Spin-Off and WOM. See "Spin-Off."

TRADING MARKET FOR AND MARKET PRICE OF BESICORP COMMON STOCK

The Besicorp Common Stock is not listed on any Exchange and is not quoted
on NASDAQ or any other automated quotation system. Accordingly, no trading
prices are available. On March 22, 1999, when the shares of Besicorp Common
Stock were distributed to the former holders of Old Besicorp Common Stock in
the Prior Spin-Off, the Besicorp Common Stock was deemed to have a value of
$43.01 per share for the purpose of, among other things, providing cash in lieu
of fractional shares of Besicorp Common Stock. When the Restricted Shares were
issued, which issuance was effective in May, 1999, they were valued at $43.00
per share for financial statement purposes. See "Market Information Regarding
Besicorp Common Stock."

VOTING AT THE SPECIAL MEETING

INTRODUCTION

This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Besicorp for the Special Meeting. At the
Special Meeting, you will be asked to consider and vote on a proposal to adopt
the Plan of Merger.

TIME, DATE AND PLACE OF MEETING

The Special Meeting will be held at 10:00 a.m. (local time) on April 25,
2000 at the offices of Robinson Brog Leinwand Greene Genovese & Gluck, P.C.,
located on the 31st Floor at 1345 Avenue of the Americas, New York, New York.

QUORUM

Under the NYBCL and Besicorp's by-laws, the presence in person or by
properly executed proxy of holders of a majority of the shares of Besicorp
Common Stock issued and outstanding on the Record Date is required to
constitute a quorum at the Special Meeting. Accordingly, abstentions, but not
broker non-votes, will be counted in determining the presence of a quorum.

RECORD DATE; VOTE REQUIRED

The Record Date for the determination of shareholders entitled to notice
of and to vote at the Special Meeting is March 6, 2000. Accordingly, only
shareholders of record of Besicorp at the close of business on the Record Date
have the right to receive notice of and to vote at the Special Meeting and any
postponement or adjournment thereof and each such shareholder will be entitled
to one vote for each share of Besicorp Common Stock that such shareholder held
of record on the Record Date. As of the Record Date, there were 135,886 shares
of Besicorp Common Stock outstanding.

Under the NYBCL, the affirmative vote of holders of at least 50% of the
shares of Besicorp Common Stock outstanding as of the Record Date is required
to adopt the Plan of Merger. In addition, the Plan of Merger contains special
provisions regarding the voting of the Management Restricted Shares, which were
issued to employees and officers (including officers who are also directors) of
Besicorp as of May 3, 1999. To prevent these shares from affecting the outcome
of the vote, the Plan of Merger provides that the shares of Besicorp Common
Stock will be tabulated twice, first, as they actually were voted and second as
they were voted except for the Management Restricted Shares which will in the
second tabulation be tabulated as if the holders of such shares had abstained,
not voted or voted for and against the Plan of Merger in the same proportions
that the shares of Besicorp Common Stock (other than Management Restricted
Shares) are voted (or not voted) with respect to the Plan of Merger.
Abstentions and broker non-votes will have the effect of votes against the Plan
of Merger.

23
<PAGE>

An example can show how the Neutralizing Tabulation operates.

VOTE ON MERGER
<TABLE>
<CAPTION>
In Don't Total
Favor Against Abstain Vote Shares
----------- ----------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C>
(A) How Shares
(other than Management Restricted
Shares) vote .............................. 65,000 40,000 5,000 12,436 122,436

(B) How Management Restricted Shares
vote ...................................... 8,450 5,000 0 0 13,450

Total Vote (A + B) ........................ 73,450 45,000 5,000 12,436 135,886

(C) Percent of Shares
(other than Management Restricted
Shares) that vote ......................... 53.1% 32.7% 4.1% 10.2% --

(D) How Management Restricted Share
are deemed to have voted when the
Neutralizing Tabulation is applied (i.e.
the 13,450 Management Restricted
Shares multiplied by (C)) ................. 7,141 4,394 549 1,366 13,450

(E) Effect of Neutralizing Tabulation (i.e.
A+D) ...................................... 72,141 44,394 5,549 13,802 135,886
</TABLE>

Consequently, in this example the shareholders would have approved the
adoption of the Plan of Merger by the Requisite Vote. The NYBCL requirement
that at least 50% of the issued and outstanding shares approve the adoption is
satisfied since 73,550 shares voted in favor of adoption of the Plan of Merger,
which is more than 50% of the issued and outstanding shares. In addition, when
the Neutralizing Tabulation provisions are utilized, 72,141 shares, which also
is more than 50% of the issued and outstanding shares, would have approved the
adoption.

As of the Record Date, the Buyer owned 57,967 shares of Besicorp Common
Stock, representing 42.7% of the outstanding shares of Besicorp Common Stock.
Pursuant to the Plan of Merger, the Buyer is required to vote all of its shares
of Besicorp Common Stock in favor of adopting the Plan of Merger. In addition,
as of the Record Date, Mr. Zinn owned 3,000 Management Restricted Shares and
the Trust established by Mr. Zinn owned 10,000 shares of Besicorp Common Stock.
Mr. Zinn disclaims beneficial ownership of the Trust's shares. The trustee for
the Trust and Mr. Zinn have indicated that they intend to vote all of such
shares in favor of adopting the Plan of Merger. Accordingly, if the Buyer, Mr.
Zinn and the Trust vote all of their 70,967 shares in favor of the Plan of
Merger, the Plan of Merger will be adopted even if no other shares to vote in
favor of adoption of the Plan of Merger. The 70,967 shares is more than 50% of
the issued and outstanding shares, which will satisfy the requirements of the
NYBCL. In addition, when the voting of Mr. Zinn's Management Restricted Shares
is retabulated pursuant to the Neutralizing Tabulation, at least 1,665 of Mr.
Zinn's 3,000 Management Restricted Shares would be deemed to have voted in
favor of adoption. Therefore, when the Neutralizing Tabulation is applied, at
least 69,632 shares, which is more than 50% of the issued and outstanding
shares, would be deemed to have adopted the Plan of Merger.

In addition to adoption of the Plan of Merger by the shareholders of
Besicorp, adoption by the Board and by the Buyer is required under the NYBCL.
The Board (other than Mr. Zinn, who abstained because he and members of his
immediate family own Parent) determined on October 7, 1999, that the Initial
Plan of Merger is fair, and on November 24, 1999, that the Plan of Merger is
fair to, and in the best interests of, Besicorp and its shareholders (other
than the Buyer). The Board (other than Mr. Zinn, who abstained because he and
members of his immediate family own Parent) adopted the Plan of Merger and
recommends adoption of the Plan of

24
<PAGE>

Merger by Besicorp's shareholders. See "Factors to be Considered --
Recommendation of the Board of Directors, Fairness of the Merger." The board of
directors of Acquisition Corp. and the board of directors of Parent, as the
sole shareholder of Acquisition Corp. and on behalf of Parent, have approved
the Merger and adopted the Plan of Merger.

If the shareholders do not adopt the Plan of Merger, the Merger, in its
current form, will not be effectuated.

SOLICITATION, REVOCATION AND USE OF PROXIES

Shares of Besicorp Common Stock represented by a properly executed proxy
received by Besicorp will, unless such proxy is properly revoked prior to the
Special Meeting, be voted at the Special Meeting in accordance with the
instructions thereon. SHARES OF BESICORP COMMON STOCK REPRESENTED BY PROPERLY
EXECUTED PROXIES THAT DO NOT CONTAIN INSTRUCTIONS TO THE CONTRARY WILL BE VOTED
FOR ADOPTION OF THE PLAN OF MERGER AND IN THE DISCRETION OF THE PROXY HOLDER AS
TO ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE SPECIAL MEETING OR ANY
ADJOURNMENT OR POSTPONEMENT THEREOF. However, shares of Besicorp Common Stock
represented by properly executed proxies will not be voted for any adjournment
or postponement in order to continue to solicit proxies to adopt the Plan of
Merger.

The Board knows of no business that will be presented for consideration at
the Special Meeting other than the proposal to adopt the Plan of Merger. If
other matters should properly come before the Special Meeting, the proxy
holders will vote on such matters in accordance with their best judgments.
Proxies are being solicited hereby on behalf of the Board.

Your vote is important. Whether or not you plan to attend the Special
Meeting, please complete, sign and date your proxy card and return it in the
enclosed envelope. You may also return the proxy card by facsimile transmission
to Continental. To return the card by fax, you must photocopy both sides of the
signed card so that they appear on the same page and fax the photocopy to
Continental at (212) 509-5152, Attn: Proxy Department. If you have any
questions regarding this procedure call Continental at (212) 509-4000 x520.

Any shareholder of record may revoke his proxy at any time before it is
voted by executing and delivering to the Secretary of Besicorp, at Besicorp's
principal executive offices as set forth under "Summary -- The Parties," an
instrument of revocation or a proxy bearing a later date, or by delivering a
written notice to the Secretary of Besicorp stating that the proxy is revoked,
or by voting in person at the Special Meeting.

The cost of soliciting proxies, including the cost of preparing,
assembling, printing and mailing this Proxy Statement, the Proxy and any
additional materials furnished to shareholders, will be borne by Besicorp. If
the Merger is effectuated, Parent, as the sole shareholder of the Surviving
Corporation, will indirectly bear the costs of this solicitation. Arrangements
will be made with brokerage houses and other custodians, nominees and
fiduciaries to send proxies and proxy materials to the beneficial owners of
stock, and such persons may be reimbursed for their expenses. Proxies may be
solicited by directors, officers or employees of Besicorp in person or by
telephone, telegram, facsimile, electronic mail or other means. No additional
compensation will be paid for these services other than for their out-of-pocket
expenses (which it is anticipated will be nominal) incurred in connection
therewith.

RIGHTS OF DISSENTING SHAREHOLDERS

We are summarizing below the rights of Dissenters. This summary is not
complete and is qualified in its entirety by reference to Sections 623 and 910
of the NYBCL, a copy of which appears in Annex C to this Proxy Statement.

Sections 623 and 910 of the NYBCL give to any Dissenter of record who
wishes to object to the Merger the right to receive from Besicorp in cash, the
"appraised" value of his shares, unless the Plan of Merger is abandoned or
fails to be adopted and authorized, and provided, further, that the following
procedure is carefully followed. The Dissenters' Shares will not be converted
into Merger Consideration and the Dissenters will receive only the cash to
which they are entitled pursuant to the statutory procedure; however Dissenters
will receive shares of WOM Common Stock pursuant to the Spin-Off. Beneficial
holders should instruct their nominees and fiduciaries to dissent on their
behalf.

25
<PAGE>

WE URGE YOU TO CONTACT YOUR OWN ATTORNEY IF YOU ARE INTERESTED IN
DISSENTING.

In order to dissent and have the value of your shares appraised by a
court, the following procedures must be carefully followed:

(a) The Dissenter must not vote in favor of adoption of the Plan of
Merger.

(b) Before the proposal to adopt the Plan of Merger is submitted to a
vote at the Special Meeting, the Dissenter must file with Besicorp a Notice
of Dissent stating his intention to demand payment for his shares of
Besicorp Common Stock. The Notice of Dissent should be sent to Besicorp
Ltd, 1151 Flatbush Road, Kingston, New York, 12401, Attention: Joyce
DePietro; Vice President - Administration. We recommend that this Notice of
Dissent be sent by Registered Mail, Return Receipt Requested. The Notice of
Dissent may also be submitted at the Special Meeting so long as it is
submitted before a vote is taken on the Plan of Merger. The Notice of
Dissent must include:

o a notice of election to dissent;

o the Dissenter's name and residence address;

o the number of shares of Besicorp Common Stock as to which the
Dissenter dissents; and

o a demand for payment of the appraised value of the Dissenter's
shares of Besicorp Common Stock if the Merger is effectuated.

(c) A Dissenter may not dissent as to less than all of the shares as to
which he has a right to dissent, held by him of record and that he owns
beneficially. A nominee or fiduciary may not dissent on behalf of any
beneficial owner as to less than all of the shares of Besicorp Common Stock
of such beneficial owner, as to which such nominee or fiduciary has a right
to dissent, held of record by such nominee or fiduciary.

(d) Within ten days after the date of the Special Meeting, Besicorp must
give written notice to each Dissenter that the Plan of Merger has been
authorized by the vote of Besicorp's shareholders.

(e) Together with the Notice of Dissent or within one month thereafter,
the Dissenter must submit the Certificates representing all of his shares
of Besicorp Common Stock to Besicorp or Continental for the purpose of
having a notation affixed to such Certificates indicating that a demand for
payment has been made. We recommend that Certificates be sent by Certified
or Registered Mail, Return Receipt Requested. Dissenters should also
consider obtaining insurance. After the notation is made on the
Certificates, the Certificates will be returned to the Dissenter. If the
Dissenter fails to so submit the Certificates to Besicorp or Continental
with the Notice of Dissent or within one month thereafter, Besicorp has the
option, exercisable by written notice given within 45 days from the date of
filing of the Notice of Dissent, to eliminate such Dissenter's right to
dissent, unless a court, for good cause shown, otherwise directs.

(f) Within 15 days after the later of the Effective Date and the last
day of the period during which Notices of Dissent may be made (but in no
case later than 90 days after the date of the Special Meeting), the NYBCL
requires the Surviving Corporation to make an offer (referred to herein as
the Company Offer) by registered mail to the Dissenters to pay the
Dissenters for their Dissenters' Shares at a specified price (referred to
herein as the Offering Price) which the Surviving Corporation considers to
be their fair value. Such Company Offer will be accompanied by a statement
setting forth the aggregate number of shares of Besicorp Common Stock with
respect to which Notices of Dissent have been received and the aggregate
number of holders of such shares. If the Merger has been effectuated at the
time of such Company Offer, the Company Offer will also be accompanied by
(i) the advance payment to each Dissenter who has submitted to Besicorp his
Certificates as described in paragraph (e) above of an amount equal to 80%
of the amount of such Offering Price multiplied by the number of shares
represented by such Certificates, and (ii) as to each Dissenter who has not
yet submitted his Certificates, a statement that the Surviving Corporation
will make an advance payment to him of an amount equal to 80% of the amount
of such Offering Price multiplied by the number of shares represented by
his Certificates promptly upon submission of such Certificates. Every
advance payment or statement regarding advance payments will advise the
Dissenters that acceptance of such payment does not constitute a waiver of
any dissenters' rights. All Company Offers will be made at the same
Offering Price to all Dissenters.

26
<PAGE>

(g) If, within 30 days after the Surviving Corporation's making such
Company Offer, a Dissenter and the Surviving Corporation agree upon the
price to be paid for such Dissenter's shares, payment must be made by the
Surviving Corporation, upon the surrender of the Certificates representing
such Dissenter's shares of Besicorp Common Stock, within 60 days of the
later of the date of the making of such Company Offer and the Effective
Date

(h) If the Surviving Corporation fails to make an Company Offer as
described in paragraph (f) above within the period provided therein or if
the Dissenter and the Surviving Corporation fail to agree upon the price to
be paid within 30 days of the date of the Company Offer, the Surviving
Corporation will, within 20 days after the expiration of the applicable
time period, institute a special proceeding in the Supreme Court of the
State of New York, County of Ulster to determine the rights of the
Dissenter and to fix the appraised value of his Dissenters' Shares.

(i) If the Surviving Corporation fails to institute such special
proceeding the Dissenter may do so within 30 days after the expiration of
such 20 day period. Failure of the Dissenter to institute such proceedings
will result in the loss of his objector's rights unless the court, for good
cause shown, otherwise directs.

(j) The court will determine the appraised value of the shares of
Besicorp Common Stock, which will be the appraised value as of the close of
business on the day prior to the Special Meeting. In fixing the value of
the shares of Besicorp Common Stock, the court will consider the nature of
the Merger and its effects on Besicorp and its shareholders, the concepts
and methods then customary in the relevant securities and financial markets
for determining fair value of shares of a corporation engaging in a similar
transaction under comparable circumstances and all other relevant factors.
The court will determine the appraised value of the shares of Besicorp
Common Stock without a jury and without referral to an appraiser or
referee.

(k) The final order will include an allowance for interest at such rate
as the court finds to be equitable, from the date the Merger was
effectuated to the date of payment. If the court finds that the refusal of
any Dissenter to accept the Company Offer for his shares of Besicorp Common
Stock was arbitrary, vexatious or otherwise not in good faith, no interest
will be allowed to him.

(l) Each party to such proceeding will bear its own costs and expenses,
including the fees and expenses of its counsel and of any experts employed
by it. Notwithstanding the foregoing, the court may, in its discretion,
apportion and assess all or any part of the costs, expenses and fees
incurred by the Surviving Corporation against any or all of the Dissenters
who are parties to the proceeding if the court finds that their refusal to
accept the Company Offer was arbitrary, vexatious or otherwise not in good
faith. The court may in its discretion, apportion and assess all or any
part of the costs, expenses and fees incurred by any or all of the
Dissenters who are parties to the proceeding against the Surviving
Corporation if the court finds any of the following: (A) that the appraised
value of the shares of Besicorp Common Stock as determined materially
exceeds the Offering Price; (B) that no Company Offer or required advance
payment (as described by paragraph (f) above) was made by the Surviving
Corporation; (C) that the Surviving Corporation failed to institute the
special proceeding (as described in paragraph (h) above) within the period
specified therefor; or (D) that the action of the Surviving Corporation in
complying with its obligations as provided in this section was arbitrary,
vexatious or otherwise not in good faith.

(m) Within 60 days after the final determination of the special
proceeding, the Surviving Corporation will pay to each Dissenter party to
such proceeding the amount found to be due him, upon surrender of the
Certificates representing his shares of Besicorp Common Stock.

Holders of Management Restricted Shares may dissent by following the
procedures outlined above. However, since their shares have not vested, the
appraised value paid for these shares (including any advance payments) will be
placed in escrow with the Surviving Corporation and released to the holders at
the times that the Management Restricted Shares would have been released upon
their vesting to the holders of such Management Restricted Shares.
Consequently, if the conditions to vesting for such Management Restricted
Shares were not satisfied, then the appraised value would not vest and would
not be released to the holder. For example, if the holder ceases to be an
employee of the Surviving Corporation before the Management Restricted Shares
vest, the holder would lose his right to the appraised value.

27
<PAGE>

FACTORS TO BE CONSIDERED

PURPOSES, EFFECTS AND BACKGROUND OF THE MERGER

At the time of the Prior Spin-Off, Management disclosed to the
shareholders of Besicorp that, after giving effect to projected operating
losses from operations, the funds available to Besicorp were only sufficient to
allow Besicorp to continue operations for approximately two to six months. For
Fiscal 1999 and Fiscal 1998, the Distributed Businesses had losses on a
historical basis of $5.8 million and $7.2 million, respectively, on total
revenues of $5.7 million and $4.4 million, respectively. Therefore, without
additional funds, Besicorp might not be able to pay its obligations as they
became due. The failure of Besicorp to obtain additional funds or otherwise
reduce its short term obligations would materially adversely affect Besicorp
and require it to curtail operations.

On May 17, 1999 and May 21, 1999, Mr. Zinn sent the Special Committee the
Memoranda in which he indicated that he believed (i) it was very unlikely that
Besicorp would be able to raise capital without significantly diluting the
equity of the existing shareholders or requiring personal guarantees from Mr.
Zinn, which he would not provide, and (ii) the costs of being a public company
were unsustainable. In Mr. Zinn's opinion, the best alternative would be to
sell Besicorp to management for cash, which would enable the shareholders to
immediately realize cash without incurring the risk of an unknown future or the
effects of substantial dilution. In the Memoranda he stated that he was willing
to purchase all of the shares of Besicorp Common Stock for cash and would pay a
25% premium over the $5.5 million value of Besicorp (based on an appraisal by
Loeb Partners at the time of the Prior Spin-Off in which appraisal Loeb
Partners indicated that based upon and subject to the qualifications in such
appraisal that, at such time, the aggregate value from a financial point of
view of the all of the issued and outstanding shares of Besicorp Common Stock
was in the range of $5 million to $6 million) adjusted for cash, excluding the
Escrow Fund.

28
<PAGE>

On May 21, 1999, the Board authorized the Special Committee to represent
Besicorp in evaluating, structuring and negotiating a potential transaction in
which it might be acquired by Mr. Zinn and to continue investigating
alternatives to such a transaction. The Special Committee engaged legal
counsel, Robinson Brog, and asked it to prepare a due diligence report
regarding Besicorp's contracts and other legal documents. The Special Committee
selected Robinson Brog because it had served as special counsel to Old Besicorp
in connection with the Prior Merger and the Prior Spin-Off, and was familiar
with Besicorp and its operations. Prior to retaining Robinson Brog, the Special
Committee reviewed the various aspects of Robinson Brog's representation of
Besicorp, including (i) its role as the Escrow Agent under the Escrow Agreement
(see "Escrow Agreement"), and (ii) its role as litigation counsel with respect
to various matters (see "Business of Besicorp -- Legal Proceedings"). In
addition, it is contemplated that Robinson Brog will serve as the agent for the
beneficiaries of Mr. Zinn's guaranty that will be entered into at the Closing
Date. See "Plan of Merger -- Principal Covenants -- Guaranty."

Besicorp retained Josephthal as its financial advisor to provide financial
advisory services to the Special Committee and to provide a fairness opinion
such as the Fairness Opinion in connection with any transaction to which
Besicorp might agree in the future. Josephthal's duties included assisting and
advising the Special Committee in responding to indications of interest from
third parties who proposed to acquire Besicorp or to provide financing to
Besicorp and to assist in the negotiation of any acquisition agreement. The
Special Committee selected Josephthal because it is a nationally recognized
investment banking firm and is familiar with Besicorp's operations since it had
assisted Old Besicorp in formulating the Prior Plan of Merger and had provided
a fairness opinion in connection with the consideration paid in the Prior
Merger. See "-- Opinions of Financial Advisor."

Because of the informal nature of the Memoranda, the Special Committee did
not view them as constituting a formal offer and the Special Committee so
advised Mr. Zinn.

On June 17, 1999 Mr. Zinn submitted to the Board and the Special Committee
his Initial Offer to acquire Besicorp for approximately $45.46 per share of
Besicorp Common Stock (based on the number of shares then outstanding) in cash.
The Initial Offer valued Besicorp at $6.2 million. In addition under the terms
of the Initial Offer all of the shares of Besicorp Common Stock would receive a
right to participate pro rata in the release of funds from the Escrow Fund. In
his Initial Offer, Mr. Zinn indicated that he believed that Besicorp would be
unable to continue operations, and that its prospects would be extinguished,
without a significant reorganization. He noted that Besicorp's businesses
(i.e., Old Besicorp's Distributed Businesses) had a history of operating
losses, and it was anticipated that Besicorp would continue to experience
operating losses in the indeterminate future. He also noted that Besicorp's
cash reserves were insufficient to fund ongoing operations after November 30,
1999 and that Besicorp's auditors expressed concern as to the ability of
Besicorp to continue as a going concern without an infusion of additional
capital. He indicated that he expected Besicorp to gain various benefits from
his purchase. For example, as Besicorp would only have one shareholder,
Besicorp could deregister from the Exchange Act which would permit Besicorp to
reduce its expenses. Once Besicorp deregistered, it would no longer be required
to prepare annual and quarterly reports, and comply with the proxy solicitation
provisions of the Exchange Act, and would not be required to distribute such
material to shareholders. Mr. Zinn also noted that access to capital markets
had been severely limited and indicated that he would not guarantee Besicorp's
debt.

The Special Committee recognized that Besicorp only had sufficient funds
to continue operations for several months unless funds were quickly obtained.
However, Besicorp had not succeeded in obtaining additional funds. Based upon
the experiences of Old Besicorp, the Special Committee suspected that banks,
lending institutions and other potential lenders would require a guarantee by
Mr. Zinn. in connection with advancing a loan to cover operating expenses. Mr.
Zinn was not willing to act as a guarantor. Therefore, under the Special
Committee's direction, Management contacted a bank to confirm that lenders
would not be willing to consider advancing a loan to cover operating expenses
unless it was guaranteed by Mr. Zinn. In addition, Management did not believe
that any asset-based lender would be interested in funding the money-losing
operations of an entity that did not have significant assets with which to
secure the funding. The Special Committee also considered that even though
Besicorp might be able to raise equity, there was no guarantee that the
proceeds would be sufficient to fund on-going needs. The Special Committee
noted that the photovoltaic business had historically

29
<PAGE>

incurred losses and Management estimated that it was not likely to become
profitable before March 31, 2001. Since independent power development
businesses generally generate significant revenues and profits only after
plants become operational, and all of Besicorp's power project initiatives were
in very early stages, it was, in Management's estimate, unlikely that Besicorp
would be profitable during the next several years. Moreover, since issuing
additional shares would dilute the current shareholders' holdings, the Special
Committee recognized that an equity offering might result in shareholders'
finding the value of their shares in the future to be significantly less than
what Mr. Zinn was then offering. The Special Committee also considered whether
there would be any advantage to Besicorp's voluntarily commencing a bankruptcy
proceeding, but decided it would not solve Besicorp's need for additional
capital. Consequently, Besicorp had only two realistic options: liquidation and
sale.

Old Besicorp had attempted to sell the Distributed Business before the
Prior Merger as part of a sale of all of Old Besicorp. However, every
prospective purchaser of Old Besicorp except for one had insisted that Old
Besicorp either sell or distribute the Distributed Businesses prior to their
purchasing Old Besicorp. One prospective purchaser had been willing to acquire
the Distributed Businesses together with the rest of Old Besicorp but the terms
were unacceptable. Old Besicorp's limited attempts to sell the Distributed
Businesses without the rest of Old Besicorp proved to be unsuccessful. In
addition, since the Prior Spin-Off, Besicorp had not been able to identify any
potential purchasers (other than Mr. Zinn). Moreover, since Mr. Zinn and the
Trust held approximately 44.9% and 7.4%, respectively, of the shares of
Besicorp Common Stock, it was highly unlikely that the sale of Besicorp, which
was likely to require shareholder approval, could occur without Mr. Zinn's
voting in favor of such a sale and Mr. Zinn had not indicated that he would so
vote. In these circumstances, especially since Besicorp's available cash
declined daily and Management projected that Besicorp's funds were only
sufficient to continue operations for two to six months, the Special Committee
could not justify spending substantial sums in efforts to find another possible
purchaser, or deferring consideration of Mr. Zinn's Initial Offer while waiting
to see if another potential purchaser would emerge.

Shortly after Mr. Zinn submitted his Initial Offer to Besicorp, Besicorp
issued a press release describing the Initial Offer. Besicorp expected the
press release to alert potential purchasers that the Special Committee was
considering offers; by issuing the press release, Besicorp hoped that the
Initial Offer would lead others to make offers to acquire Besicorp. No one then
or subsequently expressed any interest. Therefore, unless Besicorp negotiated
with Mr. Zinn, Besicorp's only alternative might be liquidation. The Special
Committee decided to negotiate with Mr. Zinn while continuing to evaluate the
other possibilities.

On July 7, 1999, the Special Committee, representatives of Robinson Brog
and representatives of Josephthal met representatives of Besicorp. The
representative of Besicorp present at the meeting was Michael F. Zinn, and the
representatives of Besicorp participating by telephone were Joyce DePietro,
Vice President -- Administration, David Kulik, President of SunWize, William
Seils, President of Besicorp Development, Joseph Novarro, Vice President -
Project Development of Besicorp Development, and James Curtin, the Controller
and Chief Accounting Officer of Besicorp. In preparation for the meeting
Josephthal had circulated an outline identifying various categories of assets
of Besicorp which served as a basis for seeking information from the
representatives of Besicorp regarding Besicorp's assets and businesses. At this
meeting, the Special Committee discussed, among other things, SunWize and its
prospects and reviewed SunWize's management's current projections and its
recent financial results. The Special Committee noted SunWize's improving
operating results (although SunWize was still operating at a loss), and its
attempts to cut costs and to accelerate collections. The Special Committee
questioned Besicorp's representatives about development projects in New York,
India, Brazil, Gabon and Mexico (including their status, risks and the
possibility of selling Besicorp's interests). In addition, the Special
Committee sought information about partnership interests, Hydro-Credits, the
Escrow Fund and real property.

The Special Committee held a conference call with representatives of
Josephthal and representatives of Robinson Brog on July 22, 1999 to discuss
generally Besicorp's alternatives to selling Besicorp to Mr. Zinn. The

30
<PAGE>

Special Committee discussed obtaining additional funds for Besicorp and noted
the difficulties in determining Besicorp's precise capital resource
requirements which included at least $5 million in development fees for the
Empire Newsprint Project and which capital resource requirements were subject
to the uncertainty of when, if ever, Besicorp would internally generate
sufficient monies to fund its operations. The Special Committee also discussed
raising additional equity through a public or private offering of Besicorp's
securities, and noted the risks described above. In addition, Josephthal
indicated that, in its view, because of the high risks of an investment in
Besicorp and the amount of capital likely to be required, a prospective
investor would probably expect to acquire control of Besicorp. The Special
Committee also discussed selling SunWize or selling Besicorp to another
purchaser, but it was observed that any such transaction would probably require
approval of the holders of Besicorp Common Stock, and because of Mr. Zinn's and
the Trust's ownership of approximately 44.9% and 7.4%, respectively, of the
shares of Besicorp Common Stock, it would be impossible to obtain shareholder
approval without their cooperation of Mr. Zinn. Therefore the Special Committee
decided to obtain written confirmation of its understanding that Mr. Zinn would
not vote in favor of any such sale.

In addition, during the conference call the Special Committee discussed
certain issues concerning valuing Besicorp: namely that while it was possible
to attempt to value Besicorp's two principal businesses -- its photovoltaic
business and its independent power development business -- certain residual
interests that it had received from Old Besicorp pursuant to the Prior
Contribution or as a result of the Prior Merger were difficult to evaluate with
any precision since they represented uncertain amounts of cash that Besicorp
might realize in the future; moreover the receipt of these amounts did not
depend upon on-going investments by Besicorp: instead such monies would be the
result of the efforts of third parties, such as Niagara Mohawk's efforts to
reach agreements with certain hydro-energy developers before July 1, 2003. The
value of the Escrow Fund depended upon the obligations to indemnify BGI Parent
as a result of the Prior Merger and various expenses to be paid from the Escrow
Fund and it was difficult to quantify these amounts since Escrow Funds would be
applied at least until March 22, 2004 in response to BGI Indemnity Claims, BGI
Monitoring Costs and Litigation Costs, including litigation matters that might
be commenced in the future. Various non-recurring residual interests, mostly
related to the Partnerships, were also difficult to value since they primarily
consist of the right to receive any additional distributions, if any, that
might occur as businesses are wound up. See "Escrow Agreement" and "Business of
Besicorp -- Potential Non-Recurring Funds." Consequently, as the Special
Committee and its advisors attempted to analyze some of these residual
interests, it was realized that they could either make a rough estimate of the
value of these residual interests, which might prove to be too low, or they
could provide that additional, deferred payments would be made to the
shareholders after the closing of any sale to reflect accurately the proceeds
obtainable from the residual interests. It was believed that most of the
distributions, if any were ever to occur, would be made in the next several
years as various escrows and contingency funds relating to the partnerships
were released to the partners of the partnerships and as certain rights to
payments, such as the right to distributions in connection with Hydro-Credits,
expired, and that the Escrow Fund probably would not be released until after
March 22, 2004. The Special Committee and Josephthal discussed the advantages
of distributing the partnership distributions and Hydro-Credits to Besicorp's
shareholders.

During the meeting on July 22, 1999, the Special Committee authorized
Josephthal and Robinson Brog to commence negotiations with Mr. Zinn. Therefore,
following the meeting, representatives of the Special Committee and Mr. Zinn
held a conference call to negotiate the terms of a possible transaction.
Representing the Special Committee were Robinson Brog and Josephthal. The
Special Committee's representatives indicated that they thought that the
purchase price was inadequate. Mr. Zinn responded by expressing concern about
SunWize's sustainability and the development of the Empire Newsprint Project.
The Special Committee's representatives also sought clarification about certain
aspects of Mr. Zinn's proposal, such as whether Mr. Zinn was proposing to
acquire cash items, such as liquidating distributions from partnerships. Mr.
Zinn responded that he proposed only acquiring certain cash items whose receipt
was expected in the near future. As a result of this conversation, Mr. Zinn
orally offered to raise his offer to approximately $54.99 per share (based on
the number of shares then outstanding) which offer effectively valued Besicorp
at $7.5 million. In addition, pursuant to this offer, shareholders would
receive a right to participate pro rata in (1) liquidating distributions from
partnerships, (2) Hydro- Credits and (3) the release of funds from the Escrow
Fund. This $7.5 million valuation, after giving effect to his ownership
position in Besicorp (other than his Management Restricted Shares), would
result in a price to be paid by Mr. Zinn of approximately $4.3 million in cash
(including approximately $740,000 in Restricted Merger

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Consideration) assuming that no shares of Besicorp Common Stock were issued or
cancelled and there were no Dissenters.

The Special Committee held another conference call with representatives of
Robinson Brog on July 23, 1999. The Special Committee discussed Mr. Zinn's
revised oral offer, and the fact that while Mr. Zinn's purchase of Besicorp
would not be a taxable event for him, it was likely that the other shareholders
would be subject to short term capital gain taxes if the transaction were
effectuated before March 22, 2000 and long term capital gain taxes if the
transaction were effectuated thereafter. The Special Committee also discussed
the shareholder approval that would be required before the consummation of the
sale: the Special Committee considered whether members of Management including
Mr. Zinn should be allowed to vote all of their shares, none of their shares,
or only some their shares (e.g., all but their Management Restricted Shares) or
whether their votes should be "neutralized" and if so what method of
neutralizing should be used.

The Special Committee held a conference call with representatives of
Josephthal and Robinson Brog on August 2, 1999. Josephthal and the Special
Committee discussed in detail the assumptions (including Josephthal's reliance
upon information provided by Management), the methodology and the limitations
in the analysis that Josephthal was preparing. Josephthal discussed its review
of companies that might be comparable in terms of line of business with SunWize
and the returns on investment that investors might require to invest in
SunWize. Josephthal noted that Venture Economics Information Services had
conducted a study which showed that investors in "venture capital investments"
required returns that averaged, on an annualized basis, 37.7% and 33.7% over a
three year and five year period, respectively. Josephthal stated that in its
view, investors would likely require returns in a similar range to invest in
Besicorp. Josephthal explained that in evaluating the Empire Newsprint Project
it had relied on the Financial Model and its underlying assumptions, but had
not prepared independent financial projections although Josephthal explained
that it viewed the Financial Model as "optimistic" since it had been prepared
with a view toward selling an equity position in the Empire Newsprint Project.
The Special Committee and Josephthal also discussed assumptions made by
Josephthal in preparing its analysis including its treatment of the Corporate
Headquarters.

The Special Committee again considered alternatives to the sale of
Besicorp to Mr. Zinn. The Special Committee renewed its discussion of a
possible sale of SunWize; however, the Special Committee continued to believe
that Mr. Zinn would vote against such a sale. It was observed that such a sale
would result in the shareholders continuing to own Besicorp Development which
would continue to require large amounts of capital; the Special Committee
tentatively concluded that it would be preferable to provide the shareholders
with cash now by engaging in a transaction with Mr. Zinn rather than to sell
SunWize to finance projects for Besicorp Development that might never produce
any returns for the shareholders. The Special Committee again considered having
Besicorp issue stock to raise equity since this could be done over Mr. Zinn's
objections. However, Josephthal noted that, in its view, attempting to raise
addition equity was at best speculative, would not produce any immediate
returns to stockholders and might cause Mr. Zinn to withdraw his proposal.

The Special Committee met with representatives of Josephthal and Robinson
Brog on August 9, 1999. At this meeting the Special Committee examined in
detail Josephthal's analysis of Besicorp and sought additional information
about Josephthal's assumptions, comparisons and methodology and the limitations
to Josephthal's review, including its reliance, without independent
verification, on information provided by Management. Josephthal noted that it
had reviewed projections and cash flows only for SunWize and the Empire
Newsprint Project. The Special Committee discussed the process that Josephthal
used in evaluating SunWize and in particular the appropriateness of the
comparable companies identified in the Josephthal analysis. The Special
Committee focused particular attention on the fact that SunWize's growth rate
was double that of Golden Genesis, which was identified as one of the companies
comparable to SunWize. In Josephthal's view, the difference in growth rates was
not sufficiently large enough to justify a larger multiple than the multiple
indicated by Golden Genesis. The Special Committee then discussed the discount
rates used in the analysis of "free cash flow" for SunWize which ranged from
the 30-40% as compared to the 15% rate used in SunWize's own projections. It
was also noted that SunWize's operating results for Fiscal 1999 had improved
significantly over Fiscal 1998's results. Josephthal explained that Management
had advised Josephthal that even though SunWize had been in existence for a
number of years, its industry was marked by market uncertainty and an absence
of profitability. Thus, Josephthal determined that potential investors would
likely require rates of return similar to those required

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by "venture capital investors" which based on the study by Venture Economics
Information Services referred to above, ranged from 37.7% to 33.7%. Josephthal
noted that the same returns would likely be required by investors in the Empire
Newsprint Project since it was an "early stage" venture. The Special Committee
asked whether there were any other valuation methodologies, such as comparable
transaction analyses, and whether they could be used to evaluate SunWize.
Josephthal indicated that it would determine whether there were any other
valuation methodologies, such as comparable transaction analyses, that could be
used to evaluate SunWize.

At this meeting, the Special Committee also discussed the Restricted
Shares and what would happen to the Management Restricted Shares if no action
were taken by the Board to accelerate their vesting. The Special Committee also
discussed the period leading up to the Closing Date. The Special Committee
wanted to ensure that the buyer would still be required to buy Besicorp even if
Besicorp's prospects worsened following the signing of the purchase agreement
and at the same time the Special Committee wanted to protect the shareholders
if Besicorp's prospects were to improve. It was suggested that in certain
conditions, such as the receipt of a superior purchase proposal, Besicorp
should be entitled to terminate any agreement with Mr. Zinn.

Following the meeting, the Special Committee, and representatives of
Robinson Brog and Josephthal met representatives of Besicorp. The
representatives of Besicorp present at the meeting were Michael F. Zinn,
Michael J. Daley, Frederic Zinn and Joyce DePietro. The Special Committee
obtained additional information from the representatives of Besicorp regarding
Besicorp's assets and businesses and the prospects of the foreign projects.

Following the meeting with the representatives of Besicorp,
representatives of the Special Committee and Mr. Zinn met again to refine the
terms of a possible transaction . Representing the Special Committee were
Robinson Brog and Josephthal. The Special Committee's representatives relayed
the Special Committee's belief that Mr. Zinn's offer based on a $7.5 million
valuation of Besicorp was inadequate. In addition, the Special Committee's
representatives asked Mr. Zinn to clarify whether he had intended to acquire
receivables such as monies recovered as the result of Besicorp's prosecution of
its litigation claims. Mr. Zinn confirmed he did not intend to acquire more
than his pro rata interest as a shareholder in the financial benefit from
litigation claims. As a result of such meeting, Mr. Zinn orally offered to
raise the valuation from $7.5 million to $8 million.

On August 10, 1999, Mr. Zinn submitted his Revised Offer in which he
offered to increase the amount he would pay for Besicorp, which amount was
based on a valuation of Besicorp of $8 million, which is the amount Parent has
agreed to pay as the Aggregate Cash Merger Consideration pursuant to the Plan
of Merger. This $8 million valuation, after giving effect to his ownership
position in Besicorp (other than his Management Restricted Shares), would
result in a price to be paid by Mr. Zinn of approximately $4.6 million in cash
(including approximately $800,000 in Restricted Merger Consideration) assuming
that (i) no shares of Besicorp Common Stock are issued or cancelled prior to
the Merger and (ii) there are no Dissenters.

The Special Committee held a conference call with Josephthal and Robinson
Brog on August 13, 1999 to discuss Mr. Zinn's Revised Offer. At this meeting
the Special Committee decided to ask Mr. Zinn to fund Besicorp's operations
following the signing of a purchase agreement. The Special Committee also
discussed other methods of ensuring the "fairness" of the transaction such as
"neutralizing" the voting by members of the management and thought it might be
appropriate to "neutralize" the voting of the Management Restricted Shares to
since these shares had been issued recently. The Special Committee discussed
the valuations of the development

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projects. Even though it was recognized that it was unlikely that any
particular project would ever be completed, and that if a project were to be
completed it would not be for several years, the Special Committee realized
that if a project were completed Besicorp might obtain a great deal of money as
a result of its development activities and its ownership of partnership
interests. Some of the projects had only been initiated recently and therefore
their prospects were difficult to evaluate. Moreover, representatives of the
Special Committee had spoken to Besicorp's partners in Brazil and Mexico and
they were optimistic about the possible success of the initiatives. Although
Management asserted that Besicorp did not expect to receive any benefits from
these projects in the near future, the Special Committee was concerned that the
shareholders would lose a benefit if any of the projects unexpectedly produced
significant profits. The Special Committee concluded that it would ask Mr. Zinn
to share in the profits if Besicorp were to sell any of its development
interests within a certain period of time.

Following the meeting, representatives of the Special Committee and Mr.
Zinn held a negotiating session to further refine the terms of a possible
transaction. Representing the Special Committee were Robinson Brog and
Josephthal. The Special Committee's representatives discussed their analysis of
the foreign development projects and the status of these projects. They
observed that if any projects were sold without the expenditure of significant
amounts of money by Besicorp, such a sale would be akin to a liquidating
distribution and Mr. Zinn should not be entitled to a windfall. As a result of
such meeting, Mr. Zinn (i) agreed to provide a deferred payment if a foreign
development interest were sold within one year, (ii) agreed to "neutralize" the
votes of the Management Restricted Shares and (iii) agreed in principal that if
a purchase agreement were signed, the buyer would provide temporary financing
in the event Besicorp ran out of cash.

During the remainder of August, representatives of the Special Committee
and Mr. Zinn discussed possible structures for the acquisition; they considered
stock sales, asset sales and mergers. Neither a stock sale nor an asset sale
would provide better tax treatment to the Outside Shareholders than a merger. A
merger, unlike an asset sale, would also ensure that the buyer would acquire
all of Besicorp's liabilities, including contingent and unknown liabilities. An
asset sale and a merger would be subject to shareholder approval. A tender
offer would not be subject to a shareholder vote, but it would be necessary to
follow up the tender offer with a "cash-out" merger and if fewer than 90% of
the outstanding shares were tendered, Mr. Zinn would need to obtain shareholder
approval prior to the merger, which would make a tender offer potentially more
time consuming and expensive than an asset sale or a merger. Thus the parties
determined that Mr. Zinn's purchase of Besicorp should be effected by a merger.

The Special Committee also considered requiring adoption of the Plan of
Merger by the shareholders other than Mr. Zinn, but Mr. Zinn indicated he was
unwilling to spend time and money negotiating if approval by the unaffiliated
shareholders would be required. As no one else had expressed any interest in
acquiring Besicorp, funding for Besicorp's current operations was unavailable,
and Besicorp's best alternative to negotiating with Mr. Zinn would have been
liquidation, the Special Committee decided not to require approval by the
unaffiliated shareholders, believing that sufficient procedural safeguards were
in place to ensure procedural fairness.

Following these discussions, a draft of an agreement and plan of merger
was prepared by the Special Committee's counsel and circulated to the Special
Committee, Besicorp, Mr. Zinn and his special counsel, Zeichner Ellman. This
draft was circulated as a means to set forth in general terms a proposed
structure in which a wholly owned subsidiary of Parent (i.e., Acquisition
Corp.) would be merged with and into Besicorp, with Besicorp as the surviving
corporation and with the shareholders of Besicorp receiving for their shares
cash and a deferred payment right.

On or about September 10, 1999, the Special Committee's representatives
delivered the September 10 Draft of an agreement and plan of merger to
representatives of Mr. Zinn. This draft reflected a number of revisions to the
initial draft based on further discussions between representatives of Mr. Zinn
and Besicorp as to structure, and especially the mechanics of the deferred
payments. The September 10 Draft revised the terms of the bridge financing to
be provided by the buyer to require Besicorp to provide a security interest to
the buyer and to contain solvency requirements as a condition to the advancing
of loans. The indemnification provisions were revised and certain other
representations, covenants and other provisions were refined. There were no
other material changes in this draft.

On or about September 16, 1999, the Special Committee's representatives
delivered the September 16 Draft of an agreement and plan of merger to
representatives of Mr. Zinn. This draft reflected a number of revisions to

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the September 10 Draft. Additional refinements were made to the mechanics of
the deferred payments. The insurance and indemnification provisions were
revised and certain other representations, covenants and other provisions were
refined. There were no other material changes in this draft.

The Special Committee held a conference call with representatives of
Josephthal and Robinson Brog on September 22, 1999. Prior to this meeting
Josephthal delivered its written opinion to the effect that, as of the date of
such opinion and based upon and subject to certain matters stated therein, the
Merger Consideration was fair, from a financial point of view, to the holders
of Besicorp Common Stock (other than the Buyer). See "-- Opinion of Financial
Advisor." Josephthal gave a presentation after which it answered questions from
the Special Committee. The Special Committee reviewed the assumptions made in
and the limitations to Josephthal's report. The Special Committee noted that
Josephthal's report included an analysis of comparable transactions, but that
there were only two comparable transactions for which there was publicly
available financial information and one involved the acquisition of only a
small percentage of a company's stock. The Special Committee noted that
shareholders would receive the cash merger consideration and deferred payment
rights. The Special Committee also noted that certain members of Besicorp's
Management had certain interests in the Merger that were in addition to or
different from the interests of the Outside Shareholders. These included (1)
Mr. Zinn's increased control of Besicorp, (2) the benefit Mr. Zinn would
realize if any holders of Management Restricted Shares were to cease to be
employees of the Surviving Corporation before the vesting of the Restricted
Merger Consideration and (3) the fact that the Merger would not be a taxable
event for Mr. Zinn although it would be a taxable event for the Outside
Shareholders. See "--Interests of Executive Officers and Directors in the
Merger." The Special Committee also reviewed the September 16 Draft and
discussed various aspects, including the merger consideration, the bridge loans
to be provided by the buyer and the indemnification and insurance provisions.
The Special Committee noted the following: (1) the deferred payment fund is
under the control of the Surviving Corporation which may act without the
consent of the Outside Shareholders, so that the Surviving Corporation has the
ability to decide (a) whether to sell a project, and if so for how much, (b)
whether to use, so long as BGI Acquisition consented, amounts in the Escrow
Fund that if not used would end up becoming a part of the deferred payment fund
and (c) whether to prosecute and settle claims; (2) there would be no effective
means of monitoring expenses that the Surviving Corporation might assert should
reduce deferred payments; (3) the Surviving Corporation has the right to
restructure itself after the closing, may not exist for many more years and
sales, liquidations and restructuring may further complicate the shareholders'
ability to realize deferred payments; (4) the draft provides for neutralized
voting for the Management Restricted Shares and requires Mr. Zinn to vote his
shares in favor of the Merger; (5) the draft provides that if the deal is
terminated Besicorp will repay within four months all monies lent by the buyer
to fund Besicorp's operations prior to the closing. The Special Committee
decided to seek to revise the plan of merger to increase control over deferred
payments by requiring that deferred payments associated with the Escrow Fund be
paid over to Continental and not to the Surviving Corporation and permit
Besicorp to repay loans from the buyer six months after the termination date.

On or about September 23, 1999, the Special Committee's representatives
delivered the September 23 Draft of the agreement and plan of merger to
representatives of Mr. Zinn. This draft reflected a number of revisions to the
September 16 Draft. Additional refinement were made to the components of the
deferred payments, which were revised to include certain amounts that might be
received between signing the agreement and closing. Besicorp was required to
irrevocably instruct the Escrow Agent under the Escrow Agreement to release to
Continental the Outside Participating Shareholders' pro rata share of monies
released from the Escrow Fund. Besicorp was permitted to repay loans from the
buyer six months after the termination date; however, limitations were imposed
with respect to the amount of money the buyer was required to lend to Besicorp
and conditions were imposed that had to be satisfied before the buyer was
required to advance a loan. The insurance and indemnification provisions were
revised and certain other representations, covenants and other provisions were
refined. There were no other material changes in this draft. In addition,
drafts of all of the exhibits to the Initial Plan of Merger were circulated.

On or about September 28, 1999, the Special Committee's representatives
delivered the September 28 Draft of the agreement and plan of merger to
representatives of Mr. Zinn. There were no material changes in this draft. In
addition, revised drafts of certain exhibits to the Plan of Merger were
circulated.

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In early October several additional drafts and partial drafts were
circulated. These reflected a number of further minor changes to the agreement
and plan of merger and limited the guaranty's guarantee of the payment of
deferred payment rights by providing Mr. Zinn generally had no obligation to
guarantee payments to the extent that assets of the deferred payment fund are
subject to acts by government entities that prohibit Besicorp from paying
obligations to the Outside Participating Shareholders.

The Special Committee held a conference call with representatives of
Josephthal and Robinson Brog on October 7, 1999. At this meeting the Special
Committee noted that 15 days had passed since the date of the Fairness Opinion
and discussed whether they still could rely on the Fairness Opinion. It was
noted that there had been no material improvements to Besicorp's conditions,
Empire Newsprint Project was encountering unanticipated opposition from third
parties, Besicorp's available cash had continued to decline, Management
continued to predict that Besicorp would run out of funds by November 30, 1999
and no other potential buyers had appeared. The Special Committee concluded
that these changes were not likely to positively impact Besicorp's value and
that it was therefore appropriate to rely on the Fairness Opinion. The Special
Committee also reviewed the current form of the Initial Plan of Merger and the
changes to Mr. Zinn's guaranty. The Special Committee noted the matters and
provisions contained in the draft that they had discussed on September 22,
1999. The Special Committee reviewed the deliberations it had held and the
factor identified under "-- Recommendation of the Special Committee and the
Board of Directors; Fairness of the Merger." The Special Committee then decided
to recommend to the Board that the Board adopt the Initial Plan of Merger.

Immediately after the meeting of the Special Committee, a meeting of the
Board was held. It was confirmed that there had been no material improvements
to Besicorp's conditions, and then Mr. Zinn was asked to excuse himself so the
rest of the Board could consider adopting the Initial Plan of Merger.
Josephthal made a presentation of its Fairness Opinion to the Board. The
Special Committee reviewed with the Board the various factors that it had
considered in its deliberations including the factors set forth above and the
factors identified below under "-- Recommendation of the Special Committee and
the Board of Directors; Fairness of the Merger." The Special Committee then
recommended adoption of the Initial Plan of Merger. Based upon its discussions,
the Board determined that in light of the current circumstances and future
prospects of Besicorp, and the other factors described above and the factors
identified below under "-- Recommendation of the Special Committee and the
Board of Directors; Fairness of the Merger," the Initial Plan of Merger was
fair to and in the best interest of Besicorp and its shareholders (other than
the Buyer). The Board (other than Mr. Zinn, who abstained because he and
members of his immediate family own Parent) adopted the Initial Plan of Merger.
The Initial Plan of Merger was signed on October 7, 1999.

On November 24, 1999, a meeting of the Special Committee was held to
discuss the effects of the Merger on the Bansbach Litigation. The Special
Committee was concerned that consummation of the Merger would cause the named
plaintiff in the Bansbach Litigation to lose his status as a shareholder of
Besicorp, and therefore would cause the termination of the Bansbach Litigation.
See "-- Interests of Executive Officers and Directors in the Merger." In order
to ensure that the Bansbach Litigation was not terminated as a result of the
Merger, the Special Committee decided to recommend a spin-off which would
permit the Bansbach Litigation to continue.

The Special Committee then proceeded to discuss whether the Plan of
Merger, which had been previously circulated and which would supercede the
Initial Plan of Merger, was in the best interest of Besicorp and its
shareholders. Among other matters, the Special Committee discussed the effects
of the Plan of Merger's changes to the Initial Plan. These changes (i)
effectuated the Spin-Off, thereby providing a benefit to Besicorp's
shareholders to the extent the Spin-Off permitted the plaintiff to maintain the
Bansbach Litigation and (ii) made technical changes to clarify certain matters,
including the treatment of shares held by Dissenters and the effect of
appraisal rights on the Merger Consideration.

In connection therewith, the Special Committee reviewed and discussed
various aspects of, and factors pertaining to, the Merger and the Plan of
Merger and the transactions contemplated thereby, including the Spin-Off, and
reviewed and discussed, among other things, its deliberations of September 22,
1999 and October 7, 1999. The Special Committee noted that approximately two
months had passed since the date of Josephthal's Fairness Opinion and discussed
whether they could still rely on the Fairness Opinion. The Special Committee
invited Management to participate in the meeting so as to obtain additional
information regarding Besicorp's financial

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condition and prospects. Management advised the Special Committee that there
had been no favorable material developments regarding Besicorp since the date
of the Fairness Opinion and that no offers for Besicorp, SunWize or the project
initiatives had been made. The Special Committee concluded that it could
continue to rely on the Fairness Opinion. Based upon its discussions, the
Special Committee determined that in light of the current circumstances and
future prospects of Besicorp, the Merger, the Plan of Merger and the Merger
Consideration were fair to and in the best interest of Besicorp and its
shareholders (other than the Buyer). The Special Committee unanimously
recommended that the Board adopt the Plan of Merger.

Immediately afterwards a meeting of the Board was convened. Based upon the
Special Committee's recommendations and upon (i) the Board's discussions of the
effects of the Merger on the Bansbach Litigation and the changes to the Initial
Plan contained in the Plan of Merger, (ii) the Board's review of its
deliberations on October 7, 1999, and (iii) the Board's review and discussion
of various aspects of and factors pertaining to the Merger and the Plan of
Merger and the transactions contemplated thereby, the Board, with Mr. Zinn
abstaining because he and members of his immediate family own Parent, decided
to effectuate a spin-off and determined, that in light of the current
circumstances and future prospects of Besicorp, the Merger, the Plan of Merger
and the Merger Consideration were fair to and in the best interest of Besicorp
and its shareholders (other than the Buyer). The Board (other than Mr. Zinn,
who abstained because he and members of his immediate family own Parent)
adopted the Plan of Merger. On November 24, 1999 the Plan of Merger was signed.

Accordingly, the Merger is intended to maximize the return to Besicorp's
shareholders by providing them with at least $58.87 in cash and a Combined
Deferred Payment Right, for each share of Besicorp Common Stock they hold.
However, as a result, Parent, through Acquisition Corp., will acquire all of
the outstanding shares of Besicorp Common Stock.

If the Merger is effectuated, holders of Besicorp Common Stock will no
longer have any equity interest in Besicorp. Instead, each such shareholder
will receive, upon surrender of the Certificate or Certificates evidencing
Besicorp Common Stock, the Merger Consideration in exchange for each share of
Besicorp Common Stock owned by such shareholder immediately prior to the
Effective Date. See "-- Certain Effects of the Merger."

RECOMMENDATION OF THE SPECIAL COMMITTEE AND THE BOARD OF DIRECTORS; FAIRNESS OF
THE MERGER

The proposed Merger and the Plan of Merger were negotiated by Besicorp and
its representatives on an arms-length basis with Parent. Since Michael F. Zinn
and members of his immediate family beneficially own the Buyer, in order to
protect the unaffiliated shareholders (i.e., the shareholders other than the
Buyer) and provide procedural safeguards regarding the fairness of the
transaction, the Board appointed a Special Committee consisting solely of
Independent Directors, none of whom are employees of Besicorp, to represent
Besicorp in these negotiations and the Special Committee engaged a financial
advisor, Josephthal, which is not affiliated with Besicorp or Mr. Zinn, to
prepare a report concerning the fairness of the transaction. Josephthal was not
engaged to negotiate the terms of the proposed transaction but it did assist
the Special Committee in its negotiations. In addition, the Special Committee
retained a legal advisor, Robinson Brog, to assist it in evaluating the
proposed transaction. The Special Committee also considered requiring adoption
of the Plan of Merger by the shareholders other than the Buyer, but the Buyer
indicated it was unwilling to spend time and money negotiating if approval by
the unaffiliated shareholders would be required. As no one else had expressed
any interest in acquiring Besicorp, funding was unavailable, and Besicorp's
only alternative to negotiating with the Buyer would have been liquidation, the
Special Committee decided not to require approval by the unaffiliated
shareholders, believing that sufficient procedural safeguards were in place to
ensure procedural fairness.

Over the course of an almost five month period, the Special Committee,
with the assistance of these advisors, analyzed and evaluated the proposed
merger and alternatives thereto and negotiated the terms of the Initial Plan of
Merger with the Buyer. As a result of the appointment of the Special Committee,
the engagement of Josephthal to prepare a fairness opinion and to assist in the
negotiations and as a result of the Special Committee's analysis and
evaluation, and after taking into account the Spin-Off, the Special Committee
unanimously determined that the Merger and the Plan of Merger were fair to, and
in the best interests of Besicorp and its shareholders (other than the Buyer),
and unanimously recommended approval of the Merger and adoption of the Plan of
Merger by the Board.

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Following the Special Committee's delivery of its recommendations to the
Board, the Board (other than Mr. Zinn, who abstained because he and members of
his immediate family own Parent) determined that the Merger and the Plan of
Merger are fair to, and in the best interests of, Besicorp and its shareholders
(other than the Buyer), and recommended approval of the Merger and the adoption
of the Plan of Merger by Besicorp's shareholders.

In reaching its conclusion that the Merger and Plan of Merger were in the
best interests of Besicorp and its shareholders, the Special Committee and the
Board considered all the material factors described above in "-- Purpose,
Effects and Background of the Merger," including the information and factors
set forth below.

The most significant factors in favor of adopting the Merger and the Plan
of Merger are as follows:

o Besicorp has liquidity, capital resource and cash flow problems; in
August 1999, Management estimated that Besicorp would be unable to fund
its operations after approximately mid December, 1999. These problems left
Besicorp with the following alternatives or solutions: reduce operating
expenses or obtain financing to fund Besicorp's operations until it became
self- sustaining. Besicorp could reduce its operating expenses by
eliminating expenses relating to power plant developments, which expenses
amount to approximately $550,000 to $850,000 per year; however, this would
only produce a small savings and would only delay briefly Besicorp's
running out of cash. Besicorp had no other means of significantly reducing
its operating expenses. Besicorp could attempt to obtain debt or equity
financing and numerous discussions with Josephthal were conducted
concerning such alternatives. Because its businesses had a history of
losses, and limited prospects for short term profitability, Besicorp would
most likely be unable to obtain debt financing to finance ongoing
operations without a guaranty from Mr. Zinn, which he was unwilling to
provide. While equity financing would not require Mr. Zinn's guaranty,
there were many uncertainties associated with any equity financing,
including how much cash could be raised and what effect such financing
would have on Besicorp's short term and long term liquidity and capital
resources. In addition, an equity financing would dilute substantially the
equity interests of Besicorp's current shareholders. Finally, even if
Besicorp could obtain financing, there was a substantial risk that SunWize
and the power development projects would not become profitable and that
profitability, if achieved, might only be achieved after the passage of at
least three years, if not greater. Thus, it was believed that the equity
financing might merely postpone Besicorp's running out of cash and that
the shareholders would never be able to realize any significant return on
their investment. Because of the uncertainties associated with an equity
financing, the risks and passage of time that would be involved in waiting
for Besicorp to become profitable and the dilution that would reduce the
per share benefits of any profits, the potential benefits associated with
an equity financing were outweighed by the benefits of receiving the Cash
Merger Consideration and the potential for getting additional cash from
the Combined Deferred Payment Rights. Thus, Besicorp concluded its only
realistic options were liquidating or selling the Company.

o Besicorp's liquidity, capital resource and cash flow problems could be
avoided by selling it to a person or entity unaffiliated with Mr. Zinn or
the Buyer. However, no competing proposals to acquire Besicorp emerged and
it seemed unlikely that any competing proposals would emerge in the
foreseeable future: Old Besicorp had been unsuccessful in its limited
attempts to sell the Distributed Businesses; Mr. Zinn had indicated his
opposition to a sale to any other buyer and because his significant
ownership interest in Besicorp would probably permit him to veto (in his
capacity as a Besicorp shareholder) any such transaction, potential buyers
might be less interested in attempting to acquire Besicorp. In addition,
almost four months had elapsed between Besicorp's publicly disclosing Mr.
Zinn's offer and the Board's adopting the Initial Plan of Merger without
any other person offering to acquire Besicorp or any of its businesses.
This factor suggested there would not be any competing offers for
Besicorp, nor any potential for a bidding war driving up the price for
Besicorp and that if it was determined to sell Besicorp, it would be
necessary to sell Besicorp to Mr. Zinn.

o Another alternative was to liquidate Besicorp. No attempt was made to
quantify formally Besicorp's liquidation value for several reasons. First,
the speculative and uncertain nature of the power development projects in
terms of both order of magnitude and the timing of any returns made it
impossible to accurately determine Besicorp's liquidation value. Second,
liquidation was not viewed as a practical strategy: Old Besicorp had, in
effect, begun its attempts to liquidate Besicorp before the Prior
Spin-Off, but no one

38
<PAGE>

other than Mr. Zinn had expressed any interest in acquiring any of
Besicorp's assets for cash. Liquidation was also deemed to be impractical
since if Besicorp were liquidated, a significant number of Besicorp's more
senior employees would likely resign: therefore the purchaser would need
to install and train senior management to run the businesses; the power
development activities depended upon the expertise and contacts of senior
management and without them Besicorp's partners might well have no
interest in pursuing projects with Besicorp. Thus, the potential loss of
senior management made it still less likely that Besicorp would be able to
find anyone interested in acquiring Besicorp's assets and likely that if
anyone were to buy them, a significant discount would be required.
Therefore, even though no attempt was made to quantify formally Besicorp's
liquidation value, it was believed that the per share proceeds from a
liquidation would be less than the Cash Merger Consideration payable per
share.

o Josephthal's presentation and the Fairness Opinion to the effect that, as
of the date of such Opinion, the Merger Consideration to be received by
the Outside Participating Shareholders is fair, from a financial point of
view, to those shareholders, as well as the assumptions made, and the
limitations, in the Fairness Opinion, and the analysis prepared by
Josephthal. Extensive discussions were conducted with respect to
Josephthal's analysis. See "Factors to be Considered -- Purposes, Effects
and Background of the Merger." Consideration was given to the fact that
the Fairness Opinion had not been updated (i.e., approximately two months
elapsed from the rendering of the Fairness Opinion to the date of adoption
of the Plan of Merger), and the number of companies included in
Josephthal's analysis. The absence of an update to the Fairness Opinion
was considered immaterial because there had been no favorable material
developments regarding Besicorp that would suggest that an updated
fairness opinion would result in a higher valuation for Besicorp. The
number of comparable companies and similar transactions involving
comparable companies in Josephthal's analysis was not deemed to be of
particularly high significance because such number is merely a reflection
of the size of the industry in which Besicorp operates and is not
reflective of Besicorp's value. The Fairness Opinion indicated that the
Merger Consideration to be received by the Outside Participating
Shareholders was fair, from a financial point of view, to such
shareholders. The Special Committee and the Board are expressly adopting
the analyses of Josephthal.

o The Outside Participating Shareholders will receive Cash Merger
Consideration of at least $58.87 per share and may receive additional cash
in the future as a result of Combined Deferred Payments. It was observed
that if the Merger was not consummated, Besicorp either would or would not
obtain sufficient financing to fund its operations. If Besicorp did not
obtain financing to fund its operations, Outside Participating
Shareholders would receive no benefit from their shares of Besicorp Common
Stock (except to the extent the Escrow Fund still held monies at the end
of the escrow period (which funds would, after being applied to satisfy
claims of creditors, be distributed to them at a later date)); if Besicorp
obtained financing, it was believed that the benefits associated with a
continued ownership interest in Besicorp were likely to be less than
benefits afforded by receipt of the Merger Consideration in light of the
substantial uncertainties and risks associated with Besicorp's businesses.

The factors that were considered to be of intermediate significance in
favor of adopting the Merger and the Plan of Merger are as follows:

o Besicorp should have an easier time obtaining financing following the
Merger, because Mr. Zinn indicated that if the Buyer acquires Besicorp, he
would be willing to contribute additional equity to Besicorp or guarantee
Besicorp's debt financing, both of which he refused to do unless he and
members of his family owned Besicorp. This factor suggested that it would
be in Besicorp's best interest to "go private" as it would have access as
a private company to financial resources that would otherwise be
unavailable to it.

o By effectuating the Plan of Merger and going private, Besicorp would be
able to eliminate legal, accounting and other miscellaneous fees and
expenses associated with being a public company. This factor suggested
that it would be in Besicorp's best interests to adopt the Plan of Merger
and effectuate the Merger as Besicorp would realize significant cost
savings by being a private company. (See "--Certain Effects of the
Merger.")

o There is no public trading market for Besicorp Common Stock; the Merger
presents to Outside Shareholders an opportunity to convert their illiquid
Besicorp holdings into cash.

39
<PAGE>

o Mr. Zinn guaranteed, with certain exceptions, the payment of the Deferred
Payments. This factor strengthened the prospect that the Combined Deferred
Payment Rights would provide value to the Outside Participating
Shareholders.

The factors that were in favor of adopting the Plan of Merger and
effectuating the Merger but were of less significance than the factors
identified above are as follows:

o The $8 million valuation ascribed to Besicorp by virtue of the Cash
Merger Consideration payable pursuant to the Plan of Merger exceeded by
approximately $1.3 million Besicorp's book value at June 30, 1999 of
approximately $6.7 million (after eliminating approximately $1.4 million
in total assets reflected on Besicorp's consolidated balance sheet
representing amounts held in escrow by third parties and which, to the
extent received by Besicorp, will be distributed pursuant to the Combined
Deferred Payments Rights). The book value at June 30, 1999, the date of
the most current financial information available to Besicorp at the time
the Board adopted the Initial Plan of Merger, was reviewed by the Board.
See "Business of Besicorp -- Potential Non-Recurring Funds." At the time
the Plan of Merger was adopted on November 24, 1999, the $8 million
valuation of Besicorp exceeded by approximately $2.59 million Besicorp's
book value at September 30, 1999, the date of the most current financial
information available to Besicorp at the time the Board adopted the Plan
of Merger, of approximately $5.41 million (after eliminating approximately
$1.46 million in total assets reflected on Besicorp's consolidated balance
sheet representing amounts held in escrow by third parties, which, to the
extent received by Besicorp, will be distributed pursuant to the Combined
Deferred Payments Rights). Further, the Board believed that Besicorp's
book value would likely continue to decline subsequent to the date of
adoption of the Plan of Merger because of Besicorp's ongoing losses.
Josephthal did not provide a book value analysis in its presentation,
explaining that Besicorp's value was based on its earning potential, not
the historical book value of its assets. Therefore, the Special Committee
and the Board did not accord much weight to book value. Since book value
was not an especially significant measure of value (unlike earnings
potential), no attempt was made to value Besicorp on the basis of a
multiple of book value. Nonetheless, the book value suggested that the
Cash Merger Consideration payable to the Outside Participating
Shareholders was fair because the Buyer was not acquiring Besicorp at a
discount to Besicorp's equity value as reflected on its consolidated
financial statements.

o The provisions regarding Acquisition Proposals in the Plan of Merger that
permit the Special Committee or the Board to approve a transaction other
than the Merger if either one of them determines properly that another
transaction is more favorable to the Outside Shareholders. This factor
suggested that the Plan of Merger would not preclude the possibility
(albeit unlikely) of a competing proposal.

o The belief that the non-financial terms of the Plan of Merger, including
the parties' representations, warranties and covenants and conditions to
obligations to consummate the Plan of Merger, are reasonable.

o The Neutralization Tabulation eliminated the ability of the Management
Restricted Shares to influence the outcome of the vote on adopting the
Plan of Merger (although the Special Committee and the Board were aware
that the Buyer together with the Trust had the votes required to adopt the
Plan of Merger). This factor was given only nominal significance because
notwithstanding the Neutralization Tabulation, the Buyer (together with
the Trust) has sufficient votes to adopt the Plan of Merger.

The Special Committee and the Board of Directors also considered potential
drawbacks relating to the Merger and the Plan of Merger. The most serious
drawback associated with the Merger and Plan of Merger was as follows:

o If Besicorp has future successes, for example, if it develops the Empire
Newsprint Project or another power plant project or there are improvements
in its photovoltaic business, the Outside Shareholders will not share in
the benefits of such successes. This concern was addressed by, among other
things, a careful review of the contractual arrangements and status of
Besicorp's development projects and the prospects for improvements in its
photovoltaic business.

40
<PAGE>

Drawbacks to the Merger and the Plan of Merger of intermediate significance
were as follows:

o The gain, if any, recognized by the Outside Participating Shareholders
from the receipt of the Cash Merger Consideration will be taxed in 2000
and will be taxed at long term capital gain rates and the Combined
Deferred Payments will be taxed as long term capital gains, whereas there
will be no immediate tax effect upon the Buyer as a result of the Merger.

o The relative complexity of the Combined Deferred Payment Rights, the
uncertainties with respect to the amount of proceeds to be received from
Combined Deferred Payment Rights and the limitations on the ability of the
Outside Participating Shareholders to monitor the Combined Deferred
Payments or ensure that the Deferred Payments will be paid.

o The degree to which the realization of Combined Deferred Payments are
within the control of the Surviving Corporation whose actions may
compromise, delay and reduce certain of such payments and the limitations
with respect to Mr. Zinn's guarantee of such payment. These concerns, as
well as the concern identified immediately above, were addressed in part
by (i) requiring the Surviving Corporation to deliver irrevocable
instructions to the Escrow Agent to distribute to Continental -- and not
the Surviving Corporation -- any monies payable to the Outside
Participating Shareholders pursuant to the Escrow Fund Payment Rights and
(ii) requiring the Surviving Corporation to deliver to the Outside
Participating Shareholders certain information whenever a deferred payment
is made to them.

Drawbacks to the Merger and the Plan of Merger of lesser significance were
as follows:

o The possibility Besicorp will default under the Parent Loan before the
Merger is consummated and the probability that Besicorp will default under
the Parent Loan if the Plan of Merger is terminated; in the event of a
default under the Parent Loan, because Parent has a security interest in
Besicorp's assets and could foreclose on those assets.

o Mr. Zinn and other executive officers and directors will benefit (without
the Outside Shareholders benefiting as well) from the effectuation of the
Merger because they have interests in addition to or different from the
interests of the Outside Shareholders. For example, Mr. Zinn will increase
his holdings in Besicorp (and indirectly become its sole owner).

Neither the Special Committee nor the Board considered current market
prices or historical market prices for Besicorp Common Stock because, inasmuch
as the Besicorp Common Stock is not publicly traded, no such prices were
available.

Except as set forth above, the Special Committee and the Board did not
quantify, rank or otherwise assign relative weights to the specific factors
they considered. In considering the factors described above, individual members
of the Special Committee and the Board may have given different weight to
different factors. The Special Committee and the Board considered all these
factors as a whole, and considered the factors collectively to be favorable to
and to support their determination that the Merger and the Plan of Merger are
fair to, and in the best interests of, Besicorp and its shareholders (other
than the Buyer).

RECOMMENDATION OF THE BUYER: FAIRNESS OF THE MERGER

The Buyer and Michael F. Zinn believe that the procedures by which the
Merger was negotiated and the Merger Consideration was determined are fair to
the Outside Participating Shareholders of Besicorp, notwithstanding his refusal
to guarantee Besicorp's indebtedness and his indicating that he would oppose
any sale of Besicorp to a third party.

The Buyer and Mr. Zinn note the following procedural safeguards. In order
to avoid unduly influencing Besicorp in its deliberations, including in the
negotiations with the Buyer, Michael Zinn refrained from participating in
meetings and votes of the Board (except to the extent that the Board sought
information from him as an officer of Besicorp) regarding the Merger. To
further minimize his influence, a committee (i.e., the Special Committee)
consisting solely of Independent Directors was appointed to consider Besicorp's
options and ultimately to negotiate with the Buyer. This Special Committee
selected and engaged a financial advisor, Josephthal, and Josephthal provided
the Fairness Opinion. The Buyer and Michael Zinn expressly adopt the analyses

41
<PAGE>

of Josephthal. The Special Committee also selected and engaged legal counsel.
The Plan of Merger contains additional safeguards intended to protect the
Outside Participating Shareholders: most significantly, pursuant to the Plan of
Merger, the Special Committee has the right to terminate the Plan of Merger and
the obligations of Besicorp pursuant to the Plan of Merger either (i) if
Besicorp receives an offer to buy its assets, business or securities which
would be more favorable to the shareholders than the terms contained in the
Plan of Merger or (ii) if the Special Committee concludes that the Merger
Consideration is not fair. In addition, the NYBCL provides a method by which
shareholders may seek an appraisal of their shares if they believe that the
Merger Consideration is not fair. Additional measures could have been taken:
Mr. Zinn could have been required to agree to "neutralized" voting (i.e., vote
his shares in the same manner as the other shareholders so as to not affect the
vote of shareholders to approve the Plan of Merger or any vote with respect to
the sale of Besicorp or certain of its assets to a third party). These
additional measures were not taken since they were not required under the
NYBCL, and Mr. Zinn believed that as a shareholder he should be allowed to vote
his shares as he chose. Mr. Zinn also believed that Besicorp's financial
condition was so precarious that it would not be in the shareholders' best
interests to unnecessarily risk delaying a closing so long that Besicorp might
be forced to liquidate before a sale could be consummated. The Buyer and Mr.
Zinn note particularly that they would not have been willing to effect the
Parent Loan if they had been required to agree to neutralized voting, since if
the shareholders had voted against the Plan of Merger Besicorp would not have
had the means to repay the Parent Loan; without the Parent Loan Besicorp would
have had no money with which to fund operations after December 15, 1999. In
fact, the Buyer and Mr. Zinn thought that Besicorp's financial condition was so
precarious that they indicated they were unwilling to spend time and money
negotiating if neutralized voting would be required.

The Buyer and Mr. Zinn believe that the Merger, Merger Consideration and
Plan of Merger are fair and in the best interests of, Besicorp's shareholders
(other than the Buyer) and recommends adoption of the Plan of Merger by
Besicorp's shareholders.

The most significant factors upon which the Buyer and Mr. Zinn base their
belief that the Merger and Merger Consideration are in the best interests of
the Outside Participating Shareholders are the necessity for Besicorp to engage
in transaction which would result in an infusion of cash; the lack of a trading
market for the Besicorp Common Stock; and the valuation of the Besicorp Common
Stock at the time of the Prior Merger.

At the time of the Prior Merger, management disclosed to shareholders of
Besicorp that, after giving effect to projected losses from operations, the
funds available to Besicorp were only sufficient to allow Besicorp to continue
operations for approximately two to six months. For Fiscal 1999 and Fiscal
1998, the businesses which constitute Besicorp had losses on a historical basis
of $5.8 million and $7.2 million, respectively, on total revenues of $5.7
million and $7.4 million, respectively. Although Management has taken short
term steps to reduce overhead, the failure of Besicorp to obtain additional
funds or otherwise reduce its short term obligations will materially adversely
affect it and require it to severely curtail operations. Neither the Buyer nor
Michael F. Zinn is aware of any offer which would have resulted in an infusion
of cash into Besicorp (other than the offer by Parent to engage in the Merger).
Mr. Zinn expressed his intent not to infuse capital into Besicorp or to
personally guarantee any corporate borrowings by it. Consequently, without a
transaction in which a cash infusion or other financing is a possibility,
Besicorp faces insolvency and the curtailment or termination of its business
and operations.

The Besicorp Common Stock is not listed on any Exchange. To the knowledge
of the Buyer, there has been no public trading of the Besicorp Common Stock
since it was distributed to the former holders of Old Besicorp Common Stock in
the Prior Distribution. Consequently, the Merger is a method by which
shareholders of Besicorp can realize the value of their shares of Besicorp
Common Stock in the foreseeable future.

In connection with the Prior Distribution, and for the purposes of
determining the income tax payable by shareholders because of the distribution
to them of shares of Besicorp Common Stock, Old Besicorp valued the Besicorp
Common Stock at $43.01 per share in the information statement distributed to
shareholders of Old Besicorp in connection with the Prior Distribution.

OPINION OF FINANCIAL ADVISOR

Josephthal was retained to render an opinion as to the fairness, from a
financial point of view, to the holders of Besicorp common stock, other than
Michael F. Zinn, of the consideration to be paid to the holders in the

42
<PAGE>

Merger. No limits were imposed by the Board, the Special Committee or
Besicorp's Management on Josephthal's investigation or on the procedures
followed by Josephthal in preparing and rendering its opinion. On September 22,
1999, Josephthal delivered to the Special Committee, and on October 7, 1999,
Josephthal delivered to the Board, the Fairness Opinion dated September 22,
1999 to the effect that, based upon and subject to the considerations set forth
in its opinion as of September 22, 1999, the Merger Consideration was fair to
Besicorp's shareholders (other than Michael F. Zinn) from a financial point of
view.

The full text of the Fairness Opinion, including the assumptions made by
Josephthal and the general procedures followed by Josephthal, is set forth in
Annex B to this Proxy Statement. Each shareholder is urged to read the Fairness
Opinion in its entirety. The Fairness Opinion addresses only the fairness of
the Merger Consideration and does not constitute a recommendation to any holder
of Besicorp Common Stock as to how such holder should vote on the proposal to
adopt the Plan of Merger.

In arriving at its opinion, Josephthal reviewed the following materials
and considered such financial and other factors it deemed relevant under the
circumstances, including, among others, the following: (i) certain historical
financial, operating and other data that were publicly available or were
furnished to Josephthal by Besicorp regarding the Merger including, but not
limited to: (a) projections and cash flow analyses for SunWize prepared by
management; (b) Besicorp's Annual Report on Form 10-KSB and Form 10-KSB/A for
Fiscal 1999; (c) Old Besicorp's Proxy Statement dated March 1, 1999; (d) the
Information Statement regarding Besicorp dated March 1, 1999; (e) Besicorp's
Quarterly Report on Form 10-QSB for the period ending June 30, 1999; (f)
internally generated operating reports and discussions from Management
concerning the various business segments of Besicorp; (g) the Financial Model
for the Empire Newsprint Project prepared by Besicorp, with the assistance of
Morgan Stanley Dean Witter; (h) real estate appraisals and valuations of
partnership interests and Hydro-Credits prepared by Management with the
assistance of identified third parties; (ii) various press releases regarding
the development and status of the Empire Newsprint Project and other projects;
(iii) publicly available financial, operating and stock market data for
companies engaged in business deemed comparable to Besicorp's; (iv) merger and
acquisition transactions by companies in the same or similar businesses
considered to have degrees of comparability to the Merger; and (v) such other
factors and information as Josephthal deemed appropriate.

Josephthal also met with Besicorp's senior officers to discuss the
prospects for Besicorp's businesses and such other matters as Josephthal
believed were relevant to its analysis. In addition, Josephthal reviewed the
draft, dated as of September 16, 1999, of the agreement and plan of merger.
Josephthal was advised by Michael F. Zinn that he : (i) was unwilling to
continue as an employee of Besicorp under current conditions; (ii) would not
continue as an employee at Besicorp if he were not in control; (iii) in his
capacity as a shareholder, would not approve the sale of Besicorp's assets to a
third party and would vote against such sale and had been advised by the
Trustee of the Trust that the Trust also opposes any sale of assets and would
similarly vote against such sale to a third party; (iv) was unwilling to
purchase some, but less than all, of Besicorp's business assets; and (v) would
not personally guarantee any debt or debt-related financings in a public
company, including Besicorp. Josephthal assumed that the representations and
warranties in the agreement and the plan of merger would be true and that the
agreement and the plan of merger would be completed in accordance with the
terms of such agreement. The Fairness Opinion is necessarily based on economic,
market and financial conditions, and the information made available to
Josephthal, as of the date of such Fairness Opinion.

In preparing its opinion, Josephthal reviewed the various business
segments and assets of Besicorp identified by management. Josephthal divided
assets into categories and estimated valuation ranges for each category based
upon information provided by Management and on materials obtained through due
diligence. The valuation ranges pertaining to the individual assets and
Besicorp as a whole are not necessarily indicative of actual values or
predictive of future results or values, which may be significantly more or less
favorable than those suggested by such analyses. In addition, analyses relating
to the value of the business assets do not purport to be appraisals or
necessarily reflect the prices at which the business assets actually may be
sold or valued by additional third parties. Accordingly, such estimates are
inherently subject to substantial uncertainties.

In evaluating the fairness of the merger consideration, Josephthal
considered and evaluated the following: (i) the SunWize business; (ii) all
outstanding projects and identified prospective projects of Besicorp
Development Inc. and other subsidiaries of Besicorp and SunWize; (iii)
outstanding partnership interests and credits due

43
<PAGE>

to Besicorp which may result in cash inflows to Besicorp; (iv) Besicorp real
estate, including the properties used in existing business operations and
properties that were not essential to Besicorp's existing business operations;
and (v) the Escrow Fund, established in connection with the merger involving
old Besicorp to fund the litigation costs, judgments and/or assist in the
settlement of any litigation pending against old Besicorp or arising out of the
prior Merger. Josephthal noted that the combined Deferred Payments are excluded
from the Cash Merger Consideration, and any monies received will be segregated
and distributed pro rata to shareholders of record as of the Effective Time.

SunWize. In assessing the value of the SunWize business, Josephthal
researched publicly-available information on the photovoltaic industry, and
with management's assistance, identified public companies with operations
comparable to SunWize. Josephthal also reviewed and relied upon financial
projections with respect to SunWize prepared by Besicorp's management. To
estimate value ranges for the SunWize business, Josephthal performed an
analysis of comparable companies and comparable transactions and evaluated an
analysis of discounted cash flow.

(a) Comparable Public Company Analysis.

Josephthal analyzed certain publicly-traded companies that Management
and Josephthal believed were generally comparable to SunWize (the
"Comparable Companies"). The Comparable Companies were Golden Genesis,
Astropower, Inc. Energy Conversion Devices, Inc. and Spire Corporation.
Josephthal compared the ratio of each Comparable Company's stock price as
of September 11, 1999 to the each public company's earnings before
interest, taxes, depreciation and amortization ("EBITDA"), earnings before
interest and taxes ("EBIT"), certain operating margins, financial ratios
and projected growth rates. In some cases, information was adjusted for
extraordinary or non- recurring items.

Josephthal also compared the ratio of each company's equity value as of
September 11, 1999 plus debt less cash and equivalents ("Enterprise Value")
to their respective revenues, EBITDA and EBIT during the most recent
12-month period ("LTM"), and the ratios of their stock prices as of
September 11, 1999 to their respective LTM earnings per share and projected
fiscal year 1999 and 2000 earnings per share.

44
<PAGE>

The chart below indicates the results of Josephthal's analysis:

Solar Power Industry Selected Measures of Relative Valuation
- --------------------------------------------------------------------------------
Selected Comparable Company Analysis
(thousands, except per share figures)

<TABLE>
<CAPTION>
Stock
Price 52 Week
Name Tkr 9/11/99 High Low Shs Mkt Cap
- --------------------------------- ------ -------------- ---------- --------- -------- ---------
$ $
<S> <C> <C> <C> <C> <C> <C>
Golden Genesis Company GGGO $ 2.31(5) 2.31(5) 0.78 17,153 39,666
Astropower, Inc. APWR $ 14.1 18.50 5.88 8,731 123,323
Energy Conversion Devices, Inc. ENER $ 12.50 15.00 4.63 13,283 166,033
Spire Corporation SPIR $ 3.50 5.69 2.25 3,245 11,358
Median $ 8.00 -0- -0- -0- 81,494
Average $ 8.11 -0- -0- -0- 85,095
Minimum $ 2.31 -0- -0- -0- 11,358
Maximum $ 14.13 -0- -0- -0- 166,033

<CAPTION>
P/E Multiplies Ent Val Multiples of
------------------------------- ------------------------------ Rev.
REV(7) EBITDA(3) EBIT(4) Growth
-------- --------- --------- ------------
Name Ent Val(1) LTM(2) F99E F00E LTM LTM LTM LFY
- --------------------------------- ---------- --------- --------- --------- -------- --------- --------- ------------
$ X X X X X X
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Golden Genesis Company 49,007 NM(6) NM NM 1.1 NM NM 32.0%
Astropower, Inc. 121,173 48.7 56.5 28.3 4.3 44.0 72.8 39.5%
Energy Conversion Devices, Inc. 146,053 NM NM NM 4.5 NM NM 6.7%
Spire Corporation 12,398 NM NM NM 1.0 NM NM (38.5%)
Median 85,090 48.7 56.5 28.3 2.7 44.0 72.8 19.4%
Average 82,158 48.7 56.5 28.3 2.7 44.0 72.8 9.9%
Minimum 12,398 48.7 56.5 28.3 1.0 44.0 72.8 (38.5%)
Maximum 146,053 48.7 56.5 28.3 4.5 44.0 72.8 39.5%

<CAPTION>
Growth and Margin Analysis
------------------------------------------------
Gross Margin Operating Margin
---------------------- ------------------------
Name LFY LTM LFY LTM
- --------------------------------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Golden Genesis Company 16.6% 16.6% ( 2.6%) ( 3.2%)
Astropower, Inc. 25.6% 26.1% 4.7% 5.9%
Energy Conversion Devices, Inc. 10.4% 8.9% (53.4%) (40.3%)
Spire Corporation 20.7% 21.3% (24.4%) (18.4%)
Median 18.7% 18.9% (13.5%) (10.8%)
Average 18.3% 18.2% (18.9%) (14.0%)
Minimum 10.4% 8.9% (53.4%) (40.3%)
Maximum 25.6% 26.1% 4.7% 5.9%
</TABLE>

- --------
(1) Enterprise Value is equal to total market capitalization with debt added and
cash removed.
(2) LTM means Last Twelve months of reported data.
(3) EBITDA means earnings before interest, depreciation, amortization and tax
expenses.
(4) EBIT means earnings before interest and tax expense.
(5) Golden Genesis stock price as of 8/99 (Acquired by Kyocera).
(6) NM means not meaningful
(7) Rev. means revenues

45
<PAGE>

To eliminate the impact of differing capital structures, Josephthal
ascribed greater weight to the multiple of Enterprise Value to LTM revenue
in estimating a value for the SunWize business than to the multiples
indicated by the other ratios.

Josephthal did not rely solely on the quantitative results of the
analysis, but also made qualitative judgments concerning differences in
financial and operating characteristics of SunWize and the Comparable
Companies and other factors that could affect the values of each.
Josephthal chose the Comparable Companies because they have general
business, operating and financial characteristics similar to those of
SunWize; although, for purposes of this analysis, Josephthal took note of
management's view that Golden Genesis was the only Comparable Company that
primarily distributes, resells and markets photovoltaic systems and related
products and directly competes with the business operations of SunWize.
Based on this analysis, Josephthal estimated a value for SunWize of
approximately $5.5 million.

(b) Comparable Transaction Analysis

Josephthal also reviewed certain publicly available financial
information relating to the merger and acquisition transactions in
SunWize's industry that were completed over the prior two years that
Josephthal deemed generally comparable to the Merger (the "Comparable
Transactions"). For these Comparable Transactions, Josephthal reviewed
certain publicly available financial information for the acquired company,
including revenue, book value, EBITDA, EBIT, net income and certain
valuation statistics, as adjusted for certain extraordinary and
non-recurring items. Financial information was not available for three of
the transactions. Josephthal noted that no company used in the analysis is
identical to SunWize. Accordingly, Josephthal did not rely solely on the
results of the analysis, but also made qualitative judgments concerning
differences in financial and operating characteristics of the Comparable
Transactions and other factors that could affect the value of the companies
or transactions to which the SunWize business is being compared. In
reviewing the Comparable Transactions, Josephthal noted that the August
1999 acquisition of Golden Genesis by Kyocera was likely the transaction
that was most comparable to the Merger since the only other transaction for
which financial information was available involved the acquisition of only
a small percentage of the company's stock. In this transaction, Kyocera
acquired Golden Genesis for approximately $40.0 million and the assumption
of approximately $10.7 million in debt, for a transaction value of
approximately $50.7 million or a multiple of 1.1x of Golden Genesis' LTM
sales (of approximately $45.0 million). Using this transaction as a
comparable, Josephthal estimated a value for SunWize based on its sales of
approximately $5.0 million for fiscal year 1999 and the multiple of such
sales represented by the Golden Genesis transaction of approximately $5.6
million.

Josephthal also reviewed an analysis of "free cash flow" prepared by
Management and discounted these cash flows as another means of estimating
the value of SunWize. In this analysis, Josephthal discounted to present
value a stream of cash flows projected by Management through December 31,
2003. The year to year cash flows were all negative. Josephthal added to
this stream, however, a "terminal" year cash flow which was calculated by
multiplying SunWize's projected revenues for fiscal year 2003 as estimated
by Management by the multiple of LTM sales derived from the Golden Genesis
transaction described above. For purposes of this analysis, Josephthal
reviewed and relied upon management's projections of "free cash flow" of
($2.8 million), ($2.8 million), ($2.7 million) and ($46,000) for the years
ending March 31, 2000-2003, respectively. Josephthal defined "free cash
flow" as EBIT plus depreciation and amortization less capital expenditures
and working capital requirements. Josephthal used discount rates ranging
from 30% to 40% which it derived based on a study conducted by Venture
Economics Information Services which showed that the three-year and
five-year averaged annualized returns for early stage venture capital
investments ending December 31, 1998 were 37.7% and 33.7%, respectively.
Based on discussions with Management regarding its view of Besicorp's
financial position and future cash needs, Josephthal assumed that equity
investors in SunWize would expect returns similar to, or better than, those
required by investors in early stage venture capital investments. Based on
this analysis, Josephthal estimated a value for SunWize of approximately
$6.4 million.

46
<PAGE>

Besicorp Development. In evaluating Besicorp Development, Josephthal
analyzed the status and stage of development of the following projects: (i) the
Empire Newsprint Project; (ii) the Krishnapatnam Project; (iii) the Brazilian
development projects; (iv) the Mexican development projects; and (v) the Gabon
Initiative. Josephthal relied upon information furnished by Besicorp.

(a) Empire Newsprint Project.

Josephthal used a discounted cash flow analysis to estimate the current
Net Present Value ("NPV") of the Empire Newsprint Project. Based upon the
early nature of the Project, Josephthal assumed that the development
capital would require returns in the 30- 40% range. In preparing its model,
Josephthal accepted (without making any changes) the cash flows projected
in the Financial Model of the project previously prepared by Morgan Stanley
Dean Witter and Management. The Financial Model had been prepared for
lenders in connection with a potential financing of the project. In
Josephthal's view, the projections likely represented the most optimistic
view of the project since the Financial Model was being used for financing
purposes. The Financial Model assumed that it would take four years to
develop the project and that Besicorp and Empire Newsprint would maintain
an aggregate ownership of 20% in both the power plant and the paper mill.
The Financial Model further assumed a tax rate equal to 41% with a capital
structure comprise of 81% debt and 19% equity. The debt was assumed to bear
interest at a rate ranging from 7% to 9.5%. The Financial Model presented
discounted cash flows for the four-year period of development and twenty
years of operations. However, based on the discussions with management,
Josephthal assumed that the plant would have no terminal value. Based upon
the project assumptions provided by Management and the Financial Model,
Josephthal estimated that the NPV as of July 1999 for the Empire Newsprint
project ranged from $988,000 (utilizing a 40% discount rate per annum) to
$1,889,000 (utilizing a 35% discount rate per annum).

(b) Other Projects.

Josephthal also reviewed the Krishnapatnam Project, the Brazilian
development projects, the Mexico development projects and the Gabon
Initiative, focusing on: (i) the status of the development efforts to date;
(ii) Management's internal reports on the status of projects; (iii)
uncertainties and contingencies identified by Besicorp and Josephthal; (iv)
macroeconomic conditions, including, but not limited to, government
regulations and currency fluctuations; (v) construction outlays, costs and
potential financing sources; and (vi) negotiated contracts and agreements
to date. Based on numerous discussions with management, Josephthal
concluded that there is little chance for the construction, development and
success of these projects. As a result of the analyses and due diligence
performed, Josephthal did not ascribe any value to these projects.

Real Estate. Josephthal also reviewed the current properties owned by
Besicorp and information provided to Josephthal by Management regarding the
value of these properties including appraisals. Josephthal focused on only
those properties which were not deemed necessary to Besicorp's overall
businesses. These excess properties were 1151 Flatbush Road, Cascade Drive and
48 Canal Street.

In reviewing the information provided for the property located at 1151
Flatbush Road, which serves as Besicorp's headquarters and includes an 80 unit
self-storage facility, Josephthal noted that the property may be too large for
Besicorp's existing and near term operations and needs. Thus, Josephthal
estimated the value that Besicorp may be able to realize by selling 1151
Flatbush and relocating the corporate headquarters to a smaller location.
Josephthal then estimated the cost of purchasing a new property as well as
transaction costs associated with buying and selling real estate. To this "net"
value, Josephthal added estimated values for the Cascade and 48 Canal Street
properties which were based on Besicorp's purchase price for Cascade and a
recent appraisal for 48 Canal Street provided to Josephthal and estimated a
value of approximately $716,000 for Besicorp's "excess" real estate.

In assessing the overall valuation range of Besicorp, including all of the
various business assets of Besicorp, Josephthal assumed and relied upon the
accuracy and completeness of all of the financial and other information
provided to it by Besicorp or that was publicly available and neither attempted
independently to verify nor assumed responsibility for verifying any of this
information. Josephthal did not conduct a physical inspection of Besicorp's
properties or facilities and did not make any independent evaluations or
appraisals of any of the properties, facilities or business segments.
Josephthal assumed that management's financial analyses were

47
<PAGE>

prepared on a good faith reasonable basis reflecting the best currently
available estimates and judgments of Management and/or financial consultants or
advisors to Besicorp. Based upon the assets identified and described above and
information provided to Josephthal by Besicorp, either through materials sent
to Josephthal or publicly available, and after deducting $288,000 on account of
SunWize's portion of Besicorp's equipment lease (other than that portion
included as a depreciation expense), Josephthal estimated values for Besicorp
(without giving effect to any of the components of the Adjustment Amounts)
ranging from approximately $7.0 million to $8.8 million.

The summary above sets forth all of the material assumptions, factors and
analyses considered by Josephthal but does not purport to be a complete
description of Josephthal's analyses. The preparation of a fairness opinion is
a complex process and is not necessarily susceptible to partial analysis or
summary description. Josephthal believes that the summary and its analyses must
be considered as a whole and that selecting portions thereof, without all of
its analyses, could create an incomplete view of the processes underlying its
analyses and opinion. Josephthal based its analyses on assumptions that it
deemed reasonable, including assumptions concerning general business and
economic conditions. Josephthal's analyses are not necessarily indicative of
actual values or actual future results that might be achieved. These values may
be higher or lower than those indicated. Moreover, Josephthal's analyses are
not, and do not purport to be, appraisals or other wise reflective of the
prices at which businesses or securities actually could be bought or sold.

Josephthal was engaged on June 8, 1999 to provide financial advisory
services and to provide a fairness opinion such as the Fairness Opinion. Under
the terms of its engagement, Besicorp has paid Josephthal a total of $50,000
for services rendered thereunder, excluding the rendering of the Fairness
Opinion. Besicorp also agreed to reimburse Josephthal for reasonable expenses
incurred by Josephthal under its engagement not to exceed $5,000 without
Besicorp's approval and to indemnify Josephthal against certain liabilities,
including liabilities under the federal securities laws. Also see "Information
Regarding Parent and Acquisition Corp." Besicorp has also agreed to pay
Josephthal a fee of $75,000 for rendering the Fairness Opinion and, contingent
upon completion of the Merger, $50,000 for services rendered in connection with
the Merger.

Josephthal was previously engaged by Old Besicorp to provide advisory
services, including assisting Old Besicorp in formulating and consummating a
strategy or transaction to maximize the value of the MRA to Old Besicorp's
shareholders, to sell the Power Plants and to provide a fairness opinion in
connection with the consideration paid in the Prior Merger. Old Besicorp paid
Josephthal a total of $852,571 for services rendered thereunder, including the
rendering of a fairness opinion with respect to the MRA. Old Besicorp also paid
Josephthal a fee of $200,000 for rendering the fairness opinion in connection
with the Prior Merger and $800,000 for other services rendered in connection
with the Prior Merger. Josephthal received an aggregate of $315,000 from the
Partnerships with respect to the sale of the Power Plants

Josephthal has consented to the use of the Fairness Opinion in this Proxy
Statement but advised Besicorp that the Fairness Opinion is "solely for the
benefit and use of Besicorp and its Special Committee and Board of Directors"
and, as such, may not be relied upon by third parties, such as Besicorp's
shareholders. Josephthal believes that under the terms of its engagement letter
with Besicorp, which is governed by New York state law, Josephthal has no legal
responsibility to any other persons, including Besicorp's shareholders, as a
result of the express disclaimers described above. Josephthal has advised the
Board that it intends to assert the disclaimer as a defense to any claims that
may be brought against it by shareholders with respect to the Fairness Opinion.
However, since, according to Josephthal, no New York state court or federal
court applying New York law has definitively ruled on the availability to a
financial advisor, such as Josephthal, of an express disclaimer as a defense to
shareholder liability with respect to a fairness opinion such as the Fairness
Opinion, the issue necessarily would have to be resolved by a court of
competent jurisdiction. The availability or non-availability of such a defense
will have no effect on Josephthal's rights and responsibilities under federal
securities laws, or the rights and responsibilities of the Board under
governing state law or under federal securities laws.

Josephthal was selected to provide a fairness opinion because it is a
nationally recognized investment banking firm and is familiar with Besicorp's
operations since it had been retained to provide advisory services to Old
Besicorp. As part of its investment banking practice, Josephthal regularly
values businesses and securities in connection with mergers and acquisitions.
In the ordinary course of business, Josephthal may trade the securities of
Besicorp for its own account and for the accounts of its customers, and may at
any time hold a long or short position in Besicorp's securities.

48
<PAGE>

REPORTS OF COMMERCIAL ASSOCIATES

Commercial Associates, which was selected by Besicorp because it is a
commercial real estate broker based in Kingston, New York, provided two
opinions dated August 18, 1999. These opinions were not intended to be
appraisals. The first opinion contained a valuation of the Corporate
Headquarters and an 80 unit self-storage facility on the same property.
Commercial Associates decided to base its valuation on the income
capitalization of the property as there were no recent sales of comparable
properties but there were recent leases. Commercial Associates' analysis
indicated that the Corporate Headquarter's annual net operating income should
be $78,500. Applying a 12% capitalization, which Commercial Associates deemed
typical in the market, to this income Commercial Associates concluded that the
Corporate Headquarters had a value of $650,000. Commercial Associates' analysis
of the storage facility indicated that its annual net operating income should
be $40,000 and should be capitalized at 11%, which Commercial Associates deemed
appropriate because of the lesser risks. This produced a value of $364,000.
However, because of the ease with which a similar facility could be constructed
elsewhere in Kingston at a cost of $275,000, Commercial discounted the value to
$325,000, and further indicated that if the Corporate Headquarters and the
storage facility were sold together, they should be further discounted to an
aggregate of $900,000. The second opinion contained a valuation of Besicorp's
warehouse/manufacturing building in Ellenville, New York. Commercial Associates
noted that the building is located in an extremely depressed economic market
and that similar buildings have been on the market for extended periods of time
and sold for $4 to $6 per square foot. Commercial Associates concluded that the
value of the property was $225,000.

Commercial Associates, which is not affiliated with Besicorp, received
$300 for its services.

INTERESTS OF EXECUTIVE OFFICERS AND DIRECTORS IN THE MERGER

In considering the recommendations of the Special Committee and the Board
with respect to the Merger, shareholders should be aware that certain members
of Besicorp's Management and the Board have certain interests in the Merger
that are in addition to or different from the interests of the Outside
Shareholders. The Special Committee and the Board were aware of these interests
and considered them, among other things, in adopting the Plan of Merger.

No officers or directors will be paid bonuses by Besicorp in connection
with the Merger nor will the consummation of the Merger give rise to any
termination or severance payments.

Pursuant to the Incentive Plan, Besicorp issued Restricted Shares to
certain of its employees, officers and directors. At present, 14,500 Restricted
Shares are issued and outstanding, consisting of 13,450 Management Restricted
Shares which are held by employees, officers and directors (but not by
Independent Directors), and 1,050 Independent Directors' Restricted Shares, all
of which are held by Independent Directors. Certain executive officers and
directors, including Michael F. Zinn, own 8,575 Management Restricted Shares.
See "Business of Besicorp -- Security Ownership of Certain Beneficial Owners
and Management." Besicorp has not granted any other Rights, including Rights to
acquire Restricted Shares, and does not anticipate granting any Rights between
now and the Effective Date. In the Spin-Off, the holders of the Restricted
Shares will receive one share of WOM Restricted Stock for each of these
Restricted Shares and these shares of WOM Restricted Stock will be held in
escrow by Besicorp. See "Spin-Off."

49
<PAGE>

The following table summarizes the outstanding Restricted Shares, what
will happen to them upon the effectuation of the Spin-Off and Merger, when they
will vest and what would happen if any of the Restricted Shares become forfeit
prior to their vesting:

<TABLE>
<CAPTION>
What will happen
Type of Restricted at Time of When Restricted Effect of Post-
Share(1) Merger Securities vest(2) Merger Forfeiture(3)
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Independent Directors' Receive Merger Upon the occurrence Not applicable
Restricted Shares Consideration; of Merger
WOM Restricted
Stock vests
- -------------------------------------------------------------------------------------------------
Management Restricted Receive Restricted The Restricted The Restricted
Shares Merger Merger Merger Consideration
Consideration Consideration and will become property
(which is identical WOM Restricted of the Surviving
to the Merger Stock will vest Corporation(4) (and
Consideration but according to the will benefit those
will be held in terms of the issuance persons who are
escrow until it of the Management shareholders at such
vests); WOM Restricted Shares time(5)) and the
Restricted Stock (generally 1/3 on shares of WOM
remains in escrow May 2, 2002, 1/3 on Restricted Stock are
May 2, 2003, and cancelled.
1/3 on May 2, 2004)
- -------------------------------------------------------------------------------------------------
</TABLE>

- ------------
(1) Will receive one share of WOM Restricted Stock for each Restricted Share.

(2) Unless the administrator for the Incentive Plan accelerates the vesting
(and such administrator has indicated that it will not accelerate their
vesting).

(3) If any Restricted Shares are forfeited and cancelled before the Merger,
assuming no Substitute Restricted Shares are issued in connection with
such cancellation, the per share Merger Consideration will increase. See
"Plan of Merger -- Merger Consideration."

(4) Restricted Merger Consideration will generally be forfeited, to the extent
it has not vested, if the employee entitled to such Merger Consideration
ceases to be employed by the Surviving Corporation.

(5) Presumably, the Surviving Corporation will be a wholly owned subsidiary of
Parent, which will be owned beneficially by Mr. Zinn and members of his
immediate family.

50
<PAGE>

Set forth below is a table describing (i) the Restricted Shares held by
executive officers and directors of Besicorp, (ii) the effect of the Merger on
each Restricted Share and (iii) and the dollar value of the Restricted Shares
as a result of the Merger:

<TABLE>
<CAPTION>
Name and Position Effect of Merger
of Executive Officer Number of on Dollar Value of
or Director Restricted Shares Restricted Shares Restricted Shares(1)
- ------------------------------------------- ------------------- ------------------- ---------------------
<S> <C> <C> <C>
Gerald Habib, Director .................... 350 Will Vest $ 20,605
Richard Rosen, Director ................... 350 Will Vest $ 20,605
Melanie Norden, Director .................. 350 Will Vest $ 20,605
Michael F. Zinn, Chairman of the
Board, President and CEO ................. 3,000 Will Not Vest $ 176,610(2)
Michael J. Daley, Director, Executive
Vice President and CFO ................... 1,750 Will Not Vest $ 103,023(2)
Joseph P. Novarro, Vice President ......... 625 Will Not Vest $ 36,794(2)
Frederic M. Zinn, Senior Vice
President and General Counsel ............ 1,750 Will Not Vest $ 103,023(2)
James E. Curtin, Vice President and
Controller ............................... 400 Will Not Vest $ 23,548(2)
</TABLE>

- ------------
(1) Based on the difference between (i) the grant price of $0.00 per share for
the issuance of the Restricted Shares and (ii) the Merger Consideration
applicable to such Restricted Shares, assuming in each case that the Cash
Merger Consideration will be $58.87 and that there are no Combined
Deferred Payments. See "Plan of Merger -- Merger Consideration" for an
explanation on how the actual Merger Consideration will be calculated.

(2) Represents the Restricted Merger Consideration to which this person is
entitled. Restricted Merger Consideration will be held in escrow by the
Surviving Corporation until the end of the restricted period.

Michael F. Zinn's ownership interest in Besicorp will increase while the
Outside Shareholders' interest will be eliminated as a result of the Merger. At
present, Mr. Zinn beneficially owns approximately 44.9% of the shares of
Besicorp. Following the Merger, he and immediate relatives will indirectly own
100% of the stock of the parent of the Surviving Corporation.

<TABLE>
<CAPTION>
What Holder Will Receive in
Type of Shares Merger Tax Consequences
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Outside Participating Merger Consideration Taxable Event
Shareholders' Shares (other than
Management Restricted Shares),
including Independent Directors'
Restricted Shares
- ----------------------------------------------------------------------------------------------
Dissenters' Shares Appraisal value Taxable event
- ----------------------------------------------------------------------------------------------
Management Restricted Restricted Merger Consideration No taxable event(1)
Shares
- ----------------------------------------------------------------------------------------------
Buyer's shares All of Parent's shares of No taxable event
Besicorp Common Stock are
cancelled and Parent's shares of
Acquisition Corp. are converted
into all of the issued and
outstanding shares of the
Surviving Corporation
- ----------------------------------------------------------------------------------------------
</TABLE>

- ------------
(1) However, a taxable event is likely to occur upon the vesting of the
Restricted Merger Consideration.

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<PAGE>

See "Factors to be Considered -- Material Federal Income Tax Consequences."

The Plan of Merger provides that prior to the Effective Date, Besicorp
will have in force D&O Insurance covering the Covered Persons, including the
current and former directors, officers, employees and agents of Besicorp and
its subsidiaries, with respect to acts and omissions occurring on or prior to
the Closing Date.

The Plan of Merger provides that after the Effective Time:

o the Surviving Corporation will maintain D&O Insurance for each Covered
Person for acts and omissions occurring on or before the Effective Date,
and such coverage will continue until the sixth anniversary of the
Effective Date;

o if the Surviving Corporation liquidates, merges, consolidates, or engages
in a similar transaction, it must obtain and pay for "run-off" or "tail"
insurance for each Covered Person for acts and omissions occurring on or
before the Effective Date, and such coverage will continue until the sixth
anniversary of the Effective Date;

o the Surviving Corporation will reimburse the Covered Persons with respect
to any deductibles contained in such D&O Insurance or "run-off" or "tail"
insurance policies; and

o the Surviving Corporation will indemnify the Covered Persons against all
Losses arising out of or in connection with claims that would have been
covered if Besicorp's current insurance policy had remained in effect
until the sixth anniversary of the Effective Date.

Additionally, the Plan of Merger provides that for the lesser of six years
after the Closing Date or the period the Surviving Corporation maintains its
existence, the provisions of the Certificate of Incorporation and By-Laws of
the Surviving Corporation will provide indemnification to the Covered Persons
on terms, in a manner, and with respect to matters, which are no less favorable
than Besicorp's Certificate of Incorporation and By-Laws, as in effect on
October 7, 1999.

In addition, Mr. Zinn has agreed to guarantee, under certain conditions
and subject to certain limitations, the Surviving Corporation's obligations to
provide such insurance and indemnification to such officers and directors and
in connection with his guaranty he has agreed to put $100,000 in escrow. Funds
deposited by Mr. Zinn pursuant to the Guaranty Escrow Agreement may be used to
satisfy certain obligations of Besicorp and/or the Surviving Corporation to the
Covered Persons. See "Plan of Merger -- Principal Covenants -- Guaranty."

Old Besicorp and certain of its executives, officers and directors
(including former executives, officers and directors) were named as defendants
in two shareholder derivative actions, the Lichtenberg Litigation and the
Bansbach Litigation (which together are sometimes referred to as the Derivative
Litigation). Pursuant to the Prior Contribution Agreement that was executed in
conjunction with the Prior Merger, the contingent assets and/or liabilities of
Old Besicorp comprised of Old Besicorp's interests in the Derivative Litigation
were assigned to Besicorp by means of the Prior Assignment of the Derivative
Litigation. As a result of the Prior Distribution, Old Besicorp's shareholders,
including the plaintiffs in the Derivative Litigation, received shares of
Besicorp Common Stock and then, as a result of the Prior Merger, their shares
of Old Besicorp's common stock were converted into cash. A plaintiff in a
shareholder derivative action must remain a shareholder of the subject
corporation at all times during the prosecution of the action in order to be
eligible to continue to prosecute his claims. The named plaintiffs in the
Derivative Litigation lost their status as shareholders of Old Besicorp as a
result of the Prior Merger. However, as a result of the Prior Assignment of the
Derivative Litigation from Old Besicorp to Besicorp, Besicorp became the
subject corporation of the Derivative Litigation. Therefore the Prior
Assignment of the Derivative Litigation before the Old Merger preserved the
rights of the named plaintiffs in the Derivative Litigation to pursue
prosecution of their claims.

The Lichtenberg Litigation asserts that 1.2 million shares of Old
Besicorp's common stock were improperly issued to Mr. Zinn, Enowitz and Steven
Eisenberg. If Lichtenberg ultimately had prevailed on all of his claims, the
Lichtenberg Litigation could have resulted in the recovery by Besicorp of
approximately $44.5 million, which would have been an Adjustment Amount for
purposes of the Deferred Payments. Old Besicorp and the other defendants in the
Lichtenberg Litigation filed a motion to dismiss the complaint which was
granted by the Supreme Court, Ulster County, based on the recommendation of the
Old Besicorp Board's special litigation

52
<PAGE>

committee (comprised of independent outside directors of Old Besicorp) that
concluded that the continuation of such litigation was not in the best
interests of Old Besicorp. The dismissal of the complaint was unanimously
affirmed in April 1999 by the Appellate Division, Third Department. The
plaintiff's motion with the Appellate Division, Third Department seeking leave
to appeal to the Court of Appeals was unanimously denied. A further motion in
the New York Court of Appeals for leave to appeal the dismissal of the
complaint to that court was denied on November 18, 1999. Therefore, the
Lichtenberg Litigation is not being assigned to WOM.

The Bansbach Litigation seeks to hold Mr. Zinn, Michael Daley, Gerald
Habib, Harold Harris and Richard Rosen liable for the legal expenses, fines,
costs and other alleged damages incurred by Old Besicorp as a result of certain
criminal proceedings relating to federal campaign financing law violations that
were the subject of the Proceeding. The Bansbach Litigation is pending, and the
parties are currently engaged in the discovery process. If Bansbach ultimately
prevails on all of his claims, the Bansbach Litigation could result in the
recovery of approximately $1 million, excluding interest and punitive damages.
Besicorp is assigning its interests in the Bansbach Litigation to WOM.

It is not anticipated that the Surviving Corporation will, following the
Effective Date, enter into employment or similar agreements or arrangements
with Besicorp's current management. It is anticipated that the executive
officers of Besicorp will serve the Surviving Corporation in the capacities in
which they currently serve Besicorp and that Michael F. Zinn and Frederic Zinn
will be named the only directors of the Surviving Corporation; they may be
compensated for the services they render as employees on behalf of the
Surviving Corporation.

CERTAIN EFFECTS OF THE MERGER

Upon effectuation of the Merger, Acquisition Corp. will be merged with and
into Besicorp, the separate corporate existence of Acquisition Corp. will
cease, and Besicorp will continue as the Surviving Corporation. Parent will own
all of the outstanding shares of common stock of the Surviving Corporation and
will be entitled to all of the benefits and detriments resulting from that
interest.

After the Effective Date, the Outside Shareholders will no longer have any
equity interest in Besicorp or any right to vote on corporate matters; as a
result, they will not share in Besicorp's future profits, if any, receive
dividends or be able to sell their shares. The Outside Participating
Shareholders' Shares will automatically be converted into the right to receive
the Merger Consideration but the Outside Participating Shareholders will not be
able to appoint directors or other representatives to protect their interests
(e.g., protect their Combined Deferred Payment Rights). If Besicorp is
restructured, sells part of or all of its assets, or successfully develops any
projects, the Outside Shareholders will not benefit except to the extent that
such matters result in Deferred Payments; moreover it is conceivable that if
Besicorp is restructured or certain sales are consummated in an unexpected
manner, the Combined Deferred Payments may be adversely affected. See "Plan of
Merger -- Merger Consideration -- Matters Applicable to both Deferred Payments
and Escrow Fund Payments." Dissenters who perfect their right to dissent in
accordance with Sections 623 and 910 of the NYBCL will receive payment in
accordance with those provisions. See "Voting at the Special Meeting -- Rights
of Dissenting Shareholders." The receipt of the Merger Consideration by the
Outside Participating Shareholders and the receipt of the appraised value of
the Dissenters' Shares by Dissenters will be a taxable transaction for federal
income tax purposes under the Code. See "-- Material Federal Income Tax
Matters."

As a result of the Merger, the Surviving Corporation will become a
wholly-owned subsidiary of Parent and there will cease to be any potential for
a public market for the Besicorp Common Stock. Upon such event, it is
anticipated that the Surviving Corporation will apply to the SEC for the
deregistration of the Besicorp Common

53
<PAGE>

Stock under the Exchange Act. As a result of this deregistration certain
provisions of the Exchange Act (including the proxy solicitation provisions of
Section 14(a), and the short swing trading provisions of Section 16(b)), no
longer will be applicable to the Surviving Corporation; the Surviving
Corporation will no longer need to prepare audited financials, hold shareholder
meetings or distribute reports to shareholders and the Surviving Corporation
will be able to realize savings which Management estimates to equal
approximately $355,000 per year in legal expenses, accounting fees, transfer
agent fees, and expenses associated with annual meetings (plus an additional
saving of approximately $300,000 in internal expenses, primarily the cost of
employee time devoted to such matters). These savings should result in an
increase in earnings of an equivalent amount. Besicorp's revenues will not be
affected by the Merger, but Besicorp's book value will decrease by the amount
of Besicorp's costs resulting from the Merger, which equal approximately
$580,000 as of January 24, 2000. The effectuation of the Merger will not be a
taxable event for Besicorp. See "-- Material Federal Income Tax Consequences."

As a result of the Merger, the Buyer's shares of Besicorp Common Stock
will be cancelled without payment therefor. The effectuation of the Merger will
not be a taxable event for the Buyer. See "-- Material Federal Income Tax
Consequences." As a result of the Merger, the Buyer will own all of the shares
of the Surviving Corporation, and thus will be able to appoint all of its
directors and determine its course of action and its business and operations.
It will be the beneficiary of all earnings, will receive all dividends and be
able to sell its shares in the future. It will be able to sell Besicorp's
assets. However, the Buyer cannot be assured that there will be any profits or
that it will be able to sell the Surviving Corporation. In addition, the Buyer
will need to provide (or guarantee) all funds for the Surviving Corporation's
operations and will need to pay approximately $4.6 million for the Outside
Participating Shareholders' Shares (assuming that there are no Dissenters)
(including approximately $800,000 as Restricted Merger Consideration which will
be held in escrow by the Surviving Corporation until it vests, or, to the
extent that it is forfeited before it vests, which will revert to the Surviving
Corporation). The Buyer has informed us that it has no plans to restructure
itself or the Surviving Corporation and has not entered into discussions or
negotiations with third parties regarding the sale of stock or assets following
the Merger.

In order to fund its obligations pursuant to the Plan of Merger, including
the payment of the Cash Merger Consideration, Parent intends to borrow
approximately $4.6 million from Avalon Funding, which has been granted the HSBC
Credit Facility by HSBC Bank. The HSBC Credit Facility is a discretionary line
of credit with a maximum of $10 million principal amount of borrowing. Each
borrowing under the HSBC Credit Facility requires the approval of HSBC Bank and
all borrowings under the HSBC Credit Facility are payable on demand, or, in any
event, on December 31, 2000. See "Information Regarding Parent and Acquisition
Corp."

In addition, as a result of the Spin-Off, the WOM Common Stock will be
distributed on a pro rata basis to the holders of shares of Besicorp Common
Stock, including to Outside Participating Shareholders, Dissenters, the Buyer
and holders of Restricted Shares. See "Spin-Off."

MATERIAL FEDERAL INCOME TAX CONSEQUENCES

The following is a discussion of the material federal income tax
consequences relating to the Merger and the Spin-Off based on the provisions of
the Internal Revenue Code of 1986, as amended, and applicable regulations,
rulings and judicial authority as in effect on the date of this Proxy
Statement. Subsequent changes in the law could alter the federal income tax
consequences of the Merger. Besicorp did not rely upon any opinion of counsel
with respect to the matters discussed in this section.

THE FEDERAL INCOME TAX CONSEQUENCES SET FORTH BELOW ARE BASED UPON PRESENT
LAW. BECAUSE INDIVIDUAL CIRCUMSTANCES MAY DIFFER, YOU ARE URGED TO CONSULT YOUR
TAX ADVISOR TO DETERMINE THE APPLICABILITY OF THE RULES DISCUSSED BELOW TO YOU
AND THE PARTICULAR TAX EFFECTS OF THE MERGER, INCLUDING THE APPLICATION AND
EFFECT OF STATE, LOCAL AND OTHER TAX LAWS.

54
<PAGE>

The receipt by a shareholder of the Cash Merger Consideration and Combined
Deferred Payments, if any, for shares of Besicorp Common Stock pursuant to the
Merger will be a taxable transaction for federal income tax purposes under the
Code and also may be a taxable transaction under applicable state, local and
other tax laws. The tax consequences of such receipt may vary depending upon,
among other things, the particular circumstances of the shareholder. Generally,
a shareholder will recognize gain or loss equal to the difference between the
aggregate amount of the Cash Merger Consideration (plus Combined Deferred
Payments, if any) received by the shareholder pursuant to the Merger in
exchange for his or her shares of Besicorp Common Stock (other than Management
Restricted Shares) and the shareholder's adjusted tax basis in such shares.
Generally, such gain or loss will be capital gain or loss if the shares are a
capital asset in the hands of the shareholder and will be long-term gain or
loss if the shares have a holding period of more than one year at the time of
the Merger. With respect to shares that a shareholder acquired in the Prior
Spin-Off, the gain or loss on account of the Cash Merger Consideration will be
long-term gain or loss. Long-term capital gain recognized by an individual
shareholder generally will be taxed at a maximum federal income tax rate of
20%. Certain limitations apply with respect to the deductibility of capital
losses.

The receipt of the Combined Deferred Payments will be taxed to
shareholders on the installment basis (pursuant to which a taxpayer is taxed on
a deferred payment only upon receipt of the deferred payment). The Code does
not permit installment reporting for gains from the sale or disposition of
stock or securities which are traded on an established securities market. In
Management's view, however, the Besicorp Common Stock should not be treated as
stock or securities which are traded on an established securities market under
the Code and the applicable regulations. The United States Congress has passed
and President Clinton has signed legislation which generally repeals
installment reporting for accrual basis taxpayers, effective as of December 17,
1999. The legislation would not repeal installment reporting for cash basis
taxpayers.

The receipt by a Dissenter of monies from Besicorp (as the Surviving
Corporation) for shares of Besicorp Common Stock will be a taxable transaction
for federal income tax purposes under the Code and also may be a taxable
transaction under applicable state, local and other tax laws. The tax
consequences of such receipt may vary depending upon, among other things, the
particular circumstances of the Dissenter. Generally, a Dissenter will
recognize gain or loss equal to the difference between the aggregate amount of
the monies so received for his or her shares of Besicorp Common Stock and the
Dissenters' adjusted tax basis in such shares. Generally, such gain or loss
generally will be capital gain or loss if the shares are a capital asset in the
hands of the shareholder and will be long-term gain or loss if the shares have
a holding period of more than one year at the time of the receipt of such
monies.

Each holder of Management Restricted Shares will receive Restricted Merger
Consideration, the receipt of which will not be a taxable event. However, an
ordinary income taxable event will occur for the holders of the Restricted
Merger Consideration upon the vesting of such Consideration.

The effectuation of the Merger will not be a taxable event for the Buyer
and Michael F. Zinn (except with respect to the Restricted Merger Consideration
received with respect to his Management Restricted Shares, the receipt of which
will not be taxed until the Restricted Merger Consideration vests).

The receipt by a holder of Besicorp Common Stock of shares of WOM Common
Stock (other than WOM Restricted Stock) pursuant to the Spin-Off will be a
taxable transaction for federal income tax purposes under the Code and also may
be a taxable transaction under applicable state, local and other tax laws. The
tax consequences of such receipt vary depending upon, among other things, the
particular circumstances of such holder. Such holder will receive dividend
income equal to the value of the shares of WOM Common Stock; however, since
Besicorp is valuing the shares of WOM Common Stock at $0.00 per share, holders
of Besicorp Common Stock should receive no dividend income. The distribution of
WOM Common Stock will also result in a taxable transaction to Besicorp, the
distributing corporation. The amount of corporate tax depends upon the
valuation of the WOM Common Stock; however, since Besicorp is valuing WOM at
$0.00, Besicorp should incur no corporate tax.

Each holder of Restricted Shares will receive WOM Restricted Stock, the
receipt of which will not be a taxable event. However, an ordinary income
taxable event will occur for the holders of the WOM Restricted Stock upon the
vesting of such WOM Restricted Stock. Additional information concerning the tax
consequences of the Spin-Off will be provided in the Information Statement that
will be sent to shareholders of Besicorp at or about the Effective Date of the
Merger.

55
<PAGE>

The receipt of cash by a shareholder pursuant to the Merger and the
receipt of shares of WOM Common Stock (other than WOM Restricted Stock) is
subject to backup withholding at the rate of 31% unless the shareholder (i) is
a corporation or comes within other exempt categories, or (ii) provides a
certified taxpayer identification number on Form W-9 and otherwise complies
with the backup withholding rules. Backup withholding is not an additional tax;
any amounts so withheld may be credited against the federal income tax
liability of the shareholder subject to the withholding.

This discussion applies only to shareholders holding shares of Besicorp
Common Stock as capital assets, and to shareholders holding shares of Besicorp
Common Stock received pursuant to the exercise of employee stock options or
otherwise as compensation. This discussion does not apply to Besicorp's
shareholders who are not citizens or residents of the United States, to
Besicorp's shareholders who are tax-exempt or to other shareholders of Besicorp
of special status.

REGULATORY AND OTHER APPROVALS

We are not aware of any material governmental or regulatory requirements
to be complied with in connection with the Merger, other than obtaining the
shareholders' adoption of the Plan of Merger, and the filing of a Certificate
of Merger conforming to the requirements of the NYBCL with the Secretary of
State of the State of New York (and certain other governmental authorities in
the State of New York) and certain other requirements that must be satisfied in
connection with the Spin-Off.

PLAN OF MERGER

Set forth below is a description of the material terms of the Plan of
Merger. We urge shareholders to read carefully in its entirety the Plan of
Merger which we have attached as Annex A to this Proxy Statement and
incorporated into this document by reference. Capitalized terms that are not
defined in Appendix 1 are defined in the Plan of Merger.

GENERAL

The Plan of Merger provides that a wholly owned subsidiary of Parent
(i.e., Acquisition Corp.) will be merged with and into Besicorp, with Besicorp
surviving as a wholly owned subsidiary of Parent. The Merger will become
effective upon the filing of the Certificate of Merger with the Secretary of
State of the State of New York or such other date as may be specified in the
Certificate of Merger.

At the Effective Date, as a result of the Merger:

o each share of Besicorp Common Stock issued and outstanding immediately
prior to the Effective Date (other than shares then owned by the Buyer and
Dissenters' Shares) will, by virtue of the Merger and without any action
on the part of the holder thereof, be converted into the right to receive
the Merger Consideration upon surrender of the Certificate evidencing such
share;

o each share of Besicorp Common Stock issued and outstanding immediately
prior to the Effective Date owned by the Buyer will be cancelled without
any conversion thereof;

o each Dissenters' Share will be converted into the right to receive the
appraised value to which such person is entitled pursuant to the NYBCL;
and

o each share of Acquisition Corp.'s common stock issued and outstanding
immediately prior to the Effective Date will be converted into and
exchanged into one validly issued, fully paid and nonassessable share of
common stock of the Surviving Corporation.

Before the Effective Date, the Buyer is required to deposit with
Continental the aggregate Cash Merger Consideration for all outstanding shares
of Besicorp Common Stock held by Outside Shareholders which is currently
approximately $4.6 million (including approximately $800,000 as Restricted
Merger Consideration which will be held in escrow by the Surviving Corporation
until it vests, or, to the extent that it is forfeited before it vests, which
will revert to the Surviving Corporation) assuming that (i) no shares of
Besicorp Common Stock are issued or cancelled prior to the Merger and (ii)
there are no Dissenters.

56
<PAGE>

In order to fund its obligations pursuant to the Plan of Merger, including
the payment of the Cash Merger Consideration, Parent intends to borrow
approximately $4.6 million from Avalon Funding, which has been granted the HSBC
Credit Facility by HSBC Bank. The HSBC Credit Facility is a discretionary line
of credit with a maximum of $10 million principal amount of borrowing. Each
borrowing under the HSBC Credit Facility requires the approval of HSBC Bank and
all borrowings under the HSBC Credit Facility are payable on demand, or in any
event, on December 31, 2000. See "Information Regarding Parent and Acquisition
Corp."

After the Effective Date, Continental will send to each Outside
Participating Shareholder a Letter of Transmittal to effect the surrender of
the Certificates in exchange for the Merger Consideration. Each Outside
Participating Shareholder who surrenders a Certificate, along with a properly
completed Letter of Transmittal, will receive:

o one Combined Deferred Payment Right for each share of Besicorp Common
Stock represented by such Certificate; and

o cash equal to (i) the number of shares of Besicorp Common Stock
represented by such Certificate multiplied by (ii) the Cash Merger
Consideration.

Combined Deferred Payment Rights, Deferred Payments nor Escrow Fund
Payment Rights will not be evidenced by certificates and will not be
transferable (other than by will and the laws of descent). Until surrendered,
each Certificate will at and after the Effective Date be deemed to represent
only the right to receive upon surrender of such Certificate the Merger
Consideration with respect to the shares of Besicorp Common Stock represented
thereby. No interest will be paid or will accrue on the cash payable upon
surrender of any Certificate. DO NOT SURRENDER YOUR CERTIFICATES OF BESICORP
COMMON STOCK UNTIL YOU RECEIVE AND COMPLETE SUCH LETTER OF TRANSMITTAL.

Funds deposited with Continental which remain unclaimed by the Outside
Participating Shareholders for nine months after the Effective Date will be
delivered to the Surviving Corporation upon its request, and the Outside
Participating Shareholders will thereafter look only to the Surviving
Corporation for payment of their claim for the Cash Merger Consideration in
respect of their shares of Besicorp Common Stock. Upon a determination by
Continental that a shareholder is a Dissenter and not an Outside Participating
Shareholder, Continental will deliver to the Surviving Corporation the amount
equal to (i) the number of shares of Besicorp Common Stock held by such
Shareholder multiplied by (ii) the Cash Merger Consideration.

Sections 623 and 910 of the NYBCL give to any shareholder who wishes to
object to the Merger the right to receive the appraised value of his shares
from Besicorp in cash, unless the Merger fails to be adopted and authorized or
is abandoned, and provided, further, that the statutory procedure set forth in
Sections 623 and 910 is carefully followed. The Dissenters' Shares will not be
converted into Merger Consideration and the Dissenters will only receive the
cash to which they are entitled pursuant to the statutory procedure. IF YOU ARE
INTERESTED IN DISSENTING WE URGE YOU TO CONSULT YOUR OWN ATTORNEY REGARDING THE
PROCEDURES TO BE FOLLOWED IN ORDER TO DISSENT. See "Voting at the Special
Meeting -- Rights of Dissenting Shareholders" and Appendix C to this Proxy
Statement.

If the Plan of Merger is adopted by the Requisite Vote of the shareholders
of Besicorp and certain other conditions to the Merger are satisfied or waived
(as more fully described below), the Closing will be held promptly following
the Special Meeting.

MERGER CONSIDERATION

Each Outside Participating Shareholders' Share (which excludes Dissenters'
Shares) will be converted into the right to receive the Cash Merger
Consideration and a Combined Deferred Payment Right.

Cash Merger Consideration

The Cash Merger Consideration equals:

$8,000,000
------------
Total Shares

57
<PAGE>

The Total Shares equals the sum of:

o the number of shares of Besicorp Common Stock issued and outstanding
immediately prior to the Effective Date (other than those shares held as
treasury shares by Besicorp); plus

o the number of Substituted Management Restricted Shares.

Substituted Management Restricted Shares means Management Restricted Shares
which have been cancelled as the result of the issuance of Substitute
Restricted Shares in substitution therefor prior to the Effective Date. At the
Record Date, there were 135,886 Total Shares.

The Cash Merger Consideration will be at least $58.87 in cash. It will
increase if shares of Besicorp Common Stock are cancelled (other than the
cancellation of Management Restricted Shares in connection with the issuance of
Substitute Restricted Shares). The Cash Merger Consideration will decrease if
shares of Besicorp Common Stock are issued prior to the Effective Date.
However, Besicorp does not intend to issue any additional shares, and, pursuant
to the Plan of Merger, Besicorp may issue additional shares only with the prior
consent of the Buyer. If Besicorp issues any additional shares that would cause
the Cash Merger Consideration to be less than $58.87, we will inform you of the
effect of the issuance on the Merger Consideration prior to the Special
Meeting.

The Buyer will pay approximately $4.6 million for all Outside
Participating Shareholders' Shares (including approximately $800,000 as
Restricted Merger Consideration which will be held in escrow by the Surviving
Corporation until it vests, or, to the extent that it is forfeited before it
vests, which will revert to the Surviving Corporation) assuming that (i) no
shares of Besicorp Common Stock are issued or cancelled prior to the Merger and
(ii) there are no Dissenters. This amount will increase if any shares of
Besicorp Common Stock are cancelled (other than the cancellation of Substituted
Management Restricted Shares). Also, this amount will decrease if there are any
Dissenters. To the extent that Management Restricted Shares are not cancelled,
the amount of money that the Buyer will be required to pay for the shares, will
be increased although the per share Merger Consideration will be unaffected.

The Plan of Merger provides that the Restricted Merger Consideration to be
received upon the conversion of Management Restricted Shares will be placed in
escrow with the Surviving Corporation and not be transferable until it vests,
which ordinarily will occur with respect to 1/3 of such Restricted Merger
Consideration on May 2, 2002, 1/3 on May 2, 2003 and 1/3 on May 2, 2004). If a
holder of Restricted Merger Consideration ceases to be an employee of the
Surviving Corporation during such period, it is likely that such holder will
forfeit his Restricted Merger Consideration and it will become the property of
the Surviving Corporation.

Combined Deferred Payment Right

Each Outside Participating Shareholder will receive one Combined Deferred
Payment Right for each of his shares of Besicorp Common Stock. Dissenters will
not receive any Combined Deferred Payment Rights. A Combined Deferred Payment
Right consists of one Deferred Payment Right and one Escrow Fund Payment Right.

Deferred Payment Rights

Outside Participating Shareholders will be entitled to receive for each
Deferred Payment Right an amount equal to:

Deferred Payments Fund
------------------------------------------
Outside Participating Shareholders' Shares

The Outside Participating Shareholders' Shares equals the number of shares
of Besicorp Common Stock held of record immediately before the Effective Date
by the Outside Participating Shareholders.

The Deferred Payment Fund consists of the sum of all Adjustments (net of
corporate taxes for such Adjustments) less all amounts previously distributed
from the Deferred Payment Fund to the Outside Participating Shareholders.

58
<PAGE>

The Adjustments equal:

Adjustment Amounts x Outside Participating Shareholders' Shares
------------------------------------------
Total Shares

The Adjustment Amounts equals all proceeds received by Besicorp, the
Surviving Corporation and their subsidiaries (or in the case of an entity that
is less than wholly owned by Besicorp or the Surviving Corporation, their
proportionate interest in such proceeds at the time of their receipt, from
October 7, 1999 (i.e., the date of the Initial Plan of Merger) through the
Deferred Payment Termination Date with respect to the following:

<TABLE>
<CAPTION>
ELEMENTS OF THE INFORMATION ABOUT THESE
COMBINED DEFERRED PAYMENTS ELEMENTS
- ------------------------------------------------------ -------------------------------------------------------
<S> <C>
(1) amounts, if any, released from the Escrow Fund The Escrow Fund as of March 7, 2000, consists of
as Remaining proceeds because they were not approximately $6.10 million as a result of the
utilized to fund covered claims during the term release of approximately $583,065 and interest
of the Escrow Fund other than amounts income of approximately $187,394 through such
delivered pursuant to the Instructions (see date. In addition, WOM Costs of approximately
"Escrow Agreement"); $57,526 have been incurred (but not reimbursed
from the Escrow Fund) through February 29, 2000.
All or a portion of the remaining Escrow Funds
will be used to cover BGI Indemnity Claims, BGI
Monitoring Costs, Litigation Costs and WOM
Costs. If Besicorp does not effectuate the Spin-Off
because the Prior Merger Order is reversed, no
WOM Costs would be incurred and there would
most likely be no further costs associated with the
Bansbach Litigation (assuming the Bansbach
Litigation is dismissed as a result of the Prior
Merger Order being reversed); as a result, more
money would be available for distribution to
Outside Participating Shareholders as Combined
Deferred Payments. Because we do not know how
much of the Escrow Fund will be used to cover
BGI Indemnity Claims, BGI Monitoring Costs,
Litigation Costs and WOM Costs, we cannot
predict how much of the Escrow Fund will be
available for distribution to shareholders as
Combined Deferred Payments.
- ------------------------------------------------------ -------------------------------------------------------
(2) amounts received, with certain exceptions, from We have not predicted how much, if any, money
their sale of their interests in the foreign will be received with respect to the sale of
development projects (unless such foreign Besicorp's interests in its foreign development
development project is sold along with the projects. The Buyer has informed us that it has no
Empire Newsprint Project in which case the plans to sell any of these interests and there are no
proceeds are not an Adjustment Amount) discussions at present with any unaffiliated third
pursuant to agreements entered into on or party regarding the sale of these interests.
before the first anniversary of the Effective Construction has not commenced on any of the
Date, less Besicorp or the Surviving foreign development projects, and no efforts are
Corporation's expenses (other than SG&A and underway to obtain the financing necessary to
Excluded Expenses) incurred and paid after construct these projects. See "Business of Besicorp
October 7, 1999 directly related to such foreign -- Power Development Activities."
development project (see "Business of Besicorp
-- Power Development Activities");
- ------------------------------------------------------ -------------------------------------------------------
</TABLE>

59
<PAGE>

<TABLE>
<CAPTION>
- ------------------------------------------------------ -------------------------------------------------------
<S> <C>
(3) amounts received by Beta, distributions received The partnerships' principal assets (excluding the
from Natural Dam (other than the Anticipated Anticipated Partnership Distribution) consist of
Partnership Distribution) and any other funds cash held in escrow to satisfy their potential
that are distributed as a result of partnership liabilities. As of December 31, 1999, Besicorp's
interests in existence as of October 7, 1999 or share of the escrows is approximately $1.47
the Effective Date (see "Business of Besicorp million. We have not predicted how much will be
-- Potential Non-Recurring Funds"); distributed as Combined Deferred Payments.
- -------------------------------------------------------- ---------------------------------------------------
(4) amounts distributed as a result of Hydro- The maximum amount that Besicorp may receive
Credits (other than the distribution with respect as distributions as a result of Hydro-Credits
to Glen Park Associates scheduled for on or (excluding the distribution Besicorp has received
about September 30, 1999, which distribution with respect to Glen Park Associates) is
has been received), less expenses (other than approximately $750,000 and it is likely that there
SG&A and Excluded Expenses) incurred and will be no expenses, No agreement has been
paid following October 7, 1999 directly related reached to date between any of the remaining
to distributions as a result of Hydro-Credits (see developers and Niagara Mohawk that would
"Business of Besicorp -- Potential Non- result in such Hydro-Credits. We have not
Recurring Funds"); and predicted how much money, if any, will be
distributed as a result of the Hydro-Credits
- ------------------------------------------------------ -------------------------------------------------------
(5) amounts received with respect to each of their We have not predicted how much money will be
litigation claims with respect to matters arising received with respect to these claims (of which
before the Effective Date, less their expenses the principal claim is the RICO Action) or how
(including reasonable SG&A expenses but much the expenses will be. See "Business of
excluding Excluded Expenses) incurred and Besicorp -- Legal Proceedings."
paid after October 7, 1999 directly related to
any such claim for which amounts have been
received (see "Business of Besicorp -- Litiga-
tion").
- ------------------------------------------------------ -------------------------------------------------------
</TABLE>

Excluded from the Adjustment Amounts are the proceeds of any transfer of
assets by the Surviving Corporation or its wholly owned subsidiaries to any
wholly owned subsidiary of the Surviving Corporation or to any Related Entity
if:

o the Related Entity assumes the obligation to make Deferred Payments in
the manner set forth in the Plan of Merger (without the right to defer
payments if the amount accrued on a Deferred Payment Date is less than
$90,000) with respect to such asset; and

o the Surviving Corporation guarantees the Related Entity's payment of all
amounts it is required to pay to the Outside Participating Shareholders
pursuant to this assumption.

The Surviving Corporation will segregate the Deferred Payment Fund and
invest the proceeds in a separate interest bearing money market account at a
nationally recognized financial institution, and the interest on the Deferred
Payment Fund will be added to such Fund.

The Deferred Payments will be paid to the Outside Participating
Shareholders (i) annually, on or about the Deferred Payment Date (unless the
amount in the Deferred Payment Fund is less than $90,000 on such date, in which
case no payment will be made on such date) and (ii) on the Deferred Payment
Termination Date. The payments will be accompanied by a notice indicating in
reasonable detail the proceeds resulting in the Deferred Payment and the
deductions therefrom.

If the Surviving Corporation or a Related Entity transfers, sells or
otherwise assigns, directly or indirectly, any of the assets underlying the
Adjustment Amounts, the Assignee is required to consent in writing to its
assumption of the obligation to make Deferred Payments (without the right to
defer payments if the amount accrued on a Deferred Payment Date is less than
$90,000) with respect to such underlying asset other than the obligation to
make the Deferred Payment, if any, resulting from proceeds received by the
Surviving Corporation or Related Entity from such assignment; the Deferred
Payment resulting from such proceeds will be the obligation of the Surviving
Corporation or Related Entity, as applicable.

60
<PAGE>

Michael F. Zinn is required, with certain exceptions, to guarantee the
payment of the Deferred Payment Rights. See "-- Principal Covenants --
Guaranty."

Escrow Fund Payment Rights

The Plan of Merger has special provisions regarding the Remaining Proceeds
from the Escrow Fund. That portion of the Remaining Proceeds that would
otherwise have been placed in the Deferred Payment Fund (to provide Deferred
Payments) will be released to Continental as the Escrow Fund Payment
Distributions and provide Escrow Fund Payments.

The Escrow Fund Payments work as follows. The Plan of Merger requires
Besicorp to deliver the Instructions before the Merger. The Instructions will
irrevocably instruct the Escrow Agent to release, at the time that Remaining
Proceeds are released, the Escrow Fund Payment Distribution to Continental.

The Escrow Fund Payment Distribution is an amount equal to:

<TABLE>
<CAPTION>
<S> <C>
the Remaining Proceeds being distributed x Outside Participating Shareholders' Shares
------------------------------------------
Total Shares
</TABLE>

The portion of the Remaining Proceeds not released to Continental will be
released to the Surviving Corporation.

The Plan of Merger also requires Besicorp to irrevocably instruct
Continental to use the Escrow Fund Payment Distributions it receives in order
to distribute an Escrow Fund Payment to the Outside Participating Shareholders
for each of their Outside Participating Shareholders' Shares.

The Escrow Fund Payment is an amount equal to:

Escrow Fund Payment Distributions
---------------------------------
Outside Participating Shareholders' Shares

For example, if the Remaining Proceeds were $2,750,000, and there were
135,886 Total Shares, each Outside Participating Shareholder would be entitled,
as a result of the Escrow Fund Payments, to a payment of approximately $20.24
for each of his Outside Participating Shareholders' Shares

Pursuant to the Plan of Merger, to the extent that monies are delivered by
the Escrow Agent to Continental, these amounts will not be Adjustment Amounts,
the Surviving Corporation will be deemed to have satisfied its obligations to
make payments of such amounts and Michael F. Zinn will have no obligation
pursuant to his Guaranty.

Matters Applicable to both Deferred Payments and Escrow Fund Payments

As indicated above Combined Deferred Payments are dependent upon the
receipt of certain monies and no assurance can be given that any such monies
will be received.

At present the Escrow Fund consists of $6.10 million: in the first 11 1/2
months following the Prior Closing approximately $583,065 was released from the
Escrow Fund, and interest income of approximately $187,394 was received. As a
result, the amount of money in the Escrow Fund has declined by approximately
$395,000, and if the Escrow Fund were to continue to incur expenses and earn
interest through March 31, 2004 at the same rates as for this 11 1/2 month
period, the Escrow Fund would consist of approximately $4.3 million, as the
result of releases of approximately $3.0 million and interest of approximately
$0.8 million and if all of the Remaining Funds were then released, more than
$30 would be distributed from the Escrow Fund as Escrow Fund Payments for each
of the Outside Participating Shareholders' Shares. See "Escrow Agreement."

61
<PAGE>

Two partnerships in which Besicorp has interests hold in escrow money to
satisfy certain potential liabilities: if a tax audit of a third party's
treatment of its receipt of certain funds in 1996 is not commenced by June 15,
2000 there will be a distribution to Besicorp that would lead to a Deferred
Payment; another such distribution would occur if funds are not disbursed to
satisfy certain potential liabilities by May 15, 2002. As of December 31, 1999,
Besicorp's share of these escrows was approximately $1.47 million. See
"Business of Besicorp--Potential Non-Recurring Funds."

Still other distributions are possible, although perhaps less likely, with
respect to (i) other partnership assets, (ii) Hydro-Credits, (iii) the sale of
interests in foreign development projects within one year of the Closing Date
and (iv) as a result of litigation. The Buyer has informed us that it has no
plans to sell any of the foreign development project interests and there are no
discussions at present with any unaffiliated third party regarding the sale of
these interests. See "Business of Besicorp." While there is no reason to
believe that all three of the escrow funds will be depleted in their entirety
before any distribution can be made, and that none of the other distributions
will occur, it is possible that you will receive no additional monies on
account of the Combined Deferred Payment Rights. Therefore it is possible that
the Cash Merger Consideration of $58.87 may be the only Merger Consideration
you will receive.

Combined Deferred Payments are payable only with respect to proceeds
receivable by the Deferred Payment Termination Date, which is likely to be
March 22, 2004. However, if on March 22, 2004, the Escrow Agent has not
released all of the Escrow Funds or the RICO Action is still pending, the
Deferred Payment Termination Date shall be the later of (i) the date of the
release by the Escrow Agent of all of the Escrow Funds and (ii) the
disposition, pursuant to a final and non-appealable judgment of a court of
competent jurisdiction, including the payment of all monies required by such
disposition, of the RICO Action and any litigation relating to the RICO Action.

It is possible that the Surviving Corporation will receive after the
Deferred Payment Termination Date amounts with respect to litigation claims
(other than the RICO Action) or distributions from partnerships; if the
Surviving Corporation does receive such proceeds, since these proceeds will
have been received after the Deferred Payment Termination Date, the Surviving
Corporation will be entitled to retain all of such proceeds. In addition,
pursuant to the Plan of Merger the Surviving Corporation is entitled to retain
all proceeds from sales of its interests in foreign development projects if the
sales occur more than a year after the Effective Date; therefore, if the
Surviving Corporation receives any proceeds from such sales after the Deferred
Payment Termination Date, the Surviving Corporation is entitled to retain such
proceeds. However, after the Deferred Payment Termination Date, the Surviving
Corporation will not receive any money from the Escrow Fund or any monies on
account of Hydro-Credits.

Following the Merger you will not be a shareholder of Besicorp and
therefore the directors and executive officers will cease to have any fiduciary
duty to you as a shareholder although the NYBCL does permit directors to
consider the effect that a corporation's actions may have on, among others, its
customers and creditors. There is no trustee or other representative to oversee
Besicorp and any potential deferred payments, and to protect your right to
receive Combined Deferred Payments. You do, nonetheless, have some protection.
First, as indicated above, when Besicorp makes a Deferred Payment, Besicorp
will provide a notice about the Deferred Payment and the deductions therefrom.
Second, as indicated above, Besicorp will deliver the Instructions to the
Escrow Agreement so the Escrow Fund Payments will be less subject to Besicorp's
actions. Third, since Besicorp is paying Combined Deferred Payment Rights
pursuant to the terms of the Plan of Merger, Besicorp is contractually
obligated to pay the Combined Deferred Payments to the Outside Participating
Shareholders and if Besicorp does not abide by its contractual duties, Outside
Participating Shareholders may avail itself of all means of enforcing their
rights, notably their right to bring an action in court. It should be observed
that it may be difficult to bring such an action outside of New York, that it
may be difficult to find a lawyer interested in representing the Outside
Participating Shareholders unless the amount at issue is significant, it may be
expensive to bring an action, it may take a long time to obtain a final
judgment, and, if Besicorp is suffering financial problems at such time, it may
be difficult to collect payment.

Although Besicorp is obligated to make Combined Deferred Payments,
Besicorp has not granted you a security interest in any of its assets.
Therefore your right to receive Combined Deferred Payments is subordinated to
all secured obligations. At present Besicorp has granted to the Buyer a
security interest in substantially

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all of its assets pursuant to the Security Agreement that Besicorp executed at
the time of the original Parent Loan. See "-- Principal Covenants -- Parent
Loans." It is possible that Besicorp may grant security interests in the future
in which case your ability to receive the payments that Besicorp is obligated
to make to you will be subordinated to those secured obligations. In addition
your right to receive Combined Deferred Payments is subordinate to all
obligations of Besicorp that arose before Besicorp's obligation to make the
Combined Deferred Payments. However, even though your right to receive Combined
Deferred Payments is subordinated to all secured obligations and all earlier
obligations, Besicorp's obligation to make Combined Deferred Payments is
guaranteed by Michael F. Zinn and thus generally if Besicorp cannot make a
Combined Deferred Payment Mr. Zinn is obligated to make such payments. See "--
Principal Covenants -- Guaranty."

Your right to receive Combined Deferred Payments is a contractual right.
Both the Buyer and Besicorp have agreed that Besicorp shall make Combined
Deferred Payments. Moreover, Besicorp's obligation to make Combined Deferred
Payments cannot be renounced by Besicorp, nor can Besicorp amend the Plan of
Merger to eliminate or modify its obligation. Thus Besicorp cannot eliminate
its obligation to make Combined Deferred Payments after the Merger.
Nonetheless, the Plan of Merger does not impose any restrictions on Parent or
Besicorp's ability to restructure, issue stock, sell assets, charge its
operations or liquidate. However, the Buyer has informed us that it has no
plans to restructure itself or the Surviving Corporation and that it has not
entered into discussions or negotiations with third parties regarding the sale
of stock or assets following the Merger. See "Information Regarding Parent and
Acquisition Corp." In addition, the Plan of Merger does contain provisions that
would result in Outside Participating Shareholders receiving Combined Deferred
Payments upon the occurrence of certain such events and would ensure that
purchasers assume responsibility for paying Combined Deferred Payments upon the
occurrence of certain other events. Also Michael Zinn's guaranty will survive
the occurrence of such events . These provisions are intend to protect your
Combined Deferred Payment Right upon the occurrence of such events. However, it
is not possible to contemplate every possible transaction that may occur in the
future. Thus it is conceivable that if Besicorp is restructured or certain
transactions are consummated in an unexpected manner, the Combined Deferred
Payments may be adversely affected. Therefore, although it is likely that the
provisions of the Plan of Merger will protect you, these provisions will not
necessarily afford you with protection in the event of a highly leveraged
transaction, reorganization, restructuring, merger or similar transaction
involving Besicorp or Parent.

Disputed Shares

Old Besicorp is a party to a legal proceeding seeking a determination that
Enowitz, a former director and executive officer of Old Besicorp, is not
entitled to the 100,000 Enowitz Shares (of Old Besicorp's common stock). In
connection with this proceeding, Old Besicorp, Besicorp and Enowitz signed a
stipulation regarding the 4,000 Disputed Shares of Besicorp Common Stock that
would be issued in the Prior Spin-Off if the Enowitz Shares had been
outstanding. In calculating the Merger Consideration, the parties assumed that
such 4,000 Disputed Shares were outstanding. See "Business of Besicorp -- Legal
Proceedings." Because of this stipulation, the Plan of Merger provides that the
Merger Consideration payable in respect of such shares will be held in escrow
pending resolution of this dispute. If it is determined that Mr. Enowitz:

o was not entitled to the Disputed Shares, Old Besicorp's shareholders at
the effective time of the Prior Merger will receive, on a pro rata basis,
the Merger Consideration with respect to the Disputed Shares; or

o was entitled to the Disputed Shares, Mr. Enowitz will receive the Merger
Consideration applicable to such Disputed Shares.

Besicorp has no rights to the 4,000 Disputed Shares and in no event will the
Outside Participating Shareholders (except to the extent that they were
shareholders of Old Besicorp at the effective date of the Prior Merger) receive
the Merger Consideration with respect to such shares.

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REPRESENTATIONS AND WARRANTIES

Representations and Warranties by Besicorp

The Plan of Merger contains representations and warranties of Besicorp as
to:

o The due organization, valid existence, good standing and capital
structure of Besicorp and/or certain subsidiaries;

o The authorization of the execution and delivery of the Plan of Merger and
certain related agreements, the enforceability of such agreements, and
that the Plan of Merger and the related agreements do not contravene
Besicorp's organizational documents or any material order or judgment of a
governmental entity applicable to Besicorp;

o The absence of any Authorizations required to be obtained or filed by
Besicorp in connection with the Merger; and

o The accuracy of certain information regarding Besicorp included in the
Proxy Statement and the other SEC Documents.

Representations by Parent and Acquisition Corp.

The Plan of Merger contains representations and warranties of each of
Parent and Acquisition Corp. as to:

o Its due organization, valid existence, good standing and/or capital
structure;

o Due authorization, execution and delivery of the Plan of Merger and
certain related agreements, the validity and enforceability of these
agreements and that the Plan of Merger and certain related agreements do
not contravene the organizational documents of Parent and Acquisition
Corp. or other agreements to which they may be bound;

o The absence of conflicts and defaults and the absence of any required
Authorization; and

o The accuracy of the information provided in writing by Parent and
Acquisition Corp. for use in the Proxy Statement and their other SEC
Documents.

PRINCIPAL COVENANTS

Conduct of Business Pending the Merger

Each of the parties to the Plan of Merger agreed that it would:

o Not intentionally perform or omit to perform any act which would prevent
the performance of the Plan of Merger or would result in any
representation or warranty being untrue in any material respect;

o Give the other parties notice of any event which would make any
representation or warranty in the Plan of Merger untrue or that would
otherwise prevent the consummation of transactions contemplated by the
Plan of Merger;

o Prepare and file with the SEC a Schedule 13E-3;

o Use its reasonable best efforts to respond to the SEC's comments; and

o Timely seek all Consents required to be obtained prior to the Effective
Date in connection with the Plan of Merger and the transactions
contemplated thereby.

Besicorp also agreed in the Plan of Merger that, except for the Spin-Off
and the SunWize Project, it would not and would not permit its subsidiaries to:

o Amend its Certificate of Incorporation, By-Laws or other organizational
documents;

o Make any change in its authorized capital stock; adjust, split, combine
or reclassify its capital stock, or, with certain exceptions, issue any
shares of stock, or rights to acquire capital stock or other similar
rights;

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o Subject to certain exceptions, sell, transfer, encumber or otherwise
dispose of any of its material properties or assets to any person;

o Make any investments in, or contributions to capital of, or, subject to
certain exceptions, purchases of, any property or assets from any other
person;

o Change, with certain exceptions, its method of accounting as in effect
at March 31, 1999;

o Subject to certain exceptions, increase the compensation payable to any
employee, or enter into any new employment agreements with new or existing
employees;

o Pay any dividend or make any distribution on its securities or purchase
any of its securities;

o Make any tax election or settle or compromise any tax liability, with
certain exceptions; and

o Subject to certain exceptions, enter into any business or contract not
related to the Merger.

Pursuant to the Plan of Merger, Besicorp agreed:

o To call a meeting of its shareholders for the purpose of voting upon
adoption of the Plan of Merger and to hold such meeting as soon as
practicable;

o Subject to an exception regarding Acquisition Proposals (as described
below), to recommend to its shareholders the adoption of the Plan of
Merger;

o Subject to the provisions of the Plan of Merger, to use its best efforts
to obtain the adoption of the Plan of Merger by the shareholders of
Besicorp;

o To prepare and file with the SEC this Proxy Statement;

o To use its reasonable best efforts to respond to any comments of the
SEC; and

o To file all other reports and schedules required to be filed by Besicorp
with the SEC.

Acquisition Proposals

The Plan of Merger indicates how the Board and Special Committee will
respond to Acquisition Proposals. Acquisition Proposals are proposals regarding
significant transactions, such as mergers and purchases by third parties of
significant portions of the assets or capital stock, of Besicorp or any
significant subsidiary. The Plan of Merger provides that the Board and Special
Committee will not:

o withdraw or modify their approval or recommendation of the Plan of Merger
or, the Merger;

o approve, adopt or recommend or publicly propose to approve, adopt or
recommend an Acquisition Proposal;

o cause Besicorp to enter into any agreement with respect to an Acquisition
Proposal; or

o resolve to do any of the foregoing.

However, the Plan of Merger provides that the Board or the Special
Committee may take such actions if they determine reasonably and in good faith,
after due investigation, that either:

o the Merger Consideration is not fair to the Outside Shareholders; or

o a pending Acquisition Proposal is more favorable to the Outside
Shareholders.

Parent Loans

Pursuant to the Plan of Merger, Parent will lend Besicorp amounts (not to
exceed $350,000 in a 30 day period or an aggregate of $1,050,000) Besicorp
reasonably requests to satisfy its obligations with respect to its'

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and its subsidiaries' normal operating expenses to the extent payable on or
prior to the Termination Date. As of March 7, 2000, Parent had advanced
approximately $871,785 as Parent Loans. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources." Parent is not required to make the Parent Loan if:

o an injunction is in effect prohibiting the Merger;

o litigation is pending in a court of competent jurisdiction seeking to
enjoin the Merger;

o a request for an injunction enjoining the Merger is pending in a court of
competent jurisdiction;

o a proxy statement for the Merger has not been filed with the SEC; or

o certain events of bankruptcy have occurred.

The terms of Parent Loans are as follows:

o The Parent Loans will be evidenced by the Promissory Note;

o The Parent Loans are payable on the earlier of six months after the
Termination Date or upon default under the Promissory Note;

o Interest is payable at the time the principal becomes due;

o Interest accrues at a rate of 9% per year, increasing to a rate of 15% per
year if and when the Promissory Note is not repaid within four months after
the Termination Date; and

o If the Merger is effectuated, the Buyer is responsible for the payment of
the Promissory Note.

The Parent Loans are secured by a security interest on substantially all
of Besicorp's assets. These security interests will be created pursuant to the
Security Agreement and the Mortgage. As a result of the Security Agreement and
Mortgage:

o Besicorp is prohibited from selling its assets other than in the ordinary
course of business or from granting, except in connection with financing
the SunWize Project, a security interest on its assets (with certain
exceptions); and

o If Besicorp defaults on the Promissory Note (which may occur if, among
other things, the Parent Loans do not provide sufficient funds for Besicorp
to continue operations until the Closing Date), Parent is entitled to sell
Besicorp's assets in accordance with the Security Agreement and the
Mortgage and apply the proceeds to repay all amounts owing to Parent
pursuant to the Promissory Notes, the Security Agreement and the Mortgage
prior to claims of the Outside Shareholders.

Neither a default on the Promissory Notes nor foreclosure under the
Security Agreement and the Mortgage will permit the Buyer to not consummate the
transactions contemplated by the Plan of Merger. However, it is possible that
the events giving rise to such a default or foreclosure may also permit the
Buyer to not consummate the transactions contemplated by the Merger. See "--
Termination -- Right to Terminate."

Indemnification

The Plan of Merger provides that before the Effective Date, Besicorp will
have D&O Insurance covering the Covered Persons for their acts and omissions
occurring on or prior to the Closing Date. The Plan of Merger provides that
after the Effective Time:

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o the Surviving Corporation the Surviving Corporation will reimburse the
Covered Persons with respect to any deductibles contained in such D&O
Insurance or "run-off" or "tail" insurance policies; and

o if there is no D&O Insurance, the Surviving Corporation will indemnify
the Covered Persons against all Losses arising out of or in connection
with claims that would have been covered if Besicorp's current insurance
policy had remained in effect until the sixth anniversary of the Effective
Date.

Guaranty

The Plan of Merger provides that on the Closing Date Michael F. Zinn will
execute the Guaranty in favor of the Outside Participating Shareholders and the
directors and officers of Besicorp. In the Guaranty, Mr. Zinn guarantees:

o the payment of the Deferred Payments, except to the extent that assets of
the Deferred Payment Fund are subject to liens, judgments or acts by
government entities other than liens, judgments or acts which are the
result of voluntary acts of Besicorp that prohibit the payment by Besicorp
of its obligations to the Outside Participating Shareholders as described
under "-- Merger Consideration;" and

o the payment of the insurance premiums, the reimbursement of the Covered
Persons with respect to any deductibles contained in such insurance
policies and the indemnification matters described under "--
Indemnification."

In addition, Mr. Zinn has agreed to place $100,000 in escrow on the
Closing Date which will fund for six years his obligations under the Guaranty
with respect to insurance and indemnification matters.

Spin-Off

Besicorp is required to consummate the Spin-Off immediately prior to the
Merger. In order to do this, Besicorp has agreed to: (i) transfer to WOM the
interests in the Bansbach Litigation that Besicorp had received from Old
Besicorp as a result of the Prior Merger Order and (ii) distribute to the
shareholders of Besicorp on the Spin-Off Record Date all of the outstanding
capital stock of WOM.

Other Covenants

The Parent, Acquisition Corp. and Michael F. Zinn are required to vote all
of their shares of Besicorp Common Stock in favor of the Plan of Merger and the
Merger.

The Plan of Merger contemplates that Parent may enter into agreements with
the holders of the Management Restricted Shares whereby the holders will
receive Substitute Restricted Shares in substitution for their Management
Restricted Shares. Parent has informed Besicorp that no such agreements will be
entered into by Parent and the holders of the Management Restricted Shares and
consequently all of the Management Restricted Shares should be outstanding
immediately prior to the Merger. Besicorp has waived any non-compliance, if
any, regarding this covenant. Besicorp waived such non-compliance since
non-compliance will not affect the amount of the Cash Merger Consideration or
Combined Deferred Payments receivable per share, and thus will not affect the
amount that the Outside Participating Shareholders will receive for their
shares of Besicorp Common Stock (other than Management Restricted Shares) and
holders of Management Restricted Shares will receive the same Merger
Consideration as the other Outside Participating Shareholders, although their
Merger Consideration will be held in escrow in accordance with the terms of
their Management Restricted Shares.

The Plan of Merger contemplates that the Surviving Corporation will be
bound by the Escrow Agreement. In addition, the Plan of Merger requires
Besicorp to deliver irrevocable Instructions to the Escrow Agent before the
Merger. See "-- Merger Consideration -- Combined Deferred Consideration --
Escrow Funds Payments."

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CONDITIONS TO THE MERGER

Conditions to Each Party's Obligations

Each party's obligation to consummate the Merger is subject to the
satisfaction (or waiver by such party) of the following conditions:

o The adoption of the Plan of Merger by the Requisite Vote of the
shareholders of Besicorp;

o The consummation of the Spin-Off;

o No governmental entity or court having enacted any law or regulation or
order which is then in effect and has the effect of making the Merger
illegal;

o No suit, proceeding or investigation having been commenced by any
governmental entity on any grounds to restrain, enjoin or hinder, or seek
material damages on account of, the effectuation of the Merger or the
other transactions contemplated by the Plan of Merger; and

o The approval of the Plan of Merger and the Merger by each governmental
entity whose approval is so required.

Additional Conditions to Obligations of Besicorp

The obligation of Besicorp to effectuate the Merger is subject to the
satisfaction (or waiver by Besicorp) of certain additional conditions:

o The accuracy of the representations and warranties of Parent and
Acquisition Corp. when made and as of the Closing Date;

o The performance by Parent and Acquisition Corp. of all their obligations
required in the Plan of Merger to be performed by them on or prior to the
Closing Date; and

o Acquisition Corp. being solvent immediately prior to the Merger, and,
assuming that the representations and warranties made by Besicorp are true
and correct, the Surviving Corporation being solvent immediately following
the Effective Date.

Additional Conditions to Obligations of Buyer

The obligation of Parent and Acquisition Corp. to effectuate the Merger is
subject to the fulfillment (or waiver by such parties) of certain additional
conditions:

o The accuracy of the representations and warranties of Besicorp when made
and as of the Closing Date; and

o The performance by Besicorp of all obligations required by the Plan of
Merger to be performed by it.

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TERMINATION

Right to Terminate

The Plan of Merger may be terminated and the Merger may be abandoned at
any time prior to the Effective Date as follows:

o by the mutual consent of the Buyer and Besicorp.

o by either the Buyer or Besicorp if:

(1) the Merger is not effectuated by the Termination Date;

(2) upon a vote at the Meeting, Besicorp's shareholders do not adopt the
Plan of Merger by the Requisite Vote; or

(3) either the Board or the Special Committee has taken any Acquisition
Proposal Activity.

o by the Buyer, if:

(1) there has been a material breach of any representation or warranty of
Besicorp which could reasonably by expected to prevent Besicorp from
fulfilling its obligations under the Plan of Merger or of any material
agreement or covenant under the Plan of Merger on the part of Besicorp
which is not cured or adequate assurance of cure given on a timely
basis;

(2) a tender offer or exchange offer for 40% or more of the shares of
Besicorp Common Stock is commenced (other than by the Buyer or an
affiliate of the Buyer), and the Board fails to recommend against
acceptance of such offer within the time period required by Section
14e-2 of the Exchange Act; or

(3) any person (other than the Buyer and its affiliates) acquires 40% or
more of the outstanding shares of Besicorp Common Stock.

o by Besicorp, if:

(1) there has been a material breach of any agreement of the Buyer in the
Plan of Merger which is not cured (or adequate assurance of cure given)
on a timely basis; or

(2) there has been a breach of a representation or warranty of Parent or
Acquisition Corp. which could reasonably be expected to prevent Parent
or Acquisition Corp. from fulfilling its obligations under the Plan of
Merger.

Remedies

Notwithstanding any termination right described under "--Right to
Terminate," in the event of the nonfulfillment of any condition to a party's
closing obligations, such party may elect to proceed to close despite the
nonfulfillment of any closing condition without waiving any claim for any
breach.

Damages

If the Plan of Merger is terminated as described under "--Rights to
Terminate," no party will have any claim against the others, except as follows:

Generally, a party terminating the Plan of Merger will retain all of such
party's legal rights if the circumstances giving rise to such termination were:

o caused by another party's willful failure to comply with a material
covenant set forth in the Plan of Merger; or

o a material representation or warranty of such other party was materially
false when made and the party making such representation or warranty knew
or should have reasonably known such representation or warranty was
materially false when made.

Besicorp will reimburse the Buyer for its Covered Expenses up to a maximum
of $150,000 if:

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o the Buyer terminates the Plan of Merger because:

(1) there has been a material breach of (i) any representation or warranty
of Besicorp which could reasonably be expected to prevent Besicorp from
fulfilling its obligations under the Plan of Merger or (ii) any material
agreement or covenant under the Plan of Merger on the part of Besicorp
which has not been cured or adequate assurance of cure given, in either
case within ten business days following notice of such breach from
Parent; or

(2) either (i) a tender offer or exchange offer for 40% or more of the
shares of Besicorp Common Stock is commenced (other than by the Buyer or
an affiliate of the Buyer), and the Board fails to recommend against
acceptance of such offer within the time period required by Section
14e-2 of the Exchange Act or (ii) any person (other than the Buyer or an
affiliate of the Buyer) acquires by any means 40% or more of the
outstanding shares of Besicorp Common Stock; or

o the Plan of Merger is terminated because:

(1) upon a vote at the Meeting, Besicorp's shareholders do not adopt the
Plan of Merger by the Requisite Vote; or

(2) either the Board or the Special Committee will have taken any
Acquisition Proposal Activity.

Parent will pay to Besicorp immediately upon such termination Besicorp's
Covered Expenses up to a maximum of $500,000 if:

o the Plan of Merger is terminated because the Merger will not have been
effectuated by the Termination Date; or

o Besicorp terminates the Plan of Merger because:

(1) there has been a material breach of any agreement therein on the part of
the Buyer which has not been cured or adequate assurance of cure given
within ten business days following notice of such breach from Besicorp;
or

SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS

All representations, warranties and agreements set forth in the Plan of
Merger or in any document or certificate delivered pursuant thereto will
survive the Merger for a period of five years following the Effective Date.

FEES AND EXPENSES

The Plan of Merger provides generally that whether or not the Merger is
effectuated, all costs and expenses incurred in connection with the Plan of
Merger and the transactions contemplated thereby will be paid by the party
incurring such expenses, except as described under " -- Termination --
Damages."

INDEMNIFICATION AGREEMENT

The Indemnification Agreement that was entered into at the time of the
Prior Merger provides that Besicorp will generally indemnify the Purchaser
Indemnitees against and from all damages sustained or incurred by any Purchaser
Indemnitee as a result of, or arising out of, by virtue of, or in connection
with:

o any inaccuracy in or breach of any representation and warranty made by
Old Besicorp in the Prior Plan of Merger or in any closing document
delivered in connection with the Prior Plan of Merger;

o any breach by Old Besicorp of, or failure by Old Besicorp to comply with,
any of its covenants or obligations under the Prior Plan of Merger or
under the Indemnification Agreement;

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o the existence of any liability or other obligation of Old Besicorp as of
March 22, 1999 or arising out of or relating to the Prior Merger or any
claim against a Purchaser Indemnitee with respect to any such liability or
obligation other than certain permitted liabilities, including, without
limitation, liability on account of taxes payable by Old Besicorp or for
which Old Besicorp is liable;

o the failure of Besicorp to pay and discharge in full when due any of its
liabilities, including liability on account of taxes other than such
permitted liabilities;

o any claims for indemnification by current or former officers, directors,
employees, agents or consultants of Old Besicorp;

o any third party claim (which includes the Existing Litigation) to the
extent it arises out of or relates to any action or inaction of, or the
conduct of the business of Old Besicorp on or prior to March 22, 1999
other than such permitted liabilities;

o any violation of, or delinquency with respect to, any order or
arbitration award or statute, or regulation in effect on or prior to March
22, 1999 or of any agreement of Old Besicorp with, or any license, permit
or environmental permit granted to Old Besicorp by, any federal, state or
local governmental authority to which the properties, assets, personnel or
business activities of Old Besicorp are subject (or to which Old Besicorp
is subject) as it relates to the properties, assets, personnel or business
activities of Old Besicorp;

o certain environmental matters;

o certain matters relating to employee pension benefit plans of Old Besicorp;

o any federal or state taxes imposed upon Old Besicorp, or for which Old
Besicorp is liable, with respect to any taxable period or portion of a
taxable period ending on or prior to March 22, 1999 other than a permitted
liability;

o litigation against Old Besicorp pending or threatened as of March 22, 1999;
and

o any claims, investigations, proceedings, actions or lawsuits asserted or
initiated before or after March 22, 1999 arising out of or in connection
with pre-closing occurrences involving Old Besicorp.

With certain exceptions, the Purchaser Indemnitees are not entitled to
indemnification:

o unless a notice of a claim has been delivered to Besicorp prior to March
22, 2004;

o to the extent the aggregate claims actually paid by Besicorp or any of its
subsidiaries to the Purchaser Indemnitees exceeds the aggregate Prior
Merger Consideration;

o for damages to the extent such damages were expressly included in the
adjustment amount pursuant to the Prior Plan of Merger;

o with respect to consequential damages relating to lost profits or punitive
damages (other than consequential damages or punitive damages paid or
payable to, or claimed by third parties); and

o with respect to damages arising from time spent by BGI Parent or its
affiliates and their respective officers and employees, for amounts in
excess of their actual out-of-pocket costs.

The payment of any damages to which the Purchaser Indemnitees are entitled
pursuant to the Indemnification Agreement will first be satisfied from the
Escrow Fund, pursuant to the terms of the Escrow Agreement to the extent
available, until the Escrow Fund has been reduced to zero and thereafter will
be satisfied by Besicorp directly. To the extent that the Escrow Fund is
reduced because of the Indemnification Agreement and the WOM Costs, the amounts
available for Combined Deferred Payments to the Outside Participating
Shareholders will be reduced.

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ESCROW AGREEMENT

In connection with the Prior Merger, Old Besicorp deposited $6.5 million
into the Escrow Fund pursuant to the Escrow Agreement. The Escrow Fund serves
to fund claims for BGI Indemnity Claims, BGI Monitoring Costs and Litigation
Costs, which at present includes the Bansbach Litigation. In order to provide
that the Bansbach Litigation is still covered by the Escrow Fund after the
Spin-Off, the Escrow Agreement has been amended pursuant to the Escrow
Agreement Amendment, to provide, effective as of the Spin-Off; that (i) WOM and
Besicorp shall be provided from the Escrow Fund with their reasonable expenses
incurred in connection with (a) the formation of WOM, (b) the Spin-Off
(including the cost of distributing the shares of WOM's Common Stock (including
the fees and expenses of Continental)) and (c) the preparation and filing with
the SEC of a registration statement for the WOM Common Stock, (ii) WOM shall be
provided from the Escrow Fund with its reasonable expenses (up to $35,000 per
annum) in connection with maintaining its existence, complying with the
Exchange Act and the rules and regulations promulgated thereunder, and such
other matters as may be reasonably necessary to permit the Bansbach Litigation
to continue and (iii) that the Bansbach Litigation will still be covered by the
Escrow Agreement following the Spin-Off. If the Merger were effectuated without
Besicorp's effectuating the Spin-Off (because the Prior Merger Order is
reversed), none of the WOM Costs would be incurred and there would most likely
be no further costs related to the Bansbach Litigation (assuming the Bansbach
Litigation were dismissed as a result of the Prior Merger Order being
reversed); any reimbursements with respect to such costs will reduce the monies
available to you as Deferred Payments. As of March 7, 2000, as a result of
permitted releases aggregating approximately $583,065 and after giving effect
to interest income aggregating approximately $187,394, the Escrow Fund
contained approximately $6.10 million.

The Escrow Agent will disburse Escrow Funds, unless any other party
objects, upon request (i) to BGI Parent, with respect to BGI Indemnity Claims
or BGI Monitoring Costs, (ii) to Besicorp, with respect to Litigation Costs and
(iii) once the Escrow Agreement Amendment is effective, to WOM (and to Besicorp
with respect to expenses incurred prior to the Spin-Off), with respect to WOM
Costs. If a party objects, the Escrow Agent will disburse such funds only in
accordance with the Escrow Fund Determination Procedure. Besicorp and WOM
agreed not to unreasonably withhold consent to a request by BGI Parent for
payment of BGI Indemnity Claims and BGI Parent and WOM agreed not to
unreasonably withhold consent for payment of Litigation Costs. BGI Parent and
Besicorp agreed not to unreasonably withhold consent for the payment of WOM
Costs if the Escrow Agreement Amendment becomes effective.

The terms of the Escrow Agreement provide that the Escrow Fund, if any,
will be released at any time after March 22, 2004 provided that all of the
following conditions have occurred and notice has been provided by Besicorp to
the Escrow Agent:

o no claims are then subject to the Escrow Fund Determination Procedure;

o in the reasonable judgment of BGI Parent, no future BGI Indemnity Claims
are foreseeable;

o all Besicorp Assumed Matters have been finally settled through either:

(1) a final, non-appealable judgment against Besicorp and all Purchaser
Indemnitees; or

(2) a settlement or other conclusion to each Besicorp Assumed Matter that
(x) contains a release from all liability in favor of Besicorp and
Purchaser Indemnitees without any further obligation by Besicorp or
Purchaser Indemnitees to make any payment or incur any other liability
or obligation with respect to such matter, (y) does not attribute by
its terms liability to Besicorp or any Purchaser Indemnitee and (z) if
the scheduled matter is a litigation or a proceeding, includes as a
term thereof a full dismissal of the litigation or proceeding with
prejudice; and

o the final settlement of the Bansbach Litigation through either:

(1) a final, non-appealable judgment against Besicorp, WOM and all
Purchaser Indemnitees; or

(2) a settlement or other conclusion to the Bansbach Litigation that (x)
includes a release from all liability in favor of WOM without any
further obligation by WOM to make any payment or incur any other
liability or obligation with respect to such matter, (y) does not
attribute by its terms liability to WOM and (z) includes as a term
thereof a full dismissal of the litigation with prejudice.

72
<PAGE>

Such amounts released are Remaining Proceeds. BGI Parent, WOM and Besicorp also
agreed to meet at least once a year to determine whether the amount of the
Escrow Fund is more than sufficient to (i) secure BGI Parent pursuant to the
Indemnification Agreement and (ii) secure WOM (if the Escrow Agreement
Amendment becomes effective) in connection with the Bansbach Litigation and
under the Escrow Agreement. Amounts released as a result of such meetings are
also Remaining Proceeds.

Ordinarily all of the Remaining Proceeds would be released by the Escrow
Agent to Besicorp or, after the Merger, the Surviving Corporation. However, the
Plan of Merger requires Besicorp to deliver the Instructions before the Merger.
The Instruction will irrevocably instruct the Escrow Agent to release, at the
time that Remaining Proceeds are released, the Escrow Fund Payment Distribution
to Continental.

The Escrow Fund Payment Distribution is an amount equal to:
<TABLE>
<CAPTION>

<S> <C>
the Remaining Proceeds being distributed x Outside Participating Shareholders' Shares
------------------------------------------
Total Shares
</TABLE>
The portion of the Remaining Proceeds not released to Continental will be
released to the Surviving Corporation and will not be considered Adjustment
Amounts.

The Plan of Merger also requires Besicorp to irrevocably instruct
Continental to distribute the Escrow Fund Payment Distribution to the Outside
Participating Shareholders on a pro rata basis as Escrow Fund Payments.

See "Plan of Merger -- Merger Consideration -- Combined Deferred Payments
- -- Escrow Fund Payments" and "Plan of Merger -- Principal Covenants -- Other
Covenants."

Pursuant to the Plan of Merger, to the extent that monies are delivered by
the Escrow Agent to Continental pursuant to the Instructions, these amounts
will not be Adjustment Amounts, the Surviving Corporation will be deemed to
have satisfied its obligations to make payments of such amounts and Michael F.
Zinn will have no obligation pursuant to his Guaranty.

Because the amount required to be released from the Escrow Fund to satisfy
BGI Indemnity Claims, BGI Monitoring Costs, Litigation Costs and WOM Costs, is
unknown, we have not estimated the amount of the Remaining Proceeds that will
be released from the Escrow Fund, the amount of Escrow Fund Payments or when
any of these monies will be released or distributed.

SPIN-OFF

BACKGROUND

The only shareholder of the Surviving Corporation following the Merger
will be Parent. Consummation of the Merger ordinarily would cause the named
plaintiff in the Bansbach Litigation to lose his status as a shareholder of
Besicorp, and therefore ordinarily would cause him to lose his right to
prosecute the Bansbach Litigation. If the Bansbach Litigation were not
maintained certain of Besicorp's executive officers and directors who are
defendants in such suits, including Michael F. Zinn, Besicorp's Chairman of the
Board, President and Chief Executive Officer, would benefit and certain
potential Adjustment Amounts would no longer be available. See "Factors to be
Considered -- Interests of Executive Officers and Directors in the Merger" and
"Business of Besicorp -- Legal Proceedings." If the Bansbach Litigation were
maintained and if the plaintiff in such litigation were to prevail,
approximately $1 million, excluding interest and punitive damages, might be
recoverable. Therefore, in order to avoid terminating the Bansbach Litigation
as a result of the Merger, we decided to effect the Spin-Off. Effectuating the
Assignment of the Bansbach Litigation to WOM pursuant to the Contribution and
issuing shares of WOM Common Stock in the Distribution to the shareholders of
Besicorp is intended to preserve the rights of the named plaintiff in the
Bansbach Litigation to pursue prosecution of the claim.

73
<PAGE>

Although the Spin-Off will not be effected unless the Merger is adopted by
Besicorp's shareholders and all other conditions precedent to the Closing
(other than the Spin-Off) have been satisfied or waived, the Spin-Off is
separate from the Merger, and the shares of WOM Common Stock to be received by
holders of Besicorp Common Stock in the Spin-Off do not constitute a part of
the Merger Consideration.

The Information Statement that will be sent to Besicorp's shareholders in
conjunction with the Spin-Off will contain additional information regarding the
Spin-Off and WOM.

THE CONTRIBUTION

Following the Special Meeting and prior to the Spin-Off, Besicorp will
transfer or cause to be transferred to WOM the interests in the Bansbach
Litigation that Besicorp had received from Old Besicorp as a result of the
Prior Merger Order. The transfer is referred to herein as the "Contribution."
In addition, the Escrow Agreement was amended to permit WOM and Besicorp to
receive the WOM Costs. If the Merger were effectuated without Besicorp's
effectuating the Spin-Off (because the Prior Merger Order is reversed), none of
the WOM Costs would be incurred and there would most likely be no further costs
related to the Bansbach Litigation (assuming the Bansbach Litigation were
dismissed as a result of the Prior Merger Order being reversed); any
reimbursements with respect to such costs will reduce the monies available to
you as Deferred Payments. See "Escrow Agreement." To effectuate the
Contribution, Besicorp and WOM will enter into the Contribution Agreement.
Pursuant to the Contribution Agreement, Besicorp has agreed to furnish WOM free
of charge with the services of Besicorp's employees and the use of Besicorp's
corporate headquarters.

It is anticipated that Michael F. Zinn, the Chairman of the Board,
President and Chief Executive Officer of Besicorp, will be a director,
President and Chief Executive Officer of WOM at the time of the Spin-Off, and,
in addition, certain of the executive officers of Besicorp will serve WOM in
capacities in which they currently serve Besicorp but that they will not be
compensated for the services they render on behalf of WOM. See "Factors to be
Considered -- Interests of Executive Officers and Directors in the Merger."

THE DISTRIBUTION

Besicorp will declare a stock dividend (the Distribution) to each holder
of record of Besicorp Common Stock as of the Spin-Off Record Date of one share
of WOM Common Stock for each share of Besicorp Common Stock held by such holder
on such Spin-Off Record Date. The Spin-Off Record Date is the date that all
conditions to the consummation of the Merger, including (i) the adoption of the
Plan of Merger by the Requisite Vote at the Special Meeting and (ii) the
Contribution, have been or will be waived or satisfied. Consequently it is
anticipated that the Spin-Off Record Date will be the date of the Special
Meeting and the same date as the Effective Date. However, the Spin-Off will
occur before the Merger.

Holders of Restricted Shares will receive shares of WOM Restricted Stock,
which are shares of WOM Common Stock subject to the same restrictions upon
transferability as the Restricted Shares. Therefore each share of WOM
Restricted Stock will be held in escrow by Besicorp and will vest or be forfeit
at the same time as the Restricted Share for which it was issued. However,
there will be different results depending upon whether the holder is (i) an
Independent Director (i.e., a holder of the 1,050 Independent Directors'
Restricted Shares) or (ii) a holder of Management Restricted Shares.

o The shares of WOM Restricted Stock held by the Independent Directors will
vest at the Effective Date.

o The shares of WOM Restricted Stock held by the holders of Management
Restricted Shares will be held in escrow by the Surviving Corporation and
will vest or be forfeit at the same time as such holders' Restricted Merger
Consideration vests or is forfeited.

Since all holders of record on the Spin-Off Record Date will receive WOM Common
Stock, the Buyer will receive shares of WOM Common Stock.

Since the Distribution will occur prior to the Merger, Dissenters will
receive shares of WOM Common Stock, which shares will not be forfeit on account
of the Merger.

74
<PAGE>

Therefore, assuming that no shares of Besicorp Common Stock are issued or
cancelled prior to the Spin-Off, 135,886 shares of WOM Common Stock will be
issued, including 57,967 shares (or approximately 42.7% of the aggregate number
of shares) that will be issued to the Buyer, 3,000 (or approximately 2.2% of
the aggregate number of shares) that will be issued to Michael F. Zinn, and
10,000 shares (or approximately 7.4% of the aggregate number of shares) that
will be issued to the Trust; of these shares, 14,500 shares will be shares of
WOM Restricted Stock of which 1,050 will vest upon the effectuation of the
Merger and the remainder will vest at such time that the Management Restricted
Shares for which they were issued would have vested.

These 135,886 shares of WOM Common Stock include 4,000 shares that will be
issued to Enowitz on account of the 4,000 Disputed Shares of Besicorp Common
Stock that would be issued in the Prior Spin-Off if the Enowitz Shares (of Old
Besicorp's Common Stock) were outstanding at the time of the Prior Spin-Off. A
legal proceeding is pending to determine whether Enowitz is entitled to these
shares and the parties to this proceeding have signed a stipulation regarding
the 4,000 Disputed Shares which, as a result, are being held in escrow by
Continental. See "Business of Besicorp -- Legal Proceedings."

Certificates representing shares of WOM Common Stock will be distributed
by Continental, the transfer agent for the WOM Common Stock, following the
Spin-Off Record Date. As a result of the Spin-Off, the shareholders of record
of Besicorp at the close of business on the Spin-Off Record Date will own all
of the outstanding shares of WOM Common Stock.

CONDITIONS TO THE SPIN-OFF

Besicorp will not effect the Spin-Off unless (i) Besicorp's shareholders
adopt the Plan of Merger, (ii) all other conditions to the closing of the
Merger have been waived or satisfied and (iii) a Form 10-SB containing the
Information Statement has been filed with the SEC and become effective. In
addition, the Spin-Off will occur only if the Prior Merger Order is still in
effect. Besicorp has appealed the Prior Merger Order. See "Business of Besicorp
- -- Legal Proceedings." If a Prior Merger Order Reversal occurs before the
Spin-Off, the Spin-Off will not be effectuated.

75
<PAGE>

SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA

The following table sets forth certain historical combined financial data
for Besicorp for the year ended March 31, 1999 ("Fiscal 1999") and the year
ended March 31, 1998 ("Fiscal 1998") and the nine months ended December 31,
1999 and 1998. The historical financial data for Fiscal 1999 and 1998
(audited), and the nine months ended December 31, 1999 and 1998 (unaudited),
were derived from the Consolidated Financial Statements of Besicorp included
elsewhere herein. In the opinion of management, the historical consolidated
financial data of Besicorp for the nine months ended December 31, 1999 and 1998
include all adjusting entries (consisting only of normal recurring adjustments)
necessary to present fairly the information set forth therein. The historical
consolidated financial data are not necessarily indicative of the results of
operations for any future period. Furthermore, the results of operations for
the nine months ended December 31, 1999 and 1998 should not be regarded as
indicative of the results that may be expected for the full year.

The summary pro forma consolidated financial data set forth below is not
necessarily indicative of the results of the operations or financial position
of Besicorp had the transactions reflected therein actually been consummated on
the dates assumed and is not necessarily indicative of the Parent's future
performance. The pro forma adjustments, as described in the Notes to the
Unaudited Pro Forma Consolidated Balance Sheet and Notes to the Unaudited Pro
Forma Consolidated Statements of Operations are based on available information
and upon certain assumptions that management believes are reasonable. The
summary pro forma consolidated financial data should be read in conjunction
with "Management's Discussion and Analysis or Plan of Operation" included
elsewhere herein, the Consolidated Financial Statements of Besicorp and notes
thereto and the Unaudited Pro Forma Consolidated Financial Information and
notes thereto included elsewhere herein.

Income Statement Data

<TABLE>
<CAPTION>
(In Millions, Except Per Share Amounts)
---------------------------------------------------------------------------------------
Year Ended March 31, Nine Months Ended December 31,
------------------------------------------- -----------------------------------------
1999 1998 1999 1999 1998
------------ ------------ ------------- -------------------------- ------------
Historical Historical Pro Forma Historical Pro Forma Historical
------------ ------------ ------------- ------------ ----------- ------------
(Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Revenues ...................... $ 5.7 $ 4.4 $ 5.7 $ 6.6 $ 6.6 $ 3.7
Costs and Expenses ............ 14.4 15.3 14.6 10.1 10.1 9.8
Net Loss ...................... 5.8 (7.2) (6.0) (3.4) (3.5) (4.0)
Pro Forma Per Share Data
(Unaudited) Net loss ......... ($ 43.83) ($ 26.26)
======== ========
</TABLE>

Balance Sheet Data
<TABLE>
<CAPTION>
March 31, 1999 December 31, 1999 December 31, 1999
---------------- ------------------- ------------------
Historical Historical Pro Forma
---------------- ------------------- ------------------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
Working Capital .............. $ .5 $ 2.1 $ 2.1
Total Assets ................. 10.6 8.0 9.1
Long-Term Debt ............... 0.1 0.1 4.6
Shareholders' Equity ......... 9.3 6.0 2.5
Book Value Per Share ......... 76.50 43.79 18.33
</TABLE>

76
<PAGE>
BESICORP HOLDINGS, LTD.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
December 31, 1999

<TABLE>
<CAPTION>
Historic
------------------------------- Pro Forma
Parent Besicorp Adjustments Pro Forma
------------- --------------- -------------------- ---------------
ASSETS (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Current Assets:
Cash and cash equivalents ................. $ -- $ 474,159 $ $ 474,159
Trade accounts and notes receivable
(less allowance for doubtful
accounts of $28,906) .................... -- 872,174 872,174
Due from affiliates ....................... -- 69,305 69,305
Notes receivable (includes interest of
$5,771).................................. -- 88,214 88,214
Merger consideration ...................... 4,587,091 (1) --
(4,587,091)(2)
Inventories ............................... -- 1,998,091 1,998,091
Other current assets ...................... -- 349,842 349,842
----------- ------------ ------------- -------------
Total Current Assets ................... -- 3,851,785 -- 3,851,785
----------- ------------ ------------- -------------
Property, Plant and Equipment
Land and improvements ..................... -- 229,660 229,660
Buildings and improvements ................ -- 1,914,029 1,914,029
Machinery and equipment ................... -- 581,792 581,792
Furniture and fixtures .................... -- 237,423 237,423
Construction in progress .................. -- 94,572 94,572
----------- ------------ ------------- -------------
-- 3,057,476 3,057,476
Less: accumulated depreciation and
amortization ............................ -- (1,429,775) (1,429,775)
----------- ------------ ------------- -------------
Net Property, Plant and Equipment ......... -- 1,627,701 -- 1,627,701
----------- ------------ ------------- -------------
Other Assets:
Cash escrow ............................... -- -- 791,801 (2) 791,801
Goodwill .................................. -- -- 333,596 (3) 333,596
Patents and trademarks, less
accumulated ammortization
of $3,243 ............................... -- 17,817 17,817
Investment in Besicorp Ltd. ............... 2,492,581 -- (6,287,871)(3) --
3,795,290 (2)
Deferred costs ............................ -- 919,283 919,283
Other assets .............................. -- 1,567,956 1,567,956
----------- ------------ ------------- -------------
Total Other Assets ..................... 2,492,581 2,505,056 (1,367,419) 3,630,453
----------- ------------ ------------- -------------
TOTAL ASSETS ........................... $ 2,492,581 $ 7,984,542 $ (1,367,419) $ 9,109,939
=========== ============ ============= =============

</TABLE>

See accompanying notes to unaudited pro forma consolidated balance sheet.

77
<PAGE>

BESICORP HOLDINGS, LTD.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
December 31, 1999

<TABLE>
<CAPTION>
Historic
------------------------------ Pro Forma
Parent Besicorp Adjustments Pro Forma
LIABILITIES AND SHAREHOLDERS' ------------- -------------- -------------------- --------------
EQUITY (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Current Liabilities:
Accounts payable and accrued expenses ..... $ -- $ 1,563,259 $ $ 1,563,259
Current portion of long-term debt ......... -- 42,000 42,000
Current portion of accrued reserve and
warranty expense ........................ -- 66,954 66,954
Taxes other than income taxes ............. -- 98,122 98,122
Income taxes payable ...................... -- 10,185 10,185
----------- ------------ ------------- ------------
Total Current Liabilities .............. -- 1,780,520 -- 1,780,520
Long-Term Accrued Reserve and Warranty
Expense ................................... -- 198,677 198,677
Long-Term Debt ............................. -- 51,070 4,587,091 (1) 4,638,161
----------- ------------ ------------- ------------
Total Liabilities ...................... -- 2,030,267 4,587,091 6,617,358
----------- ------------ ------------- ------------
Shareholders' Equity:
Common stock -- unrestricted .............. 2,492,581 1,364 (1,224)(3) 2,492,581
(136)(4)
(4)(5)
Restricted merger consideration ........... -- -- 791,801 (6) 791,801
Additional paid in capital ................ -- 10,135,677 (17,196)(5) --
(582,514)(4)
(9,535,967)(3)
Unamortized deferred compensation ......... -- (544,093) 504,963 (4) (791,801)
(791,801)(6)
39,130 (7)
Retained earnings (deficit) ............... -- (3,621,473) (39,130)(7) --
77,687 (4)
3,582,916 (3)
Treasury stock ............................ -- (17,200) 17,200 (5) --
----------- ------------ ------------- ------------
Total Shareholders' Equity ............. 2,492,581 5,954,275 (5,954,275) 2,492,581
----------- ------------ ------------- ------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY ................. $ 2,492,581 $ 7,984,542 $ (1,367,419) $ 9,109,939
=========== ============ ============= ============

</TABLE>

See accompanying notes to unaudited pro forma consolidated balance sheet.

78
<PAGE>

BESICORP HOLDINGS, LTD.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
December 31, 1999

The Unaudited Pro Forma Consolidated Balance Sheet as of December 31, 1999
presents the consolidated financial position of the Parent and Besicorp as
though the Plan of Merger had been effective as of December 31, 1999 and the
fact that Parent has become the parent company as a result of the Merger. The
Parent's balance sheet reflects its investment in Besicorp immediately prior to
the Merger, Besicorp's balance sheet reflects its historical financial position
as of December 31, 1999, and the pro forma adjustments represent transactions
occurring as a result of the Merger, including the assumption of debt by Parent
to fund the Cash Merger Consideration and goodwill recorded to reflect the
excess of the Cash Merger Consideration over the net book value of the assets
acquired. The Pro Forma Balance Sheet assumes the Cash Merger Consideration is
exactly $58.87 per share.

<TABLE>
<CAPTION>
Debit Credit
------------- -------------
<S> <C> <C>
(1) Assumption of debt to pay Cash Merger Consideration
Cash Merger Consideration $4,587,091
Long-term debt $4,587,091
(2) Conversion of 64,469 shares of Besicorp Ltd. stock for Cash Merger
Consideration at $58.87 per share and establishing cash escrow account
for conversion of 13,450 Management Restricted Shares @ $58.87 per
share
Cash Escrow $ 791,801
Investment in Besicorp $3,795,290
Cash Merger Consideration $4,587,091
(3) Elimination of investment in Besicorp by Parent
Common stock $ 1,224
Additional paid-in capital $9,535,967
Goodwill $ 333,982
Retained earnings $3,582,916
Investment in Besicorp Ltd. $6,288,257
(4) Cancellation of Management Restricted Shares (13,550), including 100
shares for employee terminated subsequent to December 31, 1999
Common stock (13,550 @ $.01) $ 136
Additional paid-in capital (13,550 @ $42.99) $ 582,514
Unamortized deferred compensation $ 504,963
Retained earnings $ 77,687
(5) Cancellation of 400 treasury shares upon merger
Common stock $ 4
Additional paid-in capital $ 17,196
Treasury stock $ 17,200
(6) Recording of Restricted Merger Consideration (13,450 @ $58.87)
Unamortized deferred compensation $ 791,801
Restricted merger consideration $ 791,801
(7) Release of restrictions on Management Restricted Stock (1,050 shares)
Retained earnings $ 39,130
Unamortized deferred compensation $ 39,130

</TABLE>

79
<PAGE>

BESICORP HOLDINGS, LTD.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended March 31, 1999

<TABLE>
<CAPTION>
Pro Forma
Historic Adjustments Pro Forma
------------------- ------------------ -------------------
<S> <C> <C> <C>
Revenues:
Product sales ........................................ $ 5,103,275 $ $ 5,103,275
Other revenues ....................................... 486,030 486,030
Interest and other investment income ................. 20,412 20,412
Other income ......................................... 106,886 106,886
---------- ------------ ----------
Total Revenues .................................... 5,716,603 5,716,603
---------- ------------ ----------
Costs and Expenses:
Cost of product sales ................................ 4,839,016 4,839,016
Selling, general and administrative expenses ......... 9,444,398 22,300(2) 9,645,798
179,100(1)
Interest expense ..................................... 134,110 134,110
Other expense ........................................ 11,018 11,018
---------- ------------ ----------
Total Costs and Expenses .......................... 14,428,542 201,400 14,629,942
---------- ------------ ----------
Loss Before Income Taxes ................................ (8,711,939) (201,400) (8,913,339)
Provision (Credit) for Income Taxes ..................... (2,897,200) (60,900)(3) (2,958,100)
---------- ------------ ----------
Net Loss ................................................ $(5,814,739) $ (140,500) $(5,955,239)
=========== ============ ===========
Basic Loss per Share .................................... $ (47.90)(4) $ (43.83)(4)
=========== ===========
</TABLE>

See accompanying notes to unaudited pro forma consolidated statement of
operations.

80
<PAGE>

BESICORP HOLDINGS, LTD.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For the Nine Months Ended December 31, 1999

<TABLE>
<CAPTION>
Pro Forma
Historic Adjustments Pro Forma
------------------- --------------- -------------------
<S> <C> <C> <C>
Revenues:
Product sales ........................................ $ 6,143,793 $ $ 6,143,793
Other revenues ....................................... 314,791 314,791
Interest and other investment income ................. 87,030 87,030
Income from partnerships ............................. 56,599 56,599
---------- ---------- ----------
Total Revenues .................................... 6,602,213 6,602,213
---------- ---------- ----------
Costs and Expenses:
Cost of product sales ................................ 5,283,389 5,283,389
Selling, general and administrative expenses ......... 4,751,746 16,700(2) 4,819,046
50,600(1)
Interest expense ..................................... 287 287
Other expense ........................................ 79 79
---------- ---------- ----------
Total Costs and Expenses .......................... 10,035,501 67,300 10,102,801
---------- ---------- ----------
Loss Before Income Taxes ................................ (3,433,288) (67,300) (3,500,588)
Provision for Income Taxes .............................. 16,022 0 (3) 16,022
---------- ---------- ----------
Net Loss ................................................ $(3,449,310) $(67,300) $(3,516,610)
=========== ========== ===========
Basic Loss per Share .................................... $ (25.76)(4) $ (26.26)(4)
=========== ===========
</TABLE>

See accompanying notes to unaudited pro forma consolidated statement of
operations.

81
<PAGE>

BESICORP HOLDINGS, LTD.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

The historic financial information for the year ended March 31, 1999
represent the results of operations of the Distributed Businesses of Old
Besicorp for the period April 1, 1998 through March 22, 1999, the date of the
contribution of the Distributed Businesses to Besicorp Ltd. and the operations
of Besicorp Ltd. from March 23, 1999 to March 31, 1999. The pro forma
adjustments reflect transactions which would have occurred if the Plan of
Merger had been effective April 1, 1998.

(1) Represents amortization of deferred compensation on restricted share
grants.

(2) Represents amortization of $333,596 of excess of cost over net book
value of assets acquired over a period of 15 years.

(3) There is no tax effect of entries (1) and (2) since the tax benefits of
loss carry forwards are offset by valuation allowances for the nine
months ended December 31, 1999. The tax benefit for the year ended March
31, 1999 represents the deferred tax effect for Old Besicorp.

(4) For the year ended March 31, 1999, historic loss per share is based on
the 121,382 shares assumed outstanding upon the Prior Spin Off.

For the nine months ended December 31, 1999, historic loss per share is
based on weighted average number of shares outstanding during the period
of 133,899.

For the year ended March 31, 1999 and the nine months ended December 31,
1999, Pro Forma loss per share is based on the 135,886 shares to be
outstanding upon the Merger.

(5) Since they cannot presently be precisely quantified, no adjustments
were made to the historical operations for cost savings that might
result should the Merger be completed and the Company is no longer an
SEC reporting company, although the Company estimates approximately
$350,000 per year in external expenses and approximately $300,000 per
year in internal costs relating to SEC compliance.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

RESULTS OF OPERATIONS

This narrative discusses the financial results of Besicorp Ltd. The
financial results for Fiscal 1998 include the results obtained from Old
Besicorp's operations relating to solar thermal and heat transfer products
which historically Old Besicorp combined with its photovoltaic operations. Old
Besicorp discontinued the sale of solar thermal and heat transfer products
effective March 31, 1998 and, therefore, neither Besicorp nor Old Besicorp
engaged in the business of selling these products in Fiscal 1999. Besicorp has
not generated any significant revenue from its power plant development
activities. Through Fiscal 1998, costs with respect to certain of these
activities are reflected as deferred costs. These costs were written off and
are included in SG&A for Fiscal 1999. See Notes 1 and 3 of the Notes to the
Consolidated Financial Statements of Besicorp Ltd.

Year Ended March 31, 1999 Compared to Year Ended March 31, 1998 and Three
and Nine Months Ended December 31, 1999 Compared to Three and Nine Months Ended
December 31, 1998

REVENUES

Consolidated

Consolidated revenues increased by $1,308,181, or 30% to $5,716,603 during
Fiscal 1999 as compared to $4,408,422 for Fiscal 1998. Consolidated revenues
increased by $720,873, or 52%, to $2,120,206 during the three months ended
December 31, 1999 from $1,399,333 during the three months ended December 31,
1998. Consolidated revenues for the nine months ended December 31, 1999
increased by $2,825,032, or 75%, to $6,602,213, as compared to $3,777,181
during the nine months ended December 31, 1998.

Product Sales. For Fiscal 1999, revenues from product sales increased by
$1,264,924, or 33%, to $5,103,275 from $3,838,351 for Fiscal 1998. Revenues
from product sales during the three-month period ended December 31, 1999
increased by $668,079, or 56%, to $1,855,884 as compared to $1,187,805 for the
three months ended December 31, 1998. During the nine months ended December 31,
1999, revenues increased by $2,870,298, or 88%, to $6,143,793, from $3,273,495
for the nine months ended December 31, 1998. The increase for all periods is
due primarily to increased sales volume of photovoltaic products primarily as a
result of increases to the sales and marketing support staff which were made
primarily during the fourth quarter of Fiscal 1998 and to the general increase
in demand for solar electric products associated with Year 2000 expectations.
No assurance can be given that such revenue levels will be maintained.

Other Revenues. Other revenues are primarily comprised of contract revenue
received from various sources, including NYSERDA and Motorola, Inc. in
accordance with funding agreements with Besicorp. Subsequent to Fiscal 1999,
Other Revenues includes revenue from storage units owned by Besicorp. Other
revenues for Fiscal 1999 increased by $59,876, or 14%, to $486,030 from
$426,154 for Fiscal 1998. The increase was due to revenue received from
Motorola, Inc. See Note 12 of the Notes to the Consolidated Financial
Statements of Besicorp Ltd. Other revenues decreased by $70,792, or 39%, for
the three months ended December 31, 1999 and decreased by $92,050, or 23%, for
the nine months ended December 31, 1999 from the corresponding periods in the
prior year. Contract revenue may vary from quarter to quarter based upon the
degree of completion of and/or level of effort devoted to the various tasks
outlined in the applicable agreements.

Income from Partnerships. Income from Partnerships for the three and nine
months ended December 31, 1999 was $131,786 and $56,599, respectively, compared
to $0 for the corresponding periods in the prior year. The Income from
Partnerships is comprised primarily of final adjustments made at the time of
liquidation of the partnerships which owned or leased five natural gas
cogeneration power plants. The interests in these partnerships were contributed
to Besicorp by Old Besicorp. See Note 5 of Notes to Consolidated Financial
Statements of Besicorp Ltd.

Interest and Other Investment Income. During Fiscal 1999, interest and
other investment income decreased by $15,070, or 42%, to $20,412 from $35,482
for Fiscal 1998. The decrease was due primarily to the lower principal balances
on notes receivable. See Note 4 of Notes to the Consolidated Financial
Statements of Besicorp Ltd. Interest and other investment income during the
three months ended December 31, 1999 increased

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by $18,608 to $23,808 from $5,200 for the three months ended December 31, 1998.
Interest and other investment income during the nine months ended December 31,
1999 increased $68,628 to $87,030 compared to $18,404 for the nine months ended
December 31, 1998. The increases in both current periods are due primarily to
higher invested principal balances and to interest earned on the Liquidated
Partnership Funds. See Note 6 of Notes to the Consolidated Financial Statements
of Besicorp Ltd.

Other Income. Other income for Fiscal 1999 and Fiscal 1998 was $106,886
and $108,435, respectively. Other income for these periods includes rental
income on storage units owned by Besicorp. For the periods subsequent to March
31, 1999, rental income from storage units is included in Other Revenues.

COSTS AND EXPENSES

Cost of Product Segment Sales

The cost of product sales for Fiscal 1999 and Fiscal 1998 was $4,839,016
and $3,932,201, respectively, or 95% and 102% of the revenues attributable to
product sales for the applicable period. The decrease in cost of sales
percentage in Fiscal 1999 is due primarily to efficiencies achieved in the
photovoltaic product manufacturing process.

Cost of product sales for the three months ended December 31, 1999 and
1998 was $1,586,174 and $1,162,704, respectively, or 85% and 98% of revenues
attributable to product sales. During the nine months ended December 31, 1999
and 1998, cost of product sales was $5,283,389 and $3,144,571, respectively, or
86% and 96% of revenues attributable to product sales. The decrease in cost of
sales percentage in both periods is due primarily to the overall increase in
product sales which has resulted in increased coverage of fixed costs resulting
in higher margins and, to a lesser extent, is due to improved efficiencies in
the manufacturing process which also contributed to higher margins.

SG&A Expenses

SG&A includes remuneration of executives and sales, marketing and project
development staff, but not employees involved in the production of Besicorp's
products. During Fiscal 1999, SG&A increased by $978,038, or 12%, to $9,444,398
from $8,466,360 for Fiscal 1998. The increase during Fiscal 1999 from Fiscal
1998 is primarily due to the $1,402,085 write-off of project costs previously
deferred due to the uncertain nature of the development of the projects and due
to the uncertain political and economic conditions in the countries where the
projects are located (principally India and Brazil). Old Besicorp determined,
in accordance with its existing policy that, due to the uncertain development
of the projects, the carrying amounts may be impaired. This increase was offset
by the decrease in SG&A associated with the discontinuance of Old Besicorp's
solar thermal and heat transfer product lines and the reclassification of
certain labor charges from SG&A to cost of product sales and a decrease in
professional fees. See "Liquidity and Capital Resources" and "Business of
Besicorp -- Power Development Activities" for information regarding the status
of Besicorp's power projects and initiatives.

SG&A decreased by $582,911, or 28%, to $1,475,563 for the three months
ended December 31, 1999 from $2,058,474 for the three-month period ended
December 31, 1998. During the nine months ended December 31, 1999, SG&A
decreased by $1,825,484 or 28% to $4,751,746, from $6,577,230 for the nine
months ended December 31, 1998. The decrease in the three months ended December
31, 1999 is due primarily to a decrease in professional fees of $237,000 and a
decrease of $30,000 in general and administrative wages. SG&A for the nine
months ended December 31, 1999, decreased from the corresponding period in the
prior year primarily because the results for the prior year include the
write-off, during the second quarter of Fiscal 1999, of project costs
previously deferred of $1,402,000. Also contributing to the decrease in SG&A
for the nine months ended December 31, 1999 was a decrease in general and
administrative wages of $159,000, and a decrease in professional fees of
$98,000. These decreases were partially offset by increased marketing expense
of $198,000 incurred in connection with Besicorp's Photovoltaic Activities and
increased equipment rental expense of $80,000 associated with the Besicorp's
lease agreement with Old Besicorp.

Interest Expense

Interest expense for Fiscal 1999 decreased by $347,541, or 72%, to
$134,110 from $481,651 for Fiscal 1998. The decrease during Fiscal 1999 is due
primarily to Old Besicorp's repayment of $3 million borrowed from Stewart and
Stevenson Services, Inc.

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Interest expense for the three months ended December 31, 1999 compared to
the three months ended December 31, 1998 decreased by $6,927 to $0. Interest
expense for the nine months ended December 31, 1999 decreased by $110,947 to
$287 from $111,234 for the nine months ended December 31, 1998. The decrease in
both the three and nine month periods is due primarily to Besicorp's repayment
of all its interest bearing debt during the second and third quarter of Fiscal
1999.

Provision for Income Taxes

For Fiscal 1999, the credit for income taxes decreased by $869,800, or
23%, to $2,897,200 from $3,767,000 for Fiscal 1998. The credit for income taxes
in all periods represents the allocated benefits to Besicorp of the losses
which Old Besicorp was able to use in filing its consolidated tax returns.

The provision for income taxes increased during the three months ended
December 31, 1999 by $629,788 to $2,088 compared to the credit for income taxes
of $627,700 for the same period in the prior year. During the nine-month period
ended December 31, 1999, the provision for income taxes increased by
$2,078,022, or 101%, to $16,022 compared to the credit for income taxes of
$2,062,000 for the same period in the prior year. Besicorp provides federal and
state income taxes based on enacted statutory rates adjusted for projected
benefits of tax operating loss carry forwards and other credits. The tax
benefit associated with the operating loss for the current period was offset by
a corresponding increase in valuation allowance.

Other Expense

Other expense increased during Fiscal 1998 to $2,519,114, from $92,316,
for Fiscal 1997, due primarily to Old Besicorp's decision to reserve for the
possible uncollectibility of a loan of $2.5 million in connection with a power
project which was ultimately written off in Fiscal 1999. The reserve and
subsequent write-off were recorded as a result of certain litigation and the
subsequent settlement thereof which resulted in the impairment of the asset and
the determination that the loan was uncollectible. This loan was written off
during the quarter ended December 31, 1998. See Note 4 of Notes to the
Consolidated Financial Statements of Besicorp Ltd.

Net Loss

Besicorp's net loss for Fiscal 1999 decreased by $1,409,265, or 20%, to
$5,814,739 from $7,224,004 for Fiscal 1998. The factors contributing to the
increases in net loss are discussed above.

Besicorp's net loss for the three months ended December 31, 1999 decreased
by $257,477, or 21%, to $943,620 from the net loss of $1,201,097 for the three
months ended December 31, 1998. During the nine-month period ended December 31,
1999, Besicorp's net loss decreased by $553,376, or 14%, to $3,449,310 from the
net loss of $4,002,686 for the nine months ended December 31, 1998. The factors
contributing to the decrease in net loss are discussed above.

INFLATION

Besicorp's operations have not been, nor in the near term are expected to
be, materially affected by inflation. However, if Besicorp develops business
opportunities internationally, it may become subject to risks of inflation in
the foreign countries in which it operates.

LIQUIDITY AND CAPITAL RESOURCES

At December 31, 1999, Besicorp had working capital of $2,071,265 and cash
of $474,159 and at March 3, 2000, Besicorp had cash of $94,634. Besicorp's
working capital decreased by $1,851,738 from $3,923,003 at March 31, 1999, to
$2,071,665 at December 31, 1999 as a result of Besicorp's operating losses
which resulted in a decrease in cash, a decrease in accounts receivable, an
increase in accounts payable and accrued expenses, partially offset by an
increase in inventory. Other than cash generated by Besicorp's Photovoltaic
Activities, which is generally expended in these activities, Management
anticipates no significant cash inflows in the near future. Given Besicorp's
current net cash use rate of approximately $500,000 to $600,000 per month
(after giving effect to the salary deferment program which has resulted in a
monthly cash savings of approximately $45,000 to $50,000), management estimates
that, after drawing on the Parent Loans, Besicorp will have sufficient funds to
continue operations only until mid-March 2000. Accordingly, Besicorp will not
be able to pay its obligations as they become due after such date without
additional funds. It is anticipated that Mr. Zinn will advance such funds as
may be necessary to continue its operations until consummation of the Merger,
but he is

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not obligated nor has he committed to fund any amounts in excess of the Parent
Loans. Other than the consummation of the Plan of Merger, Besicorp has not
developed any other acceptable alternatives to its liquidity and capital
resource problems. If the Merger is not consummated by the middle of March, no
assurance can be given that Besicorp will be able to continue operations.

SHORT TERM COMMITMENTS

Besicorp's principal short-term material commitments (i.e., expenditures
Besicorp plans to make during the twelve months ending December 31, 2000) are
as follows:

o the internal overhead and employee costs associated with monitoring its
power plant initiatives and projects and internal costs ascribed with the
development of new projects (approximately $400,000);

o funds (approximately $800,000) required to fund SunWize's operating
losses;

o approximately $2 million required for the construction of a 30,000 square
foot facility in Kingston to house the solar electric product development
and manufacturing operations;

o third-party costs of approximately $250,000 associated with Besicorp's
foreign development projects and initiatives; and

o approximately $6.8 million in connection with the Empire Newsprint
Project, of which $5.7 million are third party costs and $1.1 million are
internal costs.

Besicorp currently intends to address these commitments in the manner
described below, though Besicorp reserves the right to address such commitments
differently should, in Management's discretion, circumstances so dictate.
Besicorp does not have sufficient funds to fund these short term commitments.

SunWize

SunWize's operating losses (currently approximately $45,000 to $65,000 per
month) are currently being funded by Besicorp's cash on hand and the Parent
Loans. The construction of the SunWize Project will be financed through the
issuance of an industrial development agency bond, which bond will be secured
by a letter of credit to be issued by HSBC Bank and secured by the building and
the interest of SunWize in the real property upon which this facility is
situated. Besicorp expects this financing to be completed in May 2000.

Foreign Development Project Initiatives

Activity with respect to the foreign development initiatives are being
funded, prior to the Closing, by cash on hand and the Parent Loans.

Empire Newsprint Project

Besicorp intends to fund its Total Development Costs commitments with
respect to the Empire Newsprint Project through, in part, the Parent Loans, the
Vendor Advances (i.e., advances of cash or services from, among other sources,
vendors interested in participation in the construction phase of this project)
and loans and/or capital contributions from third parties. Besicorp has engaged
PWC to provide financial advisory services for the project, including placement
of debt, equity or equity- related securities with institutional or strategic
investors necessary to finance the balance of the Total Development Costs that
are not funded through the Parent Loans or the Vendor Advances.

LONG TERM CAPITAL COMMITMENTS

The principal long term material capital commitments (i.e., expenditures
Besicorp plans to make after December 31, 2000) of Besicorp are Besicorp's
commitment as one of the partners in connection with the estimated $1 billion
in Total Project Costs (inclusive of approximately $715 million in Total
Construction Costs) to be incurred in developing, financing and constructing
the Empire Newsprint Project. Besicorp has not specifically identified the
manner in which it will finance the Total Project Costs but it anticipates that
(i) it will have to surrender part of its equity interest in this project in
connection with the financing of the Total Project Costs and (ii) PWC may
assist it in obtaining such financing.

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PARENT LOANS AND FINANCIAL SUPPORT

Pursuant to the Plan of Merger, the Parent agreed to lend Besicorp such
amounts as Besicorp reasonably requests in order to satisfy its obligations
with respect to certain operating expenses of Besicorp and its subsidiaries;
provided, however, that Parent is not required to make loans within a thirty
day period in excess of $350,000, loans with a cumulative amount in excess of
$1,050,000, or under certain other circumstances relating to the status of the
Plan of Merger and the Merger.

Through March 3, 2000, an aggregate of $871,785 in Parent Loans have been
made to fund operations. In addition, Mr. Zinn or entities he controls have
loaned Besicorp approximately $360,715 during the period from January 1, 2000
to March 1, 2000 to fund Besicorp's requirements in connection with the SunWize
Project and certain Empire Newsprint Project costs. These loans have been made
on the same terms as the Parent Loans, except that they are unsecured. Besicorp
has obtained options to acquire land to be used in connection with the Empire
Newsprint Project. These options require Besicorp to make certain periodic
payments. In connection therewith and in addition to the Parent Loans, the
Parent or its affiliate has caused a letter of credit to be issued in the
amount of $450,000 to secure Besicorp's obligation with respect to these option
payments. This letter of credit will be reduced as the option payments are
made.

SOURCES AND USES OF CASH

During the Fiscal 1999, Besicorp's working capital on a historical basis
increased by $3,468,012 from $454,991 at March 31, 1998, to $3,923,003. The
higher amount at March 31, 1999 is due primarily to cash of $1.75 million
contributed to Besicorp Ltd. as a result of the Prior Spin-Off and to $314,000
of additional cash that was identified subsequent to the Prior Merger and not
included in the calculation of the Prior Merger Consideration (see Note 11 of
Notes to the Consolidated Financial Statements of Besicorp Ltd.). Besicorp's
working capital decreased by $1,851,738 from $3,923,003 at March 31, 1999, to
$2,071,265 at December 31, 1999 primarily as a result of increases in cash and
inventory partially offset by an increase in accounts payable and accrued
expenses.

During Fiscal 1999, cash of $5,797,396 was used by operating activities
primarily as a result of the net loss for the period of $5,814,739, an increase
of $828,500 in accounts receivable, an increase of $221,748 in inventories and
a decrease of $471,389 in accounts payable. These decreases in cash were
partially offset by non-cash items, primarily comprised of the write-off of
project costs previously deferred of $1,402,085.

During Fiscal 1999, cash of $7,650,455 was provided by financing
activities, due primarily to cash transactions with Old Besicorp, which were
partially offset by the repayment of borrowings.

During Fiscal 1999, Besicorp's investing activities used cash of $133,348
to acquire property, plant and equipment.

During the nine months ended December 31, 1999, cash of $3,549,863 was
used in operations primarily as a result of the net loss for the period of
$3,449,310 and net changes in other assets and liabilities which produced a
negative cash flow of $232,416. These were partially offset by non-cash items
of $131,863.

Besicorp's investing activities provided cash of $2,242,121 during the
nine-month period ended December 31, 1999 primarily as a result of
distributions from partnerships of $2,390,102, partially offset by the
acquisition of property, plant and equipment of $147,981. The distributions
received from partnerships are non-recurring in nature and primarily represent
Besicorp's share of the proceeds from the sale of certain pollution control
emission allowances and distributions made upon the liquidation of certain
partnerships.

For the nine months ended December 31, 1999, Besicorp's financing
activities resulted in a decrease in cash of $42,238 due to the repayment of
borrowings.

YEAR 2000

Through December 31, 1999 Besicorp spent $194,327 on Year 2000 compliance.
Of this amount, $138,836 was spent during Fiscal 1999, $17,042 in Fiscal 2000,
and the balance was spent in Fiscal 1997 and Fiscal 1998. Besicorp does not
expect additional expenditures for the balance of Fiscal 2000.

Besicorp has not experienced any material Year 2000 difficulties
subsequent to December 31, 1999.

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BUSINESS OF BESICORP

BACKGROUND

Besicorp specializes in (i) Photovoltaic Activities and (ii) Power
Development Activities.

Prior to March 22, 1999, Besicorp was a wholly owned subsidiary of Old
Besicorp, which was listed on the American Stock Exchange. Old Besicorp was a
party to the Prior Plan of Merger. Besicorp was organized in New York in 1998
in order to satisfy a condition to the effectuation of the Prior Merger that
required the Prior Spin-Off of the Distributed Businesses to Besicorp before
the Prior Merger. On March 22, 1999, Old Besicorp effectuated the Prior
Spin-Off. As a result of the Prior Spin-Off, Besicorp became an independent
publicly held company. The following description contains historical
information about the subsidiaries of Besicorp when they were subsidiaries of
Old Besicorp.

PHOTOVOLTAIC ACTIVITIES

Photovoltaic systems are systems that convert sunlight directly into
electricity. The fundamental element of a photovoltaic system is the
semiconductor device, or cell, which generates a variable electric current that
is directly proportionate to the quantity of sunlight energy absorbed. Solar
cells are electrically interconnected to form a module unit in which the cell
groupings are formatted to achieve desired electrical power specifications,
such as with respect to voltage and current. The solar module is the
power-generating component of a complete photovoltaic system. Complete systems
consist of one or more solar modules; controllers to monitor, regulate and
control the electric output; and, in most systems, batteries to store the
energy generated by the solar modules. Occasionally, backup generators or
invertors, which convert DC electric power to AC power, are included as
integral components of a system.

The market for photovoltaic products and systems is primarily directed
towards those electric power applications where access to utility power is
relatively expensive, inconvenient or not available. Electric power systems
that use photovoltaic technology include residential homes, communications
systems (e.g., satellite earth stations, microwave relay stations, roadside
emergency telephones and cellular network repeater stations), power systems for
remote areas (e.g., forests and parks and rural areas) and remote monitoring
systems that are used in production, consumption and the collection of
scientific data (e.g., monitor remote gas pipelines and weather stations).

Besicorp develops, assembles, markets and distributes photovoltaic
modules, power systems and related products for a variety of applications.
Besicorp develops solar power supply products for the portable computer,
wireless electronics and telecommunications industries, solar power accessories
for motor vehicles, electric boats and telemetry, as well as a polymer
encapsulation production processes for photovoltaic modules that can be
integrated into other products for consumer, commercial and industrial use. In
addition, Besicorp markets and sells prepackaged solar electric power products
and systems, system components, and system accessories ranging from small
battery chargers, to water pumping kits, to outdoor lighting, to portable power
generators, to PV power stations.

In addition to utilizing Besicorp's resources, products are developed
using government grants, industry funded projects, and technology demonstration
contracts to the extent practicable. In connection therewith, Besicorp has
entered into various funding and development arrangements with NYSERDA. NYSERDA
is a public benefit corporation created by the New York State Legislature; its
principal goal is to help businesses, municipalities and residents of New York
State solve their energy and environmental problems while developing innovative
products and services that can be commercialized by New York State businesses.
The arrangements with NYSERDA generally require Besicorp to develop,
manufacture, test and deliver various types of photovoltaic products (e.g.,
solar powered telephone power supply systems, skid mounted photovoltaic
systems, controllers and photovoltaic home systems) in consideration for which
NYSERDA reimburses Besicorp with respect to a negotiated percentage of the
development cost of such product. Funds advanced by NYSERDA are recorded for
financial statement purposes as "other revenues" at the time of receipt and
such advances will be repaid, depending on the project, from revenues or
profits, if any, derived from the products developed under these agreements.

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SunWize and Wespro, an English private limited company, are parties to a
memorandum of understanding dated August 13, 1998 with respect to the Gabon
Initiative whereby the parties will seek to obtain, develop and supply rural
electrification projects in Gabon in Africa. Wespro has had discussions with
the government of Gabon concerning these projects, but no agreement has been
reached and the government has not conducted any feasibility studies. The
parties obtained letters of interest from the Export Import Bank of the United
States to finance 85% of these projects up to approximately $20.5 million,
which letters of interest were subsequently revoked by the Export Import Bank
because of previous defaults by the government of Gabon. At present the Gabon
Initiative is inactive and there are no discussions between SunWize and Wespro.

Suppliers

Besicorp purchases solar electric modules and other photovoltaic supplies
from several large manufacturers, of which Siemens is the principal supplier.
Besicorp has supply agreements with its two largest suppliers. Besicorp is not
currently dependent on any suppliers for its power development activities.

Sales and Distribution

In addition to direct sales to original equipment manufacturers,
industrial companies and governmental agencies, Besicorp markets and sells
products through dealers and distributors nationwide. At September 30, 1999,
approximately 157 solar energy dealers and distributors, predominantly located
in North America, offered Besicorp's products. Besicorp also employs an
in-house sales and customer support staff responsible for generating sales and
assuring customer satisfaction. The distribution market is also supported by
Besicorp through a catalogue maintained by Besicorp to provide information
about sizing and installing solar energy systems.

Prices for Products and Systems

Besicorp's products and systems range from complete photovoltaic systems
that may cost as much as $50,000 to solar power supply products that range in
price from $50 to $5,000 to pre- packaged solar electric power products that
may cost as little as $50.

Customers and Backlog

Besicorp fills orders from inventory and draws from its inventory to
fabricate and manufacture customers' orders; therefore, backlog is generally
filled within the following quarter. Certain sales may be drop-shipped from
manufacturers' locations. Backlog of orders was $2,001,072, $274,260 and
$382,410 as at March 31, 1999, 1998 and 1997, respectively. Customers for
Besicorp's products include original equipment manufacturers, industrial and
telecommunications companies, dealers, governmental agencies and consumers,
such as inhabitants of rural areas, individuals who engage in outdoors
activities and environmentally concerned consumers. During Fiscal 1999 and
Fiscal 1998, sales to Allmand Brothers accounted for 9% and 14%, respectively,
of sales of photovoltaic products. Besicorp does not have a contract or
agreement with this customer.

Competition

Besicorp competes in North America, the principal region in which it
engages in photovoltaic activities, with approximately ten businesses engaged
in the distribution of photovoltaic products, of which five have a larger
market share than Besicorp. Besicorp believes that the market for value-added
solar electric products and systems is highly fragmented. The major competitive
factors are product price, service, technical capability and delivery.

POWER DEVELOPMENT ACTIVITIES

Besicorp, in conjunction with one or more partners, develops independent
power projects. Besicorp generally holds its ownership interests in the form of
partnership or membership interests, through special-purpose entities. Usually,
financing for these entities is secured solely by their respective assets.

In February 1999, Besicorp and Empire entered into the Empire Memorandum
to form a joint development partnership (in which each party would have an
initial 50% interest) to develop the Empire Newsprint Project, which is a
newsprint recycling manufacturing plant in Ulster County, New York and a
475-megawatt natural

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gas-fired cogeneration power plant adjacent to the recycling plant. The power
plant would supply power to the recycling plant and would also supply power for
sale to power marketers for resale into the recently deregulated power market.
The Empire Memorandum contemplates, among other things, that (i) Besicorp will
commit $750,000 to the Empire Newsprint Project (in consideration for its 50%
interest in the partnership) of which $250,000 is payable at the time of
execution of the Empire Memorandum and the balance to be paid monthly
thereafter (a "draw") or more often as conditions require, (ii) if Besicorp
fails to fund a draw submitted by the partnership, it shall forfeit its rights
to participate in the partnership as an equal partner and all Besicorp funding
and billed time is to be converted to a development loan to be repaid at
Financial Close, (iii) at Financial Close, Besicorp and Empire shall retain for
25 years rights to the sales and marketing of the Empire Power Facility and the
Empire Newsprint Facility, respectively, (iv) the parties will structure the
financing arrangements to maximize their development capital and internal cost
reimbursement, (v) development funds realized at Financial Close will be shared
pro rata between the parties according to the total development cost incurred
by each party, and then in accordance with their percentage ownership of the
Empire Newsprint Project and (vi) Besicorp and Empire will enter into a
definitive agreement delineating their rights and responsibilities. Besicorp
has paid its $750,000 Commitment and has funded the Empire Newsprint Project
with an additional contribution of approximately $325,000, which contribution
has not been matched by Empire. Besicorp and Empire have an oral understanding
that to the extent either party contributes amounts that are not matched by the
other party, their proportionate interests will be adjusted to reflect their
contributions. One possibility contemplated by Management is that the estimated
$11 million of total development costs required commencing March 1, 2000 to
bring the Empire Newsprint Project to Financial Close would come in the form of
advances of cash or services from, among other sources, vendors interested in
participating in the construction of the Empire Newsprint Project; such vendors
generally would be repaid in whole or in part at Financial Close. Either
party's interest in the Empire Newsprint Project may be diluted if such party
exchanges a portion of its interest in the Empire Newsprint Project to obtain
financing for the Empire Newsprint Project. Besicorp has estimated in its
preliminary projections for the Empire Newsprint Project that were prepared in
December, 1999 that if the Empire Newsprint Project is completed, Besicorp may
be able to receive at the Financial Close a development fee for its role in
developing the Empire Newsprint Project that would cover its preconstruction
development expenses. In addition, if the Empire Newsprint Project is completed
(which in the preliminary projections is estimated to be in the fourth quarter
of Fiscal 2003) at a cost of approximately $1 billion, Besicorp's goal is to
maintain a cash flow interest of approximately 10%, which interest might
generate a net distributable pre-tax profit equivalent to $1.5 million per year
(in current dollars), when using a discount rate of 15%.

In calendar 1999 Besicorp incurred expenses of approximately $1.16 million
in connection with the Empire Newsprint Project, of which approximately
$718,000 were third party costs and approximately $442,000 were internal costs.
Besicorp expects to incur third party expenses of approximately $5.7 million in
calendar 2000 (unless development capital is obtained by the Empire Newsprint
Project) and internal costs of approximately $1.1 million.

No assurance can be given that the parties will enter into a definitive
agreement, that the Empire Newsprint Project will receive the necessary
approvals from the requisite governmental authorities, including the New York
State Department of Environmental Conservation and the New York State Public
Service Commission, that financing for the Empire Newsprint Project (estimated
to be approximately $650 million) will be obtained, that the Empire Newsprint
Project will be completed, or, if it is completed, that the Empire Newsprint
Project will prove profitable.

At present, Besicorp has an interest (that it obtained as a result of the
Prior Contribution) in the Krishnapatnam Project to build a coal fired power
plant near the village of Krishnapatnam located 120 miles north of Chennai
(Madras) on India's eastern coast. BBI, the project company developing the
power plant near Krishnapatnam, is 50% owned by Besicorp and 50% owned by
Chesapeake. Old Besicorp acquired its interest in the Krishnapatnam Project in
1995 for nominal consideration and invested approximately $983,000 in the
Krishnapatnam Project, all of which investment was written off. In calendar
1999, neither Old Besicorp nor Besicorp spent money on the Krishnapatnam
Project. Besicorp does not anticipate increasing its investment in the
Krishnapatnam Project. However, it is anticipated that, due to the size of the
project and the amount of debt and equity required to finance the project,
Besicorp's ownership interest will be reduced substantially as the result of
the participation of equity investors. Capital construction costs are currently
estimated to be approximately $700

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million. Approval of one or more agencies of the Indian and local governments
is also required before the project can proceed. A power purchase agreement
with respect to this project was entered into on November 24, 1994 though
management believes that such agreement will have to be renegotiated.
Management is attempting to obtain further information regarding the status of
this project from Chesapeake, which is the project manager for the
Krishnapatnam Project, but Chesapeake has not responded to such requests. The
May 1998 nuclear tests conducted by India resulted in the imposition of
economic sanctions by the United States, though such sanctions appear to have
been waived by the United States through October 1999. The ability to obtain
project financing may be adversely affected by these sanctions. Even if such
sanctions are eliminated or the waiver thereof is extended indefinitely, no
assurance can be given that the governmental approval will be granted, that
financing will be obtained, that the project will be completed, or, if it is
completed, that the project will prove profitable. However, if the
Krishnapatnam Project is completed, Besicorp may generate profits, which might
be significant, from which Outside Participating Shareholders will not benefit
following the Merger.

Besicorp is always considering new power projects, both domestically and
internationally, and with entities that have served as Besicorp's partners in
past development projects and with entities that have never been partners of
Besicorp in any of its projects. Besicorp and prospective partners have entered
into letters of intent with respect to trying to develop initiatives in Brazil
and Mexico. Besicorp entered into a Master Project Agreement with MPR
Associates Inc. which calls for equal sharing in development fees and ownership
interest in all projects developed in Brazil by such parties. Two potential
projects in Brazil have been identified (involving natural gas and bagasse
fueled co-generation facilities). Bagasse is the waste product created by a
sugar mill. Such projects are in the early stages of development and no
financing or construction contracts have been signed or are currently being
negotiated with respect to these projects. In calendar 1999 Old Besicorp
(before the Prior Contribution) and Besicorp (after the Prior Contribution)
incurred expenses in Brazil of approximately $170,000 (including approximately
$75,000 in internal expenses) in the aggregate and Management anticipates that
such expenses will increase in 2000 because, as a result of improved economy,
Besicorp and MPR Associates Inc. are increasing their efforts. Besicorp has
engaged in early stage marketing efforts in Mexico but its efforts have not
exceeded the process of identifying project opportunities in that country. In
calendar 1999 Old Besicorp (before the Prior Contribution) and Besicorp (after
the Prior Contribution) incurred expenses of approximately $70,000 (all of
which were internal expenses) in the aggregate and Management anticipates that
such expenses will decrease sharply in 2000 as a result of Besicorp's reduced
interest in seeking opportunities in Mexico and its termination of the services
of Besicorp's representative in Mexico as of March 1, 2000. No assurance can be
given that any such letter of intent or the Master Project Agreement will
result in the development of any projects, or that if any projects are
developed, they will prove profitable. If these projects are developed,
Besicorp may earn profits from which Outside Participating Shareholders will
not benefit following the Merger.

Besicorp anticipates that projects would be developed with partners and
Besicorp would hold its ownership interests, primarily in the form of
partnership interests, through special-purpose entities formed to be the legal
owners of the projects. Partnerships may also issue additional interests in
projects during various stages of their development (e.g., in exchange for
providing capital to the partnerships), thereby diluting Besicorp's interests
in the partnerships.

The developers prepare financial models of the project, document the
project and arrange appropriate development capital and construction and
long-term financing. In addition, developers negotiate power purchase
agreements, permitting arrangements, engineering and construction contracts and
financial participation and risk sharing agreements.

Construction, operation, engineering, and design of a project are
contracted to third parties. When development is substantially complete, the
projects typically obtain construction financing which is replaced with long-
term debt and/or equity financing when the construction is completed. To the
maximum extent possible, financing is arranged on a limited- recourse basis, so
that repayment is limited to the revenues generated by the particular
project(s) being financed. Except to the extent that a developer provides
bridge or other financing to a project, the debt of the partnership is
collateralized solely by the assets of the project(s), without guarantees of
repayment by the developer.

Besicorp would expect to earn development fees by taking an active role in
the early stage development of each project. Development fees are generally
paid from the proceeds of the project loans and are capitalized as

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part of the cost of the project. The amounts and timing of such payments of
development fees are subject to negotiations with the parties to the
transaction and represent fees for services provided to the project. Other
potential sources of revenues and cash flows are (i) management fees for
coordinating and overseeing partnership activities during the construction and
operating phases of the projects and (ii) income and distributions from project
operations. Projects are expected to generate income from the operation of the
facilities; however, in early years of operation, the partnership may incur
significant book losses, and partners will not recognize income until such time
as the operating income of the projects exceeds accumulated losses. If projects
are developed, Besicorp may receive profits. There can be no assurance that
Besicorp will develop any power projects or that it will earn development fees
on new project opportunities.

RISKS OF INTERNATIONAL OPERATIONS

Besicorp has devoted much of its efforts in developing independent power
projects towards developing foreign projects. The Krishnapatnam Project and any
future foreign projects or initiatives would be required to comply with the
applicable regulations of the jurisdictions where such projects and initiatives
are developed. In addition, Besicorp's photovoltaic activities have included
providing and installing photovoltaic systems in Mexico and, if developed, the
Gabon initiative will require providing and installing photovoltaic systems in
Gabon. At present, Management believes its foreign operations are currently in
compliance with all material applicable regulations. However, Besicorp's
foreign operations are subject to the risks of international operations,
including compliance with and unexpected changes in, foreign regulatory
requirements and currency control regulations, trade barriers, fluctuations in
exchange rates, political instability, the potential for expropriation, local
economic conditions, and difficulties in staffing and managing foreign
operations.

Projects overseas require considerable capital. Funding for international
projects may be obtained from various sources, including the private sector
(both domestically and internationally), government sponsors (e.g., United
States Trade and Development Agency, United States Agency for International
Development, the Export-Import Bank of the United States and the Overseas
Private Investment Corporation) and commercial banks. Obtaining such funding
often is more time consuming than obtaining funding for domestic projects.
There can be no assurance that sufficient funding will be available in
connection with any international project. Nor can there be any assurance that
Besicorp will be successful in international project development. Neither
Besicorp nor Old Besicorp has ever consummated a financing for an international
project. However, if projects are developed, Besicorp may receive profits
substantially greater than Besicorp's expenses associated with such projects.

POTENTIAL NON-RECURRING FUNDS

In addition to the photovoltaic and power plant development businesses,
Besicorp pursuant to the Prior Spin-Off acquired certain of Old Besicorp's
residual interests, such as the right to receive distributions from
partnerships in which Old Besicorp had interests, including the partnerships
which formerly owned the Power Plants. As a result, Besicorp may, from time to
time, obtain non-recurring funds from these residual interests although no
assurance can be given that any such funds will be obtained.

The Partnerships which owned five of the Power Plants, Niagara Mohawk and
certain other IPPs are parties to the MRA, which became effective on June 30,
1998, and which provided for, among other things, the termination or
restructuring of the Power Purchase Agreements and power purchase agreements
with the other IPPs. It is possible that in certain circumstances certain
hydro-energy developers that withdrew from the MRA will agree to restructure or
terminate their power purchase agreements with Niagara Mohawk. If any of such
developers do reach such an agreement with Niagara Mohawk before July 1, 2003,
Niagara Mohawk will pay the Hydro-Credits to the Partnerships and the other
IPPs. If all of the developers were to enter into such agreements, Besicorp
would be entitled to receive proceeds of up to approximately $1 million. As of
the date hereof Besicorp has received an Anticipated Hydro-Credit Distribution
of $257,640 and Besicorp expects to receive no future Anticipated Hydro-Credit
Distributions although it may receive other Hydro-Credits. No agreement has
been reached to date between any of the remaining developers and Niagara
Mohawk. There can be no assurance that any of such developers will enter into
such an agreement before July 1, 2003 or that Besicorp will ever receive any of
such proceeds.

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Pursuant to the MRA, Niagara Mohawk agreed to pay certain amounts to the
Partnerships and certain other IPPs in the event Niagara Mohawk materially
amended, restated or otherwise restructured the power purchase agreement of
NorCon. Niagara Mohawk has closed a transaction which has the effect of
terminating NorCon's power purchase agreement with Niagara Mohawk. Prior to
terminating NorCon's power purchase agreement, Niagara Mohawk made above-market
payments under NorCon's power purchase agreement for the period between the MRA
closing on June 30, 1998 and the NorCon settlement on December 3, 1999. Niagara
Mohawk has indicated that such payments do not require Niagara Mohawk to make
payments to the Partnerships and the other IPPs under the MRA, but at this
point it is unclear whether Niagara Mohawk's interpretation of the MRA is
accurate. If Niagara Mohawk's interpretation is inaccurate then the amount
required to be paid by Niagara Mohawk to the Partnerships and the other IPPs
pursuant to the MRA would be approximately $6.8 million of which Besicorp's
share would be approximately $500,000. At this time, the Partnerships and the
other IPPs are considering their options, including retaining counsel and
proceeding against Niagara Mohawk. Besicorp is waiting to see what the other
IPPs decide to do before deciding what it will do. If Besicorp receives any
money as a result of the termination of the NorCon agreement, such payment
would result in a Deferred Payment. There can be no assurance that Besicorp
will ever receive any such payment, or if it does, when it will be received and
how much Besicorp will receive.

Certain of these Partnerships retained the rights to the Power Plants'
Allowances to emit Nitrogen Oxide (NOx). In June 1999, Besicorp received
approximately $1.7 million principally from the sale of these Allowances. No
additional amounts are expected to be received from the sale of Allowances.

A partnership in which Besicorp holds an interest agreed in 1996 to
indemnify a third party for any tax liability associated with the third party's
tax treatment of its receipt of certain funds from this partnership. In
connection with this indemnification, this partnership as required by the third
party, placed an aggregate of $1,838,000 ($1,884,000 as of December 31, 1999,
after giving effect to accrued interest) in the Tax Escrow, of which Besicorp
is entitled, based on its proportionate ownership interest in the partnership,
to approximately $920,000 ($946,000 as of December 31, 1999, after giving
effect to accrued interest). The partnership is entitled to the Tax Escrow (to
the extent not applied to satisfy this indemnification obligation) after the
third party settles any audit of its 1995 and 1996 tax returns. As of December
31, 1999, there has been no indication that any audit will be required.
Besicorp's proportionate interest in the cash in the Tax Escrow (i.e., $946,000
as of December 31, 1999, plus any accrued interest thereon) will be released to
Besicorp if no audit has been commenced by June 15, 2000.

Certain partnerships in which Besicorp has interests are being or have
been liquidated. In connection with these liquidations, Besicorp has received
approximately $594,000 (excluding the $1.7 million of NOx credits described
above), including an Anticipated Partnership Distribution of approximately
$280,000, and expects an additional Anticipated Partnership Distribution of
approximately $100,000 in December, 1999. It is possible that additional
amounts will be distributed but there can be no assurance that any such
distributions will occur. Funds were placed in the May 1999 Escrow as a reserve
for potential liabilities of these liquidating partnerships. To the extent that
these funds have not been disbursed to satisfy potential liabilities on or
prior to May 15, 2002, they will be distributed to the partners. If no funds
are disbursed to satisfy potential liabilities, approximately $530,000 would be
distributed to Besicorp other than the Anticipated Partnership Distribution.

Old Besicorp placed $6.5 million in the Escrow Fund prior to the
effectuation of the Prior Merger. Amounts, if any, not needed to provide
indemnification pursuant to the Indemnification Agreement or to make certain
payments will be released to Besicorp, or, pursuant to the Instructions, to
Continental after March 22, 2004, so long as certain conditions have been
fulfilled. See "Escrow Agreement."

The Outside Participating Shareholders generally will be entitled to
Combined Deferred Payments with respect to distributions with respect to (i)
the Partnerships, (ii) Hydro-Credits and (iii) the Escrow Fund. However, monies
distributed prior to October 7, 1999 and the Anticipated Hydro-Credit
Distribution and the Anticipated Partnership Distributions are excluded from
such Combined Deferred Payments. See "Plan of Merger -- Merger Consideration."
However, no assurance can be given that any such distributions will occur, or
if they occur, when they will occur.

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RESEARCH AND DEVELOPMENT

Expenditures for photovoltaic research and development were $609,399,
$697,182 and $646,817 for Fiscal 1999, Fiscal 1998 and Fiscal 1997,
respectively. These expenses include personnel expenses of $223,799, $330,428
and $301,055 for Fiscal 1999, Fiscal 1998 and Fiscal 1997, respectively. Of the
total amounts, expenses attributable to Besicorp's agreements with NYSERDA were
$331,539, $520,950 and $414,307 for Fiscal 1999, Fiscal 1998 and Fiscal 1997,
respectively. No assurance can be given that funds for research and development
will be available to Besicorp from internal or external sources and the failure
to obtain such funds may have an adverse effect on Besicorp's operations.

INTELLECTUAL PROPERTY

While Besicorp does own certain intellectual property rights (e.g.,
patents, trademarks and trade secrets), Management does not believe that these
rights are essential to Besicorp's current operations.

GOVERNMENT REGULATION AND ENVIRONMENTAL MATTERS

The development and manufacture of photovoltaic products are not subject
to U.S., state, foreign and local statutes and regulations (other than statutes
and regulations generally applicable to the development and manufacture of
products).

The operations of Besicorp are subject to various U.S., state, foreign and
local laws and regulations with respect to environmental matters, including air
and water quality and underground fuel storage tanks, and other regulations
intended to protect public health and the environment. Compliance by Besicorp
with such laws and regulations has not had a material adverse effect upon
Besicorp, and Besicorp believes it is in material compliance with all such
applicable laws and regulations. Based upon current laws and regulations and
the interpretations thereof, Besicorp has no reason to believe that the costs
of future environmental compliance would be likely to materially adversely
impact the business, results of operations, cash flows or financial position of
Besicorp. However, the partnerships or other special purpose entities formed to
develop power project initiatives may incur substantial costs to comply with
applicable environmental regulations.

EMPLOYEES

As of January 31, 2000, Besicorp had approximately 71 full-time and two
part-time employees. None of these employees are represented by a union. In the
opinion of management, its relationship with its employees is satisfactory.

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PROPERTIES

Besicorp owns or leases the properties identified below:
<TABLE>
<CAPTION>

Location of Property Nature of Ownership Use of Property
- -------------------- ------------------- ---------------
<S> <C> <C>
Kingston, New York Owned Corporate Headquarters
(Includes land and the 8,000
square foot building thereon)

Stelle, Illinois Lease, expiring April 2000, for Photovoltaic Activities uses as
(Lease of 2,000 square feet) $575 per month sales office

Kingston, New York Term lease expiring May 31, 2000 Photovoltaic Activities Facility
(Lease of 17,000 square feet) for $13,851 per month.

Santa Cruz, California Lease for $410 per month, Photovoltaic Activities uses as
(Lease of approximately 300 expiring January 2000 sales office
square feet)

Ulster, New York Owned Investment purposes
(approximately 28 acres of
unimproved property)

San Diego, California Lease for $690 per month. Term is Photovoltaic Activities uses as
(Lease of 325 sq. feet) month to month. sales office
</TABLE>

Besicorp sold on January 18, 2000 its property in Ellenville, New York to
an unaffiliated third party for $95,000 (with Besicorp providing 100% of the
buyer's financing).

Besicorp is building a facility for SunWize in Kingston adjacent to the
Corporate Headquarters because it must vacate its current facilities by May 31,
2000. Management believes it can realize efficiencies and saving by building
the facility and it needs additional space. Construction commenced in October
1999 and Management estimates that the facility will be completed in May 2000
at a cost of approximately $2 million. To finance the facility, Besicorp is
negotiating with the Ulster County Industrial Development Agency for the
issuance of Industrial Development Bonds which would cover all of the costs,
including those incurred prior to the issuance of the Bonds, of the facility.
Management anticipates that the Bonds will be issued no sooner than December
1999 and that the first payment of interest would not be due prior to June
2000. No assurance can be given that financing will be available.

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LEGAL PROCEEDINGS

Besicorp has, pursuant to the Prior Contribution Agreement, agreed to
assume all liabilities of Old Besicorp, other than certain specified
liabilities (relating to certain taxes, intercompany liabilities and merger
costs) which were retained by Old Besicorp. The total amount of liabilities
(other than contingent liabilities arising out of litigation involving Old
Besicorp or Besicorp, which liabilities, if any, Management believes would be
satisfied from the Escrow Fund) assumed by Besicorp pursuant to the Prior
Contribution Agreement was approximately $1 million. In addition, in connection
with the Prior Plan of Merger, Besicorp entered into the Indemnification
Agreement whereby Besicorp agreed to indemnify the Prior Merger Parties for
damages relating to various matters including, breaches of the Prior Merger
Agreement and substantially all of Old Besicorp's litigation that was pending
at the time of the Prior Merger. See "Indemnification Agreement."
Contemporaneously with the closing of the Prior Merger, Old Besicorp deposited
$6.5 million in the Escrow Fund to fund the indemnification obligations arising
out of the Indemnification Agreement. See "Escrow Agreement." Management
anticipates that Besicorp would not be required to make any payments pursuant
to the Indemnification Agreement or to otherwise satisfy the liabilities
assumed pursuant to the Prior Contribution Agreement because the Escrow Fund
should be sufficient to satisfy such obligations. Notwithstanding the
foregoing, Besicorp has, pursuant to, among other things, the Indemnification
Agreement agreed to indemnify the Prior Merger Parties with respect to the
matters identified below and may be liable for all damages, if any, in
connection with such matters. Consequently, Besicorp may be liable for all
damages, if any, and expenses in connection with the following matters to the
extent such claims are not satisfied by the Escrow Fund.

On March 5, 1999, James Lichtenberg and John Bansbach commenced the March
Litigation by filing the March Complaint. The two named plaintiffs are the
plaintiffs in the Bansbach Litigation and the Lichtenberg Litigation which are
described below.

The March Complaint asserted four claims for relief: (i) a claim against
Besicorp and the March Director Defendants under section 14(a) of, and Rule
14a-9 promulgated pursuant to, the Exchange Act; (ii) a claim against the March
Director Defendants under section 20(a) of the Exchange Act; (iii) a claim
against the March Director Defendants for breach of fiduciary duty; and (iv) a
claim against BGI Parent and BGI Acquisition for aiding and abetting the
alleged breach of fiduciary duty. The March Complaint alleges that (i) the
proxy statement sent to Old Besicorp's shareholders in connection with the
meeting of Old Besicorp's shareholders to adopt the Prior Plan of Merger was
materially misleading because it failed to adequately disclose all available
material information regarding the effect of the Prior Merger on the Derivative
Litigation; (ii) the Prior Merger was intentionally structured to accomplish
the termination of the Derivative Litigation; and (iii) Old Besicorp and its
directors breached their fiduciary duty by (a) intentionally structuring the
Prior Merger so as to cause the termination of the Derivative Litigation, (b)
failing to retain independent counsel to act on behalf of Old Besicorp's
minority shareholders, (c) failing to retain an independent investment banker
to opine on the fairness of the Prior Merger to Old Besicorp's minority
shareholders, (d) failing to form an independent committee to ensure that the
Prior Merger was fair to and in the best interests of Old Besicorp's minority
shareholders, and (e) providing for a $1 million bonus to Michael F. Zinn and a
$500,000 bonus to Michael J. Daley, which the March Complaint deems to be
excessive and/or unwarranted compensation.

The March Complaint seeks injunctive relief directing full disclosure of
the financial impact on Old Besicorp's shareholders of the termination of the
Derivative Litigation and full disclosure of the alleged intentional
structuring of the Prior Merger to cause the termination of the Derivative
Litigation. The March Complaint also seeks an order directing that the
Derivative Litigation be transferred to Besicorp, that the Prior Merger
consideration payable to Michael F. Zinn, Martin E. Enowitz and Steven I.
Eisenberg for their shares of Old Besicorp's common stock (which were subject
to the Lichtenberg Litigation) be held in escrow, and that certain amounts at
issue in the Bansbach Litigation be held in escrow pending final adjudication
of the respective actions. The March Complaint also seeks unspecified money
damages.

On March 18, 1999, the District Court entered the Prior Merger Order
requiring (i) the Prior Assignment of the Derivative Litigation to Besicorp
prior to the effectuation of the Prior Merger; (ii) that defendants Michael F.
Zinn, Steven I. Eisenberg and Martin E. Enowitz take no action to place the
Prior Merger Consideration they would receive beyond the reach of the United
States courts so as to render the defendants unable to satisfy any judgment
which may be rendered in the Lichtenberg Action; and (iii) that plaintiffs post
a bond in the amount

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of $100,000 within seven days of the date of the order, which bond was posted.
Besicorp filed a motion for reconsideration of the Prior Merger Order and the
District Court in June 1999 denied Besicorp's motion for reconsideration of the
Prior Merger Order. Besicorp appealed the Prior Merger Order and the denial of
reconsideration to the United States Court of Appeals for the Second Circuit.
Messrs. Lichtenberg and Bansbach moved to dismiss the appeal, in part or in
whole, based on non-substantive issues concerning the timeliness of the appeal
with respect to the Prior Merger Order and the June 1999 order denying
reconsideration of the Prior Merger Order. On February 17, 2000, the Second
Circuit issued a decision consisting of a majority opinion and a dissenting
opinion. The majority opinion granted the motion to dismiss the appeal as to
the Prior Merger Order but not as to the June 1999 order. The dissenting
opinion found that the appeal was timely as to the Prior Merger Order. Besicorp
intends to move for rehearing en banc of the decision granting, in part, the
motion to dismiss the appeal. The Prior Contribution Agreement effected the
Prior Assignment of the Derivative Litigation. Therefore, the action is a
Besicorp Assumed Matter and Besicorp's costs are funded from the Escrow Fund.
The effectuation of the Merger ordinarily would adversely affect the Derivative
Litigation; however, by assigning Besicorp's interests in the pending Bansbach
Litigation to WOM pursuant to the Spin-Off, the named plaintiff should be able
to maintain the Bansbach Litigation. However, as discussed below, the
Lichtenberg Litigation is not being assigned because the complaint in the
Lichtenberg Complaint has been dismissed. See "Factors to be Considered --
Interests of Executive Officers and Directors in the Merger."

In December 1998, Fenster commenced an action in the New York Supreme
Court, New York County, against Old Besicorp, BGI Parent, BGI Acquisition,
Josephthal and each of the members of the Old Besicorp Board. In the complaint
Fenster indicated that he is seeking class certification. The complaint alleged
that the Prior Merger Consideration is inadequate and less than Old Besicorp's
intrinsic value, that in adopting the Prior Plan of Merger the Old Besicorp
Board had been unduly influenced by Michael F. Zinn, and that the Old Besicorp
Board breached its fiduciary duty to its shareholders. The complaint also
alleged that Mr. Zinn and the other members of the Old Besicorp Board would
receive the following allegedly unlawful additional consideration that the
remaining shareholders would not receive: (i) the Escrow Fund, that, according
to the complaint, has been established primarily to benefit them, (ii) the
acceleration of certain of the Old Besicorp Rights (iii) bonuses for certain
members of senior management. Fenster is seeking, among other things,
unspecified compensatory damages and an order that the defendants take
appropriate measures to maximize shareholder value. Old Besicorp filed a motion
for summary judgment to dismiss the complaint on the grounds that plaintiff's
alleged claims cannot be asserted in a class action, but rather must be alleged
in a shareholder derivative action subject to various preconditions and other
requirements. Oral arguments of the summary judgment motion were presented on
June 22, 1999. The Court dismissed the action with prejudice in February 2000.
This matter was assumed by Besicorp pursuant to the Prior Contribution
Agreement. Therefore, the action is a Besicorp Assumed Matter and Besicorp's
costs are funded from the Escrow Fund.

In December 1998, an action was commenced in the New York Supreme Court,
Westchester County, entitled Energy Investment Research Inc. v. Besicorp Group,
Inc., Index No. 98/19707. The complaint alleged, among other things, that Old
Besicorp is obligated to pay EIR 1.5% of all net cash and/or securities
received by Old Besicorp from its general partnership interests in the Carthage
and South Glen Falls Partnerships. EIR seeks, among other things, a declaratory
judgment that it is entitled to 1.5% of the distributions from the MRA and has
asked for payments in excess of $750,000. Old Besicorp answered this complaint,
denied all of the material allegations and asserted certain affirmative
defenses. The parties are currently engaged in discovery. EIR filed a mandatory
Chapter 7 petition in the U.S. Bankruptcy Court for the Southern District of
New York on or about August 2, 1999. EIR's claims will be heard in an adversary
proceeding in the bankruptcy case. It is anticipated that discovery in the
adversary proceeding will commence shortly. This matter was assumed by Besicorp
pursuant to the Prior Contribution Agreement. Therefore, the action is a
Besicorp Assumed Matter and Besicorp's costs are funded from the Escrow Fund.

In June 1997, Old Besicorp and Michael F. Zinn (then the Chairman of the
Board, President and Chief Executive Officer of Old Besicorp and currently the
Chairman of the Board, President and Chief Executive Officer of Besicorp), each
entered a guilty plea, in the United States District Court for the Southern
District of New York, to one count of causing a false statement to be made to
the Federal Election Commission and one count of filing a false tax return, all
in connection with the Proceeding. As a result of such pleas, Old Besicorp was
fined $36,400, and Mr. Zinn was fined $36,673 and sentenced to a six-month term
of incarceration (which

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commenced in November 1997 and has been completed), and a two-year term (which
commenced in May 1998 and was recently terminated before the scheduled end of
the term) of supervised release thereafter. He resigned as Chairman of the
Board, President and Chief Executive Officer of Old Besicorp in November 1997
and was reappointed to such positions in May 1998.

In August 1997, John Bansbach commenced the Bansbach Litigation. Old
Besicorp was named as a nominal defendant in this shareholder derivative action
and the other named defendants either were officers and/or directors of Old
Besicorp at the time of the alleged acts or omissions for which relief is
sought or became officers and/or directors of Old Besicorp thereafter. The
plaintiff sought to hold the defendants other than Old Besicorp liable to Old
Besicorp: (a) for all sums advanced to or on behalf of Michael F. Zinn in
connection with his defense of the Proceeding; (b) for all sums advanced to or
on behalf of Michael Daley, who was subpoenaed for information in connection
with this matter; (c) for all legal expenses, costs and fines incurred by Old
Besicorp itself in connection with the Proceeding; (d) for all harm to Old
Besicorp's reputation and goodwill resulting from the Proceeding; (e) for
punitive damages; and (f) for plaintiff's attorneys' fees, costs and expenses.
The trial court dismissed the action, stating that the plaintiff had failed to
make the requisite pre-suit demand upon the Old Besicorp Board and had failed
to demonstrate that such a demand would be futile. The plaintiff appealed this
decision. On February 4, 1999, the Appellate Division reversed the trial
court's dismissal and reinstated the action finding that the bare allegations
of the complaint sufficiently alleged that a pre-suit demand on the Old
Besicorp Board would have been futile. The parties are currently engaged in the
discovery process. This matter was assumed by Besicorp pursuant to the Prior
Contribution Agreement. Therefore, the action is a Besicorp Assumed Matter and
Besicorp's costs are funded from the Escrow Fund. If Bansbach ultimately was to
prevail on all of his claims, the Bansbach Litigation could result in the
recovery by Besicorp of approximately $1 million, excluding interest and
punitive damages. This matter will be assigned to WOM pursuant to the Spin-Off
and therefore if the plaintiff were to prevail, WOM and not Besicorp would
receive any recovery.

On March 29, 1993 James Lichtenberg commenced the Lichtenberg Litigation.
Old Besicorp was named as a nominal defendant in this shareholder derivative
action and the other defendants were directors and officers of Old Besicorp at
the time the action was filed. The complaint alleged that the directors
breached their fiduciary duties to Old Besicorp by, among other things, the
issuance of stock to themselves in lieu of cash compensation, allegedly for
inadequate consideration, and by the accounting treatment given to Old
Besicorp's interest in various partnerships which owned and operated
cogeneration facilities, which allegedly depressed the price of Old Besicorp's
common stock. The plaintiff sought an award of damages to Old Besicorp,
including punitive damages and interest, an accounting and the return of assets
to Old Besicorp, the appointment of independent members to the Old Besicorp
Board, the cancellation of shares allegedly improperly granted, and the award
to the plaintiff of costs and expenses of the lawsuit including fees. If
Lichtenberg ultimately had prevailed on all of his claims, the Lichtenberg
Litigation could have resulted in the recovery by Besicorp of approximately
$44.5 million. This matter was assumed by Besicorp pursuant to the Prior
Contribution Agreement. Therefore, the action was a Besicorp Assumed Matter and
Besicorp's costs are funded from the Escrow Fund.

The Supreme Court dismissed the Lichtenberg Litigation based on the
judicial deference accorded under the business judgment rule to the
recommendations of a corporation's properly constituted special litigation
committee. The Old Besicorp Board's special litigation committee (comprised of
independent outside directors of Old Besicorp) concluded that the continuation
of the Lichtenberg Litigation was not in the best interests of Old Besicorp.
The dismissal of the complaint was unanimously affirmed in April 1999 by the
Appellate Division, Third Department. The plaintiff's motion in the Appellate
Division, Third Department seeking leave to appeal to the Court of Appeals, New
York's highest appellate court, was unanimously denied. A further motion in the
New York Court of Appeals for leave to appeal the dismissal of the complaint to
that court was denied on November 18, 1999. Lichtenberg has exhausted all
possibilities for appellate review and the dismissal of the complaint
constitutes a final judgment on the merits. Therefore, the matter is not being
assigned to WOM.

On November 8, 1990 S.N.C. commenced an action in New York Supreme Court,
New York County, against Old Besicorp, and certain of the Partnerships and
their affiliates and an unaffiliated contractor. The complaint alleged that
S.N.C. was awarded the unaffiliated contracts to construct two power plants and
that the contracts were subsequently awarded to the Contractor in breach of
S.N.C.'s contract. S.N.C. seeks an award of compensatory damages in an
undetermined amount in excess of $680,000 and punitive damages. The Court

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granted the defendants' motion for summary judgment in part but denied the
motion insofar as it sought dismissal of plaintiff's claims for: (1) breach of
preliminary agreement to negotiate in good faith; (2) unjust enrichment/quantum
meruit; (3) promissory estoppel; and (4) fraud and negligent misrepresentation.
The Court's decision was upheld by the Appellate Court. The case is proceeding
through the litigation process in the Supreme Court, New York County. Any
liability arising out of this litigation would be first satisfied by the May
1999 Escrow.

Old Besicorp is a party to a legal proceeding in New York Supreme Court,
Ulster County, that was commenced on June 20, 1995, seeking a determination
that Enowitz, a former director and executive officer of Old Besicorp, is not
entitled to the 100,000 Enowitz Shares of Old Besicorp's common stock. Old
Besicorp believes that such shares were forfeited when he left the employ of
Old Besicorp prior to the scheduled vesting dates with respect to such shares
and that, as a result, he was obligated to resell the shares to Old Besicorp.
Enowitz asserts, among other things, that such vesting schedule was not
applicable to him because he was disabled. Old Besicorp, among other things,
disputes Enowitz's allegation that he was disabled. Because of the uncertainty
with respect to the ownership of these shares, the Prior Plan of Merger
provided that the merger consideration payable in respect of such shares would
be held in escrow pending resolution of the dispute regarding the ownership of
these shares and the rights, if any, of BGI Acquisition, BGI Parent and the
Surviving Corporation to such Prior Merger Consideration would be assigned
without recourse to Old Besicorp's shareholders. Therefore, the Prior Merger
Consideration of approximately $3.7 million (and the 4,000 Disputed Shares of
Besicorp Common Stock) payable with respect to the Enowitz Shares are held by
Continental Stock Transfer & Trust Co., Besicorp's transfer agent. The Plan of
Merger also provides that the 4,000 Disputed Shares will be held in escrow
pending resolution of the dispute. (See "Plan of Merger -- Merger
Consideration"). If it is determined that Mr. Enowitz was not entitled to the
Enowitz Shares, Old Besicorp's shareholders will receive, on a pro rata basis,
such monies and the Merger Consideration attributable to the Disputed Shares
less Old Besicorp's costs (estimated to be less than $100,000) to repurchase
such shares. If it determined that Mr. Enowitz was entitled to the Enowitz
Shares, he will receive the Prior Merger Consideration attributable to those
shares and the Merger Consideration attributable to the Disputed Shares. As a
result neither Besicorp nor its shareholders have any rights in connection with
the Enowitz Shares (including in respect to the Disputed Shares), but the costs
of the proceeding are financed with the Escrow Fund.

On September 27, 1999, Besicorp commenced the RICO Action in the Supreme
Court of the State of New York, Ulster County. The RICO Action arises out of an
alleged conspiracy by the defendants, who consist of two former employees and
several shareholders, including the plaintiff in the Lichtenberg Litigation, to
unlawfully exert or obtain control over Old Besicorp and all its assets.
Besicorp believes that the defendants, as part of their scheme to acquire
control over Old Besicorp, conspired to foment federal and civil litigation,
including the Lichtenberg Litigation, against Old Besicorp through a continuous
and ongoing campaign of false statements and accusations of wrongdoing made to
governmental agencies. The complaint alleges that at the annual Old Besicorp
shareholders' meeting held on September 27, 1995, the defendants attempted to
pressure Old Besicorp's management to provide them with control over Old
Besicorp's Board of Directors. Besicorp also believes that the defendants
published false and misleading information over the Internet in order to
further their objectives of destabilizing Old Besicorp and acquiring control.
The complaint alleges that as a result of the defendants' conduct, Old Besicorp
suffered damages including legal fees associated with responding to groundless
accusations, injury to its ability to obtain capital, injury to its ability to
build and grow in accordance with its business plans and injury to its
reputation. The RICO Action asserts claims under RICO for treble damages and
claims under New York State law including tortious interference with
prospective business advantage, business disparagement, prima facie tort,
conspiracy, and breach of contract. Besicorp's expenses connected to this
matter are being funded with monies from the Escrow Fund and any recovery, if
any, will be an Adjustment Amount for purposes of the Combined Deferred
Payments. See "Plan of Merger -- Merger Consideration." The RICO Action has
just commenced and therefore no assurances can be given as to when it will be
resolved, what amounts will be funded from the Escrow Fund, whether Besicorp
will prevail, and, if so, what damages it will recover.

Other than as discussed above, Besicorp is party to various legal matters
in the ordinary course of business, the outcome of which Besicorp does not
believe will materially affect its operations. However, Besicorp may incur
substantial legal fees and other expenses in connection with these matters.
Besicorp's liabilities and rights

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with respect to the legal proceedings that were assumed pursuant to the Prior
Contribution Agreement will be funded by the Escrow Fund. See "Escrow
Agreement" and "Indemnification Agreement." Besicorp is responsible for all
expenses with respect to proceedings that were not assumed pursuant to the
Prior Contribution Agreement.

The Outside Participating Shareholders generally will be entitled to
Deferred Payments with respect to recoveries from these matters, except as
indicated above. See "Plan of Merger -- Merger Consideration."

CERTAIN RELATED PARTY TRANSACTIONS

The Airport Enterprises, which are owned by Michael F. Zinn, own and
operate an airport where Besicorp's plane is maintained. Besicorp provides the
administrative services required in connection with the operation of the
airport and Airport Enterprises maintains Besicorp's plane and provides
Besicorp with the use of the airport. Airport Enterprises owed Besicorp (as of
March 31, 1999) and Old Besicorp (as of March 31, 1998) $58,675 and $47,662,
respectively, net of Airport Services performed by Airport Enterprises on
behalf of Besicorp and Old Besicorp. The cost of these Airport Services were
recorded for Fiscal 1999 and Fiscal 1998 as $59,925 and $31,939, respectively.
These sums do not bear interest. There is no specified date for the repayment
of such indebtedness as Besicorp, on an annual basis, offsets against the
amount owed to it by Airport Enterprises, the amount it owes to Airport
Enterprises.

Old Besicorp paid legal expenses incurred by it and certain directors,
officers, employees and their spouses in connection with the Proceeding the
Lichtenberg Litigation and the Bansbach Litigation. In part, such payments
constituted, pursuant to applicable law and governing documents, advances by
Old Besicorp of certain legal expenses on behalf of certain officers and
directors in connection with these matters. These officers and directors are
obligated to repay amounts paid by Old Besicorp on their behalf in certain
circumstances.

As of March 31, 1999 and 1998, such advances on behalf of Michael F. Zinn
in connection with the Proceeding equaled $338,517. Of such sum, Mr. Zinn
agreed to reimburse $186,000 to Old Besicorp, subject to a determination as to
whether such reimbursement is required by the NYBCL, and as of December 31,
1998, he had reimbursed $45,000 to Old Besicorp. In January 1999, after the
receipt of a report from independent legal counsel addressing the propriety
under the NYBCL and Old Besicorp's by-laws of indemnifying Mr. Zinn, a
committee of the Old Besicorp Board (composed of independent directors)
determined that Mr. Zinn was entitled to full indemnification with respect to
the Proceeding. This committee (i) authorized the repayment to Mr. Zinn of the
$36,673 fine he had paid and the refund of $45,000 he had previously reimbursed
Old Besicorp; (ii) acknowledged that Mr. Zinn had no further obligations with
respect to the remaining $141,000 (of the $186,000) Mr. Zinn had, subject to a
determination as the propriety of indemnification, agreed to reimburse Old
Besicorp; and (iii) authorized the reimbursement of Mr. Zinn for the legal fees
and expenses (approximately $39,180) which had been incurred by third parties
in connection with the Proceeding and which had been paid by him. All such
reimbursements were made during the fourth quarter of Fiscal 1999 and any
related receivables were written off and charged to expenses during that
period. In addition, Old Besicorp made additional payments of legal fees and
disbursements of approximately $497,000 in connection with the Proceeding on
behalf of directors, officers and employees (and spouses) of Old Besicorp
(including certain amounts incurred on behalf of Old Besicorp) who were
defendants or actual or potential witnesses in this matter.

In connection with the Lichtenberg Litigation, Old Besicorp had made
payments as of March 31, 1999 of approximately $829,168 in the aggregate in
legal fees and disbursements on behalf of Old Besicorp, Mr. Zinn and other
directors and/or officers of Old Besicorp.

In connection with the Bansbach Litigation, Old Besicorp had made payments
as of March 31, 1999 of approximately $155,085 in the aggregate in legal fees
and disbursements on behalf of Old Besicorp, Mr. Zinn, and other directors and
officers of Old Besicorp.

Besicorp has not advanced any monies with respect to the Proceeding, the
Lichtenberg Litigation or Bansbach Litigation. If there is a final judgment
adverse to the defendants in the Bansbach Litigation, Mr. Zinn may be required
to repay his advances in connection with the Proceeding, and it is possible
that certain individuals would be required to reimburse Old Besicorp for
certain of its payments. As a result of the Prior Contribution Agreement, the
right to receive such repayments and reimbursements has been assigned to
Besicorp.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table shows the shares of Besicorp Common Stock owned as of
March 17, 2000, by each beneficial owner of 5% or more of the Besicorp Common
Stock, each current director, the persons currently serving as executive
officers and by all current directors and executive officers as a group. Except
as otherwise provided in the footnotes to the table, the beneficial owners have
sole voting and investment power as to all securities.

<TABLE>
<CAPTION>
Number of Shares
Name of of Common Stock Percent of Common Stock
Beneficial Owner Beneficially Owned (1)(2) Beneficially Owned (1)(2)
- --------------------------------------------------- --------------------------- --------------------------
<S> <C> <C>
Besicorp Holdings, Ltd. ........................... 57,967(3) 42.7%(3)
Michael F. Zinn ................................... 3,000(4)(5) 2.2%(4)
The Trust ......................................... 10,000(6) 7.4%(6)
Gerald A. Habib ................................... 650(7) *
Richard E. Rosen .................................. 650(7) *
Michael J. Daley .................................. 2,420(8) 1.8%
Joseph P. Novarro ................................. 713(9) *
Melanie Norden .................................... 550(7) *
Frederic Zinn ..................................... 1,750(10) 1.3%
James Curtin ...................................... 400(11) *
Current Directors and executive officers as a group
(8 persons) ...................................... 68,100(12) 50.1%(3)
</TABLE>

- ------------
* Less than 1 percent.
(1) Except as described below, such persons have the sole power to vote and
direct the disposition of such shares. Pursuant to the Plan of Merger,
Besicorp Holdings, Ltd. and Michael F. Zinn have agreed to vote their
shares of Besicorp Common Stock in favor of adopting the Plan of Merger.
(2) Based on 135,886 shares of Besicorp Common Stock outstanding as of
February 14, 2000, which includes 1,688 shares that may be issued to
former shareholders of Old Besicorp's common stock who have not yet
tendered their shares of Old Besicorp's common stock in connection with
the Prior Merger and the Prior Distribution.
(3) Michael F. Zinn, the Chairman of the Board, President and Chief Operating
Officer of Besicorp, owns beneficially approximately 94.5%, and members of
his immediate family own the remaining approximately 5.5%, of the shares
of common stock of Parent. Consequently Mr. Zinn can be deemed to have
beneficial ownership of these shares.
(4) Excludes 57,967 shares held in the name of Parent, which are listed above.
Mr. Zinn owns beneficially approximately 94.5% of the shares of common
stock of Parent. Does not include 10,000 shares owned by the Trust
established by Mr. Zinn; Mr. Zinn disclaims beneficial ownership of these
shares. Mr. Zinn is the Chairman of the Board, President and Chief
Executive Officer of Besicorp.
(5) Includes 3,000 Management Restricted Shares.
(6) The Zinn Family Charitable Trust was established by Michael F. Zinn.
However, he disclaims beneficial ownership of these shares.
(7) Includes 350 Independent Directors' Restricted Shares.
(8) Includes 1,750 Management Restricted Shares.
(9) Includes 625 Management Restricted Shares.
(10) Includes 1,750 Management Restricted Shares.
(11) Includes 400 Management Restricted Shares.
(12) Includes 57,967 shares held in the name of Parent. See Note (3).

The address for each of the individuals identified above is: 1151 Flatbush
Road, Kingston, New York 12401. The address for the Trust is c/o Louis Pierro,
Independent Trustee, 21 Everett Road, Albany, New York 12205.

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MARKET INFORMATION REGARDING BESICORP COMMON STOCK

The Besicorp Common Stock is not listed on any Exchange or quoted on
NASDAQ or any other automated quotation system. To the knowledge of Besicorp,
there has been no trading of the Besicorp Common Stock since it was distributed
to the former holders of Old Besicorp's common stock on March 22, 1999 in the
Prior Distribution, at which time the Besicorp Common Stock was deemed to have
a value of $43.01 per share for the purpose of, among other things, providing
cash in lieu of fractional shares of Besicorp Common Stock. When the Restricted
Shares were issued, which issuance was effective in May, 1999, they were valued
at $43.00 per share for financial statement purposes. Accordingly, no trading
prices are available.

There were approximately 1,312 shareholders of record of Besicorp Common
Stock as of the Record Date. Besicorp has never paid, and has no plans to pay,
any cash dividends on the Besicorp Common Stock.

INFORMATION REGARDING PARENT AND ACQUISITION CORP.

THE BUYER HAS ADVISED US AS FOLLOWS:

Besicorp Holdings, Ltd. (i.e., Parent) is a New York corporation. Besi
Acquisition Corp. (i.e., Acquisition Corp.) is a New York corporation, and is
wholly owned by Parent. Acquisition Corp. is a transitory, special purpose
corporation that was formed solely to implement the transactions in connection
with the Merger. Parent holds 57,967 shares of Besicorp Common Stock
representing approximately 42.6% of the issued and outstanding shares of
Besicorp Common Stock. Parent acquired these shares from Avalon, which, in
turn, had acquired the shares from Michael F. Zinn, who is the Chairman of the
Board, President and Chief Executive Officer of Besicorp, Parent and
Acquisition Corp., and members of his immediate family. Acquisition Corp. and
Parent have not carried on any activities other than ( i) activities relating
to their organization, ( ii) Parent's receipt of 57,967 shares of Besicorp
Common Stock and ( iii) in connection with the Merger. Avalon, a limited
liability company organized under the laws of Virginia, owns approximately
94.5% of the shares of Parent's common stock. The only members of Avalon are
Michael F. Zinn and his wife, Valerie Zinn, who owns a nominal interest in
Avalon. The remaining approximately 5.5% of the shares of Parent's common stock
is owned by immediate relatives of Mr. Zinn.

Until immediately prior to the time Parent and Acquisition Corp. will
participate in the Merger, it is anticipated that such entities will not have
any significant assets or liabilities other than those incident to their
formation and capitalization, the 57,967 shares of Besicorp Common Stock held
by Parent, and the transactions contemplated by the Merger.

The principal offices of Parent, Acquisition Corp., Avalon and Avalon
Funding are located at 1151 Flatbush Road, Kingston, New York, 12401, ( 914)
336-7700.

It is expected that following the Merger, the businesses and operations of
Besicorp will be continued by it, as the Surviving Corporation, substantially
as they have been conducted since the Prior Spin-Off. Parent has no present
intention to cause (and has not entered into discussions or negotiations with
third parties to cause) the Surviving Corporation or any subsidiary to engage
in transactions which would result in a sale of all or material portions of the
stock, businesses or assets of the Surviving Corporation, or to acquire
businesses or material assets, or to borrow funds or secure borrowing with the
assets of Besicorp, except with respect to the HSBC Credit Facility. The Buyer
has no plans to restructure itself or the Surviving Corporation following the
Merger.

It is intended that, following the Merger, the Board of directors of
Besicorp will consist of two members, and that Michael F. Zinn and Frederic
Zinn will each be elected for a term of one year. Besicorp will not materially
increase the compensation of its key executive personnel.

MERGER CONSIDERATION, FEES AND EXPENSES.

Parent estimates that the total Cash Merger Consideration payable to
Outside Participating Shareholders upon the effectuation of the Merger will be
at least $4,587,316 in cash as the aggregate Cash Merger Consideration for all
of the shares of Besicorp Common Stock held by such shareholders, assuming that
there are no Dissenters. This amount will be provided by Parent. In the event
that Outside Participating Shareholders properly exercise their dissenter's
rights, the Surviving Corporation may be required to expend an unspecified
amount of

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<PAGE>

additional funds or may not expend the full amount of the funds referred to
above. See "Factors to be Considered -- Rights of Dissenting Shareholders." It
is anticipated that such additional funds, if any, will be derived from the
HSBC Credit Facility. See -- Source of Funds." It is anticipated that the fees
and expenses incurred by the Buyer (principally, fees, and expenses of their
legal and accounting advisors) in connection with the Merger will be
approximately $100,000.

SOURCE OF FUNDS.

Avalon Funding, which is controlled by Michael F. Zinn, has been granted
the HSBC Credit Facility by HSBC Bank. Avalon Funding intends, in turn, to lend
Parent approximately $4.6 million which Parent will utilize to fund its
obligations pursuant to the Plan of Merger, including the payment of the Cash
Merger Consideration. There is no loan agreement, note or other instrument that
will document the loan to Parent, and since Parent and Avalon Funding are
related parties the loan will only be evidenced by entries in the books of
Avalon Funding and Parent. The terms and conditions, including the interest
rate and period of the loan, have not been determined.

The HSBC Credit Facility is a discretionary line of credit granted by HSBC
Bank to Avalon Funding to a maximum of $10 million principal amount of
borrowing. Borrowings under the HSBC Credit Facility can be made, from time to
time, in increments up to $10 million. Each borrowing under the HSBC Credit
Facility requires the approval of HSBC Bank. All borrowings under the HSBC
Credit Facility are payable on demand, or in any event, on December 31, 2000.
There is no assurance that HSBC Bank will approve any request to borrow under
the HSBC Credit Facility, or that the HSBC Credit Facility will be renewed
after December 31, 2000.

Borrowings pursuant to the HSBC Credit Facility bear interest, at the
option of Avalon Funding, either at a rate equal to the LIBOR, plus 1.00%, or
at the Prime Rate, minus 1.00%. LIBOR is the "London Interbank Overnight Rate,"
and the Prime Rate is that rate announced as the Prime Rate by HSBC Bank from
time to time.

Repayment of the borrowings under the HSBC Credit Facility is guaranteed
by Michael F. Zinn, and is also secured by certain investment accounts
belonging to Michael F. Zinn at other institutions.

The Buyer has no other plans for financing or refinancing other than
rolling over the HSBC Credit Facility.

SOURCES AND USES OF FUNDS

It is anticipated that the fees and expenses incurred by Besicorp in
connection with the Merger will be as follows:

Attorney's Fees and Expenses ........... $575,000
Accountant's Fees and Expenses ......... $ 40,000
Appraisal Fees ......................... $ 0
Financial Advisor Fees ................. $175,000
Printing Costs ......................... $ 15,000
Distribution Expenses .................. $ 5,000
Registration Fees ...................... $ 1,000
Miscellaneous .......................... $ 4,000
--------
Total .................................. $815,000
========

OTHER MATTERS

As of the time of preparation of this Proxy Statement, the Board of
Directors knows of no matters that will be acted on at the Special Meeting
other than the adoption of the Plan of Merger. If any other matters are
presented for action at the Special Meeting or at any adjournment or
postponement thereof, it is intended that the proxies will be voted with
respect thereto in accordance with the best judgment and in the discretion of
the persons named as proxies in the accompanying proxy card.

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<PAGE>

ANNUAL MEETING OF SHAREHOLDERS

If the shareholders adopt the Plan of Merger, and if all other conditions
to the Merger are satisfied or waived, it is expected that the Merger will be
effectuated on or about April 25, 2000. Besicorp does not plan to hold an
annual meeting of shareholders following the Special Meeting unless the Merger
is not effectuated. If the Merger is not effectuated, shareholder proposals
received by the Secretary of Besicorp a reasonable time before Besicorp begins
to print and mail its proxy materials will be considered for inclusion in the
proxy materials for Besicorp's next Annual Meeting of Shareholders.

INDEPENDENT PUBLIC ACCOUNTANTS

Besicorp's independent public accountants for the fiscal year ended March
31, 1999 were Citrin Cooperman & Company, LLP (the "Former Auditor"). On or
about March 15, 2000, Besicorp dismissed the Former Auditor as its principal
outside accountant. The Former Auditor's reports on Besicorp's financial
statements during any of the past two years did not contain an adverse opinion
or a disclaimer of opinion, nor was it qualified or modified as to uncertainty,
audit scope, or accounting principles except that the Former Auditor's reports
with respect to the consolidated balance sheet of Besicorp as at March 31, 1999
and 1998 and the related consolidated statements of operations, changes in
shareholders equity and cash flows for the two years then ended contained a
going concern explanatory paragraph. The decision to change accountants was not
recommended or approved by any audit or similar committee or the Board. During
Besicorp's two most recent fiscal years and all subsequent interim periods
preceding the dismissal there were no disagreements with the Former Auditor on
any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreement, if not resolved
to the satisfaction of the Former Auditor, would have caused it to make a
reference to the subject matter of the disagreement in connection with its
report. On March 15, 2000, Besicorp engaged Urbach Kahn & Werlin P.C. as their
principal accountant to audit Besicorp's financial statements.

It is anticipated that representatives of the Former Auditor will be
present at the Special Meeting and that they will be available to respond to
questions from shareholders.

ADDITIONAL INFORMATION

Copies of the following materials are available for inspection and copying
at the offices of Besicorp, 1151 Flatbush Road, Kingston, New York during
regular business hours by shareholders of Besicorp or by persons who have been
designated in writing as representatives of such shareholders:

(i) Josephthal's presentation, which report was the basis for the Fairness
Opinion, and

(ii) two reports of Commercial Associates Realty regarding Besicorp's real
property.

In addition, such materials will be sent to any such shareholder or
representative, at the expense of such shareholder or representative, upon
written request (addressed to the attention of Ms. Joyce DePietro at Besicorp
at the address set forth above).

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<PAGE>

INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS
OF BESICORP LTD.

<S> <C>
Index to the Consolidated Financial Statements of BESICORP LTD. .......................... F-1
Independent Auditors' Report ............................................................. F-2
Consolidated Balance Sheet as of December 31, 1999 (Unaudited), March 31, 1999 and
March 31, 1998 .......................................................................... F-3
Consolidated Statement of Operations for the Three and Nine Months Ended December 31, 1999
and 1998 (Unaudited) and the Years Ended March 31, 1999, 1998 ........................... F-5
Consolidated Statement of Changes in Shareholders' Equity for the Nine Months Ended
December 31, 1999 (Unaudited) and for the Years Ended March 31, 1999 and 1998 ........... F-6
Consolidated Statement of Cash Flows for the Nine Months Ended December 31, 1999 and 1998
(Unaudited) and the Years Ended March 31, 1999 and 1998 ................................. F-7
Notes to Consolidated Financial Statements of Besicorp Ltd. .............................. F-8
</TABLE>

F-1
<PAGE>

CITRIN COOPERMAN & COMPANY, LLP
Certified Public Accountants
529 Fifth Avenue, Tenth Floor
New York, NY 10017

212-697-1000

TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF
BESICORP LTD.

Independent Auditors' Report

We have audited the accompanying consolidated balance sheet of Besicorp Ltd.
and subsidiaries as at March 31, 1999 and 1998 and the related consolidated
statements of operations, changes in shareholders' equity, and cash flows for
the two years then ended. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the aforementioned consolidated financial statements present
fairly, in all material respects, the financial position of Besicorp Ltd. and
subsidiaries as at March 31, 1999 and 1998 and the results of their operations
and their cash flows for the two years then ended in conformity with generally
accepted accounting principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 15 to the
consolidated financial statements, the Company has suffered recurring losses
from operations and has received (but will not in the future receive)
substantial financial support from the former parent company that raise
substantial doubt about its ability to continue as a going concern without such
support. Management's plans in regard to these matters are also described in
Note 15. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.

/s/ Citrin Cooperman & Company, LLP
------------------------------------------
CITRIN COOPERMAN & COMPANY, LLP

June 16, 1999
New York, New York

F-2
<PAGE>

BESICORP LTD.
CONSOLIDATED BALANCE SHEET

<TABLE>
<CAPTION>
December 31, 1999 March 31, 1999 March 31, 1998
------------------- ---------------- ---------------
ASSETS (Unaudited)
<S> <C> <C> <C>
Current Assets:
Cash and cash equivalents .............................. $ 474,159 $ 1,824,139 $ 104,428
Trade accounts and notes receivable (less allowance for
doubtful accounts of $28,906 at December 31, 1999,
$32,000 at March 31, 1999, and $23,000 at March
31, 1998) ............................................ 872,174 988,589 369,494
Due from affiliates .................................... 69,305 374,250 47,662
Notes receivable: (includes interest of $5,771 at
December 31, 1999, $4,057 at March 31, 1999, and
$8,316 at March 31, 1998)............................. 88,214 107,951 102,054
Inventories ............................................ 1,998,091 1,165,761 944,013
Other current assets ................................... 349,842 465,566 485,052
------------ ------------ ------------
Total Current Assets ................................ 3,851,785 4,926,256 2,052,703
------------ ------------ ------------
Property, Plant and Equipment:
Land and improvements .................................. 229,660 229,660 237,160
Buildings and improvements ............................. 1,914,029 1,914,029 1,906,952
Machinery and equipment ................................ 581,792 726,958 714,620
Furniture and fixtures ................................. 237,423 237,423 246,702
Construction in progress ............................... 94,572 -- --
------------ ------------ ------------
3,057,476 3,108,070 3,105,434
Less: accumulated depreciation and amortization ..... (1,429,775) (1,520,385) (1,478,950)
------------ ------------ ------------
Net Property, Plant and Equipment ................... 1,627,701 1,587,685 1,626,484
------------ ------------ ------------
Other Assets:
Patents and trademarks, less accumulated amortization
of $3,243 at December 31, 1999, $2,350, at March
31, 1999, and $1,691 at March 31, 1998 ............... 17,817 12,530 7,823
Long-term notes receivable:
Affiliate -- net of allowance of $555,376 at March
31, 1998 ............................................ -- -- 129,886
Others -- net of allowance of $1,944,624 at March
31, 1998 ............................................ -- -- --
Investment in partnerships ............................. -- 4,009,810 --
Deferred costs ......................................... 919,283 -- 1,316,693
Other assets ........................................... 1,567,956 76,620 95,063
------------ ------------ ------------
Total Other Assets .................................. 2,505,056 4,098,960 1,549,465
------------ ------------ ------------
TOTAL ASSETS ........................................ $ 7,984,542 $ 10,612,901 $ 5,228,652
============ ============ ============

</TABLE>

See accompanying notes to consolidated financial statements.

F-3
<PAGE>

BESICORP LTD.
CONSOLIDATED BALANCE SHEET

<TABLE>
<CAPTION>
December 31, 1999 March 31, 1999 March 31, 1998
------------------- ---------------- ---------------
LIABILITIES AND SHAREHOLDERS' EQUITY (Unaudited)
<S> <C> <C> <C>
Current Liabilities:
Accounts payable and accrued expenses ................. $ 1,563,259 $ 763,531 $ 1,234,920
Current portion of long-term debt ..................... 42,000 20,000 109,208
Current portion of accrued reserve and warranty
expense ............................................. 66,954 111,215 152,891
Taxes other than income taxes ......................... 98,122 103,207 100,693
Income taxes payable .................................. 10,185 5,300 --
------------ ------------ -----------
Total Current Liabilities .......................... 1,780,520 1,003,253 1,597,712
Long-Term Accrued Reserve and Warranty Expense ......... 198,677 174,462 152,402
Long-Term Debt ......................................... 51,070 115,308 3,768,233
------------ ------------ -----------
Total Liabilities .................................. 2,030,267 1,293,023 5,518,347
============ ============ ===========
Shareholders' Equity:
Common stock, $.01 par value: authorized 5,000,000
shares; issued and outstanding 136,382 at December
31, 1999 and 121,382 at March 31, 1999 .............. 1,364 1,214 --
Additional paid in capital ............................ 10,135,677 9,490,827 --
Unamortized deferred compensation ..................... (544,093) -- --
Besicorp Group Inc. investment ........................ (289,695)
Retained earnings (deficit) ........................... (3,621,473) (172,163) --
------------ ------------ -----------
5,971,475 9,319,878 (289,695)
Less: treasury stock at cost (400 shares, 0 shares,
and 0 shares respectively) ....................... (17,200) -- --
------------ ------------ -----------
Total Shareholders' Equity ......................... 5,954,275 9,319,878 (289,695)
------------ ------------ -----------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY ........................................... $ 7,984,542 $ 10,612,901 $ 5,228,652
============ ============ ===========

</TABLE>

See accompanying notes to consolidated financial statements.

F-4
<PAGE>

BESICORP LTD.
CONSOLIDATED STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
December 31, December 31,
------------------------------ --------------------------------
1999 1998 1999 1998
------------- --------------- --------------- ---------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Revenues:
Product sales ............................ $1,855,884 $ 1,187,805 $ 6,143,793 $ 3,273,495
Other revenues ........................... 108,728 179,520 314,791 406,841
Income from partnerships ................. 131,786 0 56,599 0
Interest and other investment income ..... 23,808 5,200 87,030 18,404
Other income ............................. 0 26,808 0 78,441
---------- ------------ ------------ ------------
Total Revenues ........................ 2,120,206 1,399,333 6,602,213 3,777,181
---------- ------------ ------------ ------------
Costs and Expenses:
Cost of product sales .................... 1,586,174 1,162,704 5,283,389 3,144,571
Selling, general and administrative
expenses ................................ 1,475,563 2,058,474 4,751,746 6,577,230
Interest expense ......................... 0 6,927 287 111,234
Other expense ............................ 1 25 79 8,832
---------- ------------ ------------ ------------
Total Costs and Expenses .............. 3,061,738 3,228,130 10,035,501 9,841,867
---------- ------------ ------------ ------------
Loss Before Income Taxes ................... (941,532) (1,828,797) (3,433,288) (6,064,686)
Provision (Credit) for Income Taxes ........ 2,088 (627,700) 16,022 (2,062,000)
---------- ------------ ------------ ------------
Net Loss ................................... $ (943,620) $ (1,201,097) $ (3,449,310) $ (4,002,686)
========== ============ ============ ============
Net Loss per Share ......................... $ (6.94) $ (9.90) $ (25.76) $ (32.98)
========== ============ ============ ============
Basic Weighted Average Number of
Shares Outstanding ........................ 135,982 121,382 133,899 121,382
========== ============ ============ ============

</TABLE>
<PAGE>

<TABLE>
<CAPTION>
Year Ended
March 31,
---------------------------------
1999 1998
--------------- ----------------
<S> <C> <C>
Revenues:
Product sales ............................ $ 5,103,275 $ 3,838,351
Other revenues ........................... 486,030 426,154
Income from partnerships ................. 0 0
Interest and other investment income ..... 20,412 35,482
Other income ............................. 106,886 108,435
------------ -------------
Total Revenues ........................ 5,716,603 4,408,422
------------ -------------
Costs and Expenses:
Cost of product sales .................... 4,839,016 3,932,301
Selling, general and administrative
expenses ................................ 9,444,398 8,466,360
Interest expense ......................... 134,110 481,651
Other expense ............................ 11,018 2,519,114
------------ -------------
Total Costs and Expenses .............. 14,428,542 15,399,426
------------ -------------
Loss Before Income Taxes ................... (8,711,939) (10,991,004)
Provision (Credit) for Income Taxes ........ (2,897,200) (3,767,000)
------------ -------------
Net Loss ................................... $ (5,814,739) $ (7,224,004)
============ =============
Net Loss per Share ......................... $ (47.90) $ (59.51)
============ =============
Basic Weighted Average Number of
Shares Outstanding ........................ 121,382 121,382
============ =============
</TABLE>

See accompanying notes to consolidated financial statements.

F-5
<PAGE>

BESICORP LTD.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE PERIOD APRIL 1, 1997 THROUGH DECEMBER 31, 1999

Common Stock Additional Unamortized
------------------------- Paid-in Deferred
Shares Amount Capital Compensation
---------- ------------- --------------- --------------
<S> <C> <C> <C> <C>
Balance April 1, 1997 ..... $ $ $
Net Loss ..................
Net transactions with
Besicorp Group Inc. ......
------- -------- ----------- ----------
Balance at March 31,
1998 ..................... 0 0 0 0
Net loss to March 22,
1999 .....................
Net transactions with
Besicorp Group Inc. ......
Distribution of Besicorp
Ltd. stock by Besicorp
Group Inc. ............... 122,057 1,221 9,490,820
Net loss March 23, 1999
to March 31, 1999 ........
Payment in lieu of
issuance of shares ....... (675) (7) (29,035)
Additional capital
contribution ............. 29,042
------- -------- ----------- ----------
Balance at March 31,
1999 ..................... 121,382 1,214 9,490,827
Issuance of restricted
grants (unaudited) ....... 15,000 150 644,850 (645,000)
Forfeiture of restricted
shares (unaudited) ....... 17,200
Amortization of deferred
compensation
(unaudited) .............. 83,707
Net loss April 1, 1999 to
December 31, 1999
(unaudited) ..............
------- -------- ----------- ----------
Balance at December 31,
1999 (Unaudited) ......... 136,382 $ 1,364 $10,135,677 $ (544,093)
======= ======== =========== ==========

</TABLE>
<PAGE>

Besicorp Retained Treasury Stock
Group Inc. Earnings ----------------------
Investment (Deficit) Shares At Cost Total
--------------- --------------- -------- ------------ --------------
<S> <C> <C> <C> <C> <C>
Balance April 1, 1997 ..... $ 2,221,758 $ $ $ 2,221,758
Net Loss .................. (7,224,004) (7,224,004)
Net transactions with
Besicorp Group Inc. ...... 4,712,551 4,712,551
------------- ------------ --- --------- ------------
Balance at March 31,
1998 ..................... (289,695) 0 0 0 (289,695)
Net loss to March 22,
1999 ..................... (5,642,576) (5,642,576)
Net transactions with
Besicorp Group Inc. ...... 15,424,312 15,424,312
Distribution of Besicorp
Ltd. stock by Besicorp
Group Inc. ............... (9,492,041) 0
Net loss March 23, 1999
to March 31, 1999 ........ (172,163) (172,163)
Payment in lieu of
issuance of shares ....... (29,042)
Additional capital
contribution ............. 29,042
------------- ------------ --- --------- ------------
Balance at March 31,
1999 ..................... (172,163) 0 0 9,319,878
Issuance of restricted
grants (unaudited) ....... 0
Forfeiture of restricted
shares (unaudited) ....... 400 (17,200) 0
Amortization of deferred
compensation
(unaudited) .............. 83,707
Net loss April 1, 1999 to
December 31, 1999
(unaudited) .............. (3,449,310) (3,449,310)
------------- ------------ --- --------- ------------
Balance at December 31,
1999 (Unaudited) ......... $ $ (3,621,473) 400 $ (17,200) $ 5,954,275
============= ============ === ========= ============
</TABLE>

See accompanying notes to consolidated financial statements.

F-6
<PAGE>

BESICORP LTD.
CONSOLIDATED STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
Nine Months Ended December 31, Year Ended March 31,
------------------------------------- -------------------------------------
1999 1998 1999 1998
----------------- ----------------- ----------------- -----------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Operating Activities:
Net loss ................................... $ (3,449,310) $ (4,002,686) $ (5,814,739) $ (7,224,004)
Adjustments to reconcile net loss to net
cash used by operating activities:
Amortization of discounts on notes ...... (1,009) (1,647) (2,196) (2,196)
Provision for uncollectibles ............ (3,094) 45,929 9,000 2,483,654
Income from partnership's ............... (56,599) 0 0 0
Realized and unrealized (gains)
losses ................................ 0 0 7,500 6,066
Stock compensation ...................... 83,707 0 0 0
Depreciation and amortization ........... 108,858 126,954 165,307 243,793
Changes in assets and liabilities:
Accounts and notes receivable ......... 445,200 (288,089) (828,500) 326,916
Inventories ........................... (832,330) (222,660) (221,748) 236,252
Accounts payable and accrued
expenses ............................. 799,728 (305,892) (471,389) (510,223)
Taxes payable ......................... (200) 571 7,814 (1,393)
Other assets and liabilities, net ..... (644,814) 1,556,565 1,351,555 (94,844)
------------- ------------- ------------- -------------
Net Cash Used By Operating Activities ...... (3,549,863) (3,090,955) (5,797,396) (4,535,979)
------------- ------------- ------------- -------------
Financing Activities:
Repayment of borrowings .................... (42,238) (3,742,133) (3,742,133) (72,640)
Net transactions with Besicorp Group Inc. 0 6,821,694 11,392,588 4,712,551
------------- ------------- ------------- -------------
Net Cash Provided (Used) By Financing
Activities ............................... (42,238) 3,079,561 7,650,455 4,639,911
------------- ------------- ------------- -------------
Investing Activities:
Disposal of property, plant and equipment 0 73,829 0 0
Distribution from partnerships ............. 2,390,102 0 0 0
Acquisition of property, plant and
equipment ................................ (147,981) (70,637) (133,348) (149,266)
------------- ------------- ------------- -------------
Net Cash Provided (Used) By Investing
Activities ............................... 2,242,121 3,192 (133,348) (149,266)
------------- ------------- ------------- -------------
Increase (Decrease) in Cash and Cash
Equivalents ................................ (1,349,980) (8,202) 1,719,711 45,334
Cash and Cash Equivalents -- Beginning ...... 1,824,139 104,428 104,428 59,094
------------- ------------- ------------- -------------
Cash and Cash Equivalents -- Ending ......... $ 474,159 $ 96,226 $ 1,824,139 $ 104,428
============= ============= ============= =============
Supplemental Cash Flow Information:
Interest paid .............................. $ 287 $ 93,685 $ 94,689 $ 445,601
Income taxes paid .......................... 8,556 0 0 0
</TABLE>

See accompanying notes to consolidated financial statements.

F-7
<PAGE>

BESICORP LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation.

Besicorp Group Inc., the former parent of Besicorp Ltd., was a party to an
Agreement and Plan of Merger dated November 23, 1998, as amended, (the "Prior
Plan of Merger") among Besicorp Group Inc., BGI Acquisition LLC ("Acquisition")
and BGI Acquisition Corp. ("Merger Sub"), a wholly owned subsidiary of
Acquisition. Pursuant to the Prior Plan of Merger, Merger Sub was merged into
Besicorp Group Inc., which then became a wholly owned subsidiary of Acquisition
(the "Merger"). Because Acquisition did not want to acquire certain assets or
assume certain liabilities of Besicorp Group Inc., it was a condition precedent
to the Merger that Besicorp Group Inc., before the Prior Merger, spin-off its
photovoltaic and independent power development businesses (the "Distributed
Businesses") to its shareholders. Therefore, Besicorp Group Inc. formed
Besicorp Ltd. to assume the operations of the Distributed Businesses by having
Besicorp Group Inc. assign to Besicorp Ltd. all of its assets relating to the
Distributed Businesses and substantially all of Besicorp Group Inc.'s other
assets (other than Besicorp Group Inc.'s cash, securities, the subsidiaries
which held Besicorp Group Inc.'s interests in partnerships which owned or
leased five cogeneration natural gas power plants (the "Retained Subsidiaries")
and certain other assets (including in particular, other claims of and awards
made to Besicorp Group Inc. in the aggregate stated amount of approximately $1
million)), and by having Besicorp Ltd. (the "Company") assume substantially all
of Besicorp Group Inc.'s liabilities other than the following liabilities
(collectively, the "Permitted Liabilities"): (i) the liabilities of Besicorp
Group Inc. and any Retained Subsidiary (actual or accrued) for unpaid federal
income taxes for Besicorp Group Inc.'s 1999 fiscal year based on the
consolidated net income of Besicorp Group Inc. through the effective date of
the Prior Merger (i.e. March 22, 1999), (ii) the liabilities of Besicorp Group
Inc. or its subsidiaries for New York State income taxes for the 1999 fiscal
year, and (iii) certain intercompany liabilities. The Plan of Merger
contemplated that prior to the consummation of the Merger, Besicorp Group Inc.
would effect this contribution of assets to the Company (and the assumption of
these liabilities by the Company) and distribute all of Besicorp Ltd.'s stock
to Besicorp Group Inc.'s shareholders. Therefore, following the contribution,
which took place shortly before the Merger, which was consummated on March 22,
1999, Besicorp Group Inc. distributed 100% of Besicorp Ltd.'s common stock (the
"Prior Distribution"), and Besicorp Ltd. became a separate, publicly held
company.

Effective March 22, 1999, Besicorp Group Inc. distributed to its
shareholders all of its interests in Besicorp Ltd. and certain subsidiaries.
Before the Distribution, Besicorp Ltd. and subsidiaries were wholly-owned
subsidiaries of Besicorp Group Inc.

Besicorp Ltd. and subsidiaries consolidated financial statements at and
before the Prior Distribution reflect the operations, financial position and
cash flows of Besicorp Ltd. and subsidiaries as if they were a separate entity.
Such financial statements were derived from the consolidated financial
statements of Besicorp Group Inc. using historical results of operations and
historical basis in the assets and liabilities of the business operated by
Besicorp Ltd.

The financial information for the year ended March 31, 1999 and 1998 may
not necessarily reflect the consolidated results of operations, financial
position, cash flows and changes in shareholders' equity of Besicorp Ltd. had
Besicorp Ltd. been a separate entity during that period.

The unaudited financial statements included herein have been prepared in
accordance with the generally accepted accounting principles for interim
financial information. Accordingly, they do not include all the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, the unaudited financial
statements included herein contain all adjustments (consisting only of normal
recurring adjustments) necessary to present fairly the financial position of
Besicorp Ltd. as of December 31, 1999; the results of operations for the three
and nine months ended December 31, 1999 and 1998; and the statement of cash
flows for the corresponding six month periods.

The results of operations for the three and nine months ended December 31,
1999 are not necessarily indicative of the results to be expected for any other
interim period or for the full year. Amounts shown as net transactions with
Besicorp Group Inc. represent the net effect of cash generated or used by the
Distributed Businesses and transferred to or from Besicorp Group Inc.

F-8
<PAGE>
BESICORP LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (Continued)

Business.

Besicorp Ltd. specializes in the development, assembly, manufacture,
marketing and resale of photovoltaic products and systems and the development
of power plant projects.

Basis of Consolidations.

The consolidated financial statements include the accounts of Besicorp
Ltd. and its wholly-owned subsidiaries. Investments in partnerships are
accounted for under the equity method. All significant intercompany
transactions and accounts have been eliminated.

Use of Estimates.

Management uses estimates in preparing the consolidated financial
statements, in conformity with generally accepted accounting principles.
Significant estimates include collectibility of accounts receivable, warranty
costs, profitability on long-term contracts, as well as recoverability of
long-term assets and residual values. Besicorp regularly assesses these
estimates and, while actual results may differ from these estimates, management
does not anticipate a material difference in its actual results versus
estimates in the near term.

Inventories.

Inventories are carried at the lower of cost (first-in, first-out method)
or market.

Property, Plant and Equipment.

Property, plant and equipment are stated at cost. Depreciation on such
assets is computed on a straight-line basis at rates adequate to allocate the
cost over their expected useful lives as follows: (i) land improvements -- 15
years, (ii) buildings and improvements -- 20 years to 39 years; (iii) furniture
and fixtures -- three years to 35 years; and (iv) machinery and equipment --
three years to 35 years.

Patents and Trademarks.

Costs of patents ($14,395 at March 31, 1999 and $9,029 at March 31, 1998)
are capitalized and amortized on a straight-line basis over the remaining
useful life of the patent of up to 17 years. Trademark costs ($485 at March 31,
1999 and $485 at March 31, 1998) are capitalized and amortized on a
straight-line basis over the estimated useful life of 35 years. During the year
ended March 31, 1998, $690,467 of patent and trademark costs were written off
upon the discontinuance of the related product lines as a result of
management's decision to focus Besicorp's alternative energy business on
photovoltaic products and systems. The write-off of these costs is reflected in
selling, general and administrative expenses in that period.

Deferred Costs.

Consists of engineering and legal fees, licenses and permits, site
testing, bids and other charges, including salaries and employee expenses,
incurred by Besicorp in developing projects. These costs are deferred until the
date the project construction financing is arranged and then expensed against
development fees received, or, in some cases, such costs are reimbursed
periodically or at the time of closing. When in the opinion of management it is
determined that a project will not be completed, the deferred costs are
expensed.

Impairment of Long-Lived Assets.

Besicorp follows the provisions of Statement of Financial Accounting
Standards ("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed Of." The Statement requires that
long-lived assets and certain identifiable intangibles be reviewed for
impairments whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable.

F-9
<PAGE>

BESICORP LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (Continued)

Basic/Diluted Earnings Per Common Share.

Effective December 15, 1997, Besicorp adopted the provisions of Statement
of Financial Accounting Standards ("SFAS") No. 128, Earnings per Share. The
Statement required companies with a complex capital structure to report both
Basic Earnings per Share and Diluted Earnings per Share. Diluted Earnings per
Share considers the effect of potential common shares such as stock options and
warrants. Loss per common share for Fiscal 1999 and 1998 is computed based on
121,382 shares being issued after reduction for payment of fractional shares as
adjusted after the Distribution and Spin-Off. Loss per common share for the
three and nine months ended December 31, 1999 is based on the weighted average
number of shares of 135,982 and 133,899 outstanding during those periods,
respectively. Loss per common share for the three and nine months ended
December 31, 1998 is computed based on 121,382 shares being issued as adjusted
after the Prior Distribution. Since there were no potential Common Shares as of
December 31, 1999 and March 31, 1999, Basic and Diluted Earnings per Share are
the same for all periods.

Product Warranties.

Warranty expense for Besicorp's product sales is provided on the basis of
management's estimate of the future costs to be incurred under product
warranties presently in force. Adjustments to revenue or expense are reflected
in the period in which revisions to such estimates are deemed appropriate.

Revenue Recognition.

Revenues on product sales are recognized at the time of shipment of goods.
Other revenues, primarily cost reimbursement billings, are recognized when
deemed payable under the applicable agreement.

Research and Development.

Research and development costs are expensed when incurred.

Statement of Cash Flows.

For purposes of the consolidated statement of cash flows, Besicorp
considers temporary investments with a maturity of three months or less when
purchased to be cash equivalents. There were no cash equivalents in any of the
periods presented.

Concentration of Credit Risk.

Financial instruments which potentially subject Besicorp to concentrations
of credit risk consist principally of cash and trade receivables. Besicorp
places its cash and investments with high credit qualified financial
institutions and, by policy, limits the amount of credit exposure to any one
financial institution. Concentrations of credit risk with respect to trade
receivables are limited due to the large number of customers comprising
Besicorp's customer base, and their dispersion across many different industries
and regions. During Fiscal 1999, no sales to a customer equaled or exceeded 10%
of product sales. During the year ended March 31, 1998 ("Fiscal 1998"), one
customer accounted for approximately 14% of product sales.

Goodwill.

The excess of the purchase price over the book value of a corporation
acquired at March 31, 1993 of $557,898 was added to the basis of the land and
buildings of such corporation based upon an independent appraisal of the
property acquired and is being amortized on a straight-line basis over the
asset lives of 31.5 years. The remaining book value at March 31, 1999 and 1998
was $458,489 and $475,057, respectively.

F-10
<PAGE>

BESICORP LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (Continued)

Income Taxes.

Besicorp's operations were included in the income tax returns filed by
Besicorp Group Inc. through the prior distribution date. During such time,
income tax expense (benefit) in Besicorp's consolidated financial statements
was calculated as if Besicorp had filed separate income tax returns. Deferred
income taxes are recognized for the tax consequences of "temporary differences"
by applying enacted statutory tax rates applicable to future years to
differences between the financial statement carrying amounts and tax bases of
existing assets and liabilities. The tax benefits of tax operating loss
carryforwards are recorded to the extent available, less a valuation allowance
if it is more likely than not that some portion of the deferred tax asset will
not be realized.

NOTE 2 -- INVENTORIES

Inventories consist of the following:

<TABLE>
<CAPTION>
December 31, 1999 March 31, 1999 March 31, 1998
------------------- ---------------- ---------------
<S> <C> <C> <C>
(Unaudited)
Assembly parts ......... $ 452,801 $ 263,761 $298,239
Finished goods ......... 1,546,010 902,000 645,774
------------ ---------- --------
$ 1,998,091 $1,165,761 $944,013
============ ========== ========
</TABLE>

NOTE 3 -- DEFERRED COSTS

Deferred and reimbursable costs at December 31, 1999 (unaudited), March
31, 1999 and March 31, 1998 were as follows:

<TABLE>
<CAPTION>
Internal Costs
---------------------------- Third
Payroll Expenses Party Costs Total
------------- ------------ ------------- ---------------
<S> <C> <C> <C> <C>
Balance March 31, 1997 ......... $ 917,671 $ 267,947 $ 295,110 $ 1,480,728
Additions ................... 259,335 34,706 388,238 682,279
Expensed .................... (634,631) (85,142) (64,335) (784,108)
Reimbursements .............. (58,825) -- (3,381) (62,206)
---------- ---------- ---------- ------------
Balance March 31, 1998 ......... 483,550 217,511 615,632 1,316,693
Additions ................... 75,504 11,851 43,716 131,071
Expensed .................... (513,375) (229,362) (659,348) (1,402,085)
Reimbursements .............. (45,679) -- -- (45,679)
---------- ---------- ---------- ------------
Balance March 31, 1999 ......... 0 0 0 0
Additions ................... 258,526 9,672 651,085 919,283
Expensed .................... 0 0 0 0
Reimbursements .............. 0 0 0 0
---------- ---------- ---------- ------------
Balance December 31 , 1999
(Unaudited) .................. $ 258,526 $ 9,672 $ 651,085 $ 919,283
========== ========== ========== ============
</TABLE>

Besicorp Group Inc. wrote off all deferred costs during the second quarter
of Fiscal 1999 due to the uncertain nature of the development of the projects
and due to the uncertain political and economic conditions in the countries
where the projects are located (principally India and Brazil). Besicorp Group
Inc. determined, in accordance with its existing policy, that due to the
uncertain development of the projects and uncertain economic conditions in the
respective countries the carrying amounts may be impaired. Also in accordance
with existing policy, Besicorp, during the first quarter of Fiscal 2000, began
deferring all costs, as presented above, incurred with respect to the
development of a recycled newsprint manufacturing plant and adjacent 475
megawatt natural gas-fired cogeneration power plant in Ulster County, New York
(the "Empire Newsprint Project").

F-11
<PAGE>
BESICORP LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

NOTE 4 -- NOTES RECEIVABLE

Long-term notes receivable consist of the following:

<TABLE>
<CAPTION>
December 31, March 31, March 31,
1999 1999 1998
-------------- ------------- ------------
<S> <C> <C> <C>
(Unaudited)
Due from affiliate (net of allowance of $0 at December 31
and March 31, 1999 and $555,376 at March 31, 1998 (a) $ 0 $ 0 $ 0
============ ========== =========
Due from others:
- -- Greenhouse (net of allowance of $0 at December 31
and March 31, 1999 and $1,944,624 at March 31,
1998 (a) .............................................. $ 0 $ 0 $ 0
- -- 9% notes receivable due from limited partnerships,
receivable in annual installments through December,
1999 (b) .............................................. 82,443 103,894 223,623
Less current portion -- net of interest ................. (82,443) (103,894) (93,737)
------------ ---------- ---------
TOTAL ................................................. $ 0 $ 0 $ 129,886
============ ========== =========
</TABLE>

(a) In connection with a project (the "Project"), Besicorp Group Inc.
advanced an aggregate of $2,500,000 (see Note 8(d)) of which, at March 31,
1998, $1,944,624 and $555,376 was owed to Besicorp Group Inc. by, respectively,
an affiliated partnership and an unrelated company ("Allegany"). During Fiscal
1998, Besicorp Group Inc. reserved the full amount of such loan due to its
impairment and wrote off the combined loan during the third quarter of Fiscal
1999 because Besicorp relinquished its rights thereunder pursuant to the plan
of reorganization approved by the United States Bankruptcy Court for the
District of New Jersey (Case No. 95-28703 (WT)) and the related settlement
agreements. Besicorp did not in Fiscal 1999 or Fiscal 1998 record any interest
income with respect to such advances.

(b) Besicorp Group Inc. contracted to design, build, and operate energy
systems with limited partnerships. Under the terms of the agreements with these
partnerships, the partnerships provided Besicorp with initial cash payments and
issued long-term notes. Additional interest on these notes was imputed at the
rate of 2% per annum to yield an effective rate of 11% per annum on
substantially all of the long-term notes.

NOTE 5 -- INVESTMENTS IN PARTNERSHIPS

The Company's interests in partnerships range from 35.715% to 50.2% and
are accounted for under the equity method. The investment in partnerships of
$4,009,810 at March 31, 1999 primarily represents the amounts paid by Besicorp
of $2,310,549 which equaled the tax bases of the partnership interests of
$2,310,549, which was contributed by Besicorp Group Inc. to Besicorp. In
addition, included in the investment balance is a receivable of $1,721,175
which was also contributed to Besicorp by Besicorp Group Inc. and represents
the funds due from certain revenues earned by the partnerships in March 1999.
As of December 31, 1999, the partnerships, which owned or leased five
cogeneration natural gas power plants, had been liquidated. During the three
months ended December 31, 1999, the Company received liquidating distributions
totaling approximately $350,000 from the last unliquidated partnership. All
other partnerships were liquidated during the three months ended June 30, 1999,
and the applicable liquidating distributions of approximately $2,000,000 were
received on June 1, 1999. Cash held in escrow accounts (the "Liquidated
Partnerships Funds"), which had been classified as Investment in Partnerships
in prior filings, are now classified as Other Assets (non-current) (See note
6).

F-12
<PAGE>

BESICORP LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

NOTE 6 -- OTHER ASSETS

Included in Other Assets is approximately $1.48 million which represents
the Company's share of the Liquidated Partnerships Funds. The Liquidated
Partnerships Funds (if any) are to be released to Besicorp Ltd. between June
2000 and May 2002 subject to the satisfaction of certain conditions, as to
which no assurance can be given.

NOTE 7 -- ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses were comprised of the following:

March 31, 1999 March 31, 1998
---------------- ---------------
Trade accounts payable ............... $220,107 $ 465,584
Accrued interest expense ............. -- 39,421
Accrued legal fees ................... -- 308,281
Accrued salaries ..................... 144,871 134,640
Due to affiliate ..................... -- 56,624
Deposits and other payables .......... 398,553 230,370
-------- ----------
$763,531 $1,234,920
======== ==========

NOTE 8 -- LONG-TERM DEBT

Long-term debt consists of the following:

<TABLE>
<CAPTION>
December 31, March 31, March 31,
1999 1999 1998
-------------- ----------- ------------
(Unaudited)
<S> <C> <C> <C>
- -- Installment loans at 0% to 10.54% maturing through
September 2000 (a) .................................... $ 0 $ 0 $ 75,639
- -- Mortgage loan payable in monthly installments of
$4,180 including interest at prime plus 1.5% through
April 2007, when the unpaid balance was due (b) ....... 0 0 315,455
- -- Second mortgage payable in monthly installments of
$1,771 plus interest at prime plus 1.5% through March
2002, when the unpaid balance was due (b, c) .......... 0 0 288,646
- -- Mortgage loan payable in monthly installments of
$1,060 plus interest at prime plus 1.5% to March 1998
and prime plus .5% thereafter through March 2001
(b, c) ................................................ 0 0 50,680
- -- Obligation on SunWize asset acquisition (e) ............ 93,070 135,308 147,021
- -- Working capital loan (d) ............................... 0 0 3,000,000
------- -------- ----------
Total ..................................................... 93,070 135,308 3,877,441
Less: Current maturities .................................. 42,000 20,000 109,208
------- -------- ----------
$51,070 $115,308 $3,768,233
======= ======== ==========
</TABLE>

F-13
<PAGE>

BESICORP LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

NOTE 8 -- LONG-TERM DEBT -- (Continued)

Long-term debt maturities at March 31, 1999, including current maturities,
are as follows:

March 31, 1999
---------------
2000 ................ $ 20,000
2001 ................ 20,000
2002 ................ 20,000
2003 ................ 20,000
2004 ................ 20,000
Thereafter .......... 35,308
--------
$135,308
========

With the exception of the SunWize acquisition obligation, which is the
only debt (other than trade and similar debt incurred in the ordinary course of
business) remaining subsequent to the spin-off effected on March 22, 1999, all
debt was repaid during Fiscal 1999.

a. Collateral for the installment loans consists of automobiles, machinery
and equipment, computer equipment and furniture and fixtures with a net book
value of $60,468 at March 31, 1998. All these loans were repaid prior to
December 31, 1998.

b. Collateralized by mortgages on land and/or buildings with a net book
value of $1,153,622 at March 31, 1998. These mortgages were repaid prior to
December 31, 1998.

c. As a part of his guarantees of Besicorp Group Inc.'s debts of $339,326
at March 31, 1998, the principal shareholder had a security interest in various
assets, patents and personal property owned by Besicorp Group Inc.. These
mortgages were repaid prior to December 31, 1998 and the related security
interests released.

d. On June 1, 1992, Besicorp Group Inc. and its partnership co-developer
with respect to certain projects, entered into a loan agreement with Stewart &
Stevenson Services, Inc. to borrow up to $3,000,000 each for working capital.
Interest on advances under the agreement were payable quarterly in arrears at
the rate of 2% above prime. The loan required payments of interest only during
the initial term. Principal was to be repaid based on termination dates of
operating and maintenance contracts on certain projects with an initial term of
six years that may be extended an additional six years. Loans were secured by
cash flows of certain of the partnerships in the event of default. During
Fiscal 1993 and 1994 Besicorp Group Inc. borrowed $2,500,000 under the
agreement to fund development activities of one of the partnerships (see Note
4), and, in February 1997, borrowed the remaining $500,000 available under the
loan agreement. The loan was repaid in full in July 1998.

e. Obligation payable on the acquisition of SunWize assets, payable on an
annual basis as a percentage of gross margins of the SunWize division. $42,238
was paid during the first quarter of Fiscal 2000, $11,713 was paid in Fiscal
1999 and $19,878 was paid in Fiscal 1998.

NOTE 9 -- INCOME TAXES

The credit for income taxes for the period through the Prior Distribution
represents the allocated benefits of the respective losses which Besicorp Group
Inc. was able to use in filing its consolidated tax returns.

Tax benefits are allocated based on the taxable loss of the companies and
deferred taxes are provided on temporary differences in recognition of income
between book and tax. Such tax benefits and deferred taxes are charged or
credited to the amount due to or from Besicorp Group Inc. and included in the
net transactions with Besicorp Group Inc.

Deferred tax assets of approximately $415,000 primarily from equipment and
depreciation differences are offset by valuation allowances since it is more
likely than not that some portion of the deferred tax asset will not be
realized.

F-14
<PAGE>

BESICORP LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

NOTE 9 -- INCOME TAXES -- (Continued)

Upon conclusion of the Prior Merger and Prior Distribution, Besicorp
became an independent entity and will no longer have its results included with
the consolidated tax return of Besicorp Group Inc., Besicorp has an available
net operating loss of approximately $167,900 which expires 2019. The tax
benefits of the net operating loss carry forward of $57,000 have been offset by
a corresponding increase in valuation allowance.

NOTE 10 -- CAPITALIZATION

Besicorp has authorized 1,000,000 shares of $.01 par value preferred
stock, of which none have been issued, and 5,000,000 shares of $.01 par value
common stock. Upon formation of Besicorp in November 1998, 500 shares of common
stock were issued to Besicorp Group Inc. for $500. In connection with the Prior
Merger and the Prior Distribution, approximately 122,057 shares of Besicorp are
available to be issued to the holders of Besicorp Group Inc. common stock on a
one share of Besicorp for 25 shares of Besicorp Group Inc. basis subject to
adjustment based upon the payment of cash in lieu of the issuance of fractional
shares. At March 22, 1999, $40,000 was placed in escrow with the transfer agent
for payment of cash in lieu of fractional shares. Stock certificates for
121,382 shares of Besicorp's common stock have been received for distribution
in exchange of Besicorp Group Inc. shares after payment on the issuance of
fractional shares. The $29,042 of payment for fractional shares is an
additional capital contribution by Besicorp Group Inc. and the balance of the
$40,000 was transferred to the escrow account established to satisfy Besicorp's
obligations under the Indemnification Agreement.

NOTE 11 -- RELATED PARTIES

Net amounts due from affiliates at March 31, 1999 and March 31, 1998
relate to receivables from companies owned by a major shareholder which
provided certain services to Besicorp Group Inc., and which will continue to
provide services to Besicorp, for airport usage, plane services and engineering
consulting services totaling $56,197 and $31,939 for the years ended March 31,
1999 and 1998, respectively.

Also, included in amounts due from affiliates at March 31, 1999 is
$314,000 of funds due from Besicorp Group Inc. Additional cash balances were
identified subsequent to the Prior Merger which were not included in the
calculation of the Merger consideration. The funds were transferred to Besicorp
subsequent to the balance sheet date.

Included in other current assets at March 31, 1998 is a receivable of
$164,211 from the President of Besicorp Group Inc. representing primarily the
balance due on $186,000 of legal fees incurred in connection with a certain
legal proceeding (the "Proceeding") which the President had agreed, subject to
a determination that such repayment was not required, to reimburse Besicorp
Group Inc. In January 1999, after the receipt of a report from independent
legal counsel addressing the propriety under the BCL and Besicorp Group Inc.'s
by-laws of indemnifying the President, a committee of directors of Besicorp
Group Inc. (composed of independent directors) determined that the President
was entitled to full indemnification with respect to the Proceeding and (i)
authorized the repayment to the President of the fine of $36,673 he had paid in
connection with the Proceeding and the refund of $45,000 he had previously
reimbursed Besicorp Group Inc.; (ii) acknowledged that the President had no
further obligations with respect to the $141,000 he had, subject to a
determination as the propriety of indemnification, agreed to reimburse Besicorp
Group Inc.; and (iii) authorized the reimbursement of the President for the
legal fees and expenses (approximately $39,180) incurred by third parties in
connection with the Proceeding and which were paid by him. All such
reimbursements were made during the fourth quarter of Fiscal 1999 and any
related receivables were written off and charged to expense during the same
period.

F-15
<PAGE>

BESICORP LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

NOTE 12 -- SUPPLEMENTARY INCOME STATEMENT INFORMATION

<TABLE>
<CAPTION>
Fiscal 1999 Fiscal 1998
------------- ------------
<S> <C> <C>
Advertising costs .................................. $ 72,734 $142,154
Research and development expenses(1) ............... 603,399 697,182
Warranty expense ................................... 3,767 53,701
Amortization of patents and trademarks ............. 659 40,632
Maintenance and repairs ............................ 105,949 84,903
Taxes other than payroll and income taxes .......... 57,761 57,721
</TABLE>

- ------------
(1) Expenditures for research and development were $603,399 in Fiscal 1999 and
$697,182 in Fiscal 1998. Personnel expenses, comprising the largest
portion of these amounts, were $223,799 in Fiscal 1999 and $330,428 in
Fiscal 1998. Of the total amounts, expenses attributable to Besicorp's
agreements with the New York State Energy Research and Development
Authority were $331,539 for Fiscal 1999 and $520,950 in Fiscal 1998.

NOTE 13 -- LEGAL PROCEEDINGS

Besicorp is a party to numerous legal proceedings in the normal course of
business and certain shareholder suits.

As part of the Prior Plan of Merger, there is (i) an indemnification
agreement which obligates Besicorp to indemnify the purchaser from any damages
it suffers arising out of, among other things, Besicorp Group Inc.'s breach of
representations and warranties set forth in the Prior Plan of Merger and
certain liabilities, taxes and litigation of Besicorp Group Inc. and (ii) an
escrow agreement governing the $6.5 million initially placed in escrow to
satisfy Besicorp's obligations under the indemnification agreement and provides
for payment of, among other things, certain litigation and related costs.

Management believes that there are meritorious defenses in the various
legal proceedings and that the balance in the escrow fund will cover any legal
costs and settlements that might result from these actions.

NOTE 14 -- COMMITMENTS AND CONTINGENCIES

Other than the equipment lease described below, at March 31, 1999,
Besicorp has no significant minimum annual rental commitments under
non-cancelable operating leases for equipment and office space. Besicorp has
three leases for office and warehouse space. One lease calls for monthly rental
of $575 for a period of 12 months ending April 1999 and subsequently extended
for another year. The second lease calls for monthly rental of $410 per month
for a period of 12 months ending January 2000. The third lease was for an
initial period of six months, commencing on October 1, 1995 and ending on March
31, 1996. The term automatically renews for successive periods of six months
each. Either party may terminate the lease at any time by giving the other
party at least ninety days notice in writing. The annual rent from September 1,
1995 forward is $102,000, which will be adjusted in future periods based on the
Consumer Price Index. Rent expense on all operating leases for Fiscal 1999 and
1998 was $176,964 and 155,197, respectively.

Since March 1994 Besicorp has been entering into cost-sharing agreements
with the New York State Energy Research and Development Authority ("NYSERDA")
with completion dates extending through April 2001. The agreements provide for
payment to Besicorp by NYSERDA of $1,442,237 (approximately $1,015,822 has been
earned through March 31, 1999) for funding and development of photovoltaic
projects with estimated costs of $2,963,235. Funds advanced by NYSERDA are to
be repaid from revenues on sales of products developed under the agreements, if
any.

Besicorp has a 401(k) plan covering substantially all full-time employees
for which Besicorp makes matching contributions as defined. Besicorp's expenses
under the plan for Fiscal 1999 and 1998 were $98,868 and $72,692, respectively.

F-16
<PAGE>

BESICORP LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

NOTE 14 -- COMMITMENTS AND CONTINGENCIES -- (Continued)

As part of the Prior Plan of Merger, certain equipment with an original
cost of $827,000 was retained by Besicorp Group Inc. and leased to Besicorp.
Rentals under this two year lease will be approximately $63,474 per quarter
commencing July 1, 1999. Besicorp has the option to purchase the equipment
after the first year for $288,479. Besicorp Group Inc. has the option to
require Besicorp to purchase the equipment at the end of the lease for $55,000.
The lease is accounted for as an operating lease on Besicorp's books.

In February 1999, Besicorp Ltd. adopted the 1999 Incentive Plan to provide
for the issuance of up to 40,000 shares of Besicorp Ltd. common stock as an
equity incentive program. As of May 1999, restricted grants of 15,000 shares
were made under the plan.

NOTE 15 -- SEGMENTS OF BUSINESS

Besicorp specializes in the development, assembly, manufacture, marketing
and resale of photovoltaic products and systems ("Product Segment") and the
development of power plant projects ("Project Segment"). Segments are reported
based on the subsidiary involved with the activity of that segment, with no
intersegment revenues and expenses. Export product sales, principally to Europe
and the Pacific Rim, for the years ended March 31, 1999 and 1998 were $153,543
and $299,293, respectively. A summary of industry segment information for the
three and nine months ended December 31, 1999 and 1998 (unaudited) and for
Fiscal 1999 and 1998 is as follows:

<TABLE>
<CAPTION>
For the Nine Months Ended Project Product
December 31, 1999 Segment Segment Eliminations(1) Total
- --------------------------------------- --------------- ------------- ----------------- ---------------
<S> <C> <C> <C> <C>
Net revenues .......................... $ 210,512 $6,391,701 $ 6,602,213
Loss before taxes ..................... (2,597,758) (835,530) (3,433,288)
Income tax provision (credit) ......... 14,281 1,741 16,022
Net income (loss) ..................... (2,612,039) (837,271) (3,449,310)
Identifiable assets ................... 20,155,153 2,300,957 ($ 14,471,568) 7,984,542
Investment in partnerships ............ 0 0 0
Capital expenditures .................. 21,801 126,180 147,981
Depreciation and amortization ......... 78,384 30,474 108,858
</TABLE>

<TABLE>
<CAPTION>
For the Nine Months Ended Project Product
December 31, 1998 Segment Segment Eliminations(1) Total
- --------------------------------------- --------------- --------------- ----------------- ---------------
<S> <C> <C> <C> <C>
Net revenues .......................... $ 114,750 $ 3,662,431 $ 3,777,181
Loss before taxes ..................... (4,711,364) (1,353,322) (6,064,686)
Income tax provision (credit) ......... (1,592,626) (469,374) (2,062,000)
Net income (loss) ..................... (3,118,738) (883,948) (4,002,686)
Identifiable assets ................... 13,566,367 2,430,400 ($ 11,994,756) 4,002,011
Investment in partnerships ............ 0 0 0
Capital expenditures .................. 35,508 35,129 70,637
Depreciation and amortization ......... 82,389 44,565 126,954
</TABLE>

F-17
<PAGE>

BESICORP LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

NOTE 15 -- SEGMENTS OF BUSINESS -- (Continued)

<TABLE>
<CAPTION>
For the Three Months Ended Project Product
December 31, 1999 Segment Segment Eliminations(1) Total
- --------------------------------------- ------------- ------------- ----------------- -------------
<S> <C> <C> <C> <C>
Net revenues .......................... $ 178,486 $1,941,720 $2,120,206
Loss before taxes ..................... (697,322) (244,210) (941,532)
Income tax provision (credit) ......... 2,088 0 2,088
Net income (loss) ..................... (699,410) (244,210) (943,620)
Identifiable assets ................... 20,155,153 2,300,957 ($ 14,471,568) 7,984,542
Investment in partnerships ............ 0 0 0
Capital expenditures .................. 4,072 89,363 93,435
Depreciation and amortization ......... 20,468 15,116 35,584
</TABLE>

<TABLE>
<CAPTION>
For the Three Months Ended Project Product
December 31, 1998 Segment Segment Eliminations(1) Total
- --------------------------------------- --------------- ------------- ----------------- ---------------
<S> <C> <C> <C> <C>
Net revenues .......................... $ 26,815 $1,372,518 $ 1,399,333
Loss before taxes ..................... (1,380,019) (448,778) (1,828,797)
Income tax provision (credit) ......... (150,559) (477,141) (627,700)
Net income (loss) ..................... (1,223,560) 22,463 (1,201,097)
Identifiable assets ................... 13,566,367 2,430,400 ($ 11,994,756) 4,002,011
Investment in partnerships ............ 0 0 0
Capital expenditures .................. 0 0 0
Depreciation and amortization ......... 18,325 27,538 45,863
</TABLE>

<TABLE>
<CAPTION>
For the Year Ended Project Product
March 31, 1999 Segment Segment Eliminations(1) Total
- --------------------------------------- --------------- --------------- ----------------- ---------------
<S> <C> <C> <C> <C>
Net revenues .......................... $ 165,161 $ 5,551,442 $ 5,716,603
Loss before taxes ..................... (6,856,945) (1,854,994) (8,711,939)
Income tax provision (credit) ......... (2,283,500) (613,700) (2,897,200)
Net income (loss) ..................... (4,573,445) (1,241,294) (5,814,739)
Identifiable assets ................... 18,315,811 2,635,574 $(10,338,484) 10,612,901
Investment in partnerships ............ 4,009,810 -- 4,009,810
Capital expenditures .................. -- 133,348 133,348
Depreciation and amortization ......... 84,466 80,841 165,307
</TABLE>

<TABLE>
<CAPTION>
For the Year Ended Project Product
March 31, 1998 Segment Segment Eliminations(1) Total
- --------------------------------------- --------------- --------------- ----------------- ----------------
<S> <C> <C> <C> <C>
Net revenues .......................... $ 158,427 $ 4,249,995 $ 4,408,422
Loss before taxes ..................... (8,435,438) (2,578,566) (10,991,004)
Income tax provision (credit) ......... (2,868,000) (899,000) (3,767,000)
Net income (loss) ..................... (5,544,438) (1,679,566) (7,224,004)
Identifiable assets ................... 17,355,904 1,947,316 $(14,074,568) 5,228,652
Investment in partnerships ............ -- -- --
Capital expenditures .................. 39,478 109,788 149,266
Depreciation and amortization ......... 152,662 91,131 243,793
</TABLE>

(1) Eliminations are comprised of intercompany accounts receivables recorded on
certain subsidiaries, which are eliminated in consolidation.

F-18
<PAGE>

BESICORP LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

NOTE 16 -- GOING CONCERN

Besicorp has suffered recurring losses from operations and has previously
received (but will not in the future receive) substantial financial support
from Besicorp Group Inc., which raises substantial doubt about the Company's
ability to continue as a going concern without such support. The Company is
exploring a potential transaction in which the Company's President would
acquire all outstanding shares not already owned by him (the "Transaction"). In
this regard, the Company has retained a financial advisor to render financial
and other general advice, including an evaluation of the fairness of the
Transaction from a financial point of view, and to assist the Company in
responding to proposed alternative transactions, if any. No assurance can be
given that the Transaction will be completed or that alternative transactions
will be available (see Note 18).

NOTE 17 -- PRO FORMA FINANCIAL INFORMATION

The consolidated financial statements for the year ended March 31, 1999
include the results of operations and cash flows for the period April 1, 1998
through March 22, 1999, the date of Prior Distribution, during which Besicorp
was a part of Besicorp Group Inc. and the period March 23, 1999 through March
31, 1999 during which Besicorp was a stand alone entity. The results of
operations are summarized as follows:

<TABLE>
<CAPTION>
Period April 1, 1998 March 23, 1999
through through Year Ended
March 22, 1999 March 31, 1999 March 31, 1999
---------------------- ---------------- ---------------
<S> <C> <C> <C>
Revenues:
Product sales ........................................ $ 4,902,642 $ 200,633 $ 5,103,275
Other revenues ....................................... 485,705 325 486,030
Interest and other investment income ................. 19,188 1,224 20,412
Other income ......................................... 105,041 1,845 106,886
------------ ---------- ------------
Total Revenues ..................................... 5,512,576 204,027 5,716,603
------------ ---------- ------------
Costs and Expenses:
Cost of product sales ................................ 4,661,182 177,834 4,839,016
Selling, general and administrative expenses ......... 9,251,042 193,356 9,444,398
Interest expense ..................................... 134,110 -- 134,110
Other expense ........................................ 11,018 -- 11,018
------------ ---------- ------------
Total Costs and Expenses ........................... 14,057,352 371,190 14,428,542
------------ ---------- ------------
Loss Before Income Taxes .............................. (8,544,776) (167,163) (8,711,939)
Credit for income taxes ............................... 2,902,200 (5,000) 2,897,200
------------ ---------- ------------
Net loss .............................................. $ (5,642,576) $ (172,163) $ (5,814,739)
============ ========== ============
Loss per Common Share ................................. $ (46.48) $ (1.42) $ (47.90)
</TABLE>

NOTE 18 -- SUBSEQUENT EVENTS (UNAUDITED)

Besicorp has entered into an amended and restated agreement and plan of
merger (the "Agreement") with Besicorp Holdings, Ltd. (the "Parent") and Besi
Acquisition Corp., a wholly-owned subsidiary of Parent. The Agreement is
generally structured as a cash merger whereby Besi Acquisition Corp. will be
merged into Besicorp Ltd., which will then be wholly-owned by Besicorp
Holdings, Ltd. Michael F. Zinn, the President and CEO of Besicorp Ltd.,
controls Besicorp-Holdings, Ltd.

Generally, pursuant to the terms of the Agreement, shareholders of
Besicorp (other than shares of Besicorp stock owned by the Parent) will receive
approximately $58.87 in cash for each share of stock that they own plus the
right to receive additional cash distributions, if any, during the next several
years in the event the surviving corporation receives certain funds. No
assurance can be given that any such funds will be received.

Consummation of the merger is subject to the satisfaction of a number of
conditions, including approval by the Besicorp's shareholders. No assurance can
be given that the merger will be consummated.

F-19
<PAGE>

BESICORP LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

NOTE 18 -- SUBSEQUENT EVENTS (UNAUDITED) -- (Continued)

The following actions have been taken to address Besicorp's cash flow and
liquidity problems (though these actions may be insufficient to correct these
problems):

(i) Pursuant to the Agreement, the Parent agreed to lend Besicorp such
amounts as Besicorp reasonably requests in order to satisfy its
obligations with respect to certain operating expenses of Besicorp and
its subsidiaries; provided, however, that Parent is not required to make
loans within a 30 day period in excess of $350,000, loans with a
cumulative amount in excess of $1,050,000, or under certain other
circumstances relating to the status of the proposed merger. Through
March 3, 2000 Parent had loaned Besicorp an aggregate of $1,232,500.

(ii) Besicorp implemented, as of July 5, 1999, a salary deferment plan
under which executive officers and certain key employees have been
deferring portions of their salary ranging in amounts from 15% to 67%.
Effective October 10, 1999, the Chief Executive Officer increased his
deferment to 100%. The deferral arrangements are for a one-year term and
are resulting in a monthly cash savings of approximately $45,000 to
$50,000.

Other than the consummation of the Agreement, the loans to be made by the
Parent and the salary deferment program, Besicorp has not developed any other
acceptable alternatives to its liquidity and capital resource problems.

Besicorp is currently arranging, through an industrial development agency
bond, financing for the construction of a 30,000 sq. ft. facility at the site
of the corporate headquarters in Kingston to house the Product Segment
operations ("SunWize"). This facility is estimated to cost approximately $2.0
million and would replace space currently occupied under a lease whose term
expires May 31, 2000. The bond that will fund construction of the facility will
be secured by a letter of credit to be issued by HSBC Bank USA. The letter of
credit will be secured by the building and the interest of SunWize in the real
property upon which the building will be located. Management anticipated
closing on the bond to occur around May 2000.

F-20
<PAGE>

APPENDIX I

Acquisition Corp. means Besi Acquisition Corp., a New York corporation and
a wholly owned subsidiary of Parent.

Acquisition Proposal means any bona fide offer or proposal with respect to
a merger or similar transaction involving Besicorp or the purchase of any
significant portion of the assets or capital stock of Besicorp or any
significant subsidiary or any other business combination involving Besicorp.

Acquisition Proposal Activities mean the Special Committee or Board's (1)
withdrawing or modifying their approval or recommendation of the Plan of Merger
or, the Merger; (2) approving, adopting or recommending or publicly proposing
to approve, adopt or recommend an Acquisition Proposal; (3) causing Besicorp to
enter into any agreement with respect to an Acquisition Proposal; or (4)
resolving to do any of the foregoing.

Adjustment Amounts equals all proceeds received by Besicorp, the Surviving
Corporation and their subsidiaries, or in the case of an entity that is less
than wholly owned by Besicorp or the Surviving Corporation, their proportionate
interest in such proceeds at the time of their receipt, from October 7, 1999
through the Deferred Payment Termination Date with respect to the following:

(i) amounts, if any, released from the Escrow Fund as Remaining Proceeds
because they were not utilized to fund covered claims during the term of
the Escrow Fund;

(ii) amounts received, with certain exceptions, from their sale of their
interests in the foreign development projects (unless such foreign
development project is sold along with the Empire Newsprint Project in
which case the proceeds are not an Adjustment Amount) pursuant to
agreements entered into on or before the first anniversary of the Effective
Date, less the expenses of Besicorp or the Surviving Corporation (other
than SG&A and Excluded Expenses) incurred and paid following October 7,
1999 directly related to such foreign development project;

(iii) amounts received by Beta, distributions received from Natural Dam
(other than an amount anticipated to be received by Beta from Natural Dam
in 1999 and disclosed under "Liquidity and Capital Resources" in Item 2 of
Besicorp's Form 10-QSB for the period ended June 30, 1999) and any other
funds that are distributed as a result of partnership interests in
existence as of October 7, 1999 or the Effective Date;

(iv) amounts distributed as a result of Hydro-Credits (other than the
distribution with respect to Glen Park Associates scheduled for on or about
September 30, 1999), less expenses (other than SG&A and Excluded Expenses)
incurred and paid following October 7, 1999 directly related to
distributions as a result of Hydro-Credits; and

(v) amounts received with respect to each of their litigation claims
with respect to matters arising before the Effective Date, less their
expenses (including reasonable SG&A expenses but excluding Excluded
Expenses) incurred and paid after October 7, 1999 directly related to any
such claim for which amounts have been received;

provided however that the Adjustment Amount shall not include (i) the proceeds
of any transfer of assets by the Surviving Corporation or its wholly owned
subsidiaries to any wholly owned subsidiary of the Surviving Corporation or to
any Related Entity if (a) the Related Entity assumes the obligation to make
Deferred Payments in the manner set forth in the Plan of Merger (without the
right to defer payments if the amount accrued on a Deferred Payment Date is
less than $90,000) with respect to such asset and (b) the Surviving Corporation
guarantees the Related Entity's payment of all amounts it is required to pay to
the Outside Participating Shareholders pursuant to this assumption and (ii)
amounts released by the Escrow Agent pursuant to Besicorp's instructions to pay
Remaining Proceeds directly to the Outside Participating Shareholders.

Adjustments means the Adjustment Amounts multiplied by a fraction, the
numerator of which is the Outside Participating Shareholders' Shares and the
denominator of which is the Total Shares.

Aggregate Cash Merger Consideration means $8 million, which is
approximately $58.8729 multiplied by the number of shares of Besicorp Common
Stock issued and outstanding on the date hereof.

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Airport Enterprises mean entities owned by Michael F. Zinn that own and
operate the airport where Besicorp's plane is maintained.

Airport Services mean airport usage and plane services performed by
Airport Enterprises on behalf of Besicorp and Old Besicorp.

Allowances means the Power Plants' allowances to emit NOx.

Anticipated Hydro-Credit Distribution means an additional approximately
$257,640 Besicorp received after October 7, 1999 with respect to Glen Park
Associates.

Anticipated Partnership Distribution means an additional amount Besicorp
expects to receive with respect to Natural Dam in 1999 and disclosed under
"Liquidity and Capital Resources" in Item 2 of Besicorp's Form 10-QSB for the
period ended June 30, 1999.

Assignee means the assignee of any of the assets underlying the Adjustment
Amounts.

Assignment of the Bansbach Litigation means Besicorp's assignment to WOM
of the contingent assets and/or liabilities comprising Besicorp's interests in
the Bansbach Litigation.

Authorizations means any consents, notices or registrations.

Avalon means Avalon Ventures, LLC, a limited liability company organized
under the laws of Virginia.

Avalon Funding means Avalon Funding LLC, a limited liability company
organized under the laws of Delaware.

Bansbach Litigation means a shareholder derivative action commenced in
August 1997 in the New York Supreme Court, Ulster County, entitled John
Bansbach v. Michael F. Zinn, Michael J. Daley, Gerald A. Habib, Harold Harris,
Richard E. Rosen, and Besicorp Group Inc., Index No. 97-2573.

BBI means BBI Power Inc., which is 50% owned by an indirect, wholly-owned
subsidiary of Besicorp and 50% owned indirectly by Chesapeake.

Besicorp means Besicorp Ltd.

Besicorp Assumed Matters means the Existing Litigation and other matters
to be prosecuted or defended by Besicorp pursuant to the Indemnification
Agreement.

Besicorp Common Stock means the common stock, par value $.01 per share, of
Besicorp.

Besicorp Development means Besicorp Development, Inc., a wholly-owned
subsidiary of Besicorp.

Beta means Beta Partnerships, Inc., a wholly owned subsidiary of Besicorp.

BGI Acquisition means BGI Acquisition Corp., a wholly owned subsidiary of
BGI Parent.

BGI Indemnity Claims means all claims for indemnity made by BGI Parent
pursuant to the Indemnification Agreement, including any claims of BGI Parent
with respect to the Besicorp Assumed Matters arising from the failure of
Besicorp to diligently prosecute or defend such Besicorp Assumed Matters, BGI
Monitoring Costs and any payment of fees and expenses of the payment agent
pursuant to the Prior Plan of Merger.

BGI Monitoring Costs means BGI Parent's out-of-pocket expenses (not to
exceed $40,000 per year) incurred if it is represented by counsel with respect
to the Besicorp Assumed Matters and the Bansbach Litigation.

BGI Parent means BGI Acquisition LLC.

Board means the Board of Directors of Besicorp.

Buyer means Parent and Acquisition Corp.

Cash Merger Consideration means $8 million divided by the Total Shares.

Certificate of Merger means a certificate of merger executed by Besicorp
and Acquisition Corp.

2
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Certificates means the certificates evidencing shares of Besicorp Common
Stock.

Chesapeake means Chesapeake Power Transport Inc..

Closing means the consummation of the transactions contemplated by the
Plan of Merger.

Closing Date means the day of the Closing.

Code means the Internal Revenue Code of 1986, as amended.

Combined Deferred Payment Right means one Deferred Payment Right and one
Escrow Fund Payment Right.

Combined Deferred Payments mean the Deferred Payments and the Escrow Fund
Payments.

Commercial Associates means Commercial Associates Realty, Inc.

Commitment means Besicorp's commitment pursuant to the Empire Memorandum
to provide $750,000 to the Empire Newsprint Project.

Company means Besicorp Ltd.

Company Offer means a written offer of Besicorp to pay the Dissenters for
their shares of Besicorp Common Stock.

Comparable Companies mean the publicly-traded companies that Management
and Josephthal believed were generally comparable to SunWize.

Comparable Transactions mean the merger and acquisition transactions in
SunWize's industry that were completed over the prior two years that Josephthal
deemed generally comparable to the Merger.

Consents means all consents, approvals, permits, authorizations or
waivers.

Continental means Continental Stock Transfer & Trust Co., Besicorp's
transfer agent.

Contribution means the contribution of the Contributed Assets to WOM
pursuant to the Contribution Agreement.

Contribution Agreement means the Contribution and Distribution Agreement
to be dated the date of the Spin-Off by and between Besicorp and WOM.

Contributed Assets mean the interests in the Bansbach Litigation that
Besicorp received pursuant to the Prior Contribution Agreement as a result of
the Prior Merger Order (subject to WOM's agreement to return such interests if
a Prior Merger Order Reversal occurs).

Corporate Headquarters means Besicorp's corporate headquarters located at
1151 Flatbush Road, Kingston, New York 12401 (914-336-7700).

Covered Expenses means out-of-pocket costs and expenses reasonably
incurred and due to third parties in connection with the Plan of Merger
(including fees and disbursements of counsel, accountants, financial advisors
and consultants, commitment fees, due diligence expenses, travel costs, filing
fees, and similar fees and expenses, all of which shall be conclusively
established by a good faith statement therefor).

Covered Person means certain persons, including present and former
directors, officers, employees and agents of Besicorp and its subsidiaries, who
at the time of the execution of the Initial Plan of Merger were covered by
Besicorp's officers' and directors' liability insurance or will be so covered
on the Closing Date.

D&O Insurance means officers' and directors' liability insurance.

DCF means discounted cash flow analysis.

Deferred Payment Date means each June 1st commencing on June 1, 2000 and
ending on the last June 1st immediately prior to the Deferred Payment
Termination Date.

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<PAGE>

Deferred Payment Fund means the sum of all Adjustments (net of corporate
taxes for such Adjustments) less all amounts previously distributed from the
Deferred Payment Fund to the Outside Participating Shareholders.

Deferred Payment Right means the right to a Deferred Payments.

Deferred Payment Termination Date means the latest of (i) March 22, 2004,
(ii) the date of the release by the Escrow Agent of all of the Escrow Funds and
(iii) the disposition, pursuant to a final and non-appealable judgment of a
court of competent jurisdiction, including the payment of all monies required
by such disposition, of the RICO Action, and any litigation in connection with
or relating to such lawsuit.

Deferred Payments mean the additional cash payments, if any, to be paid to
the Outside Participating Shareholders by the Surviving Corporation on the
Deferred Payment Dates and the Deferred Payment Termination Date equal to the
amount in the Deferred Payment Fund on each such date divided by the number of
Outside Participating Shareholders' Shares.

Derivative Litigation means the Bansbach Litigation and the Lichtenberg
Litigation.

Disputed Shares means the 4,000 shares of Besicorp Common Stock held in
the name of Enowitz but are being held in escrow pending resolution of the
dispute regarding the ownership of these shares.

Dissenter means any shareholder of Besicorp who wishes to object to the
Merger and complies with the procedures set forth in Sections 623 and 910 of
the NYBCL.

Dissenters' Shares means the shares of Besicorp Common Stock held by
Dissenters on the Spin-Off Record Date.

Distributed Businesses means Old Besicorp's photovoltaic and independent
power development businesses.

Distribution means a dividend of one share of WOM Common Stock immediately
prior to the Merger for each share of Besicorp Common Stock outstanding on such
date.

EBIT means earnings before interest and taxes.

EBITDA means earnings before interest, taxes, depreciation and
amortization.

Effective Date means the date of filing of the Certificate of Merger with
the Secretary of State of the State of New York in accordance with the NYBCL or
at such later time as provided in such Certificate of Merger.

EIR means Energy Investment Research Inc.

Empire means Empire State Newsprint LLC.

Empire Memorandum means a memorandum of understanding between Besicorp and
Empire to form a joint development partnership.

Empire Newsprint Facility means a newsprint recycling manufacturing plant.

Empire Newsprint Project means a project consisting of the Empire
Newsprint Facility in Ulster County, New York and the Empire Power Facility
adjacent to the Empire Newsprint Facility which Empire Power Facility would
supply power to the Empire Newsprint Facility and would also supply power for
sale to power marketers for resale into the recently deregulated power market.

Empire Power Facility means a 475-megawatt natural gas-fired cogeneration
power plant.

Enowitz means Martin Enowitz.

Enowitz Shares means 100,000 shares of Old Besicorp's common stock held of
record by Enowitz.

Enterprise Value means the ratio of equity value plus debt less cash and
cash equivalents to their revenues.

Escrow Agent means Robinson Brog as the escrow agent pursuant to the
Escrow Agreement.

Escrow Agreement means the escrow agreement entered into on March 22, 1999
by Besicorp and certain other parties as amended or to be amended by the Escrow
Agreement Amendment.

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<PAGE>

Escrow Agreement Amendment means Amendment No. 1 to the Escrow Agreement,
to be effective as of the date of the Spin-Off, by and between Besicorp, WOM
and certain other parties.

Escrow Fund means monies held by the Escrow Agent pursuant to the Escrow
Agreement.

Escrow Fund Determination Procedure means the Escrow Agent's receipt of
(i) the joint written direction of BGI Parent, WOM and Besicorp to release
funds from the Escrow Fund, (ii) a written instrument representing a final and
non-appealable order with respect to the disposition of funds from the Escrow
Fund issued by an arbitrator or (iii) a certified copy of a final and
non-appealable judgment of a court of competent jurisdiction directing the
disbursement of such funds.

Escrow Fund Payment Right means the right to Escrow Fund Payments.

Escrow Fund Payments means additional cash payments equal to the Escrow
Fund Payment Distributions divided by the Outside Participating Shareholders'
Shares.

Escrow Fund Payment Distributions mean amounts equal to the Remaining
Proceeds being distributed by the Escrow Agent multiplied by a fraction, the
numerator of which is the Outside Participating Shareholders' Shares and the
denominator of which is the Total Shares.

Exchange Act means the Securities Exchange Act of 1934, as amended.

Exchanges means the New York Stock Exchange, the American Stock Exchange
and the Nasdaq Stock Market, Inc.

Excluded Expenses means expenses which are funded with monies in the
Escrow Fund.

Existing Litigation means certain litigation specified in the
Indemnification Agreement.

Fairness Opinion means the fairness opinion of Josephthal dated September
22, 1999 and annexed hereto as Annex B.

Fenster means Alan Fenster.

Financial Close means the closing on the long term financing for the
actual construction of the Empire Newsprint Project.

Financial Model means a financial model for the Empire Newsprint Project
prepared in or about August 1999 by Besicorp, with the assistance of Morgan
Stanley Dean Witter.

Fiscal 1997 means the year ended March 31, 1997.

Fiscal 1998 means the year ended March 31, 1998.

Fiscal 1999 means the year ended March 31, 1999.

Fiscal 2000 means the year ended March 31, 2000.

Form 10-K means Besicorp's Form 10-KSB, as amended, as of and for the year
ended March 31, 1999.

Forms 10-Q means Besicorp's Forms 10-QSB, as amended, as of and for the
quarters ended June 30, 1999 and September 30, 1999.

Gabon Initiative means the efforts of SunWize and Wespro to obtain,
develop and supply rural electrification projects in Gabon.

Golden Genesis means Golden Genesis Company.

Grants means the grants of the Restricted Shares.

Guaranty means a guaranty of Michael F. Zinn to be executed on the Closing
Date for the benefit of the Outside Participating Shareholders and the
directors and officers of Besicorp.

Guaranty Escrow Agreement means an escrow agreement to be executed on the
Closing Date by Michael F. Zinn in connection with the Guaranty.

5
<PAGE>

Guaranty Escrow Fund means $100,000 to be placed in escrow pursuant to the
Guaranty Escrow Agreement on the Closing Date.

HSBC Bank means the HSBC Bank USA.

HSBC Credit Facility means a secured line of credit by HSBC Bank.

Hydro-Credits means the amounts Niagara Mohawk will pay the Partnerships
and other IPPs' when and if certain hydro-energy developers enter into
agreements to restructure or terminate their power purchase agreements with
Niagara Mohawk before July 1, 2003.

Incentive Plan means Besicorp's 1999 Incentive Plan.

Indemnification Agreement means the indemnification agreement between BGI
Parent, BGI Acquisition and Besicorp dated March 22, 1999.

Independent Directors mean the directors of Besicorp who are not employees
of Besicorp.

Independent Directors' Restricted Shares mean the 1,050 Restricted Shares
issued to Independent Directors.

Initial Offer means Michael F. Zinn's written offer, dated June 17, 1999,
to acquire Besicorp.

Initial Plan of Merger means the Agreement and Plan of Merger dated as of
October 7, 1999 by and among Besicorp, Parent and Acquisition Corp.

Instructions mean Besicorp's irrevocable instructions to the Escrow Agent
to release the Escrow Fund Payment Distributions to the Payment Agent for
distribution to the Outside Participating Shareholders.

IPPs means independent power producers.

Josephthal means Josephthal & Co., Inc.

Krishnapatnam Project means a development project to build a coal fired
power plant near the village of Krishnapatnam.

Kyocera means Kyocera International, Inc.

Letter of Transmittal means the documents needed to exchange shares of
Besicorp Common Stock for the Merger Consideration.

Lichtenberg Litigation means a shareholder derivative action commenced on
March 29, 1993 in New York Supreme Court, Ulster County, entitled Lichtenberg
v. Michael F. Zinn, Steven I. Eisenberg, and Martin E. Enowitz, et al., Index
No. 93-1987. This action has been dismissed.

Litigation Costs means costs and expenses relating to (i) Besicorp Assumed
Matters; (ii) litigation arising out of or relating to any such Besicorp
Assumed Matters; (iii) indemnification of claims against Old Besicorp's
directors and officers (prior to the Prior Merger) for actions in their
official capacity preceding the date of the Prior Merger; or (iv) in connection
with matters arising out of or relating to the Prior Merger.

Losses means any and all losses, liabilities, claims, actions, damages,
and expenses, including, without limitation, reasonable attorneys' fees and
disbursements.

LTM means the most recent 12-month period.

Management means the management of Besicorp.

Management Restricted Shares means the Restricted Shares issued to
officers, directors (except for Independent Directors) and employees.

March Complaint means the complaint in the March Litigation.

March Director Defendants mean the Old Besicorp Board consisting of
Michael F. Zinn, Michael Daley, Melanie Norden, Gerald Habib and Richard Rosen.

March Litigation means a class action commenced on March 5, 1999, in the
United States District Court for the Southern District of New York, entitled
James Lichtenberg and John Bansbach v. Besicorp Group Inc., BGI Acquisition
LLC, BGI Acquisition Corp. et al.

6
<PAGE>

May 1999 Escrow means funds that were placed in escrow in May 1999 as a
reserve for potential liabilities of certain partnerships that are being or
have been liquidated.

Memoranda mean two memoranda of Mr. Zinn to the Special Committee dated
May 17, 1999 and May 21, 1999.

Merger means the merger of Acquisition Corp. with and into Besicorp
pursuant to the Plan of Merger.

Merger Consideration means the Cash Merger Consideration and the Combined
Deferred Payment Right to be received as the result of the conversion of one
share of Besicorp Common Stock pursuant to the Merger.

Mortgage means a mortgage and security agreement to be executed by
Besicorp at the time of the original Parent Loan.

MRA means the Master Restructuring Agreement between the Partnerships,
Niagara Mohawk and certain other IPPs.

NASDAQ means the National Association of Securities Dealer's Automated
Quotation System.

Natural Dam means Kamine Besicorp Natural Dam L.P., one of the
Partnerships.

Neutralized Tabulation means tabulating the Management Restricted Shares
as if the holders of such shares had abstained, not voted or voted for and
against the Plan of Merger in the same proportions that the holders of shares
of Besicorp Common Stock abstain, do not vote or vote their shares of Besicorp
Common Stock (other than Management Restricted Shares) for and against the Plan
of Merger.

Niagara Mohawk means Niagara Mohawk Power Corporation.

NorCon means NorCon Power Partners, L.P.

Notice of Dissent means a written objection of a Dissenter to the Merger
stating his intention to demand payment for his shares of Besicorp Common
Stock.

NPV means Net Present Value.

NYBCL means the New York Business Corporation Law.

NYSERDA means the New York State Energy Research and Development
Authority.

October 7, 1999 means the date the Initial Plan of Merger was executed.

Offering Price means a specified per share price which Besicorp offers to
pay the Dissenters pursuant to the Company Offer.

Old Besicorp means Besicorp Group Inc, which owned all of the shares of
Besicorp prior to the Prior Distribution.

Old Besicorp Board means Old Besicorp's board of directors.

Old Besicorp Rights means (i) shares of Old Besicorp's common stock
containing restrictions on transferability and (ii) options, warrants and other
rights to acquire shares of Old Besicorp's common stock.

Outside Participating Shareholders means the Outside Shareholders, except
for the Dissenters.

Outside Participating Shareholders' Shares means the number of shares of
Besicorp Common Stock held of record immediately before the Effective Date by
the Outside Participating Shareholders.

Outside Shareholders means Besicorp's shareholders, except for the Buyer.

Parent means Besicorp Holdings, Ltd., a New York corporation.

7
<PAGE>

Parent Loans means the loans of Parent to Besicorp pursuant to the Plan of
Merger in such amounts as Besicorp reasonably requests in order to satisfy its
obligations with respect to normal operating expenses of Besicorp and its
subsidiaries to the extent payable on or prior to the Termination Date;
provided, however, that Parent shall not be required to make (i) loans within a
thirty day period in excess of $350,000, or (ii) loans with a cumulative amount
in excess of $1,050,000.

Partnerships means the partnerships which owned the Power Plants.

Payment Agent means Continental or such other person designated by the
parties prior to the Effective Date as the payment agent for the Plan of
Merger.

Photovoltaic Activities means the development, assembly, manufacture,
marketing and resale of photovoltaic products and systems.

Photovoltaic Activity Facility means property leased in Kingston, New York
for Photovoltaic Activities.

Plan of Merger means the Amended and Restated Agreement and Plan of
Merger, dated as of November 24, 1999 by and among Besicorp, Parent and
Acquisition Corp.

Power Development Activities means the development of power plant projects
of various types, ranging from gas-fired cogeneration plants to coal-fired
power plants to the development of other non-nuclear power plants.

Power Plants means five domestic power plants, in which Old Besicorp
formerly held ownership interests, which provided capacity and electrical power
to Niagara Mohawk.

Power Purchase Agreements means power purchase agreements, pursuant to
which the Power Plants provided capacity and electrical power to Niagara
Mohawk.

Prior Assignment of the Derivative Litigation means Old Besicorp's
assignment to Besicorp of the contingent assets and/or liabilities comprising
Old Besicorp's interests in the Derivative Litigation.

Prior Contribution means Old Besicorp's distribution of the Distributed
Businesses to Besicorp.

Prior Contribution Agreement means the Contribution and Distribution
Agreement dated March 22, 1999 by and among Besicorp and Old Besicorp.

Prior Distribution means a dividend on March 22, 1999 of one share of
Besicorp Common Stock for each 25 shares of Old Besicorp's common stock
outstanding on such date.

Prior Merger means the merger effectuated on March 22, 1999 pursuant to
the Prior Plan of Merger as a result of which Old Besicorp was acquired by BGI
Parent.

Prior Merger Consideration means the aggregate merger consideration paid
pursuant to the Prior Plan of Merger.

Prior Merger Order means the order of the Unites States District Court for
the Southern District of New York in the March Litigation issued on March 18,
1999, which order, among other things, required the Prior Assignment of the
Derivative Litigation.

Prior Merger Order Reversal means a reversal, revocation or other action,
however designated, which nullifies such part of the Prior Merger Order that
required the Prior Assignment of the Derivative Litigation so long as such
reversal, revocation or other action is subject to no further appeal.

Prior Merger Parties means BGI Acquisition, BGI Parent and Old Besicorp.

Prior Plan of Merger means the agreement and plan of merger between Old
Besicorp, BGI Acquisition and BGI Parent, as a result of which Old Besicorp was
acquired on March 22, 1999 by BGI Parent.

Prior Spin-Off means the Prior Contribution and the Prior Distribution.

Proceeding means a proceeding in the United States District Court for the
Southern District of New York, in connection with contributions to the 1992
election campaign of Congressman Maurice Hinchey.

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<PAGE>

Promissory Note means a promissory note of Besicorp payable six months
after the Termination Date.

Purchaser Indemnitees means BGI Parent, Old Besicorp and its subsidiaries
and their respective affiliates and agents.

PWC means PriceWaterhouseCoopers Securities LLC.

Record Date means March 6, 2000.

Related Entity means any entity consisting solely of shareholders of the
Surviving Corporation on the Effective Date.

Remaining Proceeds means (i) the proceeds of the Escrow Fund, if any,
released to Besicorp or pursuant to the Instructions at any time following the
fifth anniversary of the date of the Escrow Agreement provided that all of the
following conditions have occurred and notice has been provided by Besicorp to
the Escrow Agent: (a) no claims are then subject to the Escrow Fund
Determination Procedure; (b) in the reasonable judgment of BGI Parent, no
future BGI Indemnity Claims are foreseeable; and (c) all Besicorp Assumed
Matters and the Bansbach Litigation have been finally settled through either
(A) a final, non-appealable judgment against Old Besicorp and all Purchaser
Indemnitees; (B) a settlement or other conclusion to each such Besicorp Assumed
Matter that (x) contains a release from all liability in favor of Old Besicorp
and Purchaser Indemnitees without any further obligation by Old Besicorp or
Purchaser Indemnitees to make any payment or incur any other liability or
obligation with respect to such matter, (y) does not attribute by its terms
liability to Old Besicorp or any Purchaser Indemnitee and (z) if the scheduled
matter is a litigation or a proceeding, includes as a term thereof a full
dismissal of the litigation or proceeding with prejudice or (C) a settlement or
other conclusion to the Bansbach Litigation that (x) contains a release from
all liability in favor of WOM without any further obligation by WOM to make any
payment or incur any other liability or obligation with respect to such matter,
(y) does not attribute by its terms liability to WOM and (z) includes as a term
thereof a full dismissal of the litigation or proceeding with prejudice; and
(ii) amounts released from the Escrow Fund to Besicorp or pursuant to the
Instructions pursuant to a determination that the amount of the Escrow Fund is
more than sufficient to secure BGI Parent pursuant to the Indemnification
Agreement.

Requisite Vote means (i) the adoption of the Plan of Merger by at least
50% of all outstanding shares of Besicorp Common Stock provided, however, that
in tabulating such vote the Management Restricted Shares shall be tabulated
using the Neutralizing Tabulation and (ii) the adoption of the Plan of Merger
by at least 50% of all outstanding shares of Besicorp Common Stock without any
special provisions regarding tabulation.

Restricted Merger Consideration means the Merger Consideration payable
with respect to the Management Restricted Shares which Merger Consideration
will not have vested and thus will be held in escrow by the Surviving
Corporation and not be transferable until it vested, which ordinarily will
occur with respect to 1/3 of such Restricted Merger Consideration on May 2,
2002, 1/3 on May 2, 2003 and 1/3 on May 2, 2004.

Restricted Shares means the 14,500 shares of Besicorp Common Stock subject
to restrictions upon transferability which have been issued to directors,
officers and employees of Besicorp pursuant to the Incentive Plan.

Revised Offer means Michael F. Zinn's revised written offer dated August
10, 1999, to acquire Besicorp.

RICO means the Racketeer Influenced and Corrupt Organizations Act.

RICO Action means an action Besicorp commenced on September 27, 1999 in
the Supreme Court of the State of New York, Ulster County, entitled Besicorp,
Ltd., plaintiff, against Alan R. Kahn, James Lichtenberg, Vee Hockmeyer, Paul
Vannucci, Andrew Jurun, Paul Shaheen, Debra Berenda and John Does 1 through 5,
defendants.

Rights means restricted stock, options, including restricted stock options
pursuant to which restricted stock may be acquired, warrants, and other rights
to acquire Besicorp Common Stock.

Robinson Brog means Robinson Brog Leinwand Greene Genovese & Gluck P.C.

SEC means the Securities and Exchange Commission.

SEC Documents means Besicorp's filings with the SEC under the Exchange
Act.

9
<PAGE>

Security Agreement means a security agreement to be executed by Besicorp
at the time of the original Parent Loan.

September 10 Draft means a revised draft of the plan of merger distributed
on or about September 10, 1999.

September 16 Draft means a revised draft of the plan of merger distributed
on or about September 16, 1999.

September 23 Draft means a revised draft of the plan of merger distributed
on or about September 23, 1999.

September 28 Draft means a revised draft of the plan of merger distributed
on or about September 28, 1999.

SG&A means selling, general and administrative expenses.

Siemens means Siemens Solar Industries.

S.N.C. means S.N.C., Ltd.

Special Committee means a committee of the Board consisting of all of the
Independent Directors.

Special Meeting means the special meeting of the shareholders of Besicorp
to be held at 10:00 a.m., local time, on April 25, 1999 at the offices of
Robinson Brog Leinwand Greene Genovese & Gluck, P.C., located on the 31st Floor
at 1345 Avenue of the Americas, New York, New York, and at any adjournment or
postponement thereof.

Spin-Off means the Contribution and the Distribution to be effectuated
immediately prior to the Merger.

Spin-Off Record Date means the date that all conditions to the
consummation of the Merger, including (i) the shareholders' adopting of the
Plan of Merger by the Requisite Vote at the Special Meeting and (ii) the
Contribution, have been or will be waived or satisfied.

Substitute Restricted Shares means shares of common stock of Parent
containing restrictions similar to the restrictions upon the Management
Restricted Shares to be provided in substitution for the Management Restricted
Shares.

Substituted Management Restricted Shares means Management Restricted
Shares which have been cancelled as the result of the issuance of Substitute
Restricted Shares in substitution therefor prior to the Effective Date.

SunWize means SunWize Technologies, Inc., a wholly owned subsidiary of
Besicorp.

SunWize Project means the financing and construction of a facility for
SunWize in Kingston, New York, and all matters related thereto.

Surviving Corporation means the surviving corporation of the Merger.

Tax Escrow means certain funds placed in escrow in connection with the
agreement of a partnership (in which Besicorp holds an interest) to indemnify a
third party for any tax liability associated with the third party's tax
treatment of its receipt of certain funds from this partnership.

Tax Return Claims means certain claims for tax refunds made by Old
Besicorp if the refunds are not received prior to March 31, 1999.

Termination Date means 11:59 p.m. New York City time on April 25, 2000.

Total Construction Costs means the estimated $715 million required for the
physical construction of the Empire Newsprint Facility.

Total Development Costs means the estimated additional $11 million of
development costs required to bring the Empire Newsprint Project to Financial
Close.

Total Project Costs means (i) the Total Development Costs, (ii) the Total
Construction Costs and an additional estimated $272 million in other costs,
including financing, permitting and land costs.

10
<PAGE>

Total Shares means the sum of (i) the number of shares of Besicorp Common
Stock issued and outstanding immediately prior to the Effective Date (other
than those shares held as treasury shares by Besicorp) plus (ii) the number of
Substituted Management Restricted Shares.

Trust means The Zinn Family Charitable Trust.

Vendor Advances means the advancement to Besicorp of cash or services
from, among other sources, vendors interested in participating in the Empire
Newsprint Project.

Wespro means West Africa Projects Limited.

WOM means WOM, Inc., a New York corporation and wholly-owned subsidiary of
Besicorp which will be distributed to the holders of Besicorp Common Stock
pursuant to the Spin-Off.

WOM Common Stock means the common stock, par value $.01 per share, of WOM.

WOM Costs means (i) reasonable expenses incurred by Besicorp or WOM in
connection with (a) the formation of WOM, (b) the Spin-Off (including the cost
of distributing the shares of WOM's Common Stock (including the fees and
expenses of Continental)) and (c) the preparation and filing with the SEC of a
registration statement for the WOM Common Stock, (ii) WOM's reasonable expenses
(up to $35,000 per annum) (a) to maintain its existence, (b) to comply with the
Exchange Act and the rules and regulations promulgated thereunder, and (c) for
such other matters as may be reasonably necessary to permit the Bansbach
Litigation to continue and (iii) WOM Litigation Costs.

WOM Litigation Costs means WOM's costs and expenses relating to (a) the
Bansbach Litigation and (b) litigation arising out of or relating to the
Bansbach Litigation, the Spin-Off and WOM's existence.

WOM Restricted Stock means the shares of WOM Common Stock issued to the
holders of Restricted Shares pursuant to the Spin-Off, which shares are subject
to the same restrictions upon transferability as the Restricted Shares.

Zeichner, Ellman means Zeichner, Ellman and Krause, counsel to the Buyer.

11
<PAGE>

Annex A

AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER

DATED AS OF NOVEMBER 24, 1999

BY AND AMONG

BESICORP LTD.,

BESICORP HOLDINGS, LTD.

AND

BESI ACQUISITION CORP.
<PAGE>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
-----
<S> <C>
RECITALS: ....................................................................... A-1
AGREEMENTS ...................................................................... A-1
ARTICLE I: THE MERGER ........................................................... A-1
1.1 The Merger ............................................................. A-1
1.2 Consummation of the Merger ............................................. A-1
1.3 Effects of the Merger .................................................. A-1
1.4 Certificate of Incorporation; Bylaws ................................... A-1
1.5 Directors and Officers ................................................. A-1
1.6 Time and Place of Closing .............................................. A-2
1.7 Further Assurances ..................................................... A-2
ARTICLE II: CONVERSION AND EXCHANGE OF SHARES ................................... A-2
2.1 Conversion of Shares ................................................... A-2
2.2 Exchange Procedures .................................................... A-3
2.3 Adjustment of Merger Consideration ..................................... A-4
2.4 Deferred Payments ...................................................... A-4
2.5 Management Restricted Shares ........................................... A-7
ARTICLE III: REPRESENTATIONS AND WARRANTIES ..................................... A-7
3.1 General Statement ...................................................... A-7
3.2 Representations and Warranties of the Company .......................... A-7
3.3 Representations and Warranties of Parent and Acquisition Corp. ......... A-8
ARTICLE IV: CONDUCT OF BUSINESS PENDING THE MERGER .............................. A-10
4.1 Obligations of Each of the Parties ..................................... A-10
4.2 The Company's Obligations .............................................. A-10
4.3 Meeting; Proxy Statement; Schedule 13E-3; Other Regulatory Matters ..... A-11
4.4 Indemnification Provisions in Charter and Insurance .................... A-12
4.5 Parent's Funding of the Company ........................................ A-14
4.6 Voting of Shares of Common Stock held by Certain Holders ............... A-14
4.7 Certificate and Personal Guarantee ..................................... A-14
4.8 Board Action ........................................................... A-14
4.9 Management Restricted Shares ........................................... A-15
4.10 Notices of Certain Events .............................................. A-15
4.11 March 1999 Escrow Fund ................................................. A-15
4.12 Spin-Off ............................................................... A-15
4.13 Compliance With Requirements Regarding Appraisal Rights ................ A-16
4.14 Paying Agent ........................................................... A-16
ARTICLE V: CONDITIONS TO CLOSING; CLOSING DELIVERIES; BASE AMOUNT ............... A-16
5.1 Conditions to Each Party's Obligations ................................. A-16
5.2 Conditions to the Company's Obligations ................................ A-16
5.3 Conditions to Parent's and Acquisition Corp's Obligations .............. A-17
5.4 Closing Deliveries ..................................................... A-17
ARTICLE VI: TERMINATION/EFFECT OF TERMINATION ................................... A-18
6.1 Right to Terminate ..................................................... A-18
6.2 Certain Effects of Termination ......................................... A-18
6.3 Remedies ............................................................... A-19
6.4 Right to Damages; Expense Reimbursement ................................ A-19
</TABLE>

a-ii
<PAGE>

<TABLE>
<CAPTION>
Page
-----
<S> <C>
ARTICLE VII: MISCELLANEOUS .............................................. A-19
7.1 Survival of Representations, Warranties and Agreements ......... A-19
7.2 Amendment ...................................................... A-19
7.3 Publicity ...................................................... A-20
7.4 Notices ........................................................ A-20
7.5 Expenses; Transfer Taxes ....................................... A-20
7.6 Entire Agreement ............................................... A-20
7.7 Non-Waiver ..................................................... A-21
7.8 Counterparts ................................................... A-21
7.9 Severability ................................................... A-21
7.10 Applicable Law ................................................. A-21
7.11 Binding Effect; Benefit ........................................ A-21
7.12 Assignability .................................................. A-21
7.13 Governmental Reporting ......................................... A-21
7.14 Defined Terms .................................................. A-21
7.15 Headings ....................................................... A-25
7.16 Interpretation; Construction ................................... A-25

</TABLE>

Exhibit 1.2 -- Form of Certificate of Merger
Exhibit 4.5(a) -- Form of Secured Promissory Note
Exhibit 4.5(b-1) -- Form of Security Agreement
Exhibit 4.5(b-2) -- Form of Mortgage and Security Agreement
Exhibit 4.7(a) -- Form of Certificate
Exhibit 4.7(b-1) -- Form of Guarantee
Exhibit 4.7(b-2) -- Form of Escrow Agreement
Exhibit 4.11 -- Form of Instructions to Escrow Agent
Exhibit 5.2.3 -- Form of Legal Opinion of Parent's Counsel
Exhibit 5.3.3 -- Form of Legal Opinion of Company's Counsel
Exhibit 7.14 -- D&O Insurance Policy

a-iii

<PAGE>

This AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER (this "Agreement")
is dated as of November 24, 1999, by and among Besicorp Holdings, Ltd., a New
York corporation ("Parent"), Besi Acquisition Corp., a New York corporation
("Acquisition Corp"), and Besicorp Ltd., a New York corporation (the
"Company").

RECITALS:

A. The respective boards of directors of Acquisition Corp, Parent and the
Company each adopted a plan of merger as set forth in an Agreement and Plan of
Merger dated as of October 7, 1999 (the "Initial Agreement") pursuant to which
Acquisition Corp, which is a wholly-owned Subsidiary of Parent that has been
formed for the sole purpose of effectuating a merger with the Company, would
merge with and into the Company on the terms and subject to the conditions set
forth in the Initial Agreement.

B. Parent, Acquisition Corp and the Company desire to make certain
modifications to the Initial Agreement, including requiring the Company to
effectuate the Spin-Off prior to the Effective Date.

C. In order to make such modifications to the Initial Agreement, the
respective boards of directors of Acquisition Corp, Parent and the Company have
each adopted a plan of merger as set forth in this Agreement pursuant to which
Acquisition Corp will merge with and into the Company on the terms and subject
to the conditions set forth in this Agreement (the "Merger") and the New York
Business Corporation Law (the "NYBCL").

D. Parent, Acquisition Corp and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger.

E. Capitalized terms used in this Agreement have the meanings identified
in Section 7.14 of this Agreement.

A G R E E M E N T S

Therefore, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:

ARTICLE I
THE MERGER

1.1 The Merger. On the terms and subject to the conditions set forth in
this Agreement, on the Effective Date, in accordance with this Agreement and
the NYBCL, Acquisition Corp shall merge with and into the Company, the separate
existence of Acquisition Corp shall cease and the Company shall continue as the
surviving corporation. The Company, in its capacity as the corporation
surviving the Merger, is sometimes referred to herein as the "Surviving
Corporation," and Acquisition Corp and the Company are sometimes referred to
collectively herein as the "Constituent Corporations."

1.2 Consummation of the Merger. In order to effectuate the Merger, on the
Closing Date, the parties hereto will cause a certificate of merger (the
"Certificate of Merger") substantially in the Form of Exhibit 1.2 to be filed
with the Secretary of State of the State of New York and such counties within
the state of New York as required by Section 904 of the NYBCL, in such form as
required by, and executed in accordance with the NYBCL . The Merger shall be
effective as of the date of filing of the Certificate of Merger or if later,
the date specified in the Certificate of Merger (the "Effective Date") in
accordance with Section 906 of the NYBCL.

1.3 Effects of the Merger. On and after the Effective Date, the Merger
shall have the effects provided in this Agreement and as set forth in Section
906 of the NYBCL.

1.4 Certificate of Incorporation; Bylaws. On and after the Effective Date,
the Certificate of Incorporation and By-Laws of the Company, as in effect
immediately prior to the Effective Date, shall be adopted as the Certificate of
Incorporation and By-Laws of the Surviving Corporation, and shall thereafter
continue in effect until amended as provided therein and in accordance with the
NYBCL.

1.5 Directors and Officers. On and after the Effective Date, the directors
of Acquisition Corp. shall be the directors of the Surviving Corporation and
the officers of the Company holding office immediately prior to the

A-1
<PAGE>

Effective Date shall be the officers of the Surviving Corporation, until their
respective successors shall have been duly elected or appointed and qualified
or until their earlier death, resignation or removal in accordance with the
Surviving Corporation's Certificate of Incorporation and By-Laws.

1.6 Time and Place of Closing. Subject to the provisions of Article V and
Section 6.1 hereof, the transactions contemplated by this Agreement shall be
consummated (the "Closing") at 10:00 a.m., prevailing New York City time, at
the offices of Robinson Brog Leinwand Greene Genovese & Gluck P.C., 1345 Avenue
of the Americas, New York, NY on the day which is three (3) business days after
the first date on which each of the conditions to Closing set forth in Article
V hereof shall have been satisfied or waived (and continue to be satisfied or
waived), or on such other date, or at such other place, as shall be agreed upon
by the parties hereto. The date on which the Closing shall occur in accordance
with the preceding sentence is referred to in this Agreement as the "Closing
Date."

1.7 Further Assurances. If, at any time after the Effective Date, the
Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments or assurances or any other acts or things are necessary,
desirable or proper (i) to vest, perfect or confirm, of record or otherwise, in
the Surviving Corporation its right, title and interest in, to or under any of
the rights, privileges, powers, franchises, properties or assets of either of
the Company or Acquisition Corp, or (ii) otherwise to carry out the purposes of
this Agreement, the Surviving Corporation and its proper officers and directors
or their designees shall be authorized to execute and deliver, in the name and
on behalf of either the Company or Acquisition Corp, all such deeds, bills of
sale, assignments and assurances and do, in the name and on behalf of such
corporations, all such other acts and things as may be necessary, desirable or
proper to vest, perfect or confirm the Surviving Corporation's right, title and
interest in, to and under any of the rights, privileges, powers, franchises,
properties or assets of such corporations and otherwise to carry out the
purposes of this Agreement.

ARTICLE II
CONVERSION AND EXCHANGE OF SHARES

2.1 Conversion of Shares. On the Effective Date, by virtue of the Merger,
and without any action on the part of the holders thereof:

2.1.1 Each share of common stock, $.01 par value, of the Company (the
"Common Stock") issued and outstanding immediately prior to the Effective Date
(other than shares of Common Stock held as treasury shares by the Company or
its Subsidiaries, shares of Common Stock then owned of record by Acquisition
Corp and Parent (the "Ineligible Holders") and shares held by person who follow
the procedure set forth in Sections 623 and 910 of the NYBCL (the "Objecting
Shareholders") shall, by virtue of the Merger and without any action on the
part of the holder thereof, be converted into the right to receive in cash (i)
the Cash Merger Consideration without interest plus (ii) the right (a "Deferred
Payment Right") to Deferred Payments as set forth in Section 2.4 hereto plus
(iii) the right (a "Escrow Fund Payment Right" and together with the Deferred
Payment Right, the "Combined Deferred Payment Right") to Escrow Fund Payments
as set forth in Section 2.4 hereto (collectively, the "Merger Consideration").
Each share of Common Stock outstanding immediately prior to the Effective Date
(other than shares of Common Stock held as treasury shares by the Company or
its Subsidiaries and shares of Common Stock then owned of record by Ineligible
Holders and the Objecting Shareholders) shall be deemed to be no longer
outstanding and shall represent solely the right to receive the Merger
Consideration upon surrender of the certificate formerly representing such
share of Common Stock in accordance with the provisions of this section. "Cash
Merger Consideration" shall mean the Aggregate Cash Merger Consideration
divided by the sum of (i) the number of shares of Common Stock issued and
outstanding immediately prior to the Effective Date (other than those shares
held as treasury shares by the Company) and (ii) the number of Management
Restricted Shares for which substitute securities have been issued pursuant to
Section 4.9 hereof prior thereto. The "Aggregate Cash Merger Consideration" is
$8,000,000.00.

2.1.2 Each share of Common Stock issued and outstanding immediately
prior to the Effective Date which is then held as a treasury share by the
Company or is held by any of the Company's Subsidiaries or by Parent or
Acquisition Corp. shall, by virtue of the Merger and without any action on the
part of the Company, be cancelled and retired and cease to exist, without any
conversion thereof. The Surviving Corporation shall make such payments to the
Objecting Shareholders as are required by Sections 623 and 910 of the NYBCL for

A-2
<PAGE>

each share of Common Stock issued and outstanding immediately prior to the
Effective Date which is then held by such Objecting Shareholders, and the
Objecting Shareholders shares of Common Stock shall be cancelled and retired
and cease to exist, without any conversion thereof.

2.1.3 Each share of common stock, without par value, of Acquisition Corp
outstanding immediately prior to the Effective Date shall be converted into and
exchanged into one validly issued, fully-paid and non-assessable share of
common stock, $.01 par value, of the Surviving Corporation.

2.2 Exchange Procedures.

2.2.1 Immediately prior to the Effective Date, Parent or Acquisition
Corp will deposit or cause to be deposited with Continental Stock Transfer &
Trust Co., or another paying agent mutually acceptable to Parent and the
Company (the "Paying Agent"), in trust for the holders of record of Common
Stock (excluding Management Restricted Shares for which substitute securities
are to be issued pursuant to Section 4.9 hereof) immediately prior to the
Effective Date other than the Ineligible Holders and the Objecting Shareholders
(the "Company Shareholders") cash in an aggregate amount equal to (i) the
number of shares of Common Stock held of record by the Company Shareholders and
the Objecting Shareholders multiplied by (ii) the Cash Merger Consideration
(such deposit with the Paying Agent pursuant to this paragraph is referred to
as the "Payment Fund"). The Payment Fund shall not be used for any purpose
except as provided in this Agreement.

2.2.2 As soon as practicable after the Effective Date, the Surviving
Corporation shall cause the Paying Agent to mail to each Company Shareholder a
letter of transmittal and instructions for use (the "Letter of Transmittal") in
effecting the surrender of certificates representing shares of Common Stock
outstanding immediately prior to the Effective Date ("Certificates"). The
Letter of Transmittal shall be in customary form, include provisions stating
that delivery shall be effected, and risk of loss and title to such
Certificates shall pass, only upon delivery of the Certificates to the Paying
Agent, provide instructions for effecting the surrender of such Certificates in
exchange for the Merger Consideration and provide such other provisions as
Parent may reasonably specify (including those provisions described in this
Section 2.2). Upon surrender of a Certificate for cancellation to the Paying
Agent, together with such Letter of Transmittal, duly and properly executed,
the holder of such Certificate shall be entitled to receive in exchange
therefore (A) the amount equal to (i) the number of shares of Common Stock
represented by such Certificate multiplied by (ii) the Cash Merger
Consideration, and (B) one Combined Deferred Payment Right for each share of
Common Stock represented by such Certificate. If the Cash Merger Consideration
(or any portion thereof) is to be delivered to any person other than the person
in whose name the Certificate representing shares of Common Stock surrendered
in exchange therefor is registered on the record books of the Company, it shall
be a condition to such exchange that the Certificate so surrendered shall be
properly endorsed or otherwise be in proper form for transfer and that the
person requesting such exchange shall pay to the Paying Agent any transfer or
other taxes required by reason of the payment of such consideration to a person
other than the registered holder of the Certificate surrendered, or shall
establish to the satisfaction of the Paying Agent that such tax has been paid
or is not applicable. Combined Deferred Payment Rights shall not be evidenced
by certificates and shall not be transferable, except as required by law. All
payments, if any, with respect to the Combined Deferred Payment Rights shall be
paid to the persons in whose name the Certificates are registered on the books
of the Company immediately prior to the Effective Date. No interest will be
paid or will accrue on the cash payable upon surrender of any Certificate.
Until surrendered as contemplated by this Section 2.2, each Certificate shall,
on and after the Effective Date, be deemed to represent only the right to
receive, upon surrender of such Certificate, the Merger Consideration with
respect to the shares of Common Stock represented thereby.

2.2.3 On and after the Effective Date, there shall be no transfers on
the stock transfer books of the Company of the shares of Common Stock which
were outstanding immediately prior to the Effective Date. If, after the
Effective Date, Certificates are presented to the Surviving Corporation, they
shall be cancelled and exchanged as provided in this Section 2.2. In the event
of a transfer of ownership of shares of Common Stock which is not registered in
the transfer records of the Company, payment may be made with respect to such
share of Common Stock to such a transferee only if the Certificate representing
such shares of Common Stock is presented to the Paying Agent, accompanied by
all documents required to evidence and effect such transfer and evidence that
any applicable stock transfer taxes have been paid.

2.2.4 In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if required by the

A-3
<PAGE>

Surviving Corporation, upon the posting by such person of a bond in such amount
as the Surviving Corporation may reasonably direct as indemnity against any
claim that may be made against it with respect to such Certificate, the Paying
Agent will issue in respect of such lost, stolen or destroyed Certificate, the
Merger Consideration with respect to the shares of Common Stock represented
thereby.

2.2.5 Upon the determination by the Paying Agent that a shareholder is
an Objecting Shareholder and not a Company Shareholder, the Paying Agent shall
deliver to the Surviving Corporation that amount equal to (i) the number of
shares of Common Stock held by such Shareholder multiplied by (ii) the Cash
Merger Consideration. Any portion of the Payment Fund which remains unclaimed
by any of the Company Shareholders for nine (9) months after the Effective Date
shall be delivered to the Surviving Corporation upon demand of the Surviving
Corporation, and the holders of shares of Common Stock shall thereafter look
only to the Surviving Corporation for payment of their claim for the Cash
Merger Consideration in respect of their shares of Common Stock. Neither
Parent, Acquisition Corp nor the Surviving Corporation shall be liable to any
holder of shares of Common Stock for any Merger Consideration delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law.

2.2.6 Parent or the Paying Agent shall be entitled to deduct and
withhold from the consideration otherwise payable pursuant to this Agreement to
any holder of a Certificate surrendered for the Merger Consideration such
amount as Parent or the Paying Agent is required to deduct and withhold with
respect to the making of such payment under the Internal Revenue Code as of
1986, as amended (the "Code"), or any provision of any state, local or foreign
tax law. To the extent that amounts are so deducted and withheld, such amounts
shall be treated for all purposes of this Agreement as having been paid to the
holder of such Certificate.

2.2.7 In the case of 4,000 shares of Common Stock held of record by
Martin Enowitz or his assigns which the Company represents are the subject of a
dispute between Besicorp Group Inc. ("BGI") and Mr. Enowitz, the Merger
Consideration shall be placed in the existing escrow with respect to such 4,000
shares, and appropriate provision will be made in the Paying Agent agreement
for the holding of Combined Deferred Payments, if any, and the Cash Merger
Consideration payable in respect of such shares in such escrow, pending
resolution of the dispute.

2.2.8 The fees and expenses of the Paying Agent will be paid from
earnings on the Payment Fund. To the extent earnings on the Payment Fund are
insufficient to pay such fees and expenses, such fees and expenses shall be
paid by the Surviving Corporation. The Company and Parent and Acquisition Corp
agree that any interest earned on the Payment Fund and not utilized to pay the
fees and expenses of the Paying Agent will be transferred to the Surviving
Corporation.

2.3 Adjustment of Merger Consideration. In the event of any
reclassification, stock split, stock dividend or other general distribution of
securities, cash or other property (other than the Distribution) with respect
to shares of Common Stock (or if a record date with respect to any of the
foregoing should occur) on or after the date of the Initial Agreement and on or
prior to the Effective Date, appropriate and equitable adjustments, if
necessary, shall be made to the calculation of the Merger Consideration and all
references herein shall be deemed to be to the Merger Consideration as so
adjusted.

2.4 Combined Deferred Payments.

2.4.1 The parties hereto agree that the Company Shareholders shall
receive from the Surviving Corporation for each share of their Common Stock, in
addition to the Cash Merger Consideration, an additional payment or payments
("Deferred Payments") on the Deferred Payment Dates equal in the aggregate to
(i) the amount in the Deferred Payment Fund on such date divided by (ii) the
number of shares of Common Stock held of record immediately prior to the
Effective Date by the Company Shareholders. The "Deferred Payment Fund"
consists of the sum of all Adjustments (net of corporate taxes for such
Adjustments) less all amounts previously distributed from the Deferred Payment
Fund to the Company Shareholders. The "Adjustments" equal the Adjustment
Amounts multiplied by a fraction, the numerator of which is the number of
shares of Common Stock held of record by the Company Shareholders immediately
prior to the Effective Date and the denominator of which is the sum of the
number of shares of Common Stock held of record by the Company Shareholders,
the Objecting Shareholders and the Ineligible Shareholders immediately prior to
the Effective Date and the number of Management Restricted Shares which have
been cancelled pursuant to Section 4.9 hereof prior thereto. The

A-4
<PAGE>

"Adjustment Amounts" equals all proceeds received by the Company, the Surviving
Corporation and their Subsidiaries (provided that in the case of proceeds
received by an entity that is less than wholly owned, directly or indirectly,
by the Company (or the Surviving Corporation), such proceeds shall be
multiplied by a percentage equal to the percentage of the entity owned,
directly or indirectly, at the time of receipt of such proceeds by the Company
(or the Surviving Corporation)) on or after the date of the Initial Agreement
and on or before the latest of (i) March 22, 2004, (ii) the date of the release
by the escrow agent for the March 1999 Escrow Agreement of all of the March
1999 Escrow Funds and (iii) the disposition, pursuant to a final and
non-appealable judgment of a court of competent jurisdiction, including the
payment of all monies required by such disposition, of the lawsuit encaptioned
"Besicorp, Ltd., plaintiff, against Alan R. Kahn, James Lichtenberg, Vee
Hockmeyer, Paul Vannucci, Andrew Jurun, Paul Shaheen, Debra Berenda and John
Does 1 through 5, defendants" which was filed on September 24, 1999 in the
Supreme Court of the State of New York, County of Ulster, and any litigation in
connection with or relating to such lawsuit (such latest date, the "Deferred
Payment Termination Date") with respect to the following: (i) amounts, if any,
released from the March 1999 Escrow Fund pursuant to Section 4 of the March
1999 Escrow Agreement (other than amounts released pursuant to the
Instructions, (ii) amounts received with respect to each of the litigation
claims of the Company, the Surviving Corporation and their Subsidiaries with
respect to matters arising before the Effective Date, less the Company's
expenses (including reasonable SG&A but excluding expenses which are funded
with monies in the March 1999 Escrow Fund (the "Excluded Expenses")) incurred
and paid following the date of the Initial Agreement directly related to any
such claim for which amounts have been received, (iii) amounts received with
respect to the sale of the Company's interests, directly or indirectly, except
for debt financing for development capital purposes which might have an equity
carried interest in a Foreign Development Project, in each of the Foreign
Development Projects (unless such Foreign Development Project is sold along
with the Empire Project in which case the proceeds are not an Adjustment
Amount) pursuant to agreements entered into on or before the first anniversary
of the Effective Date, less the Company's expenses (other than SG&A and
Excluded Expenses) incurred and paid following the date of the Initial
Agreement directly related to such Foreign Development Project, (iv) amounts
received by Beta Partnerships, Inc. "Beta") and distributions received from
Kamine Besicorp Natural Dam L.P., ("Natural Dam") (other than an amount
anticipated to be received by Beta from Natural Dam on or before December 31,
1999 and disclosed under "Liquidity and Capital Resources" in Item 2 of the
Company's Form 10QSB for the period ended June 30, 1999) and any other funds
that are distributed as a result of partnership interests in existence as of
the date of the Initial Agreement or the Effective Date and (v) amounts, net of
expenses (other than SG&A and Excluded Expenses) incurred and paid following
the date of the Initial Agreement directly related to distributions as a result
of Hydro-Credits, distributed as a result of Hydro-Credits (other than the
distribution with respect to Glen Park Associates scheduled for on or about
September 30, 1999); provided however that the Adjustment Amount shall not
include the proceeds of any transfer of assets by the Surviving Corporation or
any wholly owned Subsidiary of the Surviving Corporation to any wholly owned
Subsidiary of the Surviving Corporation or to any entity (a "Related Entity")
consisting solely of shareholders of the Surviving Corporation on the Effective
Date, if, and only if (i) the Related Entity shall consent in writing to its
assumption of the obligation to make Deferred Payments in the manner described
in Section 2.4.4 (without the right to defer payments if the amount accrued on
a Deferred Payment Date is less than $90,000) with respect to such asset and
(ii) the Surviving Corporation will be required to guarantee the Related
Entity's payment of all amounts it is required to pay to the Company
Shareholders pursuant to this assumption. The Surviving Corporation shall
segregate the Deferred Payment Fund and invest its proceeds in a separate
interest bearing money market account at Bankers Trust Company or any other
nationally recognized financial institution, and all interest on the Deferred
Payment Fund shall be added to such Fund.

2.4.2 The Surviving Corporation shall make Deferred Payments to the
Company Shareholders (ii) annually on each June 1st commencing on June 1, 2000
and ending on the last June 1st, immediately prior to the Deferred Payment
Termination Date (each, a "Deferred Payment Date"), (provided that if on any
Deferred Payment Date the amount in the Deferred Payment Fund is less than
$90,000, no Deferred Payment shall be made on such date) and (ii) on the
Deferred Payment Termination Date. All such Payments shall be accompanied by a
notice stating in reasonable detail the proceeds and the expenses that were
deducted.

2.4.3 If the Surviving Corporation or a Related Entity transfers, sells
or otherwise assigns, directly or indirectly, any of the Underlying Assets, the
assignee (the "Assignee") of such Underlying Asset shall be required to consent
in writing to its assumption of the obligation to make Deferred Payments
(without the right to defer

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payments if the amount accrued on a Deferred Payment Date is less than $90,000)
with respect to such Underlying Asset other than the obligation to make the
Deferred Payment, if any, resulting from proceeds received by the Surviving
Corporation or Related Entity from such assignment (which Deferred Payment
resulting from such Proceeds, shall be the obligation of the Surviving
Corporation or Related Entity, as applicable) in the manner described in
Section 2.4.4.

2.4.4 Payments by a Related Entity or an Assignee (the "Payor") shall be
made on Deferred Payment Dates as follows: such payments shall be equal to (i)
the amount in the Substitute Deferred Payment Fund on such date divided by (ii)
the number of shares of Common Stock held of record immediately prior to the
Effective Date by the Company Shareholders. The "Substitute Deferred Payment
Fund" consists of the sum of all Substitute Adjustments (net of all corporate
taxes for such Adjustment) less all amounts previously distributed from the
Substitute Deferred Payment Fund to the Company Shareholders. The "Substitute
Adjustments" equal the Substitute Adjustment Amounts multiplied by a fraction,
the numerator of which is the number of shares of Common Stock held of record
by the Company Shareholders immediately prior to the Effective Date and the
denominator of which is the sum of the number of shares of Common Stock held of
record by the Company Shareholders, the Objecting Shareholders and the
Ineligible Shareholders immediately prior to the Effective Date and the number
of Management Restricted Shares which have been cancelled pursuant to Section
4.9 hereof prior thereto. The "Substitute Adjustment Amounts" equals all
proceeds received by the Payor on or after the date of the Initial Agreement
and on or before Deferred Payment Termination Date with respect to the
following: (i) amounts, if any, released from the March 1999 Escrow Fund
pursuant to Section 4 of the March 1999 Escrow Agreement, (ii) amounts received
with respect to each of the litigation claims assigned by the Company with
respect to matters arising before the Effective Date, less the expenses of the
Company and Payor (including reasonable SG&A but excluding Excluded Expenses)
incurred and paid following the date of the Initial Agreement directly related
to any such claim with respect to any such claim for which amounts have been
received, (iii) amounts received with respect to the sale of the Payor's
interests, directly or indirectly, except for debt financing for development
capital purposes which might have an equity carried interest in a Foreign
Development Project, in each of the Foreign Development Projects (unless such
Foreign Development Project is sold along with the Empire Project in which case
the proceeds are not a Substitute Adjustment Amount) pursuant to agreements
entered into on or before the first anniversary of the Effective Date, less the
expenses of the Company and Payor (other than SG&A and Excluded Expenses)
incurred and paid following the date of the Initial Agreement directly related
to such Foreign Development Project, (iv) amounts received by Beta and
distributions received from Natural Dam (other than an amount anticipated to be
received by Beta from Natural Dam on or before December 31, 1999 and disclosed
under "Liquidity and Capital Resources" in Item 2 of the Company's Form 10QSB
for the period ended June 30, 1999), and any other funds that are distributed
as a result of partnership interests in existence as of the date of the Initial
Agreement or the Effective Date and (v) amounts, net of the expenses of the
Company and Payor (other than SG&A and Excluded Expenses) incurred and paid
following the date of the Initial Agreement directly related to distributions
as a result of Hydro- Credits, distributed as a result of Hydro-Credits (other
than the distribution with respect to Glen Park Associates scheduled for on or
about September 30, 1999). If a Payee (or assignee of a Payee) attempts to
assign any Underlying Asset, the assignee of such Underlying Asset shall be
required to consent in writing to its assumption of the obligation to make
Deferred Payments (without the right to defer payments if the amount accrued on
a Substitute Deferred Payment Date is less than $90,000) with respect to such
Underlying Asset other than the obligation to make the Deferred Payment, if
any, resulting from proceeds received by the assignor from such assignment
(which Deferred Payment resulting from such Proceeds, shall be the obligation
of the assignor) in the manner described above.

2.4.5 Escrow Fund Payments. The parties hereto agree that the Company
Shareholders shall receive for each share of their Common Stock, in addition to
the Cash Merger Consideration and the Deferred Payments pursuant to Deferred
Payment Rights, an additional payment or payments ("Escrow Fund Payments") to
be paid by the Paying Agent equal in the aggregate to (i) the amount in the
Escrow Fund Payment Distributions received by the Paying Agent pursuant to the
Instructions, and not yet distributed by the Paying Agent, divided by (ii) the
number of shares of Common Stock held of record immediately prior to the
Effective Date by the Company Shareholders.

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2.5 Management Restricted Shares. The Merger Consideration, including the
Cash Merger Consideration and the Combined Deferred Payment Rights, with
respect to all Management Restricted Shares, if any, the vesting of which has
not been accelerated pursuant to the Incentive Plan, and which are not subject
to Substitution Agreements, shall be placed in escrow with the Surviving
Corporation and such Merger Consideration shall be held in accordance with the
terms of the Restricted Stock Grant Agreements with respect to such Management
Restricted Shares.
ARTICLE III
REPRESENTATIONS AND WARRANTIES

3.1 General Statement. The parties only make the representations and
warranties to each other which are set forth in this Article III or in Exhibit
4.7(a).

3.2 Representations and Warranties of the Company. The Company represents
and warrants to Parent and Acquisition Corp that as of the date of the Initial
Agreement and, in the case of Section 3.2.2, the date of this Agreement:

3.2.1 Organization and Authority. Each of the Company and each of its
Subsidiaries: (i) is a corporation or partnership duly organized, validly
existing and in good standing under the laws of the State of its organization;
and (ii) has all necessary corporate or partnership power and authority to
conduct its business as now being conducted or as proposed to be conducted
through Closing. Each of the Company and each of its Subsidiaries is duly
qualified as a foreign corporation and is in good standing in each jurisdiction
in which the nature of its business or the nature or location of its assets
require such qualification except where the failure to be so qualified would
not have a Material Adverse Effect.

3.2.2 Authority Relative to this Agreement and Related Matters. The
Board of Directors of the Company (the "Board"), at a meeting duly called and
held has (A) determined that the Agreement and Merger are fair to, and in the
best interests of, the Company and its shareholders, including the Company
Shareholders, (B) adopted and approved this Agreement, the Merger and the
Distribution, and (C) resolved to submit to the shareholders of the Company and
recommend to the shareholders of the Company that they adopt and authorize the
Agreement and the Merger. The Company has full corporate power and authority,
subject to shareholder adoption and authorization with respect to the
Agreement, to enter into and perform this Agreement, and the other agreements
(the "Transaction Agreements") to be entered into in connection with this
Agreement, the Merger and the Distribution to which it is a party. The
execution and delivery of this Agreement and each of the other Transaction
Agreements by the Company and the performance by the Company of its obligations
hereunder and thereunder have been (or, in the case of Transaction Agreements
not yet entered into, will be) duly authorized and approved by all requisite
corporate action other than the approval of the holders of at least one-half of
the outstanding shares of Common Stock voting at the Meeting with respect to
the Merger. This Agreement has been and, when executed, each of the other
Transaction Agreements will have been, duly executed and delivered by duly
authorized officers of the Company and each constitutes, or will constitute
when so executed and delivered, a valid, legal and binding obligation of the
Company enforceable against it in accordance with its terms, except as
enforceability may be limited by applicable equitable principles or by
bankruptcy, insolvency, reorganization, moratorium, or similar laws from time
to time in effect affecting the enforcement of creditors' rights generally. The
affirmative vote of the holders of at least one-half of the outstanding shares
of Common Stock voting at the Meeting with respect to the adoption and
authorization of the Agreement and the Merger are the only votes of the holders
of any class or series of the Company's capital stock necessary to approve the
Merger.

3.2.3 Capitalization. The authorized capital stock of the Company
consists solely of 5,000,000 shares of Common Stock, and 1,000,000 shares of
preferred stock, par value $0.01 per share ("Preferred Stock"). As of October
4, 1999, (i) 136,282 shares of Common Stock were outstanding, all of which are
entitled to vote as a class, including (a) 13,850 Management Restricted Shares
which will not vest as a result of the Merger and (b) 5,824 shares of Common
Stock reserved for issuance upon the delivery of shares of common stock of BGI
in connection with the March 1999 Merger (the "Reserved Shares"), (ii) 100
shares of Common Stock were held in the treasury of the Company, (iii) no
options, warrants or similar rights to purchase shares of Common Stock ("Stock
Options") were outstanding and (iv) no shares of Preferred Stock were
outstanding. There are no other

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shares of capital stock of the Company authorized, issued or outstanding. All
of the outstanding shares of Common Stock (other than the Reserved Shares
which, upon their issuance, will be fully paid and nonassessable) have been
validly issued and are fully paid and nonassessable subject to the restrictions
on the Restricted Shares set forth in the agreements for such Restricted
Shares. There are no subscriptions, options, stock appreciation rights,
warrants, rights (including preemptive rights), calls, convertible securities
or other agreements or commitments of any character relating to the issued or
unissued capital stock or other securities of the Company obligating the
Company to issue, or register the sale of, any securities of any kind.

3.2.4 Brokers. No broker, finder, investment banker or other Person is
entitled to a broker's commission, finder's fee, investment banker's fee or
similar payment from the Company in connection with the Merger other than
amounts payable to Josephthal & Co., Inc. ("Josephthal") pursuant to a letter
agreement dated June 9, 1999 between Josephthal and the Company.

3.2.5 Fairness Opinion. The Company has received the written opinion of
Josephthal (the "Fairness Opinion") dated September 22, 1999 to the effect
that, as of such date, the Merger Consideration to be received by Company
Shareholders for each share of Common Stock is fair from a financial point of
view. The Company has provided a true and correct copy of the Fairness Opinion
to Parent. The Company is authorized by Josephthal to include a copy of such
opinion in the proxy statement relating to the Agreement and the Merger to be
approved at the Meeting (as amended or supplemented, the "Proxy Statement").

3.2.6 Full Disclosure. The representations, warranties and statements of
the Company in this Agreement or contained in any schedule, list or document
delivered pursuant to this Agreement are true, complete and correct. The copies
of all documents furnished by the Company pursuant to or in connection with
this Agreement are true, complete and correct.

3.2.7 SEC Filings. None of the information provided by the Company and
included in the Proxy Statement, the Rule 13e-3 transaction statement on
Schedule 13E-3 to be filed by the Company, Acquisition Corp and Parent with
respect to the transactions to be consummated pursuant to this Agreement and
the other Transaction Agreements (the "Schedule 13E-3") pursuant to the rules
and regulations promulgated pursuant to the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and the Form 10-SB will, at the time of the
filing thereof, the mailing thereof, at the time of the Meeting and at the
Effective Date, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading.

3.2.8 Required Filings. Other than the Proxy Statement, the Schedule
13E-3 and the Form 10-SB, no consent, approval or authorization of, expiration
or termination of any waiting period requirement of, or filing, registration,
qualification, declaration or designation ("Authorization") is required by or
with respect to the Company in connection with the execution and delivery of
this Agreement or the other Transaction Agreements by the Company or the
consummation by the Company of the transactions contemplated hereby or thereby.

3.2.9 No Conflicts. Neither the execution and delivery of this Agreement
or any of the other Transaction Agreements by the Company, nor the consummation
by the Company of the transactions contemplated hereby or thereby, will
conflict with or result in a breach of any of the terms or provisions of the
Certificate of Incorporation or By-Laws of the Company or of any statute or
administrative regulation, or of any order, writ, injunction, judgment or
decree of any court or governmental authority or of any arbitration award to
which the Company is a party or by which the Company is bound.

3.3 Representations and Warranties of Parent and Acquisition Corp. Parent
and Acquisition Corp jointly and severally represent and warrant to the Company
that as of the date of the Initial Agreement and, in the case of Section 3.3.2,
the date of this Agreement:

3.3.1 Organization and Authority. Each of Parent and Acquisition Corp is
a corporation duly organized, validly existing and in good standing under the
laws of the State of New York. Each of Parent and Acquisition Corp has all
necessary corporate power and authority to conduct its business as now being
conducted.

3.3.2 Authority Relative to this Agreement. Each of Parent and
Acquisition Corp has full corporate power and authority to enter into and
perform this Agreement and each of the other Transaction Agreements to which it
is a party. The execution and delivery of this Agreement and each of the other
Transaction Agreements

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by Acquisition Corp and Parent and the performance by Acquisition Corp and
Parent of their respective obligations hereunder or thereunder have been duly
authorized by all requisite corporate action. This Agreement has been, and each
of the other Transaction Agreements to which it is a party will be, duly
executed and delivered by duly authorized officers of Acquisition Corp and
Parent and each constitutes, or will constitute when so executed and delivered,
a valid, legal and binding obligation of Acquisition Corp and Parent
enforceable against it in accordance with its terms, except as enforceability
may be limited by applicable equitable principles or by bankruptcy, insolvency,
reorganization, moratorium, or similar laws from time to time in effect
affecting the enforcement of creditors' rights generally.

3.3.3 Required Filings. No Authorization is required by or with respect
to Parent or Acquisition Corp in connection with the execution and delivery of
this Agreement or the other Transaction Agreements by Parent and Acquisition
Corp or the consummation by Parent and Acquisition Corp of the transactions
contemplated hereby or thereby.

3.3.4 No Conflicts. Neither the execution and delivery of this Agreement
or any of the other Transaction Agreements by Parent or Acquisition Corp, nor
the consummation by Parent or Acquisition Corp of the transactions contemplated
hereby or thereby, will (i) conflict with or result in a breach of any of the
terms or provisions of the Certificate of Incorporation or By-Laws of
Acquisition Corp or of Parent or of any statute or administrative regulation,
or of any order, writ, injunction, judgment or decree of any court or
governmental authority or of any arbitration award to which Parent or
Acquisition Corp is a party or by which Acquisition Corp or Parent is bound; or
(ii) violate, conflict with, breach, constitute a default (or give rise to an
event which, with notice or lapse of time or both, would constitute a default)
under, or result in the termination of, or accelerate the performance required
by, or result in the creation of any lien or other claim, equity, security
interest, preemptive right, judgment or other encumbrance ("Encumbrance") upon
any of the properties or assets of Parent or Acquisition Corp under, any note,
bond, mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which Parent or Acquisition Corp is a party or to
which Parent or Acquisition Corp or any of its properties or assets are subject
(the "Parent Obligations"), except for such violations, conflicts, breaches,
defaults, terminations, accelerations or creations of liens or other
Encumbrances that do not and will not, individually or in the aggregate, (x)
have a Material Adverse Effect on Parent or Acquisition Corp or (y) impair
Parent or Acquisition Corp's ability to perform its obligations under this
Agreement or any of the other Transaction Agreements. Without limiting the
generality of the foregoing, neither Parent nor Acquisition Corp is subject to
any Parent Obligation pursuant to which timely performance of this Agreement or
the Merger may be prohibited, prevented or materially delayed.

3.3.5 Capitalization. The authorized capital stock of Acquisition Corp
consists of 200 shares of common stock, without par value, of which 100 shares
are outstanding. All of the outstanding shares of common stock of Acquisition
Corp have been validly issued and are fully paid and nonassessable, are
entitled to vote as a class and are owned of record by Parent.

3.3.6 SEC Filings. None of the information provided by Parent or
Acquisition Corp and included in the Proxy Statement and the Schedule 13E-3
will, at the time of the filing thereof, the mailing thereof, at the time of
the Meeting and at the Effective Date, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.

3.3.7 Brokers. No broker, finder, investment broker or other person is
entitled to a broker's commission, finder's fee, investment banker's fee or
similar payment from the Acquisition Corp or Parent in connection with the
Merger.

3.3.8 Full Disclosure. The representations, warranties and statements of
Acquisition Corp and Parent in this Agreement or contained in any schedule,
list or document delivered pursuant to this Agreement are true, complete and
correct. The copies of all documents furnished by Parent and the Acquisition
Corp pursuant to or in connection with this Agreement are true, complete and
correct.

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ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER

4.1 Obligations of Each of the Parties. From and after the date of the
Initial Agreement and until and including the Effective Date, the following
shall apply with equal force to the Company, on the one hand, and Parent and
Acquisition Corp, on the other hand:

4.1.1 Each party shall promptly give the other parties written notice of
the existence or occurrence of any event or condition which would make any
representation or warranty herein contained of any party untrue or which might
reasonably be expected to prevent the consummation of the transactions
contemplated hereby.

4.1.2 No party shall intentionally perform any act which, if performed,
or omit to perform any act which, if omitted to be performed, would prevent or
excuse the performance of this Agreement by any party or which would result in
any representation or warranty herein of that party being untrue in any
material respect at any time after the date of the Initial Agreement through
and including the Closing Date as if originally made at such time.

4.1.3 Subject to the terms and conditions of this Agreement, each of the
parties 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 and make effective the Merger and the other
transactions contemplated by this Agreement as expeditiously as reasonably
practicable.

4.2 The Company's Obligations. From and after the date of the Initial
Agreement and until and including the Effective Date, without the prior written
consent of Parent, and without limiting the generality of any other provision
of this Agreement, except for the dissolution of Beta Brasil Inc., Beta BGE
Inc., Beta International Power Corp. and Besicorp International Power Corp.,
the Spin-Off and the SunWize Project, the Company shall not, and shall not
permit any of its Subsidiaries to:

(a) amend its Certificate of Incorporation, By-Laws or other
organizational documents;

(b) make any change in its authorized capital stock; adjust, split,
combine or reclassify any capital stock; or issue any shares of stock of
any class, or issue or become a party to any subscription, warrant,
rights, options, convertible securities or other agreements or commitments
of any character relating to its issued or unissued capital stock, or
other equity securities, or grant any stock appreciation or similar rights
except for the issuance of Reserved Shares as contemplated by Section
3.2.3 hereof;

(c) sell, transfer, mortgage, encumber or otherwise dispose of any of
its material properties or assets to any individual, corporation or other
entity other than a Subsidiary of the Company, except pursuant to
contracts or agreements in force at the date of the Initial Agreement or
as specifically set forth in this Agreement;

(d) make (x) any investments, either by purchase of stock or securities,
in, (y) any contributions to capital of, or (z) except in the ordinary
course of business, any purchases of any property or assets from, any
other individual, corporation or other entity;

(e) change its method of accounting in effect at March 31, 1999, except
as may be required by changes in generally accepted accounting principles
("GAAP") upon the advice of its independent accountants;

(f) increase the compensation payable to any employee, or enter into any
new employment agreements with new or existing employees which create
other than an at will relationship, in each case, except in the ordinary
course of business consistent with past practices other than bonuses to
officers and employees which are paid prior to the Effective Date;

(g) pay or declare any dividend or make any distribution on its
securities of any class or purchase or redeem any of its securities of any
class;

(h) except with respect to Taxes subject to the New York State tax
appeal, make any Tax election or settle or compromise any Tax liability;

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(i) fail to maintain in full force and effect insurance coverage
substantially similar to that in effect on the date of the Initial
Agreement; or

(j) except with respect to the Empire Project, enter into any business
or contract outside of the ordinary course of business and not related to
the Merger other than contracts which are not material or which will be
fully performed prior to the Effective Date.

4.3 Meeting; Proxy Statement; Schedule 13E-3; Other Regulatory Matters.

4.3.1 The Company will (i) call a meeting of its shareholders (the
"Meeting") for the purpose of voting upon adoption and authorization of the
Merger, (ii) hold the Meeting as soon as practicable following the date of the
Initial Agreement, (iii) subject to Section 4.8 hereof, recommend, through its
Board, to its shareholders the approval of the Merger, and (iv) use its best
efforts to obtain the necessary adoption and authorization of this Agreement by
the shareholders of the Company.

4.3.2 The Company will (i) as soon as practicable following the date of
the Initial Agreement, prepare in correct and appropriate form and file with
the Securities and Exchange Commission (the "SEC") a preliminary Proxy
Statement and (ii) use its reasonable best efforts to respond to any comments
of the SEC or its staff and to enable the Proxy Statement to be cleared by the
SEC. The Company will notify Parent of the receipt of any comments from the SEC
or its staff and of any request by the SEC or its staff for amendments or
supplements to the Proxy Statement or for additional information and will
supply Parent with copies of all correspondence and summaries of all
conversations between the Company or any of its representatives, on the one
hand, and the SEC or its staff, on the other hand, with respect to the Proxy
Statement or the Merger. The Company shall give Parent and its counsel (who
shall provide any comments thereon as soon as practicable) the opportunity to
review the Proxy Statement prior to being filed with the SEC and shall give
Parent and its counsel (who shall provide any comments thereon as soon as
practicable) the opportunity to review all amendments and supplements to the
Proxy Statement and all responses to requests for additional information and
replies to comments prior to their being filed with, or sent to, the SEC. Each
of the Company and Parent agrees to use its reasonable best efforts, after
consultation with the other parties hereto, to respond promptly to all such
comments of and requests by the SEC. The Acquisition Corp and the Parent shall
supply to the Company on a timely basis in connection with the preparation of
the Proxy Statement all information necessary to be included therein.

The Company, Acquisition Corp and Parent will (i) as soon as practicable
following the date of the Agreement, prepare in correct and appropriate form
and file with the SEC the Schedule 13E-3 and (ii) use their reasonable best
efforts to respond to any comments of the SEC or its staff and to enable the
Schedule 13E-3 be cleared by the SEC. Each party hereto will notify the other
parties of the receipt of any comments from the SEC or its staff and of any
request by the SEC or its staff for amendments or supplements to the Schedule
13E-3 or for additional information and will supply such other parties with
copies of all correspondence and summaries of all conversations between such
party or any of its representatives, on the one hand, and the SEC or its staff,
on the other hand, with respect to the Schedule 13E-3 or the Merger. Each of
the Company, Acquisition Corp and Parent agrees to use its reasonable best
efforts, after consultation with the other parties hereto, to respond promptly
to all such comments of and requests by the SEC. The Acquisition Corp and the
Parent shall supply to the Company on a timely basis in connection with the
preparation of the Schedule 13E-3 all information necessary to be included
therein.

As promptly as practicable after the Proxy Statement and the Schedule
13E-3 have been cleared by the SEC, the Company shall mail the Proxy Statement
to the shareholders of the Company.

4.3.3 Each party agrees to notify the other parties of, and to correct,
any information contained in the Proxy Statement and Schedule 13E-3 furnished
by such party to any other party for inclusion therein, which information shall
be, at the time of furnishing, or become, prior to the Meeting, false or
misleading in any respect. If at any time prior to the Meeting or any
adjournment thereof there shall occur any event that should be set forth in an
amendment to the Proxy Statement, the Company will prepare and mail to its
shareholders such an amendment. If at any time prior to the Closing Date there
shall occur any event that should be set forth in an amendment to the Schedule
13E-3, the Company, Acquisition Corp and Parent will prepare and file with the
SEC such an amendment.

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4.3.4 The Company will file all reports, schedules, definitive proxy
statements (including the Proxy Statement) and information statements
(including the Form 10-SB) (the "Company Filings") required to be filed by the
Company with the SEC (including reports required by Section 13(d) or 13(g) of
the Exchange Act) and will provide copies thereof to the Parent promptly upon
the filing thereof. The Company represents, warrants and covenants that each
Company Filing (except to the extent prepared by Parent or Acquisition Corp or
based upon information supplied by Parent or Acquisition Corp) as of the date
of its filing will comply in all material respects with the requirements of the
Exchange Act and the applicable rules and regulations of the SEC thereunder and
none of the Company Filings (except to the extent prepared by Parent or
Acquisition Corp or based upon information supplied by Parent or Acquisition
Corp) as of the date of its filing will contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they are made, not misleading. Upon learning of any such false or
misleading information, the Company will cause all required Company Filings
(including the Proxy Statement) to be corrected, filed with the SEC and
disseminated to holders of the shares of Common Stock, in each case as and to
the extent required by applicable law.

4.3.5 Parent and Acquisition Corp will file all reports, schedules and
definitive proxy statements (the "Parent Filings") required to be filed by the
Parent and Acquisition Corp with the SEC (including reports required by Section
13(d) or 13(g) of the Exchange Act) and will provide copies thereof to the
Company promptly upon the filing thereof. The Parent and the Acquisition Corp
represent, warrant and covenant that each Parent Filing (except to the extent
prepared by the Company or based upon information supplied by the Company) as
of the date of its filing will comply in all material respects with the
requirements of the Exchange Act and the applicable rules and regulations of
the SEC thereunder and none of the Parent Filings (except to the extent
prepared by the Company or based upon information supplied by the Company) will
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they are made, not misleading. Upon
learning of any such false or misleading information, the Parent and
Acquisition Corp will cause all required Parent Filings to be corrected, filed
with the SEC and disseminated to holders of the shares of Common Stock, in each
case as and to the extent required by applicable law.

4.3.6 Subject to the terms and conditions herein provided, the Company
and Parent and Acquisition Corp will cooperate and consult with one another in
(a) determining which consents, approvals, permits, licenses, certifications,
authorizations and waivers (collectively, "Consents") are required to be
obtained prior to the Effective Date from federal, state, local or foreign
courts, administrative agencies, commissions and other governmental authorities
and instrumentalities ("Governmental Entities") or other third parties in
connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, (b) preparing all
Consents and all other filings, submissions and presentations required or
prudent to obtain all Consents, including by providing to the other parties
drafts of such material reasonably in advance of the anticipated filing or
submission dates, and (c) timely seeking all such Consents (it being understood
that the parties will make or seek Consents, whether mandatory or voluntary,
and that the Parent will be responsible and pay for the costs, penalties and
expenses associated with the Consents).

4.4 Indemnification Provisions in Charter and Insurance.

4.4.1 Acquisition Corp, Parent and the Company agree that prior to the
Effective Date the Company shall have in force officers' and directors'
liability insurance ("D&O Insurance") covering each present and former
director, officer, employee and agent of the Company and each of its
Subsidiaries and each present and former director, officer, employee or agent
of the Company and its Subsidiaries (individually, an "Indemnified Person", and
collectively, the "Indemnified Persons"), with respect to actions and omissions
occurring on or prior to the Effective Date (including, without limitation, any
which arise out of or relate to the transactions contemplated by this
Agreement). The parties hereto agree that the Surviving Corporation (i) (a)
shall maintain D&O Insurance covering each Indemnified Person who is currently
covered by the Company's officers' and directors' liability insurance or will
be so covered on the Effective Date with respect to actions and omissions
occurring on or prior to the Effective Date (including, without limitation, any
which arise out of or relate to the transactions contemplated by this
Agreement) for a period ending no earlier than the sixth anniversary of the
Effective Date and (b) in the event of a liquidation, merger, consolidation, or
similar occurrence procure and pay for "run-off" or "tail" insurance covering
each Indemnified Person who is currently covered by the Company's officers'

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and directors' liability insurance or will be so covered on the Effective Date
with respect to actions and omissions occurring on or prior to the Effective
Date (including, without limitation, any which arise out of or relate to the
transactions contemplated by this Agreement) (A)for a period of the lesser of
(1) two years and (2) the period ending on the sixth anniversary of the
Effective Date (B) and thereafter for a period ending no earlier than the sixth
anniversary of the Effective Date and (ii) will reimburse the Indemnified
Persons with respect to any deductibles contained in such D&O Insurance or
"run-off" or "tail" insurance policies.

4.4.2 Acquisition Corp, Parent and the Surviving Corporation hereby
jointly and severally agree that, for the lesser of (a) six (6) years after the
Closing Date, or (b) the period during which the Surviving Corporation
maintains its existence, the provisions of the Certificate of Incorporation and
By-Laws of the Surviving Corporation shall provide indemnification to the
Indemnified Persons on terms, in a manner, and with respect to matters, which
are no less favorable to the Indemnified Persons than the Company's Certificate
of Incorporation and By-Laws, as in effect on the date of the Initial
Agreement, and further agree that such indemnification provisions shall not be
modified or amended except as required by law, unless such modification or
amendment expands the rights of the Indemnified Persons to indemnification.

4.4.3 (a) Subject to the provisions of Sections 4.4.3 (b), (c) and (d)
hereof, the Company shall indemnify, defend, and hold harmless the Indemnified
Persons, promptly upon demand at any time and from time to time, against any
and all losses, liabilities, claims, actions, damages, and expenses, including,
without limitation, reasonable attorneys' fees and disbursements (collectively,
"Losses"), arising out of or in connection with claims that would have been
covered if the Current Insurance Policy had remained in effect until the sixth
anniversary of the Effective Date.

(b) With respect to Section 4.4.3 hereof, if any Indemnified Person
wishes to make a claim for indemnification against the Company with respect to
any matter which may give rise to a claim for indemnification, then that
Indemnified Person shall notify the Company thereof promptly (which notice
shall set forth with reasonable specificity all facts relating to such claim
for indemnification). The Company shall pay to the Indemnified Person any
amount required to be paid pursuant to this Section 4.4.3 within 90 days after
receipt by the Company of such notice and such evidence that the claimed Losses
have been incurred or come due as the Company may reasonably request, unless
the payment of such amount is contested prior to the expiration of such 90 day
period by notice to the Indemnified Person. If such payment is so contested,
then such payment shall be made within 30 days after the first to occur of the
following: (i) the Company and the Indemnified Person agreeing in writing to
make such payment or (ii) such payment has been declared due in a judgment or
award entered against the Company by a court of competent jurisdiction.

(c) If any third person shall notify an Indemnified Person with
respect to any matter which shall give rise to a claim for indemnification
against a party to this Agreement pursuant to this Section 4.4.3, then the
Indemnified Person shall notify the Company thereof promptly (which notice
shall set forth with reasonable specificity all facts relating to such claim
for indemnification). Within thirty (30) days after receipt of written notice
of a particular matter, the Company may assume the defense of such matter;
provided however, that: (i) the Company shall retain counsel reasonably
acceptable to the Indemnified Person, and (ii) the Company shall not, without
the prior written consent of the Indemnified Person (which shall not be
unreasonably withheld), enter into any settlement of a claim, consent to the
entry of any judgment with respect to a claim, or cease to defend such claim,
if pursuant to or as a result of such settlement, consent or cessation,
injunctive or other equitable relief shall be imposed against the Indemnified
Person or if such settlement does not expressly unconditionally release the
Indemnified Person from all liabilities and obligations with respect to such
claim, with prejudice. If, within the thirty (30) day period, the Company does
not assume the defense of such matter which the Company is obligated to defend,
the Indemnified Person may defend against the matter in any manner that it
reasonably may deem appropriate. The Company shall bear all the reasonable fees
and expenses of defending any such matter. The Indemnified Person may
participate in the defense of such claim with co-counsel of its choice,
provided, however, that the fees and expense of the Indemnified Person's
counsel shall be at the expense of the Indemnified Person unless the Company is
liable for the Losses forming the basis of such claim pursuant to Section 4.4.3
and the Company has failed to assume the defense and employ counsel as provided
herein.

(d) No amount shall be payable by the Company with respect to claims
for indemnification asserted pursuant to this Section 4.4.3 in excess of (i)
the limitations of the Current Insurance Policy and (ii) the deductibles
contained in such Policy.

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4.5 Parent's Funding of the Company.

4.5.1 So long as (i) no Governmental Entity or court of competent
jurisdiction shall have issued an injunction (which is still in effect)
prohibiting the Merger, no litigation shall have been commenced and be pending
in a court of competent jurisdiction seeking to enjoin the Merger and no
request for such an injunction is pending in a court of competent jurisdiction,
(ii) a proxy for the Merger has been filed with the SEC, (iii) all
representations and warranties made by the Company in this Agreement shall be
materially accurate at the time of the Loan Funding Date; (iv) the Company
shall not have (A) commenced any case, proceeding or other action under any
existing or future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization, or relief of debtors, seeking to have
an order for relief entered with respect to it, or seeking to adjudicate it a
bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
winding-up, liquidation, dissolution, composition, or other relief with respect
to its debts; (B) commenced any case, proceeding or other action seeking
appointment of a receiver, trustee, custodian, or other similar official for it
or for all or any substantial part of its assets; or (C) made a general
assignment for the benefit of its creditors; (v) there shall not have been
commenced against the Company any case, proceeding or other action of a nature
referred to in clause (iv) above that (A) results in the entry of an order for
relief or any such adjudication or appointment, or (B) remains undismissed,
undischarged, or unbonded for a period of thirty (30) days; and (vi) there
shall have not been commenced against the Company any case, proceeding, or
other action seeking issuance of a warrant of attachment, execution, distraint,
or similar process against all or any substantial part of its assets that
results in the entry of an order for any such relief that shall not have been
vacated, discharged, or stayed or bonded pending appeal within thirty (30) days
from the entry thereof, Parent will lend ("Parent Loans") to the Company,
subject to the conditions set forth in Section 4.5.2, such amounts as the
Company reasonably requests in order to satisfy its obligations with respect to
normal operating expenses of the Company and its subsidiaries to the extent
payable on or prior to the Termination Date.

4.5.2 The obligations of Parent to make the Parent Loans are subject to
the following prerequisites:

A. Parent shall not be required to make (i) Parent Loans within a thirty
day period in excess of $350,000, or (ii) with a cumulative amount in excess of
$1,050,000;

B. The Parent Loans shall be evidenced by promissory notes (substantially
in the form of Exhibit 4.5 (a)); and

C. The Parent Loan shall be secured pursuant to a Security Agreement
(substantially in the form of Exhibit 4.5 (b-1)) and a Mortgage and Security
Agreement (substantially in the form of Exhibit 4.5 (b-2)) and such security
shall have a value in an amount to be approved by Parent, which approval shall
not be unreasonably withheld and which security shall include, but not be
limited to, the unencumbered real property owned by Reina Distributing, Inc.

4.6 Voting of Shares of Common Stock held by Certain Holders. Subject to
the requirements of the Exchange Act and the rules promulgated thereunder, the
Parent, Acquisition Corp and Michael F. Zinn shall vote all of their shares, if
any, of Common Stock in favor of the Agreement and the Merger.

4.7 Certificate and Personal Guarantee.

4.7.1 Each of the Executives shall execute a Certificate (substantially
in the form of Exhibit 4.7(a)).

4.7.2 Michael Zinn shall execute a Guarantee (substantially in the form
of Exhibit 4.7(b-1)) and an Escrow Agreement (substantially in the form of
Exhibit 4.7 (b-2)).

4.8 Board Action.

4.8.1 Neither the Special Committee nor the Board shall (i) withdraw or
modify its approval, adoption or recommendation of this Agreement, the Merger
or any of the transactions contemplated hereby, (ii) approve, adopt or
recommend or publicly propose to approve, adopt or recommend an Acquisition
Proposal (as defined below), (iii) cause the Company to enter into any letter
agreement, agreement in principle or definitive agreement with respect to an
Acquisition Proposal, or (iv) resolve to do any of the foregoing unless the
Special Committee or the Board determines reasonably and in good faith, after
due investigation that either the Merger Consideration is not fair to the
Company Shareholders or a pending Acquisition Proposal is more favorable to the

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Company Shareholders, taking into account the Distribution. In such case, the
Special Committee or the Board may withdraw or modify its recommendation, and,
in the case of an Acquisition Proposal, approve and recommend such Acquisition
Proposal, provided in the case of a withdrawal or modification of a
recommendation or an Acquisition Proposal, the Special Committee or the Board,
as applicable, provides to Parent and Acquisition Corp written notice of the
Company's intention to do so at least two business days prior to taking such
action and, at the end of such two business day period (y) simultaneously
terminates this Agreement, and (z) concurrently pays to Parent the Covered
Expenses pursuant to Section 6.4.2 hereof. Nothing contained in this Section
4.8 shall prohibit or restrict the Company from taking and disclosing to its
shareholders a position contemplated by Rule 14e-2(a) promulgated under the
Exchange Act so long as the Company does not withdraw or modify its position
with respect to the Merger or approve or recommend an Acquisition Proposal
(except as described in the immediately preceding sentence).

4.8.2 For purposes of this Agreement, "Acquisition Proposal" means any
bona fide offer or proposal with respect to a merger, consolidation, share
exchange or similar transaction involving the Company or any purchase of all or
any significant portion of the assets or capital stock of the Company or any
significant Subsidiary of the Company or any other business combination
(including the acquisition of any equity interest therein) involving the
Company.

4.9 Management Restricted Shares. Parent shall use its best efforts to
enter into agreements (the "Substitution Agreements"), in form reasonably
satisfactory to the Company, with the holders of the Management Restricted
Shares whereby the holders shall receive from Parent in substitution for their
Management Restricted Shares (which shares shall be cancelled prior to the
Effective Date), shares of restricted securities of Parent.

4.10 Notices of Certain Events. From the date of the Initial Agreement
until the Closing Date, the Parties hereto shall notify the Special Committee
of the receipt of (i) any proceeds which would constitute Adjustment Amounts if
such proceeds had been received on or after the Effective Date and on or before
the Deferred Payment Termination Date and (ii) any proceeds received with
respect to the sale of interests in foreign development projects.

4.11 March 1999 Escrow Fund. The parties hereto acknowledge and agree that
the Surviving Corporation shall be subject to and bound by the terms of the
March 1999 Escrow Agreement and the Surviving Corporation shall send
instructions (the "Instructions") substantially in the form of Exhibit 4.11
hereto to the Escrow Agent for such Escrow Agreement whereby such Escrow Agent
shall be irrevocably instructed to distribute the Escrow Fund Payment
Distributions to the Paying Agent.

4.12 Spin-Off.

Promptly following the execution of this Agreement, the Company will cause
the following actions to be taken in accordance with the requirements of
applicable law, including the NYBCL, and the Company's certificate of
incorporation and bylaws with the objective of effecting the Spin-Off (as
defined below) on the date that all conditions to the consummation of the
Merger, including the shareholders' adopting of the Plan of Merger by the
Requisite Vote at the Special Meeting and have been or will be waived or
satisfied, (the "Spin-Off Date"):

(a) the due and valid formation of WOM;

(b) the execution and delivery by the Company and WOM of a contribution
and distribution agreement (the "Contribution Agreement") to effectuate
the Contribution (as defined below) and the Distribution (as defined
below) and such other agreements and arrangements which are customary in
connection with all on terms reasonably acceptable to Buyer;

(c) the filing and effectiveness of Registration Statement on Form
10-SB (the "Form 10-SB") and the preparation and distribution to the
Company's shareholders of record on the Spin-Off Date of an information
statement, all in accordance with applicable law, including the Exchange
Act;

(d) the transfer to, and assumption by, WOM on the Spin-Off Date of the
contingent assets and/or liabilities of Besicorp comprised of Besicorp's
interests in the Bansbach Litigation pursuant to an assignment of the
Bansbach Litigation (the "Contribution");

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(e) the distribution of the outstanding capital stock of WOM to the
Company's shareholders of record on the Spin-Off Date (the "Distribution"
and together with the Contribution, the "Spin-Off;") in the escrow
described in Section 2.2.7 and

(f) all other actions necessary or appropriate to effect the Spin-Off.

4.13 Compliance with requirements regarding appraisal Rights. The parties
agree to comply with the requirements of Sections 623 and 910 of the NYBCL
applicable to them and to notify, or to instruct the Paying Agent in a timely
basis to notify, all Objecting Shareholders and other shareholders required to
be notified, of the adoption of the Plan of Merger within ten days of the date
of such adoption.

4.14 Paying Agent. The parties agree to instruct the Paying Agent, and use
their best efforts to cause the Paying Agent, promptly to distribute the Merger
Consideration in accordance with this Agreement and to maintain such records of
the holders of shares of Besicorp Common Stock as may be necessary to make such
distributions through the Deferred Payment Termination Date.

ARTICLE V
CONDITIONS TO CLOSING; CLOSING DELIVERIES; BASE AMOUNT

5.1 Conditions to Each Party's Obligations. The respective obligations of
each party to effect the transactions contemplated hereby shall be subject to
the fulfillment at or prior to the Effective Date of the following conditions:

5.1.1 The Agreement shall have been adopted and authorized by the
Requisite Vote of the shareholders of the Company.

5.1.2 This Agreement and the Merger shall have been approved by each
Governmental Entity whose approval is required for the consummation of the
Merger, such approvals shall remain in full force and effect and all waiting
periods relating to such approvals shall have expired.

5.1.3 No Governmental Entity or court of competent jurisdiction shall
have enacted, issued, promulgated, enforced or entered any law, rule,
regulation, executive order, judgment, decree, injunction or other order
(whether temporary, preliminary or permanent) which is then in effect and has
the effect of making the Merger illegal.

5.1.4 No suit, proceeding or investigation shall have been commenced by
any Governmental Entity on any grounds to restrain, enjoin or hinder, or seek
material damages on account of, the consummation of the Merger or the other
transactions contemplated hereby.

5.2 Conditions to the Company's Obligations. The obligation of the Company
to consummate the transactions contemplated hereby is subject to the
fulfillment (or waiver) of all of the conditions set forth in Sections 5.2.1
through 5.2.5 prior to the Effective Date. Upon the non- fulfillment (and
non-waiver) of any of the conditions set forth in Sections 5.2.1 through 5.2.5
this Agreement may, at the Company's option, be terminated pursuant to and with
the effect set forth in Article VI:

5.2.1 Each and every representation and warranty made by Parent and
Acquisition Corp shall be true and correct when made in the Initial Agreement
and as if originally made on and as of the Closing Date.

5.2.2 All obligations of Parent and Acquisition Corp to be performed
hereunder through, and including on, the Closing Date shall have been fully
performed.

5.2.3 Parent and Acquisition Corp shall have delivered to the Company
the written opinion of Zeichner, Ellman & Krause, counsel for Parent, dated as
of the Closing Date, in substantially the form of Exhibit 5.2.3 attached hereto
(the "Parent's Opinion").

5.2.4 Immediately prior to the Merger the Acquisition Corp is, and
assuming that the condition set forth in Section 5.3.1 hereof is satisfied
immediately following the effectiveness of the Merger, the Surviving
Corporation shall be, solvent.

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5.2.5 The Special Committee (the "Special Committee") of the Board that
was formed by the Board on May 10, 1999 or the Board shall not have withdrawn
its approval, adoption or recommendation of the Agreement and the Merger.

5.3 Conditions to Parent's and Acquisition Corp's Obligations. The
obligations of Parent and Acquisition Corp to consummate the transactions
contemplated hereby are subject to the fulfillment (or waiver) of all of the
conditions set forth in Sections 5.3.1 through 5.3.3 on or prior to the Closing
Date. Upon the non-fulfillment (and non-waiver) of any of conditions set forth
in Sections 5.3.1 through 5.3.3 this Agreement may, at Parent's option, be
terminated pursuant to and with the effect set forth in Article VI:

5.3.1 The representations and warranties made by the Company shall be
true and correct when made in the Initial Agreement and as if originally made
on and as of the Closing Date.

5.3.2 All obligations of the Company to be performed hereunder through,
and including on, the Closing Date shall have been fully performed.

5.3.3 The Company shall have delivered to Parent the written opinion of
Robinson Brog Leinwand Greene Genovese & Gluck P.C., counsel to the Company,
dated as of the Closing Date, in substantially the form of Exhibit 5.3.3
attached hereto (the "Company's Opinion").

5.4 Closing Deliveries.

5.4.1 At the Closing, the Company shall cause to be executed and
delivered to Parent and Acquisition Corp all of the following:

(a) a closing certificate dated the Closing Date and executed on behalf
of the Company by a duly authorized officer of the Company to the effect
set forth in Sections 5.1.1, 5.2.5, 5.3.1 and 5.3.2 hereof;

(b) certified copies of such corporate records of the Company and its
Subsidiaries and copies of such other documents as Parent or its counsel
may reasonably have requested in connection with the consummation of the
transactions contemplated hereby;

(d) the minute books and corporate records of the Company and its
Subsidiaries and originals of the stock certificates evidencing all of the
outstanding capital stock of each of its Subsidiaries free of all
Encumbrances.

5.4.2 At the Closing, Parent and Acquisition Corp shall cause to be
delivered to the Company all of the following:

(a) a closing certificate dated the Closing Date and executed on behalf
of Parent and Acquisition Corp by a duly authorized officer of Parent and
Acquisition Corp to the effect set forth in Sections 5.1.2, 5.1.3, 5.1.4,
5.2.1, 5.2.2 and 5.2.4 hereof;

(b) certified copies of such corporate records of Parent and Acquisition
Corp and copies of such other documents as the Company or its counsel may
reasonably have requested in connection with the consummation of the
transactions contemplated hereby;

(d) the certificates, guarantee and escrow agreement referred to in
Section 4.7 hereof;

(e) evidence of delivery to the Paying Agent of the Cash Merger
Consideration for each of the shares of Common Stock (excluding Management
Restricted Shares for which substitute securities have been issued
pursuant to Section 4.9 hereof prior thereto) held of record on the
Effective Date by the Company Shareholders and the Objecting Shareholders;

(f) the instructions referred to in Section 4.11 hereof; and

(g) evidence of the execution of the Substitution Agreements.

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ARTICLE VI
TERMINATION/EFFECT OF TERMINATION

6.1 Right to Terminate. Anything to the contrary herein notwithstanding,
this Agreement and the transactions contemplated hereby may be terminated at
any time prior to the Effective Date by prompt notice given in accordance with
Section 7.4 hereof:

6.1.1 by the mutual written consent of Parent and Acquisition Corp and
the Company (with the approval of their respective Boards of Directors or, in
the case of the Company, the Special Committee);

6.1.2 by Acquisition Corp and Parent or by the Company (by action of
their Board of Directors or, in the case of the Company, the Special Committee)
if:

(a) the Effective Date shall not have occurred at or before the
Termination Date; provided, however, that the right to terminate this
Agreement under this Section 6.1.2 (a) shall not be available to any party
whose failure to fulfill any of its obligations under this Agreement has
been the cause of the failure of the Effective Date to have occurred as of
such time;

(b) upon a vote at the Meeting, either this Agreement or the Merger
shall fail to be adopted and authorized by the Requisite Vote; or

(c) either the Board or the Special Committee shall have taken any
action contemplated by clause (i), (ii), (iii) or (iv) of the first
sentence of Section 4.8.1;

6.1.3 by Parent and Acquisition Corp, by giving written notice of such
termination to the Company, if:

(a) there has been a material breach of any representation or warranty
of the Company which could reasonably by expected to prevent the Company
from fulfilling its obligations hereunder or of any material agreement or
covenant hereunder on the part of the Company which has not been cured or
adequate assurance of cure given, in either case within ten (10) business
days following notice of such breach from Parent; or

(b) a tender offer or exchange offer for 40% or more of the shares of
Common Stock of the Company is commenced by a person who is not affiliated
with any Executive, any shareholder of Parent, or Parent and the Board
fails to recommend against acceptance of such tender offer or exchange
offer by its shareholders within the time period required by Section 14e-2
of the Exchange Act (the taking of no position before the expiration of
such period with respect to the acceptance of such tender offer or
exchange offer by the Company's shareholders constituting such a failure)
or any Person other than an Executive, any shareholder of Parent or Parent
acquires (other than from Executives, shareholders of Parent and Parent)
by any means 40% or more of the outstanding shares of Common Stock; or

6.1.4 by the Company (by action of the Board or the Special Committee),
by giving written notice of such termination to Parent and Acquisition Corp,
if:

(a) there has been a material breach of any agreement herein on the part
of Acquisition Corp or Parent which has not been cured or adequate
assurance of cure given, in either case within ten (10) business days
following notice of such breach from the Company;

(b) there has been a breach of a representation or warranty of Parent or
Acquisition Corp herein which could reasonably be expected to prevent
Parent or Acquisition Corp from fulfilling their obligations under this
Agreement and which, in the reasonable opinion of the Company, by its
nature cannot be cured within ten (10) days (or, if sooner, the Closing
Date);

(c) there has been a material breach of any representation or warranty
of any of the Executives in any of the Certificates.

6.2 Certain Effects of Termination. In the event of the termination of
this Agreement as provided in Section 6.1 hereof, each party, if so requested
by any other party, will return promptly every document furnished to it by or
on behalf of such other party in connection with the transactions contemplated
hereby, whether so

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obtained before or after the execution of this Agreement, and any copies
thereof (except for copies of documents publicly available) which may have been
made, and will use reasonable efforts to cause its representatives and any
representatives of financial institutions and investors and others to whom such
documents were furnished promptly to return such documents and any copies
thereof any of them may have made. This Section 6.2 shall survive any
termination of this Agreement.

6.3 Remedies. Notwithstanding any termination right granted in Section 6.1
hereof, in the event of the nonfulfillment of any condition to a party's
closing obligations, such party may elect to proceed to close despite the
nonfulfillment of any closing condition without waiving any claim for any
breach.

6.4 Right to Damages; Expense Reimbursement.

6.4.1 If this Agreement is terminated in accordance with Section 6.1
hereof, no party will have any claim against the others, subject to the
following sentence and, if applicable, the remaining provisions of this Section
6.4. A party terminating this Agreement in accordance with Section 6.1 hereof
(other than Section 6.1.1) will retain any and all of such party's legal and
equitable rights and remedies if, but only if, the circumstances giving rise to
such termination were (i) caused by another party's willful failure to comply
with a material covenant set forth herein or (ii) that a material
representation or warranty of such other party was materially false when made
and that party knew or should have reasonably known such representation or
warranty was materially false when made. In either of such events, termination
shall not be deemed or construed as limiting or denying any legal or equitable
right or remedy of said party, and said party shall also be entitled to recover
its costs and expenses which are incurred in pursuing its rights and remedies
(including reasonable attorneys' fees).

6.4.2 If (x) this Agreement is terminated pursuant to Section 6.1.2(b),
6.1.2 (c) hereof or (y) Acquisition Corp and Parent terminate this Agreement
pursuant to 6.1.3, the Company will reimburse Parent and Acquisition Corp for
their out-of-pocket costs and expenses reasonably incurred and due to third
parties in connection with this Agreement (including fees and disbursements of
counsel, accountants, financial advisors and consultants, commitment fees, due
diligence expenses, travel costs, filing fees, and similar fees and expenses,
all of which shall be conclusively established by a good faith statement
therefor) (collectively, "Covered Expenses"), up to a maximum of $150,000, by
wire transfer of same-day funds to an account designated by Parent, immediately
following receipt of Parent's statement evidencing the Covered Expenses.

6.4.3 If (x) the Agreement is terminated pursuant to Section 6.1.2(a)
hereof or (y) the Company terminates this Agreement pursuant to Section 6.1.4
hereof, Parent will pay to the Company immediately upon such termination the
Company's Covered Expenses up to a maximum of $500,000 by wire transfer of same
day funds to an account designated by the Company.

6.4.4 If the Company or Parent and Acquisition Corp fail to promptly pay
any amounts owing pursuant to this Section 6.4. when due, the Company or Parent
and Acquisition Corp, as the case may be, shall in addition to paying such
amounts pay all costs and expenses (including, fees and disbursements of
counsel) incurred in collecting such amounts, together with interest on such
amounts (or any unpaid portion thereof) from the date such payment was required
to be made until the date such payment is received by the Company or Parent and
Acquisition Corp, as the case may be, at the rate of 15% per annum during such
period. This Section 6.4 shall survive the termination of this Agreement.

ARTICLE VII
MISCELLANEOUS

7.1 Survival of Representations, Warranties and Agreements. All of the
representations and warranties contained in this Agreement or in any
certificate or other document delivered pursuant to this Agreement shall
survive the Merger for a period of five years (the "Survival Period") following
the Effective Date.

7.2 Amendment. This Agreement may be amended by the parties hereto, with
the approval of their respective Boards of Directors, at any time prior to the
Effective Date, whether before or after approval hereof by the shareholders of
the Company, but, after such approval by the shareholders of the Company, no
amendment shall be made without the further approval of such shareholders if
such amendment would violate Section 903 of the NYBCL. This Agreement may not
be amended except by an instrument in writing signed on behalf of each of the
parties hereto.

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7.3 Publicity. Except as otherwise required by law, press releases and
other publicity concerning the transactions contemplated by this Agreement
shall be made only with the prior agreement of the Company and Parent.

7.4 Notices. All notices required or otherwise given hereunder shall be in
writing and may be delivered by hand, by facsimile, by nationally recognized
private courier, or by United States mail. Notices delivered by mail shall be
deemed given three (3) business days after being deposited in the United States
mail, postage prepaid, registered or certified mail, return receipt requested.
Notices delivered by hand, by facsimile, or by nationally recognized private
courier shall be deemed given on the day of receipt (if such day is a business
day or, if such day is not a business day, the next succeeding business day);
provided, however, that a notice delivered by facsimile shall only be effective
if and when confirmation is received of receipt of the facsimile at the number
provided in this Section 7.4. All notices shall be addressed as follows:

If to the Company:

Besicorp Ltd.
1151 Flatbush Road
Kingston, New York 12401
Attention: Joyce DePietro, Vice President - Administration
Fax: (914) 336-7172

with a copy to:

Robinson Brog Leinwand Greene Genovese & Gluck P.C.
1345 Avenue of the Americas
New York, New York 10105
Attention: A. Mitchell Greene, Esq.
Fax: (212) 956-2164

If to Parent, Acquisition Corp or the Surviving Corporation:

Michael F. Zinn
c/o Besicorp Ltd.
1151 Flatbush Road
Kingston, New York 12401
Fax: (914) 336-7172

with a copy to:

Zeichner, Ellman & Krause
575 Lexington Avenue
New York , New York 10022
Attention: William Poltarak, Esq.
Fax: (212) 753-0396

and/or to such other respective addresses and/or addressees as may be
designated by notice given in accordance with the provisions of this Section
7.4.

7.5 Expenses; Transfer Taxes. Except as set forth in Section 6.4 herein,
each party shall bear all of its fees and expenses incurred in connection with,
relating to or arising out of the negotiation, preparation, execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated hereby, including, without limitation, financial advisors',
attorneys', accountants' and other professional fees and expenses.

7.6 Entire Agreement. This Agreement and the instruments to be delivered
by the parties pursuant to the provisions hereof constitute the entire
agreement between the parties with respect to their subject matter and
supersedes any and all prior understandings and agreements. This Agreement and
the instruments to be delivered by the parties pursuant to the provisions
hereof shall be binding upon and inure to the benefit of the parties hereto and
their respective legal representatives, successors and permitted assigns. Each
Exhibit and schedule hereto shall be considered incorporated into this
Agreement.

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7.7 Non-Waiver. The failure in any one or more instances of a party to
insist upon performance of any of the terms, covenants or conditions of this
Agreement, to exercise any right or privilege in this Agreement conferred, or
the waiver by said party of any breach of any of the terms, covenants or
conditions of this Agreement, shall not be construed as a subsequent waiver of
any such terms, covenants, conditions, rights or privileges, but the same shall
continue and remain in full force and effect as if no such forbearance or
waiver had occurred. No waiver shall be effective unless it is in writing and
signed by an authorized representative of the waiving party.

7.8 Counterparts. This Agreement may be executed in multiple counterparts,
each of which shall be deemed to be an original, and all such counterparts
shall constitute but one instrument.

7.9 Severability. The invalidity of any provision of this Agreement or
portion of a provision shall not affect the validity of any other provision of
this Agreement or the remaining portion of the applicable provision.

7.10 Applicable Law. This Agreement shall be governed and controlled as to
validity, enforcement, interpretation, construction, effect and in all other
respects by the internal laws of the State of New York applicable to contracts
made in that State.

7.11 Binding Effect; Benefit. This Agreement shall inure to the benefit of
and be binding upon the parties hereto, and their successors and permitted
assigns. Except as expressly provided herein, nothing in this Agreement,
express or implied, shall confer on any person other than the parties hereto,
and their respective successors and permitted assigns, any rights, remedies,
obligations or liabilities under or by reason of this Agreement, including,
without limitation, third party beneficiary rights.

7.12 Assignability. This Agreement shall not be assignable by any party
without the prior written consent of the other parties.

7.13 Governmental Reporting. Anything to the contrary in this Agreement
notwithstanding, nothing in this Agreement shall be construed to mean that a
party hereto or other person must make or file, or cooperate in the making or
filing of, any return or report to any Governmental Entity in any manner that
such person or such party reasonably believes or reasonably is advised is not
in accordance with law.

7.14 Defined Terms. (a) As used in this Agreement:

Bansbach Litigation means an action commenced in August 1997 in the New
York Supreme Court, Ulster County, entitled John Bansbach v. Michael F. Zinn,
Michael J. Daley, Gerald A. Habib, Harold Harris, Richard E. Rosen, and
Besicorp Group Inc., Index No. 97-2573.

"Current Insurance Policy" means the Company's directors and officers'
insurance policy in effect on the date of the Initial Agreement (a copy of
which policy is attached hereto as Exhibit 7.14).

"Empire Project" means the projects being developed with Empire State
Newsprint.

"Escrow Fund Payment Distribution" means an amount equal to the monies
released pursuant to Section 4 of the March 1999 Escrow Agreement multiplied by
a fraction, the numerator of which is the number of shares of Common Stock held
of record by the Company Shareholders immediately prior to the Effective Date
and the denominator of which is the sum of the number of shares of Common Stock
held of record by the Company Shareholders, the Objecting Shareholders and the
Ineligible Shareholders immediately prior to the Effective Date and the number
of Management Restricted Shares which have been cancelled pursuant to Section
4.9 hereof prior thereto.

"Executives" means James Curtin, David Kulik, William Seils, and Michael
Zinn.

"Foreign Development Projects" mean the projects being developed in
Brazil, Gabon, India and Mexico by the Company (directly or indirectly), either
by itself or with a partner, on the Effective Date.

"Hydro-Credits" mean payments by Niagara Mohawk Power Corporation as
contemplated by its letter dated July 9, 1997.

"Incentive Plan" means the Company's 1999 Incentive Plan.

"Loan Funding Date" means the date the Company makes a request for a
Parent Loan.

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<PAGE>

"Management Restricted Shares" mean the 13,850 Restricted Shares (as of
October 7, 1999) which will not vest as a result of the Merger.

"Material Adverse Effect" means an effect which involves $50,000 or more
on the business, operations (or results of operations), condition (financial or
otherwise), properties, assets, liabilities, or prospects of such Person or its
Subsidiaries.

"March 1999 Escrow Agreement" means that certain Escrow Agreement dated as
of March 22, 1999 by and among the Company, BGI, BGI Acquisition Corp. and BGI
Acquisition LLC.

"March 1999 Escrow Fund" means the fund created pursuant to the March 1999
Escrow Agreement.

"March 1999 Merger" means the merger that was consummated on March 22,
1999 between BGI and BGI Acquisition Corp.

"Person" means an individual, partnership, corporation, limited liability
company, business, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Entity or other entity of whatever
nature or a group, including any pension, profit sharing or other benefit plan
or trust.

"Requisite Vote" means the affirmative vote of the holders of at least
one-half of the outstanding shares of Besicorp Common Stock and in tabulating
such vote the Management Restricted Shares shall be tabulated in the manner
contemplated by Section 4.6 hereof regardless of the manner in which they were
voted; provided however, that nothing herein shall lessen the requirements of
Section 9.03 of the NYBCL.

"Restricted Shares" means the 14,900 shares of Common Stock (as of October
7, 1999) issued pursuant to the Incentive Plan and subject to restrictions on
transferability prior to vesting.

"SG&A" means expenses of the type that were classified as selling, general
and administrative expenses for the year ended March 31, 1999 in the Company's
financial statements included in the Company's Form 10-KSB for the year ended
March 31, 1999.

"Subsidiary" means any corporation, partnership, joint venture or other
legal entity of which a Person (either alone or through or together with any
other Subsidiary or Subsidiaries), either (A) owns, directly or indirectly, 25%
or more of the capital stock or other equity interests, the holders of which
are generally entitled to vote with respect to matters to be voted on in such
corporation, partnership, joint venture or other legal entity or a 25% or more
of the interest in the assets of the corporation, partnership, joint venture or
other legal entity upon its liquidation or (B) is otherwise a Significant
Subsidiary (as such term is defined in Section 1-02(w) of Regulation S-X
promulgated in connection with the Securities Act of 1933, as amended).

"SunWize Project" means the financing and construction of a facility for
SunWize in Kingston, New York, and all matters related thereto.

"Taxes" means all federal, state, local, foreign and other net income,
gross income, gross receipts, sales, use, ad valorem, transfer, franchise,
profits, license, lease, service, service use, withholding, payroll,
employment, excise, severance, stamp, occupation, premium, property, windfall
profits, customs, duties or other taxes, fees, assessments or charges of any
kind whatever, together with any interest and any penalties, additions to tax
or additional amounts with respect thereto, and the term "Tax" means any one of
the foregoing Taxes.

"Termination Date" means 11:59 p.m. New York City time on December 15,
1999; provided however, that each party has the right in its sole discretion,
exercisable at any time prior to 11:59 p.m. New York City time on December 15,
1999, by written notice to the other parties, to extend the Termination Date to
11:59 p.m. New York City time on March 1, 2000 in which case for all purposes
pursuant to this Agreement, the Termination Date shall be deemed to mean 11:59
p.m. New York City time on March 1, 2000.

"Underlying Assets" means any asset which is capable of generating
proceeds that would constitute an Adjustment Amount or Substitute Adjustment
Amount.

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<PAGE>

(b) In addition to the terms defined in Section 7.4(a), the following
terms are defined in the following sections of this Agreement:

Defined Term Where Found
------------ -----------

Acquisition Corp. Preamble

Acquisition Proposal 4.8.2

Adjustment Amounts 2.4.1

Adjustment 2.4.1

Aggregate Cash Merger Consideration 2.1.1

Agreement Preamble

Assignee 2.4.3

Authorization 3.2.8

Beta 2.4.1

BGI 2.2.7

Board 3.2.2

Cash Merger Consideration 2.1.1

Certificate of Merger 1.2

Certificates 2.2.2

Closing 1.6

Closing Date 1.6

Code 2.2.6

Combined Deferred Payment Right 2.1.1

Common Stock 2.1.1

Company Preamble

Company Filings 4.3.4

Company Shareholders 2.2.1

Company's Opinion 5.3.3

Consents 4.3.6

Constituent Corporation 1.1

Contribution 4.12

Covered Expenses 6.4.2

D&O Insurance 4.4.1

Deferred Payment Date 2.4.2

Deferred Payment Fund 2.4.1

Deferred Payment Right 2.1.1

Deferred Payment Termination Date 2.4.1

Deferred Payments 2.4.1

Distribution 4.12

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<PAGE>

Defined Term Where Found
------------ -----------

Effective Date 1.2

Encumbrance 3.3.4

Escrow Fund Payment Right 2.1.1

Escrow Fund Payments 2.4.5

Exchange Act 3.2.7

Excluded Expenses 2.4.1

Fairness Opinion 3.2.5

Form 10-SB 4.12

GAAP 4.2

Government Entity 4.3.6

Indemnified Person 4.4.1

Indemnified Persons 4.4.1

Ineligible Holders 2.1.1

Initial Agreement Preamble

Instructions 4.11

Josephthal 3.2.4

Letter of Transmittal 2.2.2

Losses 4.4.3

Meeting 4.3.1

Merger Preamble

Merger Consideration 2.1.1

Natural Dam 2.4.1

NYBCL Preamble

Objecting Shareholders 2.1.1

Parent Preamble

Parent Filings 4.3.5

Parent Loan 4.5.1

Parent Obligations 3.3.4

Parent's Opinion 5.2.3

Paying Agent 2.2

Payor 2.4.4

Proxy Statement 3.2.5

Related Entity 2.4.1

Reserved Shares 2.1.1

Schedule 13E-3 3.2.7

A-24
<PAGE>

Defined Term Where Found
------------ -----------

SEC 4.3.2

Special Committee 5.2.5

Spin-Off 4.12

Spin-Off Date 4.12

Stock Option 3.2.3

Substitute Adjustment Amounts 2.4.4

Substitute Adjustments 2.4.4

Substitute Deferred Payment Fund 2.4.4

Substitution Agreement 4.9

Survival Period 7.1

Surviving Corporation 1.1

Transaction Agreements 3.2.2

7.15 Headings. The headings contained in this Agreement and this
Agreement's Table of Contents are for convenience of reference only and shall
not affect the meaning or interpretation of this Agreement.

7.16 Interpretation; Construction. Whenever the term "including" is used
in this Agreement it shall mean "including, without limitation," (whether or
not such language is specifically set forth) and shall not be deemed to limit
the range of possibilities to those items specifically enumerated. All joint
obligations herein shall be deemed to be joint and several whether or not
specifically so specified. The Exhibits referred to herein shall be construed
as an integral part of this Agreement to the same extent as if they were set
forth verbatim herein. Disclosure of any fact or item in any Article or Section
of this Agreement or any Exhibit hereto shall, should the existence of the fact
or item be relevant to any other Section of this Agreement or any Exhibit
hereto, be deemed disclosed with respect to such other Article or Section of
this Agreement or such other Exhibit.

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<PAGE>

IN WITNESS WHEREOF, the parties have executed this Amended and Restated
Agreement and Plan of Merger on the date first above written.

PARENT:

BESICORP HOLDINGS, LTD.

/s/ Michael F. Zinn
By: --------------------------------
Name: Michael F. Zinn
Title: President

ACQUISITION CORP:

BESI ACQUISITION CORP.

/s/ Michael F. Zinn
By: --------------------------------
Name: Michael F. Zinn
Title: President

THE COMPANY:

BESICORP LTD.

/s/ Michael J. Daley
By: --------------------------------
Name: Michael J. Daley
Title: Executive Vice President

AGREED TO AND ACCEPTED
WITH RESPECT TO SECTION
4.6 BY MICHAEL F. ZINN

/s/ Michael F. Zinn
- -------------------------

A-26
<PAGE>

Josephthal
Annex B

PRIVATE AND CONFIDENTIAL

September 22, 1999

The Board of Directors
Besicorp, Ltd.
1151 Flatbush Road
Kingston, New York 12401

Dear Board Member:

We understand that Besi Acquisition Corp ("Acquisition Corp"), a
wholly-owned Subsidiary of Besicorp Holdings, Ltd. ("Parent"), a company
controlled by Michael F. Zinn, currently the Chairman of the Board, President
and Chief Executive Officer of Besicorp, Ltd. (the "Company" or "Besicorp"),
Parent and the Company are considering a proposed transaction in which
Acquisition Corp will merge with and into the Company (the "Merger"), subject
to all of its liabilities, on or before an agreed upon date ("Effective Time")
as set forth in the Agreement and Plan of Merger by and between Besi
Acquisition Corp and Parent (the "Merger Agreement").1 The consummation of the
Merger is subject to the execution of a certificate of merger ("Certificate of
Merger") between Acquisition Corp and Besicorp. As more specifically set forth
in the Agreement, and subject to the terms and conditions thereof, each share
of common stock of Besicorp, $0.01 par value, (the "Common Shares") issued and
outstanding immediately prior to the Effective Time of the Merger (other than
shares of Common Shares held as treasury shares by the Company or its
Subsidiaries and shares of Common Stock then owned of record by Acquisition
Corp and Parent (the "Ineligible Holders")), shall be converted into the right
to receive in cash an aggregate of $8.0 million divided by the sum of (i) the
number of shares of Common Stock issued and outstanding immediately prior to
the Effective Date (other than those shares held as treasury shares by the
Company) and (ii) the number of Management Restricted Shares for which
substitute securities have been issued, or $58.70 per share2 ("Cash Merger
Consideration") and the right to receive on a pro-rata basis in accordance with
the provisions of the Merger Agreement (i) monies, if any, that may be released
from the approximately $6.5 million March 1999 Escrow Fund established in
connection with the merger involving the Company's former parent, Besicorp
Group Inc., (ii) amounts received with respect to litigation claims by Besicorp
from matters arising before the Effective Time, (iii) amounts received by Beta
Partnership, Inc. and distributions received from Kamine Besicorp Natural Dam
L.P. Inc. (other than an amount anticipated to be received by Beta from Natural
Dam in November, 1999) and any other funds that are distributed as a result of
remaining partnership interests in existence as of the date of the Merger
Agreement, (iv) any realized funds that may be distributed to the Company as a
result of outstanding hydro credits, and (v) amounts received with respect to
the sale of the Company's interests, directly or indirectly (except for debt
financing for development capital purposes which might have an equity carried
interest in a foreign development project) in each of its non-U.S. development
projects within twelve months following the Effective Time, less expenses
(other than SG&A) incurred and paid towards the project within the twelve
months following the Effective Time (in the aggregate, the "Deferred
Payments"), collectively, the "Merger Consideration". The Zinn Family Trust
(the "Trust") in which Michael F. Zinn disclaims beneficial ownership may be
offered an opportunity to participate with Parent in the Merger. We have been
advised that the Trust will vote its Common Shares in favor of the Merger
irrespective of whether it is a participant with Parent in the Merger.

- ------------
1. Capitalized terms used herein without definitions shall have the meaning
ascribed to them in the Merger Agreement.
2. Based upon 122,432 Common Shares issued and outstanding and 13,850
restricted Common Shares owned by management. We were not involved in the
issuance of the restricted shares and do not opine on their value or
participation in the merger.

Josephthal & Co. Inc.
200 Park Avenue * New York, NY 10166
Tel: 212-907-4000, 800-285-6200 * Fax: 212-907-4080

B-1
<PAGE>

You have requested our opinion as to the fairness from a financial point
of view, to the Company and its stockholders, other than the Michael F. Zinn,
of the consideration to be paid by Acquisition Corp to the holders of Common
Shares in the Merger (the "Fairness Opinion"). We do not perform tax,
accounting, legal services or render such advice. In addition, we were not
involved in the issuance of the restricted shares and do not opine on their
value or participation in the merger.

In conducting our review and analyses, and arriving at the opinion
expressed herein, we have assumed and relied upon the accuracy and completeness
of all of the financial and other information provided to us by the Company or
publicly available and have neither attempted independently to verify nor
assumed responsibility for verifying any of this information. We have not
conducted a physical inspection of Besicorp's properties or facilities, nor
have we made or obtained or assumed any responsibility for making or obtaining
any independent evaluations or appraisals of any of the related properties,
facilities or business segments. We have assumed that management's financial
analyses have been prepared on a good faith reasonable basis reflecting the
best currently available estimates and judgments of Besicorp's management
and/or financial consultants or advisors to Besicorp. Further, the Company
represents and warrants the accuracy and completeness of the information it has
provided.

In evaluating the Merger and Merger Consideration, we have taken into
account statements by Michael F. Zinn in his offer letter, dated June 17, 1999,
and revised offer dated August 10, 1999. We understand that Michael F. Zinn:
(i) will not agree to be employed by a Company in which he is not in control;
(ii) is unwilling to personally guarantee any debt or debt related financing in
a public company; (iii) in his capacity as a shareholder, will not approve the
sale of assets to a third party and will vote against such sale, and has been
advised by the Independent Special Trustee of the Zinn Family Trust that the
Zinn Family Trust also opposes any sale of assets and would similarly vote
against such sale to a third party; (iv) is unwilling to purchase some but less
than all of the business assets of Besicorp; (v) is unwilling to continue in
the employment of the Company under current conditions; and (vi) continues to
hold to the beliefs and conclusions contained in the offer letter dated June
17, 1999 under the heading "Certain Factors Influencing Offeror." The Company
has given the Special Committee and its advisors unrestricted access to
information and employees and the Purchaser has removed himself from the
diligence process and has recused himself from the Special Committee process of
analyzing the Merger.

In conducting our analyses and reviewing the information provided to us by
the Company, we understand and have considered the following asset categories
to be included in the Company: (i) the SunWize business ("SunWize"); (ii) all
outstanding projects and identified prospective projects of Besicorp
Development Inc. ("BDI") and other subsidiaries of the Company and SunWize;
(iii) outstanding partnership interests and credits due to Besicorp which may
result in cash inflows to the Company; (iv) Besicorp real estate, including the
properties used in existing business operations and properties that are
exogenous to existing business operations; and (v) the March 1999 Escrow Fund,
established in connection with the merger involving Besicorp Group Inc. to fund
the litigation costs, judgements, and/or assist in the settlement of any
litigation pending against Besicorp Group Inc. and/or arising out of the
Besicorp Group Inc. merger transaction consummated March 22, 1999. We
understand the Deferred Payments are excluded from the Cash Merger
Consideration and any monies received will be segregated and distributed pro
rata to shareholders of record as of the Effective Time.

In order to arrive at our opinion, we have reviewed the following
materials and considered such financial and other factors as we deemed relevant
under the circumstances, including, among others, the following: (i) certain
historical financial, operating and other data that were publicly available or
were furnished to us by Besicorp regarding the Merger including, but not
limited to: (a) projections and cash flow analyses for SunWize prepared by
management; (b) Form 10KSB and Form 10KSB/A for the period ending 3/31/99,
Proxy Statement of Besicorp Group Inc. dated 3/1/99 and Information Statement
dated 3/19/99; (c) Form 10Q for the period ending 6/30/99; (d) internally
generated operating reports and discussions from management concerning the
various business segments of Besicorp; (e) Empire Project financial model
prepared by Morgan Stanley Dean Witter and Besicorp; (f) real estate appraisal
and partnership interests and hydro credit valuations prepared by management
with the assistance of identified third parties; (ii) various press releases
regarding the development and status of the Empire Project and other projects;
(iii) publicly available financial, operating and stock market data for
companies engaged in businesses deemed comparable to those of the Company; (iv)
merger and acquisition transactions by companies in the same or similar
businesses considered to have degrees of comparability to the

B-2
<PAGE>

Merger; and (v) such other factors and information as we deemed appropriate. We
have met with senior officers of the Company to discuss prospects for
Besicorp's business and such matters as we believed relevant. In addiiton, we
have reviewed the Agreement and Plan of Merger dated as of September 16, 1999.

In conducting our analyses and arriving at our opinion as expressed
herein, we have considered such financial and other factors as we have deemed
appropriate under the circumstances including, among others, the following: (i)
the historical and current financial position and results of operations of
Besicorp; (ii) the business prospects of Besicorp; (iii) the historical and
current market for the Common Shares and (iv) the nature and terms of other
acquisition transactions that we believe to be relevant. We have also taken
into account our assessment of general economic, market and financial
conditions as well as our experience in connection with similar transactions
and securities valuation generally. Our opinion necessarily is based upon
conditions as they exist and can be evaluated on the date hereof and we assume
no responsibility to update or revise this presentation based upon
circumstances or events occurring after the date hereof. In that regard, we
have not considered any acquisition or similar transaction to which Besicorp
might become a party whether announced or not, that has not closed prior to the
date hereof. This presentation is limited to the fairness, from a financial
point of view, of the Merger Consideration to be paid to the holders of Common
Shares of Besicorp other than Michael F. Zinn in the Merger. This presentation
does not address in any way Besicorp's underlying business decision to effect
the Merger. We have not been involved in forming Parent, Acquisition Corp or
the Merger Consideration and have not assumed any responsibility for making or
obtaining an independent evaluation or appraisal of Besicorp's properties or
other assets, nor do we opine on the capital requirements or availability of
capital for Besicorp.

As you know, Josephthal & Co. Inc. ("Josephthal") has been retained by
Besicorp to render this opinion and provide other financial advisory services,
and will receive fees for such services. In addition, in the ordinary course of
the business, Josephthal may actively trade the Common Shares for its own
account and for the accounts of customers, and, accordingly, may at any time
hold a long or short position in such securities.

This Fairness Opinion is solely for the use of Besicorp (including its
Board of Directors) and is not to be publicly-disclosed, used, excerpted,
reproduced or disseminated, quoted or referred to at any time, in any manner or
for any purpose, without the prior written consent of Josephthal; provided,
however, that Besicorp may include the Fairness Opinion in whole but not in
part as an annex to the Proxy Statement to be filed with the Securities and
Exchange Commission and delivered to the stockholders of Besicorp. This opinion
does not constitute a recommendation to any holder of Common Shares as to how
any such stockholder should vote on any aspect of the Merger, including the
Merger Consideration, nor does this opinion address the relative merits of the
Merger or any other transactions or business strategies discussed by the Board
of Directors of Besicorp as alternatives to the Merger or the decision of the
Board of Directors of Besicorp to proceed with the Merger.

Based upon and subject to the foregoing it is our opinion as investment
bankers that, as of the date hereof, the Merger Consideration to be received by
the holders of Common Shares of Besicorp (other than Michael F. Zinn) in the
Merger is fair from a financial point of view.

Very truly yours,

/s/ Josephthal & Co. Inc.
-------------------------------------

JOSEPHTHAL & CO. INC.

B-3
<PAGE>

Annex C

DISSENTER'S RIGHTS PROVISIONS

623 PROCEDURE TO ENFORCE SHAREHOLDER'S RIGHT TO RECEIVE PAYMENT FOR
SHARES.--(a) A shareholder intending to enforce his right under a section of
this chapter to receive payment for his shares if the proposed corporate action
referred to therein is taken shall file with the corporation, before the
meeting of shareholders at which the action is submitted to a vote, or at such
meeting but before the vote, written objection to the action. The objection
shall include a notice of his election to dissent, his name and residence
address, the number and classes of shares as to which he dissents and a demand
for payment of the fair value of his shares if the action is taken. Such
objection is not required from any shareholder to whom the corporation did not
give notice of such meeting in accordance with this chapter or where the
proposed action is authorized by written consent of shareholders without a
meeting.

(b) Within ten days after the shareholders' authorization date, which term
as used in this section means the date on which the shareholders' vote
authorizing such action was taken, or the date on which such consent without a
meeting was obtained from the requisite shareholders, the corporation shall
give written notice of such authorization or consent by registered mail to each
shareholder who filed written objection or from whom written objection was not
required, excepting any shareholder who voted for or consented in writing to
the proposed action and who thereby is deemed to have elected not to enforce
his right to receive payment for his shares.

(c) Within twenty days after the giving of notice to him, any shareholder
from whom written objection was not required and who elects to dissent shall
file with the corporation a written notice of such election, stating his name
and residence address, the number and classes of shares as to which he dissents
and a demand for payment of the fair value of his shares. Any shareholder who
elects to dissent from a merger under section 905 (Merger of subsidiary
corporation) or paragraph (c) of section 907 (Merger or consolidation of
domestic and foreign corporations) or from a share exchange under paragraph (g)
of section 913 (Share exchanges) shall file a written notice of such election
to dissent within twenty days after the giving to him of a copy of the plan of
merger or exchange or an outline of the material features thereof under section
905 or 913.

(d) A shareholder may not dissent as to less than all of the shares, as to
which he has a right to dissent, held by him of record, that he owns
beneficially. A nominee or fiduciary may not dissent on behalf of any
beneficial owner as to less than all of the shares of such owner, as to which
such nominee or fiduciary has a right to dissent, held of record by such
nominee or fiduciary.

(e) Upon consummation of the corporate action, the shareholder shall cease
to have any of the rights of a shareholder except the right to be paid the fair
value of his shares and any other rights under this section. A notice of
election may be withdrawn by the shareholder at any time prior to his
acceptance in writing of an offer made by the corporation, as provided in
paragraph (g), but in no case later than sixty days from the date of
consummation of the corporate action except that if the corporation fails to
make a timely offer, as provided in paragraph (g), the time for withdrawing a
notice of election shall be extended until sixty days from the date an offer is
made. Upon expiration of such time withdrawal of a notice of election shall
require the written consent of the corporation. In order to be effective,
withdrawal of a notice of election must be accompanied by the return to the
corporation of any advance payment made to the shareholder as provided in
paragraph (g). If a notice of election is withdrawn, or the corporate action is
rescinded, or a court shall determine that the shareholder is not entitled to
receive payment for his shares, or the shareholder shall otherwise lose his
dissenter's rights, he shall not have the right to receive payment for his
shares and he shall be reinstated to all his rights as a shareholder as of the
consummation of the corporate action, including any intervening preemptive
rights and the right to payment of any intervening dividend or other
distribution or, if any such rights have expired or any such dividend or
distribution other than in cash has been completed, in lieu thereof, at the
election of the corporation, the fair value thereof in cash as determined by
the board as of the time of such expiration or completion, but without
prejudice otherwise to any corporate proceedings that may have been taken in
the interim.

(f) At the time of filing the notice of election to dissent or within one
month thereafter the shareholder of shares represented by certificates shall
submit the certificates representing his shares to the corporation, or to its
transfer agent, which shall forthwith note conspicuously thereon that a notice
of election has been filed and shall return the certificates to the shareholder
or other person who submitted them on his behalf. Any shareholder of

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shares represented by certificates who fails to submit his certificates for
such notation as herein specified shall, at the option of the corporation
exercised by written notice to him within forty-five days from the date of
filing of such notice of election to dissent, lose his dissenter's rights
unless a court, for good cause shown, shall otherwise direct. Upon transfer of
a certificate bearing such notation, each new certificate issued therefor shall
bear a similar notation together with the name of the original dissenting
holder of the shares and a transferee shall acquire no rights in the
corporation except those which the original dissenting shareholder had at the
time of the transfer.

(g) Within fifteen days after the expiration of the period within which
shareholders may file their notices of election to dissent, or within fifteen
days after the proposed corporate action is consummated, whichever is later
(but in no case later than ninety days from the shareholders' authorization
date), the corporation or, in the case of a merger or consolidation, the
surviving or new corporation, shall make a written offer by registered mail to
each shareholder who has filed such notice of election to pay for his shares at
a specified price which the corporation considers to be their fair value. Such
offer shall be accompanied by a statement setting forth the aggregate number of
shares with respect to which notices of election to dissent have been received
and the aggregate number of holders of such shares. If the corporate action has
been consummated, such offer shall also be accompanied by (1) advance payment
to each such shareholder who has submitted the certificates representing his
shares to the corporation, as provided in paragraph (f), of an amount equal to
eighty percent of the amount of such offer, or (2) as to each shareholder who
has not yet submitted his certificates a statement that advance payment to him
of an amount equal to eighty percent of the amount of such offer will be made
by the corporation promptly upon submission of his certificates. If the
corporate action has not been consummated at the time of the making of the
offer, such advance payment or statement as to advance payment shall be sent to
each shareholder entitled thereto forthwith upon consummation of the corporate
action. Every advance payment or statement as to advance payment shall include
advice to the shareholder to the effect that acceptance of such payment does
not constitute a waiver of any dissenters' rights. If the corporate action has
not been consummated upon the expiration of the ninety day period after the
shareholders' authorization date, the offer may be conditioned upon the
consummation of such action. Such offer shall be made at the same price per
share to all dissenting shareholders of the same class, or if divided into
series, of the same series and shall be accompanied by a balance sheet of the
corporation whose shares the dissenting shareholder holds as of the latest
available date, which shall not be earlier than twelve months before the making
of such offer, and a profit and loss statement or statements for not less than
a twelve month period ended on the date of such balance sheet or, if the
corporation was not in existence throughout such twelve month period, for the
portion thereof during which it was in existence. Notwithstanding the
foregoing, the corporation shall not be required to furnish a balance sheet or
profit and loss statement or statements to any shareholder to whom such balance
sheet or profit and loss statement or statements were previously furnished, nor
if in connection with obtaining the shareholders' authorization for or consent
to the proposed corporate action the shareholders were furnished with a proxy
or information statement, which included financial statements, pursuant to
Regulation 14A or Regulation 14C of the United States Securities and Exchange
Commission. If within thirty days after the making of such offer, the
corporation making the offer and any shareholder agree upon the price to be
paid for his shares, payment therefor shall be made within sixty days after the
making of such offer or the consummation of the proposed corporate action,
whichever is later, upon the surrender of the certificates for any such shares
represented by certificates.

(h) The following procedure shall apply if the corporation fails to make
such offer within such period of fifteen days, or if it makes the offer and any
dissenting shareholder or shareholders fail to agree with it within the period
of thirty days thereafter upon the price to be paid for their shares:

(1) The corporation shall, within twenty days after the expiration of
whichever is applicable of the two periods last mentioned, institute a
special proceeding in the supreme court in the judicial district in which
the office of the corporation is located to determine the rights of
dissenting shareholders and to fix the fair value of their shares. If, in
the case of merger or consolidation, the surviving or new corporation is a
foreign corporation without an office in this state, such proceeding shall
be brought in the County where the office of the domestic corporation,
whose shares are to be valued, was located.

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<PAGE>

(2) If the corporation fails to institute such proceeding within such
period of twenty days, any dissenting shareholder may institute such
proceeding for the same purpose not later than thirty days after the
expiration of such twenty day period. If such proceeding is not instituted
within such thirty day period, all dissenter's rights shall be lost unless
the supreme court, for good cause shown, shall otherwise direct.

(3) All dissenting shareholders, excepting those who, as provided in
paragraph (g), have agreed with the corporation upon the price to be paid
for their shares, shall be made parties to such proceeding, which shall
have the effect of an action quasi in rem against their shares. The
corporation shall serve a copy of the petition in such proceeding upon each
dissenting shareholder who is a resident of this state in the manner
provided by law for the service of a summons, and upon each nonresident
dissenting shareholder either by registered mail and publication, or in
such other manner as is permitted by law. The jurisdiction of the court
shall be plenary and exclusive.

(4) The court shall determine whether each dissenting shareholder, as to
whom the corporation requests the court to make such determination, is
entitled to receive payment for his shares. If the corporation does not
request any such determination or if the court finds that any dissenting
shareholder is so entitled, it shall proceed to fix the value of the
shares, which, for the purposes of this section, shall be the fair value as
of the close of business on the day prior to the shareholders'
authorization date. In fixing the fair value of the shares, the court shall
consider the nature of the transaction giving rise to the shareholder's
right to receive payment for shares and its effects on the corporation and
its shareholders, the concepts and methods then customary in the relevant
securities and financial markets for determining fair value of shares of a
corporation engaging in a similar transaction under comparable
circumstances and all other relevant factors. The court shall determine the
fair value of the shares without a jury and without referral to an
appraiser or referee. Upon application by the corporation or by any
shareholder who is a party to the proceeding, the court may, in its
discretion, permit pretrial disclosure, including, but not limited to,
disclosure of any expert's reports relating to the fair value of the shares
whether or not intended for use at the trial in the proceeding and
notwithstanding subdivision (d) of section 3101 of the civil practice law
and rules.

(5) The final order in the proceeding shall be entered against the
corporation in favor of each dissenting shareholder who is a party to the
proceeding and is entitled thereto for the value of his shares so
determined.

(6) The final order shall include an allowance for interest at such rate
as the court finds to be equitable, from the date the corporate action was
consummated to the date of payment. In determining the rate of interest,
the court shall consider all relevant factors, including the rate of
interest which the corporation would have had to pay to borrow money during
the pendency of the proceeding. If the court finds that the refusal of any
shareholder to accept the corporate offer of payment for his shares was
arbitrary, vexatious or otherwise not in good faith, no interest shall be
allowed to him.

(7) Each party to such proceeding shall bear its own costs and expenses,
including the fees and expenses of its counsel and of any experts, employed
by it. Notwithstanding the foregoing, the court may, in its discretion,
apportion and assess all or any part of the costs, expenses and fees
incurred by the corporation against any or all of the dissenting
shareholders who are parties to the proceeding, including any who have
withdrawn their notices of election as provided in paragraph (e), if the
court finds that their refusal to accept the corporate offer was arbitrary,
vexatious or otherwise not in good faith. The court may, in its discretion,
apportion and assess all or any part of the costs, expenses and fees
incurred by any or all of the dissenting shareholders who are parties to
the proceeding against the corporation if the court finds any of the
following: (A) that the fair value of the shares as determined materially
exceeds the amount which the corporation offered to pay; (B) that no offer
or required advance payment was made by the corporation; (C) that the
corporation failed to institute the special proceeding within the period
specified therefor; or (D) that the action of the corporation in complying
with its obligations as provided in this section was arbitrary, vexatious
or otherwise not in good faith. In making any determination as provided in
clause (A), the court may consider the dollar amount or the percentage, or
both, by which the fair value of the shares as determined exceeds the
corporate offer.

(8) Within sixty days after final determination of the proceeding, the
corporation shall pay to each dissenting shareholder the amount found to be
due him, upon surrender of the certificate for any such shares represented
by certificates.

C-3
<PAGE>

(i) Shares acquired by the corporation upon the payment of the agreed
value therefor or of the amount due under the final order, as provided in this
section, shall become treasury shares or be cancelled as provided in section
515 (Reacquired shares), except that, in the case of a merger or consolidation,
they may be held and disposed of as the plan of merger or consolidation may
otherwise provide.

(j) No payment shall be made to a dissenting shareholder under this
section at a time when the corporation is insolvent or when such payment would
make it insolvent. In such event, the dissenting shareholder shall, at his
option:

(1) Withdraw his notice of election, which shall in such event be deemed
withdrawn with the written consent of the corporation; or

(2) Retain his status as a claimant against the corporation and, if it
is liquidated, be subordinated to the rights of creditors of the
corporation, but have rights superior to the non-dissenting shareholders,
and if it is not liquidated, retain his right to be paid for his shares,
which right the corporation shall be obliged to satisfy when the
restrictions of this paragraph do not apply.

(3) The dissenting shareholder shall exercise such option under
subparagraph (1) or (2) by written notice filed with the corporation within
thirty days after the corporation has given him written notice that payment
for his shares cannot be made because of the restrictions of this
paragraph. If the dissenting shareholder fails to exercise such option as
provided, the corporation shall exercise the option by written notice given
to him within twenty days after the expiration of such period of thirty
days.

(k) The enforcement by a shareholder of his right to receive payment for
his shares in the manner provided herein shall exclude the enforcement by such
shareholder of any other right to which he might otherwise be entitled by
virtue of share ownership, except as provided in paragraph (e), and except that
this section shall not exclude the right of such shareholder to bring or
maintain an appropriate action to obtain relief on the ground that such
corporate action will be or is unlawful or fraudulent as to him.

(l) Except as otherwise expressly provided in this section, any notice to
be given by a corporation to a shareholder under this section shall be given in
the manner provided in section 605 (Notice of meetings of shareholders).

(m) This section shall not apply to foreign corporations except as
provided in subparagraph (e)(2) of section 907 (Merger or consolidation of
domestic and foreign corporations).

910 RIGHT OF SHAREHOLDER TO RECEIVE PAYMENT FOR SHARES UPON MERGER OR
CONSOLIDATION, OR SALE, LEASE, EXCHANGE OR OTHER DISPOSITION OF ASSETS, OR
SHARE EXCHANGE.--(a) A shareholder of a domestic corporation shall, subject to
and by complying with section 623 (Procedure to enforce shareholder's right to
receive payment for shares), have the right to receive payment of the fair
value of his shares and the other rights and benefits provided by such section,
in the following cases:

(1) Any shareholder entitled to vote who does not assent to the taking
of an action specified in clauses (A), (B) and (C).

(A) Any plan of merger or consolidation to which the corporation is a
party; except that the right to receive payment of the fair value of his
shares shall not be available:

(i) To a shareholder of the parent corporation in a merger
authorized by section 905 (Merger of parent and subsidiary
corporations), or paragraph (c) of section 907 (Merger or
consolidation of domestic and foreign corporations); or

(ii) To a shareholder of the surviving corporation in a merger
authorized by this article, other than a merger specified in
subclause (i), unless such merger effects one or more of the changes
specified in subparagraph (b)(6) of section 806 (Provisions as to
certain proceedings) in the rights of the shares held by such
shareholder, or

(iii) Notwithstanding subclause (ii) of this clause, to a
shareholder for the shares of any class or series of stock, which
shares or depository receipts in respect thereof, at the record date
fixed

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<PAGE>

to determine the shareholders entitled to receive notice of the
meeting of shareholders to vote upon the plan of merger or
consolidation, were 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.

(B) Any sale, lease, exchange or other disposition of all or
substantially all of the assets of a corporation which requires
shareholder approval under section 909 (Sale, lease, exchange or other
disposition of assets) other than a transaction wholly for cash where
the shareholders' approval thereof is conditioned upon the dissolution
of the corporation and the distribution of substantially all of its net
assets to the shareholders in accordance with their respective
interests within one year after the date of such transaction.

(C) Any share exchange authorized by section 913 in which the
corporation is participating as a subject corporation; except that the
right to receive payment of the fair value of his shares shall not be
available to a shareholder whose shares have not been acquired in the
exchange or to a shareholder for the shares of any class or series of
stock, which shares or depository receipt in respect there of, at the
record date fixed to determine the shareholders entitled to receive
notice of the meeting of shareholders to vote upon the plan of
exchange, were 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.

(2) Any shareholder of the subsidiary corporation in a merger authorized
by section 905 or paragraph (c) of section 907, or in a share exchange
authorized by paragraph (g) of section 913, who files with the corporation
a written notice of election to dissent as provided in paragraph (c) of
section 623.

(3) Any shareholder, not entitled to vote with respect to a plan of
merger or consolidation to which the corporation is a party, whose shares
will be cancelled or exchanged in the merger or consolidation for cash or
other consideration other than shares of the surviving or consolidated
corporation or another corporation.

C-5
<PAGE>

Besicorp Ltd.
1151 Flatbush Road
Kingston, New York 12401
----------------------
PROXY
For Special Meeting of Shareholders of Besicorp Ltd.
to be held on April 25, 2000
----------------------
This Proxy is solicited on behalf of the Board of Directors.

The undersigned hereby appoints Frederic Zinn and Michael J. Daley as
Proxies, each with the power of substitution, and hereby authorizes each of them
to represent and to vote, as designated below, all the shares of common stock of
Besicorp Ltd. held of record by the undersigned on March 6, 2000 at the Special
Meeting of Shareholders to be held on April 25, 2000, or any adjournment or
postponement thereof.

1. TO ADOPT THE AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER DATED AS OF
NOVEMBER 24, 1999, BY AND AMONG BESICORP LTD., BESICORP HOLDINGS, LTD. AND BESI
ACQUISITION CORP. AND THE MERGER PROVIDED FOR THEREIN.
/ / FOR / / AGAINST / / ABSTAIN
2. TO CONSIDER AND ACT UPON ANY OTHER BUSINESS AS MAY COME BEFORE THE SPECIAL
MEETING OF SHAREHOLDERS OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF.

PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY TO CONTINENTAL STOCK TRANSFER &
TRUST COMPANY, THE COMPANY'S TRANSFER AGENT.

This Proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder. (IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSAL 1 and in the discretion of the named proxies with respect
to any other matter that may properly come before the meeting or any adjournment
or postponement thereof.)

- ------------------------------------
Signature
- ------------------------------------
Signature, if held jointly
Dated _______________________________, 2000

Please date and sign exactly as name appears on your stock certificate. Joint
owners should each sign personally. Trustees, custodians, executors and others
signing in a representative capacity should indicate the capacity in which they
sign.

NOTE: YOU MAY ALSO RETURN THIS PROXY CARD BY FACSIMILE TRANSMISSION TO
CONTINENTAL STOCK TRANSFER & TRUST COMPANY ("CONTINENTAL"). TO RETURN THIS CARD
BY FAX, YOU MUST PHOTOCOPY BOTH SIDES OF THE SIGNED PROXY CARD SO THAT THEY
APPEAR ON THE SAME PAGE AND FAX THE PHOTOCOPY TO CONTINENTAL AT (212) 509-5152,
Attn: Proxy Department. IF YOU HAVE ANY QUESTIONS REGARDING THIS PROCEDURE CALL
CONTINENTAL AT (212) 509-4000 x520.