POST-EFFECTIVE AMENDMENT NO. 1
TO
FORM 10-SB
GENERAL FORM FOR REGISTRATION
OF SECURITIES OF SMALL BUSINESS ISSUERS
Under Section 12(b) or 12(g) of
the Securities Exchange Act of 1934
----------------
WOM, Inc.
(Name of Small Business Issuer in its charter)
New York 14-1818862
(State or other jurisdiction (I.R.S. Employer)
of incorporation or Identification No.)
organization
1151 Flatbush Road
Kingston, New York 12401
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code:
(914) 336-7700
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Securities to be registered under Section 12(b) of the Act:
None
Title of each class Name of each exchange on which
each class is to be registered
None None
- -------------- ---------------------------
Securities to be registered under Section 12(g) of the Act:
Common Stock, $.01 par value
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EXPLANATORY NOTE
This Registration Statement has been prepared on a prospective basis on
the assumption that, among other things, the Spin-Off (as defined in the
Information Statement which is a part of this Registration Statement) and the
related transactions contemplated to occur prior to or contemporaneously with
the Spin-Off will be effectuated as contemplated by the Information Statement.
There can be no assurance, however, that any or all of such transactions will
occur or will occur as so contemplated. Any significant modifications or
variations in the transactions contemplated will be reflected in an amendment or
supplement to this Registration Statement.
CROSS REFERENCE
WOM, INC.
INFORMATION INCLUDED IN INFORMATION STATEMENT AND INCORPORATED IN FORM 10-SB BY
REFERENCE
CROSS REFERENCE SHEET BETWEEN INFORMATION STATEMENT
AND ITEMS OF FORM 10-SB
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Item
No. Item Caption Location in Information Statement
PART I
1. Business "SUMMARY;" "BUSINESS;" "RISK
FACTORS;" "THE CONTRIBUTION AND
THE SPIN-OFF;" "RELATIONSHIP
BETWEEN WOM AND BESICORP
AFTER THE SPIN-OFF;" "THE
MERGER;" and "MANAGEMENT'S
DISCUSSION AND ANALYSIS OR PLAN
OF OPERATIONS."
2. Management's Discussion
and Analysis "BUSINESS;" "RISK FACTORS;"
"CAPITALIZATION;" "SELECTED
HISTORICAL AND PRO FORMA
FINANCIAL DATA;" and
"MANAGEMENT'S DISCUSSION AND
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ANALYSIS OR PLAN OF
OPERATIONS."
3. Properties "BUSINESS."
4. Security Ownership of
Certain Beneficial Owners
and Management "SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND
MANAGEMENT;" and "RISK FACTORS."
5. Directors and Executive
Officers "MANAGEMENT--DIRECTORS AND
EXECUTIVE OFFICERS;" "BUSINESS;"
and "RISK FACTORS."
6. Executive Compensation "MANAGEMENT--EXECUTIVE
COMPENSATION;" and "RISK
FACTORS."
7. Certain Relationships and
Related Transactions "SUMMARY;" "RISK FACTORS;" "THE
CONTRIBUTION AND THE SPIN-OFF;"
"RELATIONSHIP BETWEEN WOM
AND BESICORP AFTER THE SPIN-
OFF;" "THE MERGER;" and "CERTAIN
RELATIONSHIPS AND RELATED
TRANSACTIONS."
8. Description of Registrant's
Securities "RISK FACTORS;" "DESCRIPTION OF
THE CAPITAL STOCK;" "DIVIDEND
POLICY;" and "DESCRIPTION OF
CERTAIN STATUTORY, CHARTER AND BY-LAW
PROVISIONS."
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PART II
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1. Market for Common
Equity and Related
Stockholder Matters "SUMMARY;" "RISK FACTORS;"
"DESCRIPTION OF THE CAPITAL
STOCK;" "LISTING AND TRADING OF WOM
COMMON STOCK" AND "DIVIDEND POLICY."
2. Legal Proceedings "BUSINESS."
5. Indemnification of Directors
and Officers "LIABILITY AND INDEMNIFICATION
OF DIRECTORS AND OFFICERS."
PART F/S
F/S. Financial Statements "CAPITALIZATION;" "SELECTED
HISTORICAL AND PRO FORMA FINANCIAL
DATA" and Financial Statements
Beginning on Page F-1.
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INFORMATION NOT INCLUDED IN INFORMATION STATEMENT
PART II
Item 3 Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.
None.
Item 4 Recent Sales of Unregistered Securities.
Following the organization of WOM, Inc. ("WOM"), on December 14,
1999, Besicorp Ltd. ("Besicorp") contributed $100 to WOM for 100 shares of WOM's
common stock that WOM issued under Section 4(2) of the Securities Act of 1933,
as amended (the "Securities Act") without registration under the Securities Act.
As a result, Besicorp became the sole shareholder of WOM. Besicorp remains the
sole shareholder and it is expected that it will
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remain the sole shareholder until the consummation of the Spin-Off, at which
time all of the shares of WOM's common stock issued to Besicorp (including any
additional shares issued to Besicorp subsequent to the date hereof) will be
distributed on a pro rata basis to the holders of Besicorp's common stock
pursuant to the Spin-Off.
PART III
Item 1 Exhibits.
The following documents are filed as
exhibits hereto:
Exhibit No. Description
2.1 Contribution and Distribution Agreement by and
between Besicorp and WOM.
3(i) Certificate of Incorporation of WOM, Inc.*
3(ii) By-Laws of WOM, Inc.
10.1 Indemnification Agreement dated as of March 22, 1999
by and among Besicorp Group Inc. ("BGI"), Besicorp,
BGI Acquisition LLC ("LLC") and BGI Acquisition Corp.
("BGI Acquisition")*
10.2 Escrow Agreement (the "Escrow Agreement") dated as of
March 22, 1999 by and among Besicorp, BGI, LLC and
BGI Acquisition.*
10.3 Amendment No.1 to the Escrow Agreement dated as of
February 23, 2000 by and among Besicorp, BGI, LLC and
WOM.
27 Financial Data Schedule - December 31, 1999*
* Previously filed
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SIGNATURES
Pursuant to the requirement of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized.
WOM, Inc.
By: /s/ Michael F. Zinn
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Name: Michael F. Zinn
Title: Secretary
April 7, 2000
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Besicorp Ltd.
1151 Flatbush Road
Kingston, New York 12401
April [ ], 2000
Dear Shareholder of Besicorp Ltd.:
On or about April 25, 2000, under a plan (the "Spin-Off") approved by
Besicorp's Board of Directors, Besicorp's contingent assets and liabilities
comprising the Bansbach Litigation will become a separate independent company -
WOM, Inc. - and all of the shares of WOM's Common Stock (the "WOM Stock") will
be issued to Besicorp's shareholders on a pro rata basis as a stock dividend.
The Spin-Off will not affect your ownership of Besicorp's Common Stock
("Besicorp Stock"). Shortly after the Spin-Off, Besicorp will merge with Besi
Acquisition Corp. (the "Merger") and your shares of Besicorp Stock will be
converted into merger consideration.
For each share of Besicorp Stock you own on April 25, 2000, you will
become an owner of one share of WOM Stock.
WOM will engage in only one activity: maintaining an existence so that
the Bansbach Litigation may be maintained after the Merger. It is expected that
WOM will be managed by certain of Besicorp's current executive officers and will
be located in Besicorp's current headquarters. The enclosed Information
Statement contains details on the Spin-Off and WOM, Inc.
Following the Spin-Off, you will receive certificates for your shares
of WOM Stock from Besicorp's transfer agent, Continental Trust & Stock Transfer
Company.
The Information Statement provides you with information explaining how
you should calculate the tax basis for your shares of Besicorp and WOM Stock.
We urge you to read the enclosed information statement carefully. For
questions relating to the issuance or trading of shares of WOM Stock, please
call Continental Trust & Stock Transfer Company, at 212-509-4000 x 535. For
other questions addressed to Besicorp or WOM, please contact Susan Whitaker at
Besicorp at 914-336-7700, ext. 104.
Sincerely,
Michael F. Zinn Michael F. Zinn
Chairman of the Board, President and Chief Executive
President and Chief Executive Officer Officer
Besicorp Ltd. WOM, Inc.
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A REGISTRATION STATEMENT ON FORM 10-SB RELATING TO THESE SECURITIES HAS BEEN
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THIS INFORMATION STATEMENT
SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR
SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER,
SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION
UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
PRELIMINARY INFORMATION STATEMENT
SUBJECT TO COMPLETION, DATED APRIL [ ], 2000
WOM, INC.
COMMON STOCK
(PAR VALUE $.01 PER SHARE)
We are furnishing you with this Information Statement in
connection with Besicorp's distribution of all of the outstanding shares of WOM
Common Stock of WOM, Inc., a New York corporation and wholly owned subsidiary of
Besicorp, to the holders of record of shares of Besicorp Common Stock as of the
Spin-Off Record Date. These shares will be distributed immediately prior to the
Merger. You will receive one share of WOM Common Stock for each share of
Besicorp Common Stock you own. You will not pay for the shares of WOM Common
Stock you will receive in the Spin-Off. CERTAIN CAPITALIZED TERMS USED IN THIS
INFORMATION STATEMENT ARE DEFINED IN APPENDIX 1 HERETO.
WOM was formed in December 1999 for the purpose of effectuating the
Spin-Off, which Besicorp is effectuating 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 Bansbach Litigation is a
shareholder derivative action that was commenced in August 1997 in the New York
Supreme Court, Ulster County, 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." The Plan of Merger by and among Besicorp and the
Buyer requires Besicorp to effectuate the Spin-Off before effectuating the
Merger unless the Bansbach Litigation is not pending at 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 Bansbach Litigation
is then pending. Your receipt of shares of WOM Common Stock ordinarily would be
a taxable event for you; however, since Besicorp is valuing the shares of WOM
Common Stock at $0.00 per share, you will most likely receive no dividend
income. See "Material Federal Income Tax Consequences."
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Prior to the Spin-Off Record Date, (i) Besicorp contributed 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) the Escrow Agreement
was amended by the Escrow Agreement Amendment to permit WOM to receive
reimbursement for WOM Costs.
We are assuming in this Information Statement that the
following events have occurred: (i) the effectuation of the Contribution and
(ii) the adoption of the Plan of Merger by Besicorp's shareholders. However, at
the time of this Information Statement such events have not occurred.
Nonetheless we expect these events to occur on April 25, 2000 prior to the Spin-
Off. In addition we are assuming that none of the Management Restricted Shares
have been or will be cancelled prior to the Spin-Off. See "The Contribution and
the Spin-Off" and "Relationship Between WOM and Besicorp after the Spin-Off."
There is currently no public trading market for the shares of
WOM Common Stock. We have no intention of taking any action to make it possible
to trade shares of WOM Common Stock. WOM has not applied for listing of the WOM
Common Stock on any Exchange and the WOM Common Stock does not meet the stated
listing requirements of any Exchange. Accordingly, it is not anticipated that a
regular trading market will develop in the WOM Common Stock. See "Listing and
Trading of WOM Common Stock."
In reviewing this Information Statement, you should carefully
consider the matters described under the caption "RISK FACTORS" commencing on
page [13].
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THIS INFORMATION STATEMENT SHALL NOT CONSTITUTE AN
OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY
NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY
STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD
BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
----------------------
NO SHAREHOLDER APPROVAL IS REQUIRED OR SOUGHT IN CONNECTION
WITH THE SPIN-OFF. EACH SHAREHOLDER OF BESICORP AT THE SPIN-OFF
RECORD DATE WILL AUTOMATICALLY BE ENTITLED TO RECEIVE SHARES OF
WOM COMMON STOCK IN THE SPIN-OFF. WE ARE NOT ASKING YOU FOR A
PROXY, YOU SHOULD NOT SEND US A PROXY AND YOU ARE NOT REQUESTED
TO TAKE ANY ACTION WITH RESPECT TO YOUR SHARES.
----------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
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COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS INFORMATION STATEMENT. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
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THIS INFORMATION STATEMENT DOES NOT CONSTITUTE AN
OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO
BUY ANY SECURITIES.
The date of this Information Statement is April [ ], 2000.
THIS INFORMATION STATEMENT IS BEING FURNISHED SOLELY TO PROVIDE
INFORMATION TO SHAREHOLDERS OF BESICORP WHO WILL RECEIVE SHARES OF WOM COMMON
STOCK IN THE SPIN-OFF. IT IS NOT, AND IS NOT INTENDED TO BE CONSTRUED AS, AN
INDUCEMENT OR ENCOURAGEMENT TO BUY OR SELL ANY SECURITIES OF WOM OR BESICORP.
EXCEPT AS OTHERWISE INDICATED, THE INFORMATION CONTAINED IN THIS INFORMATION
STATEMENT IS BELIEVED TO BE ACCURATE AS OF APRIL [21], 2000. CHANGES MAY OCCUR
AFTER THAT DATE, AND NEITHER WOM NOR BESICORP WILL UPDATE THE INFORMATION
CONTAINED HEREIN EXCEPT IN THE NORMAL COURSE OF THEIR RESPECTIVE PUBLIC
DISCLOSURES.
ADDITIONAL INFORMATION
WOM has filed with the SEC a Registration Statement on Form
10-SB under the Exchange Act with respect to the shares of WOM Common Stock to
be received by the holders of Besicorp Common Stock in the Spin-Off. This
Information Statement does not contain all of the information which is set forth
in the Registration Statement and the exhibits and schedules thereto. Statements
in this Information Statement as to the contents of any contract, agreement or
other document are only summaries and are not necessarily complete. For complete
information regarding these matters, you should review the applicable exhibit or
schedule to the Registration Statement. The Registration Statement and the
exhibits and schedules thereto filed by WOM with the SEC may be inspected and
copied at the SEC's public reference facilities at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, as well as at the Regional
Offices of the SEC located at Northwestern Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661 and 7 World Trade Center, 13th
Floor, New York, New York 10048. Copies of such information may be obtained by
mail from the Public Reference Branch of the SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. Such material may also be obtained
on line at the SEC's Web site (http://www.sec.gov).
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Following the effectiveness of the Registration Statement and
the consummation of the Spin-Off, WOM will be required to comply with the
reporting requirements of the Exchange Act and will file reports, proxy
statements and other information with the SEC unless such filings are not
required. In addition, WOM will be required to provide annual reports containing
audited financial statements to its shareholders in connection with its annual
meetings of shareholders unless an exception is available for WOM (and WOM will
see if such an exception is available to it). WOM does not intend to hold
shareholder meetings except to the extent it is required to do so. After the
Spin-Off, such reports, proxy statements and other information will be available
for inspection and copying at the public reference facilities of the SEC and may
be obtained by mail or over the Internet from the SEC, as described above.
FORWARD-LOOKING STATEMENTS
This Information Statement includes or may include certain
forward-looking statements that involve risks and uncertainties that concern
WOM's financial position, business strategy, budgets, projected costs and plans
and objectives of management for future operations as well as other statements
including words such as "anticipate," "believe," "plan," "estimate," "expect,"
"intend," and other similar expressions. Although we believe our expectations
reflected in such forward-looking statements are based on reasonable
assumptions, you are cautioned that we cannot assure you that such expectations
will prove correct and that actual results and developments may differ
materially from those conveyed in such forward-looking statements. Important
factors that could cause actual results to differ materially from the
expectations reflected in the forward-looking statements herein include (i)
costs or difficulties related to our establishment as an independent entity
(including our ability to fund our operations from the Escrow Fund); (ii) the
time it takes to resolve the Bansbach Litigation; and (iii) the outcome of the
Bansbach Litigation. Such forward-looking statements speak only as of the date
on which they are made and we are not undertaking any obligation to update any
forward-looking statement to reflect events or circumstances after the date of
this Information Statement. If we do update or correct one or more
forward-looking statements, you should not conclude that we will make additional
updates or corrections with respect thereto or with respect to other forward-
looking statements.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS INFORMATION STATEMENT, AND, IF
SO GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED.
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TABLE OF CONTENTS
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PAGE
SUMMARY .........................................................................................................9
WOM, Inc.................................................................................................9
THE SPIN-OFF AND THE MERGER..............................................................................9
RISK FACTORS.....................................................................................................13
Risks related to our operations.........................................................................13
Risks related to the Distribution.......................................................................17
CAPITALIZATION...................................................................................................18
SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA.................................................................19
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS.......................................................20
BUSINESS ........................................................................................................20
THE CONTRIBUTION AND THE SPIN-OFF................................................................................23
Introduction............................................................................................23
The Contribution Agreement..............................................................................23
The terms of the Spin-Off...............................................................................24
Procedure for receiving shares of WOM Common Stock......................................................24
MATERIAL FEDERAL INCOME TAX CONSEQUENCES.........................................................................25
RELATIONSHIP BETWEEN WOM AND BESICORP AFTER THE SPIN-OFF.........................................................27
The Indemnification Agreement...........................................................................27
Escrow Agreement........................................................................................29
Additional Legal Proceedings............................................................................31
MANAGEMENT.......................................................................................................31
Directors and Executive Officers........................................................................31
Executive compensation..................................................................................32
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT..........................................................................................33
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS...................................................................35
THE MERGER.......................................................................................................36
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DESCRIPTION OF THE CAPITAL STOCK.................................................................................37
Authorized Capital Stock................................................................................37
Common Stock............................................................................................37
Certain effects of authorized and unissued stock........................................................38
DESCRIPTION OF CERTAIN STATUTORY, CHARTER AND BY-LAW PROVISIONS..................................................38
New York Anti-Takeover Law..............................................................................38
Number of Directors; Removal; Vacancies.................................................................39
Shareholder action by written consent; Special Meetings.................................................39
Amendment of By-Law Provisions..........................................................................39
Transfer Agent and Registrar............................................................................39
LIABILITY AND INDEMNIFICATION OF DIRECTORS AND OFFICERS..........................................................39
LISTING AND TRADING OF WOM COMMON STOCK..........................................................................40
EXPENSES OF THE SPIN-OFF.........................................................................................41
INDEPENDENT ACCOUNTANTS..........................................................................................41
DIVIDEND POLICY..................................................................................................42
INDEX TO THE FINANCIAL STATEMENTS OF WOM, INC...................................................................F-1
APPENDIX 1 -- Certain Defined Terms................................................................................
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SUMMARY
We summarize below information contained elsewhere in this
Information Statement. Because this is a summary, it does not contain all the
information that may be important to you. Certain capitalized terms used in this
summary are defined in Appendix 1 hereto. SHAREHOLDERS ARE URGED TO READ
CAREFULLY THIS INFORMATION STATEMENT IN ITS ENTIRETY.
WOM, INC.
After the Spin-Off, WOM will be an independent, publicly held
company which will hold the interests in the Bansbach Litigation that Besicorp
received from Old Besicorp pursuant to the Contribution Agreement as a result of
the Prior Merger Order. We will engage in only one activity: maintaining an
existence so that the Bansbach Litigation may be maintained after the Merger.
See "The Contribution and the Spin-Off." We use Besicorp's executive offices;
therefore we are located at 1151 Flatbush Road, Kingston, New York, and our
telephone number is (914) 336-7700.
THE SPIN-OFF AND THE MERGER
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DISTRIBUTING CORPORATION Besicorp Ltd. ("Besicorp"). References to
Besicorp include its subsidiaries, except where the
context otherwise requires.
DISTRIBUTED CORPORATION WOM, Inc. ("WOM").
OVERVIEW OF WOM Pursuant to the Contribution Agreement by and
between Besicorp and WOM, we hold the interests
in the Bansbach Litigation that Besicorp received
from Old Besicorp pursuant to the Prior
Contribution Agreement as a result of the Prior
Merger Order. In addition, we are entitled to receive
repayment of WOM Costs from the Escrow Fund
from time to time. We will engage in only one
activity: maintaining an existence so that the
Bansbach Litigation may be maintained after the
Merger. However, we have no intention of
providing any assistance to him. We do intend to
defend ourself from liability to the extent we deem
appropriate. If a Prior Merger Order Reversal
occurs before the Spin-Off, the Spin-Off will not
occur; if a Prior Merger Order Reversal occurs after
the Spin-Off, WOM will be dissolved. See "The
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Contribution and the Spin-Off--The Contribution
Agreement" and "Business."
Michael F. Zinn, the Chairman of Board, President
and Chief Executive Officer of Besicorp, will be
the Chairman of the Board, President and Chief
Executive Officer of WOM at the time of the Spin- Off.
DISTRIBUTION RATIO You will receive one share of WOM Common Stock
for each share, including Dissenters' Shares, of
Besicorp Common Stock (other than Restricted
Shares of Besicorp Common Stock) you own as of
the Spin-Off Record Date. If you hold Restricted
Shares of Besicorp Common Stock, you will receive
one share of WOM Restricted Stock (i.e., a share of
WOM Common Stock containing restrictions on its
transferability) for each Restricted Share you own as
of the Spin-Off Record Date. See "The
Contribution and the Spin-Off--Terms of the Spin-
Off."
SPIN-OFF RECORD DATE The Spin-Off will be consummated on the Spin-Off
Record Date. The Spin-Off Record Date is expected
to be the same day as the Effective Date. Therefore,
the holders of Besicorp Common Stock on the Spin-
Off Record Date will become the shareholders of
WOM. See "The Contribution and the Spin-Off--
Terms of the Spin-Off."
SHARES TO BE DISTRIBUTED Assumed to be approximately 135,886 shares of
WOM Common Stock (based on the number of
shares of Besicorp Common Stock outstanding on
April [21], 2000 and assuming (i) that no shares of
Besicorp Common Stock are issued or cancelled
prior to the Spin-Off and (ii) that the 4,000 Disputed
Shares are outstanding at the time of the Spin-Off ).
See "The Contribution and the Spin-Off--Terms of
the Spin-Off."
OVERVIEW OF THE SPIN-OFF The Spin-Off is being effectuated solely in order
to comply with the intent of the Prior Merger Order
which required Old Besicorp to assign to Besicorp
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the contingent assets and/or liabilities
comprising Old Besicorp's interests in the
Bansbach Litigation; the Bansbach Litigation
is a shareholder derivative action, so that
if there is a recovery Old Besicorp, as the
corporation subject to the litigation, and
not the named plaintiff, will be the recipient
of the recovery. If the Bansbach Litigation is
maintained and if the plaintiff in such litigation
prevails, approximately $1 million might be
recoverable, excluding interest and punitive damages.
The only shareholder of the Surviving Corporation
following the Merger will be Parent. Consequently,
consummation of the Merger ordinarily would cause
the 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. Therefore, in
order to avoid terminating the Bansbach Litigation as
a result of the Merger, Besicorp decided to effect
the Spin-Off and to assign to WOM the interests in the
Bansbach Litigation (i.e., the contingent assets
and/or liabilities) that Besicorp has received from
Old Besicorp as a result of the Prior Merger Order.
Management believes that these contingent assets
that have been assigned generally consist of any
recovery to which Old Besicorp is entitled and
these contingent liabilities generally consist of
any damages for which Old Besicorp is liable upon the
resolution of the Bansbach Litigation. The Contribution
followed by the Distribution will separate from Besicorp
all of the interests in the Bansbach Litigation that
Besicorp had received from Old Besicorp as a result of
the Prior Merger Order. Thereafter, WOM and not
Besicorp will be entitled to any proceeds if there is
a judgment or settlement in favor of the plaintiff; and
WOM and not Besicorp will be liable for any damages
for which Old Besicorp, as the subject corporation, is
liable. WOM and the other defendants will be liable
for such damages, but they will undoubtedly seek
reimbursement from the Escrow Fund unless either
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(i) the judgment prohibited such reimbursement or (ii)
in the case of the defendants (other than WOM)
indemnification is impermissible under the
NYBCL.
The Spin-Off will be effectuated only if (i) all
of the other conditions to the Merger have been
satisfied or waived and (ii) the Prior Merger Order
is still in effect. Besicorp has appealed the
Prior Merger Order to the United States Court of
Appeals for the Second Circuit for a hearing en
banc. If the Second Circuit en banc reverses the Prior
Merger Order before the Spin-Off and such reversal
is subject to no further appeal, the Spin-Off will
not be effectuated. See "The Contribution and the
Spin- Off--Terms of the Spin-Off."
OVERVIEW OF THE MERGER In the Merger, Acquisition Corp. will be merged
with and into Besicorp; Besicorp will be the
Surviving Corporation and will become a wholly
owned subsidiary of Parent. Mr. Zinn and members
of his immediate family indirectly own 100% of
Parent's common stock. At the Effective Date of the
Merger, the Outside Participating Shareholders'
Shares (i.e., each issued and outstanding share of
Besicorp Common Stock other than the shares held
by the Buyer and Dissenters) will be converted into
the right to receive the Merger Consideration which
consists of (i) the Cash Merger Consideration of at
least $58.87 in cash, subject to adjustment in certain
circumstances and (ii) the right to Besicorp Deferred
Payments in certain circumstances which are set
forth in the Plan of Merger and described in the
proxy statement of Besicorp dated March 22, 2000.
Dissenters will receive the appraised value of their
shares of Besicorp Common Stock in accordance with
the NYBCL and after compliance with all statutory requirements. The
Buyer's shares of Besicorp Common Stock will be cancelled.
The consummation of the Merger is subject to the
satisfaction or waiver of various conditions. See
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"The Merger" and "Relationship between WOM and
Besicorp after the Spin-Off."
RELATIONSHIP WITH BESICORP After the Merger, Besicorp and WOM will become
AFTER THE MERGER separately owned companies. Besicorp will be
owned by Parent (and Mr. Zinn and members of his
immediate family indirectly own 100% of Parent's common
stock); WOM will be owned by the Entitled Holders
(i.e., the holders of Besicorp Common Stock as of
the Spin-Off Record Date), including Michael F. Zinn
who will own approximately 44.9% of the outstanding
shares of WOM Common Stock. However, although Besicorp
and WOM will be separately owned Besicorp has agreed
to furnish WOM free of charge with the services of
Besicorp's employees and the use of Besicorp's corporate
headquarters to the extent that WOM determines is
reasonably necessary and for as long as WOM shall seek
such services and the use of such space. Michael F.
Zinn will be one of the two directors of WOM,
President and Chief Executive Officer.
Besicorp is a party to the Indemnification Agreement
which obligates Besicorp to indemnify BGI Parent, Old
Besicorp and certain other Purchaser Indemnitees from
damages they suffer arising out of, among other things,
Old Besicorp's breach of representations and
warranties set forth in the Prior Plan of Merger and
certain liabilities, taxes and litigation of Old
Besicorp. Besicorp is also a party to the Escrow
Agreement which governs the funds placed by Old
Besicorp in escrow as the Escrow Fund (which amount
to approximately $6.10 million as of March 7, 2000)
to, among other things, (a) satisfy Besicorp's obligations
under the Indemnification Agreement and (b) provide for
the payment of, among other things, certain litigation and related
costs.
</TABLE>
11
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<TABLE>
<CAPTION>
<S>
<C>
Since Besicorp's costs with respect to the Bansbach
Litigation were covered by the Escrow Fund prior to
the Spin-Off, the Escrow Agreement has been
amended, pursuant to the Escrow Agreement Amendment,
to provide that effective as of the consummation of
the Spin-Off (i) we shall be reimbursed from the
Escrow Fund for our reasonable expenses (up to
$35,000 per annum) (A) to maintain our existence,
comply with the Exchange Act and the rules and
regulations promulgated thereunder, and (B) for
such other matters as may be reasonably necessary
to permit the Bansbach Litigation to continue and
(ii) the costs of the Bansbach Litigation will
still be covered by the Escrow Agreement following the Spin-Off.
See "Relationship between WOM and Besicorp after the
Spin-Off."
FEDERAL INCOME TAX Your receipt of shares of WOM Common Stock
CONSEQUENCES (other than WOM Restricted Stock) would
ordinarily be a taxable event for you. The tax
consequences of such receipt vary depending
upon, among other things, your particular
circumstances. You will receive 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 receive no dividend
income.
Your receipt of shares of WOM Restricted Stock will
not be a taxable event unless an election under
ss.83(b) of the Code is made. However, an ordinary
income taxable event will occur for you upon the
vesting of such shares of WOM Restricted Stock based
upon the value of the WOM Restricted Stock at the
time of vesting. Shares of WOM Restricted Stock issued
on account of the 1,050 Independent Directors'
Restricted Shares will no longer be restricted after
the Merger, and thus will be subject to tax currently
based upon the value of their shares at the time of
the Merger, but all other shares of WOM Restricted
Stock will still be restricted.
You should read carefully the discussion under
"Material Federal Income Tax Consequences" and you
are urged to consult your tax advisors as to the
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
<S>
<C>
tax consequences of the Merger to you under
federal, state, local or any other applicable law.
We have not obtained an opinion of counsel with
respect to the disclosure set forth above and under
"Material Federal Income Tax Consequences."
DISTRIBUTION AGENT, Continental Stock Transfer & Trust Company will
TRANSFER AGENT AND serve as the Distribution Agent for the Spin-Off and
REGISTRAR as the transfer agent and registrar for the WOM
Common Stock.
DISTRIBUTION OF Besicorp will deliver to Continental shares
STOCK CERTIFICATES of WOM Common Stock representing 100% of the
outstanding shares of WOM Common Stock for
distribution to the Entitled Holders. Following the
Merger, Continental will distribute WOM Stock
Certificates to all Entitled Holders. See "The
Contribution and the Spin-Off--Terms of the Spin-
Off."
TRADING MARKET Currently, there is no public trading market for
WOM Common Stock and we do not anticipate that
any such market will develop. We have no intention
of taking any action to make it possible to trade
shares of WOM Common Stock. We have not
applied and do not intend to apply for listing of the
WOM Common Stock on any Exchange and the
WOM Common Stock does not meet the stated
listing requirements of any Exchange. Trading, if
any, in WOM Common Stock will take place only in
the over-the-counter market. See "Listing and
Trading of WOM Common Stock."
</TABLE>
RISK FACTORS
Any investment in shares of WOM Common Stock involves a high degree of
risk. You should consider carefully the following information about these risks,
together with the other information contained in this Information Statement,
before you decide to buy or sell WOM Common Stock.
13
<PAGE>
Risks related to our operations
We have no business activities and therefore expect to have no revenues or
profits.
We do not have any business activities and accordingly we do not expect
to have any future revenues or profits. WOM's principal assets consist of its
interests in the Bansbach Litigation. Because we are not engaged in any business
activity, these assets are our only possible source of revenues. These assets
will not generate any revenues to WOM unless there is a settlement or final
judgment in favor of the plaintiff in the Bansbach Litigation. If there is a
settlement or judgment in favor of the plaintiff, the named plaintiff will be
entitled to collect the reimbursement of certain expenses. Because, the Bansbach
Litigation is a shareholder derivative action brought on behalf of Old Besicorp
and as a result of the Prior Contribution Agreement and the Contribution
Agreement, Old Besicorp's assets relating to the Bansbach Litigation --
including the right to any settlement or judgment -- have been assigned to WOM.,
all other proceeds of the settlement or judgment will be delivered to WOM, not
Mr. Bansbach.
If the Bansbach Litigation is decided in favor of the defendants, we will never
receive any revenues and you will receive no dividends or distributions.
The Bansbach Litigation is our only possible source of revenues.
However, we do intend to defend ourself from liability to the extent we deem
appropriate. . If the Bansbach Litigation is decided in favor of the defendants,
neither the defendants nor anyone else will be required to pay any damages to
WOM and therefore we will receive no money as a result of the Bansbach
Litigation. As there is no likelihood that we will receive any other revenues
(because we are not engaged in any business activities), you will not receive
anything of value from us.
We will not assist in the prosecution of the Bansbach Litigation.
We are under no obligation to prosecute the action or to assist the
plaintiff, financially or otherwise, in his prosecution of the Bansbach
Litigation and we have no intention of providing any assistance to the
plaintiff. However, we do intend to defend ourself from liability to the extent
we deem appropriate.
We will dissolve if the Prior Merger Order is reversed.
If a Prior Merger Order Reversal occurs, we are required, pursuant to
the Contribution Agreement, to return to Besicorp the interests in the Bansbach
Litigation that Besicorp received from Old Besicorp pursuant to the Prior
Contribution Agreement as a result of the Prior Merger Order; in this case we
would have no assets and we would dissolve. See "The Contribution and the
Spin-Off--The Contribution Agreement" and "Business."
We have no cash, and have no expectations of having any revenues and therefore
to pay expenses we are totally dependent upon obtaining reimbursements from the
Escrow Fund.
14
<PAGE>
We have no cash, do not expect to have any revenues and do not
anticipate obtaining any financing. There is no likelihood that we would be able
to obtain any financing (without a guarantee from Mr. Zinn, which guarantee he
is unwilling to provide) from unrelated third parties because we lack assets and
revenues. We will have certain expenses, including franchise taxes, the costs
related to preparing documents required to be filed by public companies
(including the legal fees and the cost of preparing audited annual financials),
the expense of distributing materials to shareholders and the transfer agent's
fees as well as the costs associated with defending the Bansbach Litigation. We
are dependent upon our ability to obtain money from the Escrow Fund to pay these
expenses. Without reimbursements from the Escrow Fund, we will not be able to
pay our obligations as they become due and may be forced to curtail activities,
including our preparation of documents required to be filed by public companies.
See "Capitalization," "Management's Discussion and Analysis or Plan of
Operations," "Selected Historical and Pro Forma Financial Data," the Financial
Statements of WOM, Inc. and the Unaudited Pro Forma Financial Information.
We are only entitled to reimbursement from the Escrow Fund in certain
circumstances; if we need money for any reason other than the reasons set forth
in the Escrow Agreement, or if we cannot or do not receive reimbursement from
the Escrow Fund, we may not be able to obtain the necessary money.
We have no revenues, we have less than $100 in cash and cash
equivalents, expect no revenue and we will not attempt to incur debt or raise
capital. However, the parties to the Escrow Agreement, which was executed in
connection with the Prior Plan of Merger, have agreed (i) to permit us to
receive up to $35,000 annually in reimbursements from the Escrow Fund to cover
our reasonable expenses in connection with maintaining our existence, complying
with the Exchange Act and such other matters as may be reasonably necessary to
permit the Bansbach Litigation to continue and (ii) WOM Litigation Costs (i.e.
WOM's costs and expenses relating to (a) the Bansbach Litigation, (b) litigation
arising out of or relating to the Bansbach Litigation, (c) the Spin-Off and (d)
WOM's existence). Therefore, the Escrow Fund is not a source of funds to the
extent we need more than $35,000 in any year (except for WOM Litigation Costs
which do not have a maximum amount). It is not a source of funds to the extent
any of the parties to the Escrow Agreement asserts that the expenses were
unreasonable. Also, it is not a source of funds to the extent expenses do not
relate to maintaining our existence, complying with the Exchange Act or
permitting the Bansbach Litigation to continue. In addition, we are dependent
upon the Escrow Fund's containing enough money to permit the release of these
reimbursements to us. However, because the Escrow Fund is also available to
satisfy Besicorp's Litigation Costs and other matters, it is possible (although
unlikely) that such matters will deplete all of the Escrow Funds; if the Escrow
Fund is depleted we will be unable to obtain reimbursement. See "Relationship
between WOM and Besicorp after the Spin-Off -- Escrow Agreement." To the extent
we cannot obtain reimbursement from the Escrow Fund we are not likely to be able
to meet our obligations.
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<PAGE>
Since our principal shareholder and the Trust own approximately 52.2% of our
shares, they can elect and remove all of our directors and exercise significant
control over us and can sell or liquidate WOM.
We estimate that after the Spin-Off, Michael F. Zinn, the Chairman of
the Board, President and Chief Executive Officer of WOM, will own indirectly
approximately 44.9% and The Zinn Family Charitable Trust will own approximately
7.4% of the then outstanding shares of WOM Common Stock, assuming (i) that no
shares of Besicorp Common Stock are issued or cancelled prior to the Spin-Off
and (ii) that the 4,000 Disputed Shares are outstanding at the time of the
Spin-Off. The holders of more than 50% of the outstanding shares of WOM Common
Stock generally will be able to elect all of the members of the WOM Board.
Consequently, as Mr. Zinn and the Trust will hold approximately 52.2% of the
outstanding shares, if they were to vote their shares in the same manner they
will be able to elect (and remove) the member(s) of the WOM Board and exercise
substantial influence over the outcome of any issues which may be subject to a
vote of our shareholders and our policies and direction. See "Description of the
Capital Stock--Common Stock." In addition, if a prospective purchaser reached an
agreement with Mr. Zinn and the Trust to purchase their shares of WOM Common
Stock and to acquire WOM, their shares of WOM Common Stock would be sufficient
to guarantee shareholder approval of the transaction by which such purchaser
would acquire WOM. In addition, under the NYBCL they can authorize the
dissolution of WOM at any time and for any reason or for no reason at all.
We eliminated certain potential obstacles that may have hindered shareholders
with large holdings from engaging in certain business transactions with us.
Generally, New York corporations are subject to the provisions of
Section 912 of the NYBCL if they have a class of securities registered under
Section 12 of the Exchange Act. Section 912 provides, with certain exceptions,
that a New York corporation shall not engage in a "business combination" (e.g.,
merger, consolidation, recapitalization or disposition of stock or assets) with
any Interested Shareholder for a period of five years from the date that such
person first became an Interested Shareholder. After the end of such five year
period, generally the Interested Shareholder may engage in a business
combination only if (a) the business combination is approved by the holders of a
majority of the outstanding voting stock not beneficially owned by such
Interested Shareholder or (b) the business combination meets certain valuation
and consideration requirements for the stock of such corporation. Therefore,
ordinarily, Mr. Zinn, as the beneficial owner of more than 20% of the WOM Common
Stock, would not be able to engage in certain business combinations with WOM for
five years after the Spin-Off Record Date. Moreover, after the end of such five
year period, ordinarily he would not be able to engage in those business
combinations unless the business combination were approved by the holders of a
majority of the outstanding voting stock not beneficially owned by Mr. Zinn.
However, the WOM Certificate provides that Section 912 does not apply to WOM.
Therefore, Mr. Zinn, and any other person who qualifies as an Interested
Shareholder, will be able to engage in business combinations with WOM at any
time, subject, to the extent required by the NYBCL (other than in
16
<PAGE>
Section 912), to the approval of such transactions by the WOM Board and/or our
shareholders. See "Description of Certain Statutory, Charter and By-Law
Provisions."
No take-over is likely to succeed without our principal shareholder's
assistance.
Because Mr. Zinn and the Trust will own approximately 52.2% of the
outstanding WOM Common Stock after the completion of the Spin-Off, it is likely
that as an initial matter any prospective purchaser would seek their consent
before purchasing shares of WOM Common Stock.
Additional shares can be issued by the Company to Mr. Zinn and/or the Trust and
then if we receive any money as a result of the Bansbach Litigation, their share
of the proceeds will increase.
There will be, after the completion of the Spin-Off, approximately
114,114 unissued and unreserved shares of WOM Common Stock (assuming that
135,886 shares of WOM Common Stock are issued in the Spin-Off). The WOM Board
can authorize, without having to obtain approval of the shareholders, the
issuance of such shares. Consequently, Mr. Zinn, acting in his capacity as the
sole member of the WOM Board, could cause WOM to issue those additional shares
to Mr. Zinn and his affiliates, for nominal consideration or otherwise. As a
result, if we then received any money as a result of the Bansbach Litigation,
the amount of money that we would be able to distribute to shareholders other
than Mr. Zinn and his affiliates would decrease while the amount of money that
Mr. Zinn and his affiliates would receive would increase.
We do not have any officers' or directors' liability insurance which will make
it difficult to attract officers and directors.
We do not have any officers' or directors' insurance, we do not intend to try to
obtain any such insurance, probably we could neither obtain any such insurance
nor pay for such insurance. Because we do not have any such insurance, because
we have only negligible cash with which to indemnify officers and directors and
because the Escrow Fund is not likely to provide the means of indemnifying our
officers and directors, it will be very difficult for us to attract officers or
directors.
Risks related to the Distribution
There has been no prior public market for our stock and it is probable that no
market will develop.
There is currently no existing trading market for WOM Common Stock. We
have not applied and currently we do not intend to apply for the listing of WOM
Common Stock on any Exchange. Accordingly, it is unlikely that a trading market
will develop for the WOM Common
17
<PAGE>
Stock. As a result you will probably be unable to sell your shares of WOM
Common Stock. See "Listing and Trading of WOM Common Stock."
We do not intend to pay cash dividends.
WOM has never declared or paid any cash dividends on the WOM Common
Stock and does not anticipate paying any cash dividends in the immediate future.
See "Dividend Policy."
CAPITALIZATION
The following table sets forth the unaudited capitalization of WOM as
at December 31, 1999 on a historical basis and as at December 31, 1999 on a pro
forma basis.
This table should be read in conjunction with the Financial Statements
of WOM, Inc. and notes thereto, the Unaudited Pro Forma Financial Information
and "Selected Historical and Pro Forma Financial Data" and notes thereto
included elsewhere herein. The unaudited pro forma information set forth below
does not necessarily reflect the capitalization of WOM in the future or as it
would have been had the Spin-Off occurred on December 31, 1999.
<TABLE>
<CAPTION>
<S>
<C> <C> <C>
Historical Adjustments Pro Forma
Long-Term Debt:
Total Long-Term Debt $ 0 $ -- $ 0
== === ==
Shareholders' Equity:
Common Stock-authorized 250,000
shares, $.01 par value, issued and
outstanding 100 shares (historical);
issued and outstanding 135,886
shares (pro forma) $ 1 $ 1,358(a) $ 1,359
Paid-in Capital 99 (99)(a) 0
Deficit 0 (1,259)(a) (1,259)
---- ---------- -------
Total Combined Equity $ 100 $ 0 $ 100
--- ---------- --------
Total Shareholders' Equity $ 100 $ 0 $ 100
--- ---------- --------
Total Capitalization: $ 100 $ 0 $ 100
==== ========== ========
</TABLE>
- -----------------------
(a) Gives effect to the issuance of 135,886 shares of WOM Common Stock.
See "Unaudited Pro Forma Financial Information."
18
<PAGE>
SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA
The following table sets forth certain historical financial data for
the Contributed Assets as at December 31, 1999. The historical financial data
was derived from the Financial Statements of WOM, Inc. included elsewhere in
this Information Statement.
The summary pro forma balance sheet at December 31, 1999 reflects: (i)
the transfer to WOM of the interests in the Bansbach Litigation that Besicorp
received from Old Besicorp pursuant to the Prior Contribution Agreement as a
result of the Prior Merger Order; and (ii) the distribution of the shares of WOM
Common Stock to the Entitled Holders assuming that these transactions were
consummated at December 31, 1999. The accounting for this transfer of assets and
liabilities represents a reorganization of companies under common control and,
accordingly, all assets and liabilities will be reflected at their historical
cost basis.
The summary pro forma combined financial data set forth below is not
necessarily indicative of the results of the operations or financial position of
the Contributed Assets had the transactions reflected in the data actually been
consummated on the dates assumed and is not necessarily indicative of WOM's
future performance as an independent entity. The pro forma adjustments, as
described in the Notes to the Unaudited Pro Forma Balance Sheet are based on
available information and upon certain assumptions that we believe are
reasonable. The summary pro forma combined financial data should be read in
conjunction with "Management's Discussion and Analysis or Plan of Operation,"
the Financial Statements of WOM, Inc. and notes thereto and the Unaudited Pro
Forma Financial Information and notes thereto included elsewhere in this
Information Statement.
Balance Sheet Data (in thousands)
Pro Forma
December 31, 1999 December 31, 1999
----------------- -----------------
(unaudited)
Net working capital $.1 $.1
Total Assets .1 .1
Long-term debt - -
Shareholders' Equity .1 .1
19
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
WOM was established in December 1999 to comply with the intent of the Prior
Merger Order. The Prior Merger Order required Old Besicorp to assign to Besicorp
the interests of Old Besicorp in the Bansbach Litigation and the Lichtenberg
Litigation (a shareholder derivative litigation which is described below under
"Relationship Between WOM and Besicorp After the Spin-Off -- Additional Legal
Proceedings"), so that the Bansbach Litigation and the Lichtenberg Litigation
could be maintained following the Prior Merger. Besicorp established WOM and
assigned to WOM the interest in the Bansbach Litigation that Old Besicorp had
assigned to Besicorp pursuant to the Prior Merger Order so that the Bansbach
Litigation may be maintained after the Merger. If Besicorp did not effectuate
the Spin-Off, consummation of the Merger would cause the plaintiff in the
Bansbach Litigation to lose his status as a shareholder of Besicorp, and
therefore would cause him to lose his right to prosecute the Bansbach
Litigation. The Lichtenberg Litigation is not being assigned to us because the
complaint in the Lichtenberg Litigation has been dismissed. The Bansbach
Litigation is a shareholder derivative action that was commenced in August 1997
by John Bansbach in connection with the Proceeding.
We have been assigned the contingent assets comprising Old Besicorp's interests
in the Bansbach Litigation that Besicorp received from Old Besicorp as a result
of the Prior Merger Order. Management believes that these contingent assets
generally consist of any recovery to which Old Besicorp would be entitled as a
result of the resolution of the Bansbach Litigation. However, we are under no
obligation to prosecute the action or to assist the plaintiff, financially or
otherwise, in his prosecution of the Bansbach Litigation and we have no
intention of providing any assistance to the plaintiff. We do, however, intend
to defend ourself from liability to the extent we deem appropriate.
We have also assumed the contingent liabilities comprising Old Besicorp's
interests in the Bansbach Litigation that Besicorp received from Old Besicorp as
a result of the Prior Merger Order. Management believes that these contingent
liabilities generally consist of any damages for which Old Besicorp would be
liable as a result of the resolution of the Bansbach Litigation. Therefore we
intend to defend ourself from liability to the extent we deem appropriate.
Reimbursements for the costs of defending ourself will be sought from the Escrow
Fund. In addition, if we are required to pay damages, we expect to seek the
money to pay such damages from the Escrow Fund unless the judgment prohibited
such reimbursement; if any of the other defendants in the Bansbach Litigation,
are required to pay damages we anticipate that we will indemnify them and seek
the money for such indemnification from the Escrow Fund unless either (i) the
judgment prohibited such indemnification or (ii) indemnification is
impermissible under the NYBCL. However, there can be no assurance that such
amounts will be available from the Escrow Fund or that WOM will be entitled to
receive any such monies from the Escrow Fund. See "Relationship Between WOM and
Besicorp after the Spin-Off -- The Escrow Agreement."
Since the Bansbach Litigation is a shareholder derivative action, if damages are
paid by us or any other defendant, we should be the recipient. However, monies
may be deducted for the fees and
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<PAGE>
expenses of the plaintiff's attorneys. It is likely that if we receive any
amounts, these amounts will be distributed to the holders of WOM Common Stock
(except to the extent a court otherwise orders) shortly afterward and that WOM
will then be liquidated. In addition, if at any time the Bansbach Litigation is
decided in favor of the defendants, or if the Prior Merger Order is reversed,
WOM will then be liquidated.
On account of our very limited activities, we have no full-time employees and no
offices. We are not compensating our officers and directors, each of whom is
also an officer or director of Besicorp, for the services they render on our
behalf. Besicorp agreed in the Contribution Agreement to provide us with the
services of its employees and to allow us to use its offices free of charge to
the extent that we determine they are reasonably necessary and for so long as we
shall seek such services and the use of such offices. We have no suppliers, no
customers, and, except for our interest in the Bansbach Litigation, we are party
to no litigation. We have no foreign operations and our activities are not
subject to any U.S., state, foreign or local laws or regulations (other than
those generally applicable to public corporations).
Liquidity and Capital Resources
As of December 31, 1999, we had cash of $100, which represented our initial
capitalization. We will not attempt to incur debt or raise capital. However, the
parties to the Escrow Agreement, which was executed in connection with the Prior
Plan of Merger, have agreed (i) to permit us to receive up to $35,000 (the
"Annual Expenses") annually in reimbursements from the Escrow Fund to cover our
reasonable expenses in connection with maintaining our existence, complying with
the Exchange Act and such other matters as may be reasonably necessary to permit
the Bansbach Litigation to continue and (ii) WOM Litigation Costs (i.e. our
costs and expenses relating to (a) the Bansbach Litigation, (b) litigation
arising out of or relating to the Bansbach Litigation, (c) the Spin-Off and (d)
our existence. Therefore, the Escrow Fund is not a source of funds to the extent
we need more than $35,000 in any year (except for WOM Litigation Costs which do
not have a maximum amount). It is not a source of funds to the extent any of the
parties to the Escrow Agreement asserts that the expenses were unreasonable.
Also, it is not a source of funds to the extent of expenses unrelated to
maintaining our existence, complying with the Exchange Act or permitting the
Bansbach Litigation to continue. In addition, we are dependent upon the Escrow
Fund's containing enough money to permit the release of these reimbursements to
us. However, because the Escrow Fund is also available to satisfy Besicorp's
Litigation Costs and other matters, it is possible that such matters will
deplete all of the Escrow Funds. If the Escrow Fund is depleted, we will be
unable to obtain reimbursement. See "Relationship between WOM and Besicorp after
the Spin-Off -- Escrow Agreement." To the extent we cannot obtain reimbursement
from the Escrow Fund we would be unable to meet our obligations.
Because management believes that the Escrow Fund will be available to satisfy
any claims against WOM resulting from the Bansbach Litigation, we do not believe
that the assumption of such contingent liabilities will have any adverse effect
on our financial position or liquidity.
21
<PAGE>
Management also believes that the Escrow Fund, the amount of which was
approximately $6,104,869 at March 7, 2000, will be sufficient to fund the Annual
Expenses, indemnify BGI Parent, Old Besicorp and other Purchaser Indemnities
pursuant to the Indemnification Agreement and reimburse Besicorp for its
Litigation Costs.
BUSINESS
WOM was established in December 1999 solely to comply with the intent
of the Prior Merger Order. The Prior Merger Order required Old Besicorp to
assign to Besicorp the interests of Old Besicorp in the Bansbach Litigation and
the Lichtenberg Litigation (a shareholder derivative litigation which is
described below under "Relationship Between WOM and Besicorp After the Spin-Off
- -- Additional Legal Proceedings"), so that the Bansbach Litigation and the
Lichtenberg Litigation could be maintained following the Prior Merger. Besicorp
established WOM and assigned to WOM the interest in the Bansbach Litigation that
Old Besicorp had assigned to Besicorp pursuant to the Prior Merger Order so that
the Bansbach Litigation may be maintained after the Merger. If Besicorp did not
effectuate the Spin-Off, consummation of the Merger would cause the plaintiff in
the Bansbach Litigation to lose his status as a shareholder of Besicorp, and
therefore would cause him to lose his right to prosecute the Bansbach
Litigation. The Lichtenberg Litigation is not being assigned to us because the
complaint in the Lichtenberg Litigation has been dismissed.
The Bansbach Litigation is a shareholder derivative action that was
commenced in August 1997 by John Bansbach who was seeking to recover certain
legal fees and expenses paid by Old Besicorp to or on behalf of certain officers
and directors of Old Besicorp in connection with the Proceeding. The Proceeding
is an action that was brought 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. In connection with the
Proceeding, 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 and
the Chairman of the Board, President and Chief Executive Officer of WOM), each
entered a guilty plea pursuant to a plea bargain 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. 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 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.
Old Besicorp paid certain legal expenses incurred by certain officers
and directors in connection with the Proceeding. As of March 31, 1999 and 1998,
the amounts paid on behalf of Michael F. Zinn in connection with the Proceeding
equaled $338,517. In addition, Old Besicorp reimbursed him for the legal fees
and expenses (approximately $39,180) which had been incurred
22
<PAGE>
by third parties in connection with the Proceeding and which had been paid by
him. In addition, Old Besicorp paid additional legal fees and disbursements of
approximately $742,576 incurred in connection with the Proceeding by Old
Besicorp, certain directors, officers, and employees and their spouses who were
defendants or actual or potential witnesses in this matter. The officers and
directors agreed to repay amounts paid by Old Besicorp on their behalf in
certain circumstances. See "Certain Relationships and Related Transactions."
In August 1997, after Old Besicorp and Mr. Zinn had entered their
pleas, Mr. 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 the plaintiff seeks relief or became
officers and/or directors of Old Besicorp afterwards. The plaintiff sought to
hold the defendants other than Old Besicorp liable to Old Besicorp for: (a) all
sums advanced to or on behalf of Michael F. Zinn in connection with his defense
of the Proceeding; (b) all sums advanced to or on behalf of Michael Daley, who
at the time was the Vice-President, Chief Financial Officer and Corporate
Secretary of Old Besicorp (and who is currently a director, Executive Vice
President and Chief Financial Officer of Besicorp) and was subpoenaed for
information in connection with the Proceeding; (c) all legal expenses, costs and
fines incurred by Old Besicorp itself in connection with the Proceeding; (d) all
harm to Old Besicorp's reputation and goodwill resulting from the Proceeding;
(e) punitive damages; and (f) plaintiff's attorneys' fees, costs and expenses.
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.
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.
By this time, Old Besicorp had entered into the Prior Plan of Merger
and on March 1, 1999 Old Besicorp distributed proxy materials for a special
meeting of its shareholders to adopt the Prior Plan of Merger. The meeting was
scheduled for March 19, 1999 and it was contemplated that if the Prior Plan of
Merger was approved by Old Besicorp shareholders the Prior Merger would occur
shortly afterwards. Effectuation of the Prior Merger would adversely affect the
Bansbach Litigation and the Lichtenberg Litigation.
On March 5, 1999, James Lichtenberg and Mr. Bansbach commenced the
March Litigation by filing the March Complaint in the United States District
Court for the Southern District of New York. The March Complaint alleged 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 two
Derivative
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Litigations, i.e., the Bansbach Litigation and the Lichtenberg 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 Mr. Zinn and a $500,000 bonus to Mr. Daley, which the March
Complaint deemed to be excessive and/or unwarranted compensation.
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 sought 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 sought an order directing that
the Derivative Litigation be transferred to Besicorp, that the Prior Merger
Consideration payable to Mr. Zinn and two former directors and executive
officers of Old Besicorp, Mr. 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 sought unspecified money damages.
On March 18, 1999, the District Court entered the Prior Merger Order
which required Old Besicorp to assign the contingent assets and/or liabilities
comprising Old Besicorp's interests in the Derivative Litigation to Besicorp
before the Prior Merger. The Prior Contribution Agreement effected Old
Besicorp's assignment of the contingent assets and/or liabilities comprising Old
Besicorp's interests in the Derivative Litigation to Besicorp. The Prior Merger
Order also required (i) defendants Messrs. Zinn, Eisenberg and Enowitz to take
no action to place the Prior Merger Consideration they would receive in the
Prior Merger 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 (ii) the plaintiffs to post a bond in the amount 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.
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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.
Prior to the Spin-Off, the Bansbach Litigation was a Besicorp Assumed
Matter and Besicorp's costs were funded from the Escrow Fund; following the
Spin-Off WOM's costs will be funded from the Escrow Fund. The parties to the
Bansbach Litigation are currently engaged in the discovery process.
The Prior Merger Order did not provide for the occurrence following the
Prior Merger of a transaction such as the Merger. The effectuation of the Merger
ordinarily would adversely affect the plaintiff's ability to maintain the
Bansbach Litigation in a manner similar to that which the Prior Merger Order had
attempted to prevent. If Besicorp did not effectuate the Spin-Off, consummation
of the Merger would cause the plaintiff in the Bansbach Litigation to lose his
status as a shareholder of Besicorp, and therefore would cause him to lose his
right to prosecute the Bansbach Litigation. Besicorp believed that in order to
adhere to the intent of the Prior Merger Order, Besicorp should assign to WOM
the interests in the Bansbach Litigation that Besicorp had received from Old
Besicorp; by assigning to WOM pursuant to the Spin-Off the interests in the
Bansbach Litigation Besicorp had received from Old Besicorp pursuant to the
Prior Merger Order (subject to WOM's agreement to return such interests upon the
occurrence of a Prior Merger Order Reversal), the plaintiff should retain
standing to maintain the Bansbach Litigation. The Lichtenberg Litigation is not
being assigned to us because the complaint in the Lichtenberg Litigation has
been dismissed. See "Relationship Between WOM and Besicorp After the Spin-Off --
Additional Legal Proceedings."
We have been assigned the contingent assets comprising Old Besicorp's
interests in the Bansbach Litigation that Besicorp received from Old Besicorp as
a result of the Prior Merger Order. Management believes that these contingent
assets generally consist of any recovery to which Old Besicorp would be entitled
as a result of the resolution of the Bansbach Litigation. However, we are under
no obligation to prosecute the action or to assist the plaintiff, financially or
otherwise, in his prosecution of the Bansbach Litigation and we have no
intention of providing any assistance to the plaintiff. We do, however, intend
to defend ourself from liability to the extent we deem appropriate.
We have also assumed the contingent liabilities comprising Old
Besicorp's interests in the Bansbach Litigation that Besicorp received from Old
Besicorp as a result of the Prior Merger Order. Management believes that these
contingent liabilities generally consist of any damages for which Old Besicorp
would be liable as a result of the resolution of the Bansbach Litigation.
Therefore we intend to defend ourself from liability to the extent we deem
appropriate. Reimbursements for the costs of defending ourself will be sought
from the Escrow Fund. In addition, if we are required to pay damages, we expect
to seek the money to pay such damages
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from the Escrow Fund unless the judgment prohibited such reimbursement; if any
of the other defendants in the Bansbach Litigation, are required to pay damages
we anticipate that we will indemnify them and seek the money for such
indemnification from the Escrow Fund unless either (i) the judgment prohibited
such indemnification or (ii) indemnification is impermissible under the NYBCL.
However, there can be no assurance that such amounts will be available from the
Escrow Fund or that WOM will be entitled to receive any such monies from the
Escrow Fund. See "Relationship Between WOM and Besicorp after the Spin-Off --
The Escrow Agreement."
Since the Bansbach Litigation is a shareholder derivative action, if
damages are paid by us or any other defendant, we should be the recipient.
However, monies may be deducted for the fees and expenses of the plaintiff's
attorneys. It is likely that if we receive any amounts, these amounts will be
distributed to the holders of WOM Common Stock (except to the extent a court
otherwise orders) shortly afterward and that WOM will then be liquidated. In
addition, if at any time the Bansbach Litigation is decided in favor of the
defendants, or if the Prior Merger Order is reversed, WOM will then be
liquidated.
On account of our very limited activities, we have no full-time
employees and no offices. We are not compensating our officers and directors,
each of whom is also an officer or director of Besicorp, for the services they
render on our behalf. Besicorp agreed in the Contribution Agreement to provide
us with the services of its employees and to allow us to use its offices free of
charge to the extent that we determine they are reasonably necessary and for so
long as we shall seek such services and the use of such offices. We have no
suppliers, no customers, and, except for our interest in the Bansbach
Litigation, we are party to no litigation. We have no foreign operations and our
activities are not subject to any U.S., state, foreign or local laws or
regulations (other than those generally applicable to public corporations).
THE CONTRIBUTION AND THE SPIN-OFF
Introduction
The only shareholder of the Surviving Corporation following the Merger
will be Parent. Consummation of the Merger ordinarily would cause the 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 the Bansbach Litigation,
including Michael F. Zinn, Besicorp's Chairman of the Board, President and Chief
Executive Officer, would benefit and certain potential Besicorp Deferred
Payments that holders of Besicorp Common Stock will receive as part of the
Merger Consideration effectively would be eliminated. However, if the Bansbach
Litigation were maintained and if the plaintiff in such litigation prevailed,
approximately $1 million might be recoverable, excluding interest and punitive
damages, if any, and since the Bansbach Litigation is a shareholder derivative
action, the beneficiary of any such recovery should be the subject corporation
(i.e., Besicorp prior to the
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Spin-Off and WOM after the Spin-Off). Therefore, in order to avoid terminating
the Bansbach Litigation as a result of the Merger, Besicorp decided to effect
the Spin-Off.
Besicorp formed WOM in December 1999 to effectuate the Spin-Off which
is a condition to the consummation of the Merger (unless the Bansbach Litigation
is not pending immediately prior to the Effective Date). Mr. Zinn, the Chairman
of the Board, President and Chief Executive Officer of Besicorp, will be the
Chairman of the Board, President and Chief Executive Officer of WOM at the time
of the Spin-Off and certain of the officers of Besicorp prior to the Merger will
serve WOM in the capacities in which they currently serve Besicorp, but they
will not be compensated for the services they render on behalf of WOM. The
Merger will not be effectuated unless the Spin-Off has been effectuated (unless
a Prior Merger Order Reversal occurs prior to the Effective Date). The Spin-Off
will not occur if (i) any of the other conditions to the Merger has not been
waived or satisfied or (ii) a Prior Merger Order Reversal occurs before such
time.
Accordingly, Besicorp and WOM entered into the Contribution Agreement
pursuant to which Besicorp contributed the Contributed Assets to us and it is
anticipated that on April 25, 2000, the Besicorp Board will declare the
Distribution of one share of WOM for each share of Besicorp Common Stock
outstanding on the Spin-Off Record Date. The Distribution will be payable to the
holders of record of Besicorp Common Stock at the close of business on the Spin-
Off Record Date. No shares of WOM Common Stock will be issued with respect to
shares of Besicorp Common Stock held in treasury. If all of the conditions to
the Closing have been waived or satisfied, the Spin-Off will occur on the
Effective Date and therefore the Effective Date will be the Spin-Off Record
Date.
The Contribution Agreement
Prior to the Spin-Off, pursuant to the Contribution Agreement, Besicorp
transferred to WOM the interests in the Bansbach Litigation it had received from
Old Besicorp as a result of the Prior Merger Order; however, WOM is required to
return such interests if a Prior Merger Order Reversaal occurs. As a result of
the Contribution, WOM and not Besicorp will be entitled to any proceeds if there
is a judgment or settlement in favor of the plaintiff; and WOM and not Besicorp
will be liable for any damages for which the subject corporation is liable. If
the Bansbach Litigation is maintained and if the plaintiff in such litigation
prevails, approximately $1 million might be recoverable, excluding interest and
punitive damages, if any, by WOM. If we are required to pay damages, we expect
to seek the money to pay such damages from the Escrow Fund unless the judgment
prohibited such reimbursement; if any of the other defendants in the Bansbach
Litigation are required to pay damages we anticipate that we will indemnify them
and seek the money for such indemnification from the Escrow Fund unless either
(i) the judgment prohibited such indemnification or (ii) indemnification is
impermissible under the NYBCL.
In addition, pursuant to the Contribution Agreement Besicorp caused the
Escrow Agreement to be amended (i) to permit us to receive up to $35,000
annually from the Escrow Fund to cover our reasonable expenses in connection
with maintaining our existence, complying
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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 (ii) to provide that the costs of the Bansbach
Litigation will still be covered by the Escrow Agreement following the Spin-Off.
See "Relationship between WOM and Besicorp after the Spin-Off -- the Escrow
Agreement."
Also, pursuant to the Contribution Agreement, Besicorp agreed to
provide us free of charge with the services of Besicorp's employees and the use
of its offices to the extent that we determine they are reasonably necessary and
for so long as we shall seek such services and the use of such offices.
The terms of the Spin-Off
As a result of the Spin-Off, on the Spin-Off Record Date Besicorp shall
distribute all of the outstanding shares of WOM Common Stock to the Entitled
Holders, assuming that all of the other conditions to the consummation of the
Merger have been waived or satisfied and that the Bansbach Litigation is pending
at such time. The Spin-Off Record Date is expected to be the same day as the day
the Merger is effectuated. The Spin-Off will be effectuated at this time and
each Entitled Holder will receive one share of WOM Common Stock for each share
of Besicorp Common Stock held by such shareholder on such date. Therefore, the
holders of Besicorp Common Stock on the Spin-Off Record Date will become the
shareholders of WOM and Besicorp will cease to own any shares of WOM.
135,886 shares of Besicorp Common Stock currently are issued and
outstanding. Shares of WOM Common Stock will be issued to holders of all shares
outstanding on the Spin-Off Record Date, including the Buyer and Dissenters.
However, shares will not be issued with respect to shares of Besicorp Common
Stock which are cancelled prior to the Spin-Off Record Date.
The 135,886 shares includes 1,050 Independent Directors' Restricted
Shares and 13,450 Management Restricted Shares. If these shares are outstanding
at the Spin-Off Record Date, the holders will receive one share of WOM
Restricted Stock for each Independent Directors' Restricted Share or Management
Restricted Share. Shares of WOM Restricted Stock are shares of WOM Common Stock
subject to the same restrictions upon transferability as the Independent
Directors' Restricted Shares or Management Restricted Shares for which they were
issued. Since the Independent Directors' Restricted Shares' restrictions upon
transferability will lapse, and thus such shares will vest, upon the
effectuation of the Merger, their shares of WOM Restricted Stock also will vest
upon the effectuation of the Merger, which is likely to occur on the same day as
the Spin-Off. However, all other shares of WOM Restricted Stock will still be
restricted.
The shares of WOM Common Stock being issued in the Spin-Off include
4,000 shares that are being issued to Mr. Enowitz on account of the 4,000
Disputed Shares. These 4,000 shares
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will be released to Mr. Enowitz if it is determined that the 100,000 Enowitz
Shares of Old Besicorp's common stock were outstanding at the time of the Prior
Spin-Off. See "Relationship between WOM and Besicorp after the Spin-Off --
Additional Legal Proceedings."
Procedure for receiving shares of WOM Common Stock
On the Spin-Off Record Date, Besicorp will deliver to Continental
shares of WOM Common Stock representing 100% of the outstanding shares of WOM
Common Stock for distribution to the Entitled Holders. The Spin-Off Record Date
will also be the Effective Date (i.e., the date when the Merger is effectuated).
Continental will distribute WOM Stock Certificates to all Entitled Holders
following the Spin-Off. No consideration will be paid by the holders of Besicorp
Common Stock for the shares of WOM Common Stock to be received by them in the
Spin-Off.
Shareholders of Besicorp with questions concerning procedural issues
related to the Spin-Off may call the Distribution Agent, Continental Stock
Transfer and Trust Co., at (212) 509-4000 (x 535). After the Effective Date,
shareholders of WOM with inquiries relating to the Spin-Off or their investment
in WOM should contact WOM, Inc., 1151 Flatbush Road, Kingston, New York,
(telephone 914-336-7700 x 104), Attention: Susan
Whitaker.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
The following is a discussion of the material federal income tax
consequences relating to the Spin-Off based on the provisions of the Code, and
applicable regulations, rulings and judicial authority as in effect on the date
of this Information Statement. Subsequent changes in the law could alter the
federal income tax consequences of the Spin-Off.
THE MATERIAL FEDERAL INCOME TAX CONSEQUENCES SET FORTH BELOW ARE
INCLUDED FOR GENERAL INFORMATIONAL PURPOSES ONLY AND ARE BASED UPON PRESENT LAW.
BECAUSE INDIVIDUAL CIRCUMSTANCES MAY DIFFER, YOU ARE URGED TO CONSULT WITH YOUR
TAX ADVISOR TO DETERMINE THE APPLICABILITY OF THE RULES DISCUSSED BELOW TO YOU
AND THE PARTICULAR TAX EFFECTS OF THE SPIN-OFF, INCLUDING THE APPLICATION AND
EFFECT OF STATE, LOCAL AND OTHER TAX LAWS. WE HAVE NOT OBTAINED AN OPINION OF
COUNSEL WITH RESPECT TO THE DISCLOSURE SET FORTH UNDER THE CAPTION "MATERIAL
FEDERAL INCOME TAX CONSEQUENCES."
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The receipt by an Entitled Holder of shares of WOM Common Stock (other
than WOM Restricted Stock) pursuant to the Spin-Off ordinarily would be a
taxable transaction for federal income tax purposes under the Code and also
ordinarily may be a taxable transaction under applicable state, local and
other tax laws. The tax consequences of such receipt ordinarily vary depending
upon, among other things, the particular circumstances of the Entitled Holder.
An Entitled Holder will receive dividend income equal to the value of such
shares of WOM Common Stock received by such Entitled Holder pursuant to the Spin
- -Off. In the opinion of Management, the current value of WOM Common Stock iS
contingent and speculative. Thus, Besicorp is valuing the shares of WOM Common
Stock at $0.00 per share. Based on this valuation, the Entitled Holder should
receive no dividend income. However, if it were to be ultimately determined that
the WOM Common Stock had a positive value at the time of the Spin-Off, the
result would be ordinary income as of the time of the Spin-Off, plus interest
and possibly penalties.
The receipt of shares of WOM Common Stock (other than WOM Restricted
Stock) by an Entitled Holder pursuant to the Spin-Off is subject to backup
withholding at the rate of 31% unless the Entitled Holder (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.
The receipt of shares of WOM Restricted Stock will not be a taxable
event unless an election under ss.83(b) of the Code is made. However, an
ordinary income taxable event ordinarily will occur for the holders of the
shares of WOM Restricted Stock upon the vesting of such WOM Restricted Stock
based upon the value of the WOM Restricted Stock at the time of vesting. Shares
of WOM Restricted Stock issued on account of the 1,050 Independent Directors'
Restricted Shares will no longer be restricted after the Merger which is likely
to occur on the same day as the Spin-Off, and thus will be subject to tax
currently based upon the value of their shares at the time of the Merger, but
all other shares of WOM Restricted Stock will still be restricted.
The tax basis in a share of WOM Common Stock will generally be equal to
the dividend income received by the holder of such share.
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This tax discussion does not apply to Entitled Holders who are not
citizens or residents of the United States, to Entitled Holders who are
tax-exempt or to other Entitled Holders of special status.
RELATIONSHIP BETWEEN WOM AND BESICORP AFTER THE SPIN-OFF
Pursuant to the Plan of Merger, Acquisition Corp. will be merged with
and into Besicorp; Besicorp will be the Surviving Corporation and will be wholly
owned by Parent. Parent will be entitled to all the benefits and detriments
resulting from its ownership interest in the Surviving Corporation. If the
Merger is effectuated, Besicorp's shareholders of record immediately prior to
the Merger (other than the Buyer and Dissenters) will be entitled to receive the
Merger Consideration consisting of at least $58.87 in cash and a Besicorp
Deferred Payment Right for each share of Besicorp Common Stock. After the
Effective Date, the holders of Besicorp Common Stock will no longer have any
equity interest in Besicorp or any right to vote on corporate matters; instead,
the outstanding shares of Besicorp Common Stock (other than the shares of the
Buyer and Dissenters) automatically will be converted into the right to receive
the Merger Consideration.
After the Spin-Off and the Merger, Besicorp and WOM will become
separately owned companies. Besicorp will be owned by Parent and WOM will be
owned by the Entitled Holders (including Mr. Zinn and the Trust who will own
approximately 52.2% of the then outstanding shares of WOM Common Stock). Prior
to the Spin-Off, Besicorp and WOM entered into the Contribution Agreement (which
is discussed above under "The Contribution and the Spin-Off -- The Contribution
Agreement") which governs various matters and ongoing relationships between
Besicorp and us. We have agreed pursuant to the Contribution Agreement that if a
Prior Merger Order Reversal occurs, we shall return to Besicorp the interests in
the Bansbach Litigation that Besicorp received from the Old Besicorp pursuant to
the Prior Contribution Agreement as a result of the Prior Merger Order. Also,
pursuant to the Contribution Agreement Besicorp agreed to provide us with the
services of Besicorp's employees and to allow us to use its offices without
charge. In addition, pursuant to the Contribution Agreement, Besicorp agreed to
cause the Escrow Agreement to be amended so that we may obtain certain monies
from the Escrow Fund. Consequently, the Indemnification Agreement and the Escrow
Agreement govern various matters between Old Besicorp, Besicorp, BGI Parent and
us.
The 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:
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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;
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;
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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, subject to the terms of the Escrow Agreement, until the Escrow
Fund has been reduced to zero and thereafter will be satisfied by Besicorp
directly. We are not a party to the Indemnification Agreement. However, even
though we have no obligations under the Indemnification Agreement and are
entitled to no benefits under the Indemnification Agreement, we are affected by
the Indemnification Agreement: to the extent that money is released from the
Escrow Fund pursuant to the Indemnification Agreement, the amount of money
available to us under the Escrow Agreement 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
initially served to fund claims for BGI Monitoring Costs, BGI Indemnity Claims
and Litigation Costs, which included the Bansbach Litigation. Therefore, in
order to provide that the Bansbach Litigation is still covered by the Escrow
Fund after the Spin-Off, the Escrow Agreement was amended by the Escrow
Agreement Amendment (effective as of the Spin-Off): (i) to provide, by funding
claims for WOM Costs, that we shall be provided from the Escrow Fund with our
reasonable expenses (up to $35,000 per annum) in connection with maintaining our
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 (ii) to provide that the Bansbach
Litigation will still be covered by the Escrow Agreement following the Spin-Off.
In addition, BGI Parent remains entitled to reimbursement for BGI Monitoring
Costs and BGI Indemnity Claims and Besicorp remains entitled to reimbursement
for Litigation Costs.
Therefore reimbursement is available for the following:
o BGI Monitoring Costs which are BGI Parent's
out-of-pocket expenses (not to exceed $40,000 per
year) incurred if it is represented by counsel with
respect to (i) the Besicorp Assumed Matters (which
are certain litigations specified in the
Indemnification Agreement and other matters to be
prosecuted or defended by Besicorp pursuant to the
Indemnification Agreement) and (ii) the Bansbach
Litigation;
o BGI Indemnity Claims which are 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;
o Litigation Costs which are 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; and (iv) matters arising out of or relating
to the Prior Merger; and
o WOM Costs which are (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
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<PAGE>
(including the fees and expenses of Continental) and
(c) the preparation and filing of the Registration
Statement, (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'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.
For a description of Besicorp's principal pending legal proceedings
that may give rise to Litigation Costs, see "--Additional Legal Proceedings." 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.
As a result of the Escrow Agreement Amendment, the Escrow Agent will
disburse Escrow Funds upon request (i) to BGI Parent, with respect to BGI
Indemnity Claims or BGI Monitoring Costs, (ii) to us (and prior to the Spin-Off,
to Besicorp), with respect to WOM Costs (if the Spin- Off occurs) and (iii) to
Besicorp, with respect to Litigation Costs, unless any other party to the Escrow
Agreement objects. If a party to the Escrow Agreement 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 its consent to a
request by BGI Parent for payment of BGI Indemnity Claims, BGI Parent and WOM
agreed not to unreasonably withhold consent for payment of Litigation Costs and
BGI Parent and Besicorp agreed not to unreasonably withhold consent for the
payment of WOM Costs.
The terms of the Escrow Agreement provide that the remaining proceeds
of the Escrow Fund, if any, will be released to Besicorp 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 (i.e., all requests for
reimbursements by BGI, Besicorp and WOM have been
resolved and have been paid, including with respect
to the Bansbach Litigation);
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
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<PAGE>
(2) a settlement or other conclusion to the
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.
BGI Parent, WOM and Besicorp also agreed that representatives of all three
companies will 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. If all three unanimously agree that the Escrow Fund includes
excess amounts, such amounts will be released to Besicorp and there will be a
Besicorp Deferred Payment. The representatives of BGI Parent, Besicorp and WOM,
who will be the only persons present, will each represent the interests of their
corporation and their shareholders. There is no provision requiring anyone to
provide additional money to the Escrow Fund if the Escrow Fund is depleted.
Any money we obtain from the Escrow Fund will reduce the money in the
Escrow Fund that would otherwise be contributed to the Outside Participating
Shareholders pursuant to the Plan of Merger as part of the Besicorp Deferred
Payments.
Additional Legal Proceedings
Besicorp, 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. In addition, in connection with the Prior Plan of
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<PAGE>
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 obligation arising out of the Indemnification Agreement. See "
- -- Escrow Agreement."
In December 1998, Alan 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 Mr. 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 Old Besicorp's stock options and warrants
and (iii) bonuses for certain members of senior management. Mr. 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. Besicorp's management anticipates 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.
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<PAGE>
On March 29, 1993 James Lichtenberg commenced the Lichtenberg
Litigation in the New York State Supreme Court, Ulster County. 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 Mr. 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.
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 contracts to construct two power plants and that the
contracts were subsequently awarded to the unaffiliated 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
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 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. If the funds in
that escrow account are not sufficient, Besicorp would have recourse to the
Escrow Fund.
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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 named 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
lead to a Besicorp Deferred Payment. 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.
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 Mr. 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. Mr. Enowitz asserts, among other things, that such vesting schedule
was not applicable to him because he was disabled. Old Besicorp, among other
things, disputes Mr. Enowitz's allegation that he was disabled. If the Enowitz
Shares were not forfeited, Mr. Enowitz would be entitled to 4,000 shares of
Besicorp Common Stock (i.e., the Disputed Shares) as a result of the prior
Spin-Off.
The shares of WOM Common Stock being issued in the Spin-Off include
4,000 shares that will be released to Mr. Enowitz with respect to the 4,000
Disputed Shares if it is determined that the Enowitz Shares were outstanding at
the time of the Prior Spin-Off. If it is determined that Mr. Enowitz was not
then entitled to the Enowitz Shares, the 4,000 shares of WOM Common Stock will
be cancelled (which will increase the equity interest of each holder of WOM
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<PAGE>
Common Stock on a pro rata basis); otherwise the shares will be released to Mr.
Enowitz. There can be no assurance as to when this dispute will be resolved or
whether it will be in Mr. Enowitz's favor.
Other than as discussed above and in "Business," 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 with respect to the legal
proceedings that were assumed pursuant to the Prior Contribution Agreement will
be funded by the Escrow Fund. Besicorp is responsible for all expenses with
respect to proceedings that were not assumed pursuant to the Prior Contribution
Agreement.
Any money Besicorp obtains from the Escrow Fund in connection with its
legal proceedings will reduce the money in the Escrow Fund that would otherwise
be available to WOM for the reimbursement of WOM Costs. See "--Escrow Agreement"
and "--Indemnification Agreement."
MANAGEMENT
Directors and Executive Officers
Pursuant to the WOM Certificate and the WOM By-Laws, the WOM Board
currently consists of two directors; however, the WOM Board is authorized to
change the number of directors from time to time. Mr. Zinn currently is the sole
member of the WOM Board and will serve in such capacity until his successor is
elected and qualified or his earlier resignation or removal.
Set forth below is certain information as to the individuals who are
expected to serve as directors and the individuals who are expected to serve as
officers of WOM following the Spin- Off.
Michael F. Zinn
Mr. Zinn, 46, has been the Chairman of the Board, President and Chief
Executive Officer of WOM since December 20, 1999, has been the President, Chief
Executive Officer and Chairman of the Board of Directors of Besicorp since
November 1998 and was the President, Chief Executive Officer and Chairman of the
Board of Directors of Old Besicorp from its founding in 1976 until March, 1999
(except from November 1997 to May 1998). Prior to the founding of Old Besicorp,
Mr. Zinn was director of a federally funded biomass-to-energy project. Prior to
the above appointment, Mr. Zinn was employed in energy engineering. He has been
40
<PAGE>
awarded six U.S. patents. In June 1997, Mr. Zinn entered guilty pleas pursuant
to a plea bargain to two felony counts in the United States District Court for
the Southern District of New York in connection with the Proceeding. Mr. Zinn
was fined $36,673 and sentenced to a six month term of incarceration (which
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, Chief Executive Officer and President of Old Besicorp in November 1997
and was reappointed to such positions in May 1998. He is a cousin of Frederic M.
Zinn, an executive officer of WOM.
James E. Curtin
Mr. Curtin, 50, has been Treasurer of WOM since December, 1999 and has
been Vice President and Controller of Besicorp since November, 1998. He joined
Old Besicorp as Corporate Controller in August 1995 and was appointed an
executive officer of Old Besicorp with the title of Vice President and
Controller in November 1997. He resigned as an officer of Old Besicorp in March
1999. Prior to joining Old Besicorp, Mr. Curtin was Director of Financial
Reporting for ENSERCH Engineers and Constructors from 1994 to 1995, and held
several financial management positions with Ebasco Services, Incorporated, an
engineering, construction and consulting firm, from 1981 to 1994. Mr. Curtin
holds a BBA in Accounting Practice from Pace University.
Frederic M. Zinn
Mr. Zinn, 42, has been a director and the Secretary of WOM since
December 1999 and has been Senior Vice President, General Counsel and Secretary
of Besicorp since November, 1998. He joined Old Besicorp as a temporary
executive with the title of Vice President in November 1997. He was appointed an
executive officer of Old Besicorp holding the title of Senior Vice President and
General Counsel in May 1998. He resigned as an officer of Old Besicorp in March,
1999. Prior to joining Old Besicorp, Mr. Zinn was the President of Zinn &
Lebovic, a Professional Law Corporation, from 1992 to 1997. Before that, Mr.
Zinn was General Counsel at JTE Real Estate Group, Inc. from 1989 to 1992;
Associate Attorney at Palmieri, Tyler, Weiner, Wilhelm & Waldron from 1986 to
1988; and Associate Attorney at Hart, King & Coldren from 1982 to 1986. Mr. Zinn
received a BA in Economics from the University of California at Davis and a JD
from the UCLA School of Law. He is a cousin of Michael F. Zinn, the Chairman of
the Board, Chief Executive Officer and President of WOM.
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Executive compensation
Prior to the Spin-Off, our business was maintained by Besicorp and the
directors and executive officers were compensated by Besicorp. Our directors and
executive officers will not receive any compensation from us for serving in such
capacities. Pursuant to the Contribution Agreement, Besicorp has agreed to
provide the service of its employees to us without charges; Besicorp's employees
who provide services to us, including our directors and executive officers, may
receive compensation for such services from Besicorp. No individuals will be
full time employees of WOM. We do not intend to enter into any written
employment agreements.
We have not granted any Rights and there are no stock option,
contribution, benefit or other plans for our directors, officers or employees.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table shows the shares of WOM Common Stock expected to be
owned as of the Spin-Off by each beneficial owner of more than 5% of the WOM
Common Stock upon completion of the Spin-Off, the current directors, the current
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>
<S>
<C> <C>
Number of Shares
Name of of Common Stock Percent of Common Stock
Beneficial Owner Beneficially Owned (1) Beneficially Owned (1) (2)
Avalon 57,967 (3) 42.7% (3)
Michael F. Zinn 70,967 (4)(5) 52.2% (4)(5)
The Trust 10,000 7.4%
Frederic Zinn 1,750 1.3%
James Curtin 400 *
Current directors and
executive officers as
a group (3 persons) 73,117 (5) 53.8%(5)
</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.
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(2) Assumes (i) that no shares of Besicorp Common Stock are issued or
cancelled prior to the Spin-Off and (ii) that the 4,000 Disputed Shares
are outstanding at the time of the Spin- Off. See "The Contribution and
the Spin-Off -- Terms of the Spin-Off."
(3) Michael F. Zinn is one of the two directors of Besicorp Holdings and is
its Chief Executive Officer and President. Avalon owns approximately
94.5% of the shares of Besicorp Holdings' common stock and therefore
can appoint and remove the directors. The only members of Avalon are
Michael F. Zinn and his wife, Valerie Zinn, who owns a nominal interest
in Avalon. Michael F. Zinn is the sole manager of Avalon and therefore
is the only person with power to vote or dispose of Avalon's shares of
Besicorp Holdings' Common Stock.
(4) Includes 57,967 shares held in the name of Besicorp Holdings.
(5) Includes 10,000 shares owned by the Trust established by Michael F.
Zinn; Mr. Zinn disclaims beneficial ownership of these shares. Mr. Zinn
is the Chairman of the Board, President and Chief Executive Officer of
WOM.
The address for each of the individuals identified above is: 1151
Flatbush Road, Kingston, New York 12401.
CERTAIN RELATIONSHIPS AND RELATED 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
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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.
Neither Besicorp nor WOM has 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 and
the Contribution Agreement, the right to receive such repayments and
reimbursements has been assigned to WOM and thus we would be the recipient.
THE MERGER
The Plan of Merger provides that, upon the terms and subject to the
satisfaction or waiver of numerous conditions set forth therein, including the
effectuation of the Spin-Off (unless the Bansbach Litigation is not pending),
Acquisition Corp. will be merged with and into Besicorp, the separate corporate
existence of Acquisition Corp. will cease and Besicorp will continue as the
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Surviving Corporation. The Merger will become effective upon the Effective Date,
which is the date of the filing of the Certificate of Merger with the Secretary
of State of the State of New York or, if later, the date specified in the
Certificate of Merger in accordance with the NYBCL. The Spin-Off Record Date is
expected to be the same day as the Effective Date.
Pursuant to the Plan of Merger, at the Effective Date
o each share of Acquisition Corp.'s common stock issued and
outstanding immediately prior to the Effective Date will be
converted into and become one validly issued, fully paid and
nonassessable share of common stock of the Surviving
Corporation (with the result that Parent will own all of the
stock of the Surviving Corporation),
o each Outside Participating Shareholders' Share (i.e., each
share of Besicorp Common Stock issued and outstanding on the
Effective Date (other than shares then held by the Buyer and
by Dissenters)) 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 his Besicorp Stock Certificates;
o each share of Besicorp Common Stock held by the Buyer will be
cancelled without receipt of the Merger Consideration and
o the Dissenters will be entitled to the appraised value of
their shares of Besicorp Common Stock.
DESCRIPTION OF THE CAPITAL STOCK
The summary of the terms of the stock of WOM set forth below does not
purport to be complete and is subject to and qualified in its entirety by
reference to the WOM Certificate and the WOM By-Laws.
Authorized Capital Stock
Under the WOM Certificate, the total number of shares of all classes of
stock that we have authority to issue is 250,000 shares, all of which are shares
of WOM Common Stock. After giving effect to the distribution of the shares of
WOM Common Stock pursuant to the Spin-Off, there will be approximately 135,886
shares of WOM Common Stock outstanding assuming (i) that no shares of Besicorp
Common Stock are issued or cancelled prior to the Spin-Off and (ii) that the
4,000 Disputed Shares are outstanding at the time of the Spin-Off.
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<PAGE>
Common Stock
Holders of WOM Common Stock will be entitled to one vote per share on
all matters voted on generally by the shareholders, including the election of
directors, and, except as otherwise required by law, the holders of such shares
will possess all of our voting power. The WOM Certificate does not provide for
cumulative voting for the election of directors. Thus, under the NYBCL, the
holders of more than one-half of the outstanding shares of WOM Common Stock will
be able to elect all of the members of the WOM Board and holders of the
remaining shares will not be able to elect any director. Subsequent to the
completion of the Spin- Off, Mr. Zinn and the Trust will own approximately 44.9%
and 7.4%, respectively, of the then outstanding shares of WOM Common Stock and,
if they were to vote their shares in the same manner, will be able to elect all
of the members of the WOM Board and exercise substantial influence over the
outcome of any issues which may be subject to a vote of our shareholders.
Holders of shares of WOM Common Stock will be entitled to receive
dividends on such stock out of assets legally available for distribution when,
as and if authorized and declared by the WOM Board and to share ratably in our
assets legally available for distribution to our shareholders in the event of
our liquidation, dissolution or winding up. We do not currently anticipate
paying cash dividends in the foreseeable future. See "Dividend Policy."
The outstanding shares of WOM Common Stock are, and the shares of WOM
Common Stock being distributed pursuant to the Spin-Off will be, when issued,
fully paid for and (subject to any liability imposed by Section 630 of the
NYBCL) nonassessable. Holders of WOM Common Stock will have no preemptive
rights. Under Section 630 of the NYBCL, our ten largest shareholders are
personally liable for unpaid wages and debts to our employees unless our capital
stock is listed on a national securities exchange or regularly quoted in an over
- -the-counter market by one or more members of a national or an affiliated
securities association. We do not currently intend to have our capital stock so
listed or quoted. However, we have no employees and Besicorp has agreed to
provide us without charge with the services of its employees.
Shares of WOM Restricted Stock will be issued to holders of Restricted
Shares. Shares of WOM Restricted Stock are shares of WOM Common Stock. However,
shares of WOM Restricted Stock are subject to the same restrictions upon
transferability as the Restricted Shares for which they were issued. Therefore,
shares of WOM Restricted Stock will be held in escrow by Besicorp along with the
Restricted Shares. When a Restricted Share vests or is forfeit, the share of WOM
Restricted Stock issued as a dividend will vest or be forfeit. The Independent
Directors' Restricted Shares' restrictions upon transferability will lapse, and
thus such shares will vest, upon the effectuation of the Merger. Therefore the
shares of WOM Restricted Stock issued as a dividend with respect to the
Independent Directors' Restricted Shares also will vest upon the effectuation of
the Merger, which is likely to occur on the same day as the Spin-Off. However,
the Management Restricted Shares' restrictions upon transferability will not
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<PAGE>
lapse, and thus such shares will not vest, upon the effectuation of the Merger.
Therefore the restrictions on transferability on the shares of WOM Restricted
Stock issued as a dividend with respect to the Management Restricted Shares will
continue after the Merger.
Certain effects of authorized and unissued stock
There will be, after the completion of the Spin-Off, approximately
114,114 unissued and unreserved shares of WOM Common Stock, assuming (i) that no
shares of Besicorp Common Stock are issued or cancelled prior to the Spin-Off
and (ii) that the 4,000 Disputed Shares are outstanding at the time of the
Spin-Off. These additional shares may be issued for a variety of corporate
purposes, including future public or private offerings to raise additional
capital or facilitate acquisitions. They may be granted to officers and
employees in lieu of compensation. They may be issued to Mr. Zinn and his
affiliates. The WOM Board could authorize, without having to obtain approval of
the shareholders, any such issuance. Such issuances would reduce the share of
the Bansbach Litigation proceeds if any, that the current shareholders would
receive (except to the extent they receive such shares of WOM Common Stock). We
do not currently intend to issue additional shares of WOM Common Stock.
DESCRIPTION OF CERTAIN STATUTORY, CHARTER AND BY-LAW PROVISIONS
New York Anti-Takeover Law
New York corporations are subject to the provisions of Section 912 of
the NYBCL for so long as they have a class of securities registered under
Section 12 of the Exchange Act and continue to be organized as corporations
under the laws of the State of New York. Section 912 provides, with certain
exceptions, that a New York corporation shall not engage in a "business
combination" (e.g., merger, consolidation, recapitalization or disposition of
stock or assets) with any Interested Shareholder for a period of five years from
the date that such person first became an Interested Shareholder unless the
transaction resulting in a person becoming an Interested Shareholder or the
business combination was approved by the Board of Directors of such corporation
prior to that person becoming an Interested Shareholder. After the end of such
five year period, generally the Interested Shareholder may engage in a business
combination only if (a) the business combination is approved by the holders of a
majority of the outstanding voting stock not beneficially owned by such
Interested Shareholder or (b) the business combination meets certain valuation
and consideration requirements for the stock of such corporation. We, as
permitted by the NYBCL, have elected in the WOM Certificate to opt out of this
section of the NYBCL with the result that the restrictions on business
combinations do not apply to us.
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<PAGE>
Number of Directors; Removal; Vacancies
The WOM By-Laws provides that initially there shall be one director and
thereafter the number of directors shall be determined from time to time by the
majority of the WOM Board. At present WOM has two directors. The WOM By-Laws
provide that the WOM Board shall have the right to fill vacancies, including
vacancies created by expansion of the WOM Board, except for vacancies resulting
from the removal of a WOM director by the shareholders.
The WOM Certificate provides that our directors may be removed with or
without cause by our shareholders by the affirmative vote of the holders of at
least a majority of the voting stock. In addition, our directors may be removed
with cause by the WOM Board.
Shareholder action by written consent; Special Meetings
The WOM Certificate provides that any action required or permitted to
be taken by our shareholders at a duly called meeting of our shareholders may be
effected by any consent in writing of such shareholders, signed by the holders
of outstanding shares having not less than the minimum number of votes that
would be necessary to authorize or take such action at a meeting at which all
shares entitled to vote thereon were present and voted.
Special meetings of our shareholders may be called by the WOM Board or
our president and shall be called by our president or secretary after receipt of
the written request of a majority of the WOM Board or shareholders owning a
majority of the issued and outstanding shares of WOM Common Stock.
Amendment of By-Law Provisions
The WOM By-Laws provide that either the shareholders or, with certain
limitations, the WOM Board may adopt, amend, or repeal any provision of the WOM
By-Laws.
Transfer Agent and Registrar
The transfer agent and registrar for WOM Common Stock will be
Continental Stock Transfer & Trust Company, which also is the Distribution Agent
for the Spin-Off, the paying agent with respect to the Merger Consideration and
the escrow agent for the Enowitz Shares and the Disputed Shares.
LIABILITY AND INDEMNIFICATION OF DIRECTORS AND OFFICERS
As permitted by the NYBCL, the WOM Certificate provides (in the WOM
Certificate Provision) that no director shall be personally liable to us or any
of our shareholders for damages for any breach of duty as a director unless a
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<PAGE>
judgment or other final adjudication adverse to him or her establishes that his
or her acts or omissions were in bad faith or involved intentional misconduct or
a knowing violation of law or that he or she personally gained in fact a
financial profit or other advantage to which he or she was not legally entitled
or that his or her acts violated Section 719 of the NYBCL. No amendment to or
repeal of the WOM Certificate Provision shall apply to or have any effect on the
liability or alleged liability of any of our directors for or with respect to
any acts or omissions of such director occurring prior to such amendment or
repeal.
This provision is intended to afford directors protection, and limit
their potential liability, from suits alleging a breach of the duty of care by a
director. As a result of the inclusion of such provision, shareholders may be
unable to recover monetary damages against directors for actions taken by them
that constitute negligence or gross negligence or that are in violation of their
fiduciary duties, although it may be possible to obtain injunctive or other
equitable relief with respect to such actions. If equitable remedies are found
not to be available to shareholders for any particular case, shareholders may
not have any effective remedy against the challenged conduct.
The WOM By-laws also provide that directors and officers shall be
indemnified against liabilities arising from their service as directors or
officers to the fullest extent permitted by law, which generally requires that
the individual have acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to our best interests, provided that the
Covered Person shall not agree to any settlement which imposes liability on
the Covered Person or the Corporation without our consent (which consent shall
not be unreasonably withheld), and provided, further no indemnification may be
made to or on behalf of any director or officer if a judgment or other final
adjudication adverse to him or her established that his or her acts were
committed in bad faith or were the result of active and deliberate dishonesty
and were material to the cause of action so adjudicated, or that he or she
personally gained in fact a financial profit or other advantage to which he or
she was not legally entitled.
We do not maintain any officers or directors liability insurance.
LISTING AND TRADING OF WOM COMMON STOCK
There is currently no existing trading market for WOM Common Stock. We
have no intention of taking any action to make it possible to trade shares of
WOM Common Stock. We have not applied for and currently do not intend to apply
for listing of the WOM Common Stock on an Exchange and the WOM Common Stock does
not meet the listing requirements of any Exchange. WOM Common Stock may be
traded on the OTC Electronic Bulletin Board, a screen-based trading system
operated by the National Association of Securities Dealers, Inc. Securities
traded on the OTC Electronic Bulletin Board are, for the most part, thinly
traded. We can make no predictions as to the effect, if any, that sales of
shares or the availability of shares for sale will have on the market price, if
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<PAGE>
any, prevailing from time to time. Nevertheless, sales of significant amounts of
WOM Common Stock in the public market, or the perception that such sales may
occur, may adversely affect prevailing market prices.
The shares of WOM Common Stock to be received by holders of Besicorp
Common Stock in the Spin-Off will be freely transferable, unless (i) a holder is
deemed to be an "affiliate" of WOM under the Securities Act or (ii) the holder's
shares of Besicorp Common Stock were "restricted stock" (i.e., contained a
legend indicated that they were restricted under the Securities Act), in which
case the same restrictions would apply to shares of WOM Common Stock issued in
the Spin-Off. Persons who may be deemed our affiliates after the Spin-Off
generally include individuals or entities that control, are controlled by, or
are under common control with us and may include certain of our officers and
directors. Persons who are our affiliates and holders of "restricted stock" will
be permitted to sell their shares of WOM Common Stock only pursuant to an
effective registration statement under the Securities Act or an exemption from
the registration requirements of the Securities Act, such as exemptions afforded
by Section 4(2) of the Securities Act or Rule 144 thereunder.
Upon completion of the Spin-Off, we will have approximately 135,886
shares of issued and outstanding WOM Common Stock. We estimate that we will
initially have approximately 340 shareholders of record, based on the number of
shareholders of record of Besicorp as of March 6, 2000. Of these shares,
approximately 135,886 will be freely tradable without restriction or further
registration under the Securities Act, except that any shares held by our
affiliates may generally only be sold in compliance with the limitations of Rule
144. The remaining shares of WOM Common Stock will be restricted shares within
the meaning of Rule 144 under the Securities Act. We have not agreed to register
any of these shares under the Securities Act for sale by the holders thereof.
EXPENSES OF THE SPIN-OFF
Besicorp shall pay all of the costing and expenses of the Spin-Off
incurred on, before or following the Spin-Off Record Date, including the cost of
preparing the Registration Statement and distributing this Information Statement
and shall seek reimbursement for such costs and expenses form the Escrow Fund.
See "Relationship between WOM and Besicorp after the Spin- Off -- Escrow
Agreement."
INDEPENDENT ACCOUNTANTS
The WOM Board appointed CC&C as our independent accountants to audit
our financial statements for Fiscal 2000. CC&C audited the financial statements
that appear in this Information Statement and served as Besicorp's auditors
throughout the periods covered by the financial statements included in this
Information Statement. On or about March 15, 2000, WOM dismissed CC&C as its
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principal outside accountant. None of CC&C's reports on WOM's financial
statements during any of the past two years contained an adverse opinion or a
disclaimer of opinion, nor was any such report qualified or modified as to
uncertainty, audit scope, or accounting principles. The decision to change
accountants was not recommended or approved by the Board. During WOM's two most
recent fiscal years and all subsequent interim periods preceding the dismissal
there were no disagreements with CC&C 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 CC&C, would have caused it
to make a reference to the subject matter of the disagreement in connection with
any of its reports. On March 15, 2000, WOM engaged Urbach Kahn & Werlin P.C. as
its principal accountant to audit WOM's financial statements.
DIVIDEND POLICY
We have never declared or paid any cash dividends on the WOM Common
Stock and do not anticipate cash dividends in the foreseeable future. The
declaration and payment of dividends is at the discretion of the WOM Board and
will be subject to our financial results and the availability of surplus funds
to pay dividends. The NYBCL prohibits us from paying dividends or otherwise
distributing funds to our shareholders, except out of legally available funds.
51
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INDEX TO THE FINANCIAL STATEMENTS OF WOM, INC.
<TABLE>
<CAPTION>
<S>
<C>
Index to the Financial Statements of WOM, Inc........................................................... F-1
Independent Auditors' Report............................................................................ F-2
Balance Sheet as of December 31, 1999................................................................... F-3
Notes to Financial Statements........................................................................... F-4
Unaudited Pro Forma Financial Information............................................................... F-9
</TABLE>
F-1
<PAGE>
CITRIN COOPERMAN & COMPANY, LLP
Certified Public Accountants
529 Fifth Avenue, Tenth Floor
New York, NY 10017
212-697-1000
Independent Auditors' Report
TO THE SHAREHOLDER OF WOM, INC.
We have audited the accompanying balance sheet of WOM, Inc. as of December 31,
1999. This financial statement is the responsibility of the Company's
management. Our responsibility is to express an opinion on this financial
statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the balance sheet is free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the balance sheet. An audit also includes assessing accounting
principles used and significant estimates made by management, as well as
evaluating the overall balance sheet presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of WOM, Inc., as of December 31, 1999,
in conformity with generally accepted accounting principles.
/s/ Citrin Cooperman & Company, LLP
CITRIN COOPERMAN & COMPANY, LLP
December 31, 1999
New York, New York
F-2
<PAGE>
WOM, INC.
BALANCE SHEET
December 31, 1999
ASSETS
Cash $ 100
---
STOCKHOLDER'S EQUITY
Common stock, $.01 par value,
250,000 shares authorized,
100 shares issued $ 1
Additional paid in capital 99
---
$ 100
===
See accompanying notes to balance sheet.
F-3
<PAGE>
WOM, INC.
NOTES TO BALANCE SHEET
NOTE 1 ORGANIZATION
WOM, Inc. ("WOM") was incorporated in December 1999 by Besicorp Ltd.
("Besicorp"), by the contribution of $100 exchange for 100 shares of WOM common
stock in order to effectuate a spin-off prior to the merger of Besicorp. WOM was
established in order to permit the named plaintiff in the Bansbach Litigation to
remain eligible to maintain the Bansbach Litigation (see Note 2).
NOTE 2 BANSBACH LITIGATION
The Bansbach Litigation is a shareholder derivative action that was commenced in
August 1997 by John Bansbach who was seeking to recover certain legal fees and
expenses paid by Besicorp Group Inc. ("Old Besicorp") to or on behalf of certain
officers and directors of Old Besicorp in connection with the Proceeding (as
defined below).
The Proceeding is an action that was brought 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. In connection with the
Proceeding, 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 and
the Chairman of the Board, President and Chief Executive Officer of WOM), each
entered a guilty plea 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. 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 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.
Old Besicorp paid certain legal expenses incurred by certain officers and
directors in connection with the Proceeding. As of March 31, 1999 and 1998, the
amounts paid on behalf of Michael F. Zinn in connection with the Proceeding
equaled $338,517. In addition, Old Besicorp reimbursed him 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. In addition, Old
Besicorp paid additional legal fees and disbursements of approximately $742,576
incurred in connection with the Proceeding by Old Besicorp, certain directors,
officers, and employees and their spouses who were defendants or actual or
potential witnesses in this matter. The officers and directors agreed to repay
amounts paid by Old Besicorp on their behalf in certain circumstances.
F-4
<PAGE>
In August 1997, after Old Besicorp and Mr. Zinn had entered their pleas, Mr.
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 the plaintiff seeks relief or became officers
and/or directors of Old Besicorp afterwards. The plaintiff sought to hold the
defendants other than Old Besicorp liable to Old Besicorp for: (a) all sums
advanced to or on behalf of Michael F. Zinn in connection with his defense of
the Proceeding; (b) all sums advanced to or on behalf of Michael Daley, who at
the time was the Vice President, Chief Financial Officer and Corporate Secretary
of Old Besicorp (and who is currently a director, Executive Vice President and
Chief Financial Officer of Besicorp) and was subpoenaed for information in
connection with the Proceeding; (c) all legal expenses, costs and fines incurred
by Old Besicorp itself in connection with the Proceeding; (d) all harm to Old
Besicorp's reputation and goodwill resulting from the Proceeding; (e) punitive
damages; and (f) plaintiffs attorneys' fees, costs and expenses. 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.
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.
By this time, Old Besicorp had entered into an agreement to merge with another
company and to distribute certain of its businesses to Besicorp Ltd. (the "Prior
Plan of Merger") and on March 1, 1999 Old Besicorp distributed proxy materials
for a special meeting of its shareholders to adopt the Prior Plan of Merger. The
meeting was scheduled for March 19, 1999 and it was contemplated that if the
Prior Plan of Merger was approved by Old Besicorp shareholders the Prior Merger
would occur shortly afterwards. Effectuation of the Prior Merger would adversely
affect the Bansbach Litigation and the Lichtenberg Litigation.
On March 5, 1999, James Lichtenberg and Mr. Bansbach commenced litigation (the
"March Litigation") by filing a complaint (the "March Complaint"). The March
Complaint alleged 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 two Derivative Litigations, i.e., the Bansbach
Litigation and the Lichtenberg 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
F-5
<PAGE>
$1 million bonus to Mr. Zinn and a $500,000 bonus to Mr. Daley, which the March
Complaint deemed to be excessive and/or unwarranted compensation.
The March Complaint sought 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 sought an order directing that the Derivative Litigation be
transferred to Besicorp, that the Prior Merger Consideration payable to Mr. Zinn
and two former directors and executive officers of Old Besicorp, Martin E.
Enowitz and Steven I. Eisenberg, for their shares of Old Besicorp's common stock
(which are 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 sought
unspecified money damages.
On March 18, 1999, the District Court entered an order (the "Prior Merger
Order") which required Old Besicorp to assign the contingent assets and/or
liabilities comprising Old Besicorp's interests in the Derivative Litigation to
Besicorp before the Prior Merger. The Prior Contribution Agreement effected Old
Besicorp's assignment of the contingent assets and/or liabilities comprising Old
Besicorp's interests in the Derivative Litigation to Besicorp. The Prior Merger
Order also required (i) defendants Messrs. Zinn, Eisenberg and Enowitz to take
no action to place the Prior Merger Consideration they would receive in the
Prior Merger 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 (ii) the plaintiffs to post a bond in the amount 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 this motion (the "June Order"). Besicorp
appealed the Prior Merger Order and the June Order to the United States Court of
Appeals for the Second Circuit. 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
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
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.
Prior to the Spin-Off, the Bansbach Litigation was a Besicorp Assumed Matter and
Besicorp's costs were funded from the Escrow Fund; following the Spin-Off WOM's
costs will be funded from the Escrow Fund. The parties to the Bansbach
Litigation are currently engaged in the discovery process.
The Prior Merger Order did not provide for the occurrence following the Prior
Merger of a transaction such as the proposed merger of Besicorp Ltd. and Besi
Acquisition Corp. (the "Merger"). The effectuation of the Merger ordinarily
would adversely affect the named plaintiffs ability to maintain the Bansbach
Litigation in a manner similar to that which the Prior Merger Order had
attempted to prevent. If Besicorp did not effectuate the Spin-Off, consummation
of the Merger
F-6
<PAGE>
would cause the plaintiff in the Bansbach litigation to lose his status as a
shareholder of Besicorp, and therefore would cause him to lose his right to
prosecute the Bansbach Litigation. Besicorp believed that in order to adhere to
the intent of the Prior Merger Order, Besicorp should assign to WOM the
interests in the Bansbach Litigation that Besicorp had received from Old
Besicorp; by assigning to WOM pursuant to the Spin-Off the interests in the
Bansbach Litigation Besicorp had received from Old Besicorp pursuant to the
Prior Merger Order (subject to WOM's agreement to return such interests upon the
occurrence of a Prior Merger Order Reversal), the plaintiff should retain
standing to maintain the Bansbach Litigation. The Lichtenberg Litigation is not
being assigned to WOM because the complaint in the Lichtenberg Litigation has
been dismissed.
WOM has been assigned the contingent assets comprising Old Besicorp's interests
in the Bansbach Litigation that Besicorp received from Old Besicorp as a result
of the Prior Merger Order. WOM's management believes that these contingent
assets generally consist of any recovery to which Old Besicorp would be entitled
as a result of the resolution of the Bansbach Litigation. However, WOM is under
no obligation to prosecute the action or to assist the plaintiff, financially or
otherwise, in his prosecution of the Bansbach Litigation and WOM has no
intention of providing any assistance to the plaintiff. WOM does, however,
intend to defend itself from liability to the extent WOM deem appropriate.
WOM has also assumed the contingent liabilities comprising Old Besicorp's
interests in the Bansbach Litigation that Besicorp received from Old Besicorp as
a result of the Prior Merger Order. WOM's management believes that these
contingent liabilities generally consist of any damages for which Old Besicorp
would be liable as a result of the resolution of the Bansbach Litigation.
Therefore WOM intends to defend itself from liability to the extent it deems
appropriate. Reimbursements for the costs of defending itself will be sought
from the Escrow Fund. In addition, if WOM is required to pay damages, WOM
expects to seek the money to pay such damages from the Escrow Fund unless the
judgment prohibited such reimbursement; if any of the other defendants in the
Bansbach Litigation, are required to pay damages WOM anticipates that it will
indemnify them and seek the money for such indemnification from the Escrow Fund
unless either (i) the judgment prohibited such indemnification or (ii)
indemnification is impermissible under the NYBCL. However, there can be no
assurance that such amounts will be available from the Escrow Fund or that WOM
will be entitled to receive any such monies from the Escrow Fund.
Since the Bansbach Litigation is a shareholder derivative action, if damages are
paid by WOM or any other defendant, WOM should be the recipient. However, monies
may be deducted for the fees and expenses of the plaintiff's attorneys. It is
likely that if WOM receives any amounts, these amounts will be distributed to
the holders of WOM Common Stock (except to the extent a court otherwise orders)
shortly afterward and that WOM will then be liquidated. In addition, if at any
time the Bansbach Litigation is decided in favor of the defendants, or if the
Prior Merger Order is reversed, WOM will then be liquidated.
NOTE 3 OPERATIONS
F-7
<PAGE>
On account of WOM's very limited activities, WOM has no full-time employees and
no offices. WOM is not compensating its officers and directors, each of whom is
also an officer or director of Besicorp, for the services they render on WOM's
behalf. Besicorp has agreed in the Contribution Agreement to provide WOM with
the services of its employees and to allow WOM to use its offices free of charge
to the extent that WOM determines is reasonably necessary and for as long as WOM
shall seek such services and the use of such offices. It is not anticipated that
the value of these services will be material. Should the value become
significant, then appropriate charges will be made. WOM has no suppliers, no
customers, and, except for WOM's interest in the Bansbach Litigation, WOM is
party to no litigation. WOM has no foreign operations and WOM's operations are
not subject to any U.S., state, foreign or local laws or regulations (other than
those generally applicable to public corporations).
NOTE 4 CAPITAL STOCK
Prior to the completion of the Besicorp Ltd. merger, WOM will issue, to Besicorp
Ltd. to the extent necessary and in addition to the 100 shares of WOM Common
Stock currently outstanding and held by Besicorp Ltd., the number of shares of
WOM Common Stock necessary so that Besicorp Ltd. can distribute one share of WOM
Common Stock for each share of Besicorp Ltd. common stock outstanding (assumed
to be approximately 135,886 shares).
NOTE 5 ESCROW FUND (UNAUDITED)
In connection with the Prior Merger, Old Besicorp deposited $6.5 million into
the Escrow Fund pursuant to the Escrow Agreement. The Escrow Fund initially
served to fund claims for BGI Monitoring Costs, BGI Indemnity Claims and
Litigation Costs, which included the Bansbach Litigation. Therefore, in order to
provide that the Bansbach Litigation is still covered by the Escrow Fund after
the Spin-Off, the Escrow Agreement was amended by the Escrow Agreement Amendment
(effective as of the Spin-Off): (i) to provide, by funding claims for WOM Costs,
that WOM shall be provided from the Escrow Fund with its reasonable expenses (up
to $35,000 per annum) in connection with maintaining WOM's 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 (ii) to provide that the Bansbach Litigation will
still be covered by the Escrow Agreement following the Spin-Off. In addition,
BGI Parent remains entitled to reimbursements for BGI Monitoring Costs and BGI
Indemnity Claims and Besicorp remains entitled to reimbursement for Litigation
Costs. 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.
F-8
WOM, INC.
PRO FORMA BALANCE SHEET
December 31, 1999
<TABLE>
<CAPTION>
<S>
<C> <C> <C>
Historical Adjustments Pro Forma
ASSETS ----------- ----------- ---------
------
Cash $ 100 $ 0 $ 100
--- --- ---
$ 100 $ 0 $ 100
=== === ===
STOCKHOLDER'S EQUITY
Common stock $ 1 $1,358 (1,2) $ 1,359
Additional paid in capital 99 (99) (2) 0
Deficit 0 (1,259) (2) (1,259)
--- ----- ------
$ 100 $ 0 $ 100
=== ===== ======
</TABLE>
See accompanying notes to pro forma balance sheet.
F-9
<PAGE>
WOM, INC.
NOTES TO PRO FORMA BALANCE SHEET
December 31, 1999
(1) Upon the merger of the parent company, Besicorp Ltd. will declare the
distribution of one share of WOM, Inc. for each share of Besicorp Ltd.
common stock outstanding. Based on the number of outstanding shares at
December 31, 1999, approximately 135,886 shares of WOM, Inc. common stock
will be distributed. The outstanding shares reconciles with the outstanding
shares of Bisicorp Ltd. at December 31, 1999 as follows:
Outstanding shares at December 31, 1999 136,382
Less: Treasury Stock at December 31, 1999 (400)
Less: Share forfeited with respect to employee
stock grants after December 31, 1999 (100)
Aggregate of fractional shares issued subsequent
to December 31, 1999 in connection with the spin-
off of Besicorp Ltd. 4
-------
135,886
=======
(2) Excess par value of shares to be issued over capital contributed will be
charged to additional paid in capital and deficit.
(3) WOM is expected to have only very limited activities, no full-time employees
and no offices. WOM is not compensating its officers and director,
each of whom is also an officer or director of Besicorp, for the services they
render on WOM's behalf. Besicorp Ltd. has agreed in the Contribution Agreement
to provide WOM with the services of its employees and to permit the Company to
operate from its corporate headquarters free of charge to the extent that WOM
determines is reasonably necessary and for as long as WOM shall seek such
services and the use of such space. Because these activities will have an
immaterial effect, no proforma operations have been presented. Other expenses of
the ongoing litigation are expected to be reimbursed from the Escrow Fund.
(4) The accounting for this transfer of assets and liabilities represents a
reorganization of companies under common control and, accordingly, all assets
and liabilites will be reflected at their historical cost basis.
F-10
<PAGE>
APPENDIX 1
Acquisition Corp. means Besi Acquisition Corp., a New York corporation and a
wholly owned subsidiary of Parent.
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.
Avalon means Avalon Ventures, LLC, a limited liability company organized under
the laws of Virginia. The only members of Avalon are Michael F. Zinn and his
wife, Valerie Zinn, who owns a nominal interest in Avalon
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.
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 Board means the Board of Directors of Besicorp.
Besicorp Common Stock means the common stock, par value $.01 per share, of
Besicorp.
Besicorp Deferred Payment Right means the right to Besicorp Deferred Payments.
Besicorp Deferred Payments mean the Deferred Payments and the Escrow Fund
Payments.
Besicorp Holdings means Besicorp Holdings, Ltd., a New York corporation.
Besicorp Stock Certificates mean the certificates evidencing ownership of shares
of Besicorp Common Stock.
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
<PAGE>
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.
Buyer means Parent and Acquisition Corp.
Cash Merger Consideration means $8 million divided by the Total Shares.
CC&C means Citrin Cooperman & Company, LLP.
Certificate of Merger means a certificate of merger executed by Besicorp and
Acquisition Corp.
Closing means the consummation of the transactions contemplated by the Plan of
Merger.
Code means the Internal Revenue Code of 1986, as amended.
Continental means Continental Stock Transfer & Trust Co., the transfer agent for
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)
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.
Deferred Payments mean the additional cash payments, if any, to be paid by the
Surviving Corporation equal to (i) the sum of all additional amounts received by
Besicorp which are required to be paid pursuant to the Plan of Merger to the
Outside Participating Shareholders (net of corporate taxes for such amounts)
divided by (ii) 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 Martin
2
<PAGE>
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.
Distribution Agent means Continental as the distribution agent for the Spin-Off.
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.
Enowitz Shares means 100,000 shares of Old Besicorp's common stock held of
record by Martin Enowitz.
Entitled Holders mean the holders of Besicorp Common Stock as of the Spin-Off
Record Date.
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.
Escrow Agreement Amendment means Amendment No. 1 to the Escrow Agreement, dated
as of February 23, 2000, 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.
3
<PAGE>
Escrow Fund Payments means additional cash payments equal to the Remaining
Proceeds being distributed by the Escrow Agent divided by 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.
Existing Litigation means certain litigation specified in the Indemnification
Agreement.
Fiscal 1998 means the year ended March 31, 1998.
Fiscal 1999 means the year ended March 31, 1999.
Fiscal 2000 means the year ending March 31, 2000.
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.
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.
Interested Shareholder means any person that is the beneficial owner of 20% or
more of the then-outstanding voting stock of an entity.
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; and (ii)
4
<PAGE>
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.
Management Restricted Shares means the 13,450 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.
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 Besicorp
Deferred Payment Right to be received as the result of the conversion of one
share of Besicorp Common Stock pursuant to the Merger.
MRA means the Master Restructuring Agreement between (i) the partnerships which
owned the five domestic power plants, in which Old Besicorp formerly held
ownership interests, which provided capacity and electrical power to Niagara
Mohawk Power Corporation, (ii) Niagara Mohawk Power Corporation and (iii)
certain other independent power producers.
NYBCL means the New York Business Corporation Law.
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.
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.
5
<PAGE>
Outside Shareholders means Besicorp's shareholders, except for the Buyer.
Parent means Besicorp Holdings, Ltd., a New York corporation.
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.
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.
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 Old Besicorp to assign to Besicorp the
contingent assets and liabilities comprising Old Besicorp's interests in the
Bansbach Litigation and the Lichtenberg 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.
6
<PAGE>
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.
Purchaser Indemnitees means BGI Parent, Old Besicorp and its subsidiaries and
their respective affiliates and agents.
Registration Statement means a registration statement on Form 10-SB (as it may
be amended or supplemented) under the Exchange Act with respect to the shares of
WOM Common Stock.
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.
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.
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.
7
<PAGE>
Rights means restricted stock, options, including restricted stock options
pursuant to which restricted stock may be acquired, warrants, and other rights
to acquire shares of WOM Common Stock.
Robinson Brog means Robinson Brog Leinwand Greene Genovese & Gluck P.C.
SEC means the Securities and Exchange Commission.
Securities Act means the Securities Act of 1933, as amended.
S.N.C. means S.N.C., Ltd.
Special Meeting means 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, 1345 Avenue of the Americas, New York, NY 10105, 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 effectuation 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.
Surviving Corporation means the surviving corporation of the Merger.
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.
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.
8
<PAGE>
WOM Board means the Board of Directors of WOM.
WOM By-laws mean the By-laws of WOM in effect on the date of this Information
Statement.
WOM Certificate means the Certificate of Incorporation of WOM, as amended on or
before the date of this Information Statement.
WOM Certificate Provision means the provision in the WOM Certificate that
provides that no director shall be personally liable to WOM or any of its
shareholders for damages for any breach of duty as a director unless a judgment
or other final adjudication adverse to him or her establishes that his or her
acts or omissions were in bad faith or involved intentional misconduct or a
knowing violation of law or that he or she personally gained in fact a financial
profit or other advantage to which he or she was not legally entitled or that
his or her acts violated Section 719 of the NYBCL.
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 of the Registration
Statement, (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.
WOM Stock Certificates mean the certificates evidencing ownership of shares of
WOM Common Stock.
9
<PAGE>
EXHIBITS TO
POST EFFECTIVE AMENDMENT NO. 1
TO
FORM 10-SB
General Form for Registration
Of Securities of Small Business Issuers
Under Section 12(b) or 12(g) of
the Securities Exchange Act of 1934
----------------
WOM, INC.
<PAGE>
INDEX OF EXHIBITS
2.1 Contribution and Distribution Agreement by and
between Besicorp and WOM.
3(i) Certificate of Incorporation of WOM*
3(ii) By-Laws of WOM
10.1 Indemnification Agreement dated as of March 22, 1999
by and among Besicorp Group Inc. ("BGI"), Besicorp,
BGI Acquisition LLC ("LLC") and BGI Acquisition Corp.
("BGI Acquisition")*
10.2 Escrow Agreement (the "Escrow Agreement") dated as of
March 22, 1999 by and among Besicorp, BGI, LLC and
BGI Acquisition.*
10.3 Amendment No. 1 to the Escrow Agreement dated as of
February 23, 2000 by and among Besicorp, BGI, LLC and
WOM*.
27 Financial Data Schedule - December 31, 1999*
* Filed previously
CONTRIBUTION AND DISTRIBUTION AGREEMENT
CONTRIBUTION AND DISTRIBUTION AGREEMENT, dated as of April [ ], 2000
(this "Agreement") between Besicorp Ltd. ("Besicorp"), a New York corporation,
and WOM, Inc. ("WOM"), a New York corporation and a wholly owned subsidiary of
Besicorp.
W I T N E S S E T H
WHEREAS, Besicorp Group, Inc. ("Old Besicorp"), BGI
Acquisition LLC ("BGI Parent"), and BGI Acquisition Corp. ("BGI Sub"), a New
York corporation and a wholly owned subsidiary of BGI Parent, are parties to an
agreement and plan of merger dated November 23, 1998 (as amended, the "Prior
Plan of Merger"), providing for the merger of BGI Sub and Old Besicorp (the
"Prior Merger") with Old Besicorp being the surviving corporation;
WHEREAS, in connection with the Prior Merger, a class action
(the "Prior Merger Litigation") was commenced on March 5, 1999 in the United
States District Court (the "Court") for the Southern District of New York;
WHEREAS, in connection with the Prior Merger Litigation, on
March 18, 1999 the Court issued an order (the "Prior Merger Order"), which
order, among other things, required Old Besicorp to assign to Besicorp (the
"Prior Bansbach Assignment") the contingent assets and liabilities comprising
Old Besicorp's interests in 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., (the "Bansbach Litigation");
WHEREAS, following the issuance of the Prior Merger Order and
in connection with the Prior Merger, Old Besicorp and Besicorp entered into a
contribution and distribution agreement dated as of March 22, 1999 (the "Prior
Contribution Agreement") whereby, among other things, Old Besicorp assigned to
Besicorp the contingent assets and liabilities comprising Old Besicorp's
interests in the Bansbach Litigation;
WHEREAS, Besicorp, Besicorp Holdings, Ltd. ("Parent"), a New
York corporation, and Besi Acquisition Corp. ("Merger Sub"), a New York
corporation and a wholly owned subsidiary of Parent, are parties to an Amended
and Restated Agreement and Plan of Merger dated November 24, 1999 (as amended,
the "Plan of Merger") (all capitalized terms defined therein and not defined
herein shall have the meanings provided in the Plan of Merger), providing for
the merger of Merger Sub and Besicorp (the "Merger") with Besicorp being the
surviving corporation (the "Surviving Corporation");
WHEREAS, it is a condition precedent to the Merger that prior
to the Effective Date (as defined in the Plan of Merger) (i) Besicorp contribute
(as defined below) to WOM the interests in the Bansbach Litigation that Besicorp
received pursuant to the Prior Contribution Agreement as
<PAGE>
a result of the Prior Merger Order (subject to WOM's agreement to return such
interests upon the occurrence of a Prior Merger Order Reversal (as defined
below)) (the "Contributed Assets") and (ii) WOM assume all of the liabilities
Besicorp assumed as a result of its acquisition from Old Besicorp of Old
Besicorp's interests in the Bansbach Litigation pursuant to the Prior
Contribution Agreement (subject to Besicorp's agreement to re-assume such
liabilities upon the occurrence of a Prior Merger Order Reversal) (the
"Contributed Liabilities;" collectively such contribution of Contribution Assets
and assumption of Contributed Liabilities is referred to as the "Contribution"),
all as more particularly set forth below. A "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 Bansbach Assignment so
long as such reversal, revocation or other action is subject to no further
appeal.
WHEREAS, it is also a condition precedent to the Merger that
following such Contribution and prior to the Effective Date, Besicorp distribute
on a pro rata basis to the holders of shares of common stock, par value $.01 per
share, of Besicorp (the "Besicorp Common Stock") all of the outstanding shares
of common stock, par value $.01 per share, of WOM (the "WOM Common Stock"), so
that following the distribution of such shares of WOM Common Stock, Besicorp
will own no shares of capital stock of WOM;
WHEREAS, it is the intention of the parties that in order to
effectuate the foregoing, a distribution shall be effected to each holder of
record of Besicorp Common Stock as of the Distribution Date (as defined below)
of one share of WOM Common Stock for each share of Besicorp Common Stock held of
record by such holder on such date (such distribution is hereinafter referred to
as the "Distribution," and together with the Contribution is hereinafter
referred to as the "Spin-Off");
WHEREAS, it is the intention of the parties that following the
Spin-Off, Besicorp will retain all of its businesses (the "Retained
Businesses"), all of its assets other than the Contributed Assets (the "Retained
Assets") and all of its liabilities other than the Contributed Liabilities (the
"Retained Liabilities");
WHEREAS, the Board of Directors of Besicorp has determined
that it is appropriate and desirable that Besicorp effectuate the Spin-Off and
that the Spin-Off will not make Besicorp insolvent; and
WHEREAS, the Board of Directors of WOM has determined that it
is appropriate and desirable that WOM agree to the Contribution;
NOW THEREFORE, in consideration of the mutual agreements
contained herein and in the other agreements and instruments executed in
connection with this Agreement, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
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1. CONTRIBUTION OF ASSETS
1.1 Contribution of Assets.
On the Contribution Date (as defined below), subject to the
satisfaction or waiver of the conditions provided for pursuant to Article 5
hereto, Besicorp shall contribute, convey, assign, transfer and deliver
(collectively, "contribute") to WOM all of Besicorp's right, title and interest
in the Contributed Assets.
1.2 Assumption of Liabilities.
On the Contribution Date, subject to the conditions of this Agreement,
WOM shall assume and agree to pay and discharge when due all of the Contributed
Liabilities.
1.3 The Retained Liabilities.
Besicorp shall retain, and be responsible for the performance of, all
of the Retained Liabilities.
1.4 Issuance of Additional Shares of WOM Common Stock.
On the Contribution Date, WOM shall issue to Besicorp such number of
shares of WOM Common Stock as shall be required in order that (i) Besicorp shall
be able to effect the Distribution on the Distribution Date and (ii) after such
Distribution Besicorp shall no longer own any shares of WOM Common Stock.
1.5 Assets Being Contributed "AS IS WHERE IS".
The Contributed Assets are being transferred AS IS, WHERE IS, WITH ALL
FAULTS. Besicorp makes no express or implied warranty of any kind whatsoever to
WOM or any other party, including, without limitation, any representation as to
the value of any of the Contributed Assets or the future profitability or future
earnings performance of the Contributed Assets. ALL IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE ARE EXPRESSLY EXCLUDED. The
parties hereto agree that with respect to the Contributed Assets the exclusive
remedy of the parties for any claim regarding the Contributed Assets shall be
made under the terms of this Agreement, and the Escrow Agreement dated as of
March 22, 1999 by and among Old Besicorp, Besicorp, BGI Parent and BGI Sub, as
amended by Amendment No. 1 (the "Escrow Agreement Amendment") dated as of
February 23, 2000 by and among Old Besicorp, Besicorp, BGI Parent and WOM (as
amended by the Escrow Agreement Amendment, the "Escrow Agreement"). Without
limiting the generality of the preceding sentence, no legal action sounding in
tort, strict liability or under securities laws may be maintained by WOM against
Besicorp with respect to any of the Contributed Assets, except those that arise
out of Besicorp's breach of this Agreement.
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1.6 Release.
In consideration of the Contributed Assets, WOM hereby irrevocably
releases, remises and forever discharges Besicorp, its successors and assigns,
and their respective parents, subsidiaries, officers, directors, partners,
members, managers, shareholders, representatives and employees (collectively,
the "Released Parties"), of and from any and all manner of rights to
indemnification or contribution, claims, actions, debts, liens, contracts,
agreements, obligations, promises, liabilities, accounts, rights, demands,
damages, controversies, losses, costs and expenses (including attorneys' fees
and costs) ("Claims") of any nature whatsoever, whether known or unknown, in law
or in equity, in contract or in tort, known or unknown, fixed or contingent, or
otherwise, including under the New York Business Corporation Law, which WOM or
any of its subsidiaries following the Spin-Off, now has or ever had or hereafter
can, shall or may have against the Released Parties for, upon, or by reason of
any matter, cause or thing whatsoever from the beginning of time to and
including the date of the Spin-Off, with respect to the Contributed Assets, the
Contributed Liabilities and the Contribution.
2. DISTRIBUTION
2.1 Cooperation Prior to the Distribution.
As promptly as practicable after the date hereof and prior to the
commencement of business on the Distribution Date, the Company and WOM shall
take all such action as may be necessary or appropriate to effect the
Distribution, including without limitation the specific actions set forth in
Section 2.2 or Section 2.3 as applicable, so that the Distribution shall be
effective as of the Distribution Date.
2.2 Actions by WOM Prior to the Distribution.
As promptly as practicable after the date hereof and prior to the
commencement of business on the Distribution Date:
(a) WOM shall promptly prepare and file with the Securities and
Exchange Commission (the "SEC") a Registration Statement on Form 10-SB, or such
other form as may be appropriate (the "Form 10"), pursuant to the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations thereunder, to register the WOM Common Stock, and shall take all
reasonable action to cause the Form 10 to become effective as promptly as
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possible. The Form 10 shall contain, or otherwise provide the basis for, an
information statement (the "Information Statement"), to be delivered to holders
of record of Besicorp Common Stock on the Distribution Date (the "Eligible
Holders").
(b) WOM shall amend its certificate of incorporation, if necessary, and
take all other corporate action, including without limitation, the obtaining of
all necessary authorizations, so that WOM will have authorized and issued and
outstanding a sufficient number of shares of WOM Common Stock to effectuate
the Distribution.
(c) WOM shall make all necessary arrangements to obtain a transfer
agent and registrar (the "Transfer Agent") for the WOM Common Stock.
2.3 Actions by Besicorp Prior to the Distribution.
As promptly as practicable after the date hereof and prior to the
commencement of business on the Distribution Date:
(a) Besicorp shall take all necessary corporate action, including,
without limitation, the obtaining of all necessary authorizations and the
declaring of the Distribution with a record date to be the Distribution Date
(the "Record Date"), in order to distribute the WOM Common Stock pursuant to the
Distribution.
(b) Besicorp shall take all reasonable actions as the Transfer Agent
may request in order that the Transfer Agent shall serve as the distribution
agent (the "Distribution Agent") for the Distribution and shall instruct the
Distribution Agent in a timely manner (the "Instruction") to, and use its best
reasonable efforts to cause the Distribution Agent to, (i) distribute the
Information Statement to the Eligible Holders prior to the Distribution and (ii)
distribute to each Eligible Holder promptly after the Distribution Date
certificates for the shares of WOM Common Stock issued to him pursuant to the
Distribution.
(c) Besicorp shall deliver as many copies of the Information Statement
to the Distribution Agent as the Distribution Agent reasonably requests, which
delivery shall occur in a timely manner so that the Distribution Agent can
distribute the Information Statement to the Eligible Holders prior to the
Distribution.
(d) Besicorp shall deliver prior to the Distribution a sufficient
number of shares of WOM Common Stock in order to effect the Distribution.
(e) Besicorp shall cause WOM to take all necessary action in order to
comply with the Distribution, including but not limited to, the actions
contemplated by Section 2.2.
(f) Besicorp shall inform the Transfer Agent at the time of the
Distribution of such information that the Transfer Agent shall reasonably
require in order (i) to place appropriate legends on all shares of WOM Common
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Stock subject to restrictions on transferability, which includes all shares of
WOM Common Stock issued on account of shares of Besicorp Common Stock ("Besicorp
Restricted Shares") issued pursuant to Besicorp's 1999 Incentive Plan (the
"Plan"), and (ii) to cause the shares of WOM Common Stock issued on account of
the Besicorp Restricted Shares to be held by the escrow agent for the Besicorp
Restricted Stock (the "Besicorp Restricted Stock").
(g) Besicorp shall arrange to have any shares of WOM Common Stock
issued to Martin Enowitz as a result of the Distribution held in escrow by the
Transfer Agent along with the other assets the Transfer Agent is holding on
account of the dispute regarding 100,000 shares of common stock of Old Besicorp
that were issued to Mr. Enowitz.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS
3.1 Cooperation Prior to the Spin-Off.
As promptly as practicable after the date hereof, Besicorp and WOM
shall take all such action as may be necessary or appropriate to effect the
Spin-Off.
3.2 Escrow Agreement.
The parties hereto represent and warrant that Besicorp, BGI Parent, Old
Besicorp and WOM executed and delivered the Escrow Agreement Amendment and that
such Amendment will be effective at the time of the Spin-Off.
3.3 Spin-Off Costs.
Besicorp shall pay all of the fees and expenses incurred in connection
with, relating to or arising out of the negotiation, preparation, execution,
delivery and performance of the Spin-Off, and the effectuation of the
transactions contemplated thereby, including, without limitation, financial
advisors', attorneys', accountants' and other professional fees and expenses
(the "Spin-Off Costs").
3.4 Further Assurances.
In addition to the actions specifically provided for elsewhere in this
Agreement, each of the parties hereto shall use its best efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, all things,
reasonably necessary, proper or advisable under applicable laws, regulations and
agreements to effectuate and make effective the transactions contemplated by
this Agreement, including, without limitation, using its best efforts to obtain
the consents and approvals, to enter into any amendatory agreements and to make
the filings and applications necessary or desirable in order to effectuate the
transactions contemplated by this Agreement; provided, however, that no party
shall be required to qualify in any jurisdiction in which it is not currently
qualified.
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4. POST CLOSING AGREEMENTS AND ACTIONS
4.1 Authorizations.
Without limiting in any respect the right, title and interest in and to
the Contributed Assets to be acquired by WOM hereunder, effective upon the
Contribution Closing, Besicorp hereby irrevocably authorizes WOM, and its
successors and assigns: to demand and receive, from time to time, any and all of
the Contributed Assets, to give receipts and releases for or in respect of the
same, to collect, assert or enforce any claim, right or title of any kind
therein or thereto and, for such purpose, from time to time, to institute and
prosecute in the name of Besicorp, or otherwise, any and all proceedings at law,
in equity or otherwise, which WOM shall deem expedient or desirable. Besicorp
further agrees that WOM shall retain for its own account any amounts collected
pursuant to the foregoing authorization, and Besicorp agrees to pay to WOM, if
and when received, any amounts which shall be received by it after the
Contribution Date in respect of any of the Contributed Assets. Without limiting
in any respect Besicorp's right, title and interest in and to the Retained
Assets, effective upon the Contribution Closing, WOM hereby irrevocably
authorizes Besicorp, and its successors and assigns: to demand and receive, from
time to time, any and all of the Retained Assets, to give receipts and releases
for or in respect of the same, to collect, assert or enforce any claim, right or
title of any kind therein or thereto and, for such purpose, from time to time,
to institute and prosecute in the name of WOM, or otherwise, any and all
proceedings at law, in equity or otherwise, which Besicorp shall deem expedient
or desirable. WOM further agrees that Besicorp shall retain for its own account
any amounts collected pursuant to the foregoing authorization, and WOM agrees to
pay to Besicorp, if and when received, any amounts which shall be received by
WOM after the Contribution Date in respect of the Retained Assets.
4.2 Correspondence.
Besicorp shall deliver to WOM any mail which relates to WOM, the
Contributed Assets or the Contributed Liabilities which is delivered to and
received by Besicorp or any of its subsidiaries. WOM shall deliver to Besicorp
any mail which relates to Besicorp, the Retained Assets or the Retained
Liabilities which is delivered to and received by WOM.
4.3 Use of Besicorp's employees and offices.
WOM has no employees and no facilities and does not intend to engage
any employees or obtain any facilities. Instead Besicorp shall at the sole cost
of Besicorp (i) provide WOM with the services of Besicorp's employees (including
its officers and consultants but excluding Besicorp's accountants and attorneys)
to the extent that WOM, in its sole discretion, determines is reasonably
necessary and (ii) allow WOM to use Besicorp's facilities, including its offices
located at 1151 Flatbush Road, Kingston, New York to the extent that WOM, in its
sole discretion, determines is reasonably necessary.
4.4 Prior Merger Order Reversal.
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The parties hereto agree that if there is a Prior Merger Order
Reversal, the Contributed Assets and the Contributed Liabilities shall be
returned immediately to Besicorp and the Contribution shall be unwound to the
fullest extent possible so as to return the parties to the positions that they
would have been in if the Contribution had never occurred.
5. THE CONTRIBUTION - CLOSING AND CLOSING CONDITIONS
5.1 Contribution Closing and Contribution Date.
Subject to Sections 5.4, 5.5, 5.6 and 5.7, the closing of the
transactions contemplated by Article 1 of in this Agreement (the "Contribution
Closing") shall take place at 10:00 A.M. local time on the first business day
after the date when all of the conditions required pursuant to Sections 5.4,
5.5, 5.6 and 5.7 to be satisfied prior to the Contribution Closing have been
satisfied or waived, or such other time after all of the conditions required
pursuant to Sections 5.4, 5.5, 5.6 and 5.7 to be satisfied prior to the
Contribution Closing have been satisfied or waived (the "Contribution Date"),
and at such place as shall be agreed upon by the parties.
5.2 Besicorp Deliveries at the Contribution Closing.
At the Contribution Closing, Besicorp shall execute and deliver to WOM:
(a) one or more bills of sale and instruments of assignment duly
executed by Besicorp; and
(b) all such other conveyances, deeds, assignments, confirmations,
powers of attorney, and other instruments, duly executed by Besicorp, as WOM
shall determine are necessary, expedient or proper in order to effectuate the
contribution of the Contributed Assets as contemplated hereby.
5.3 WOM Deliveries at the Contribution Closing.
At the Contribution Closing, WOM shall execute and deliver to Besicorp;
(a) all such assumptions, confirmations, releases, indemnifications and
other instruments, duly executed by WOM, as Besicorp shall determine are
necessary or proper in order to evidence the assumption of the Contributed
Liabilities;
(b) a certificate for such a number of shares of WOM Common Stock as
shall be required pursuant to Section 1.4 hereof.
5.4 General Conditions to the Contribution.
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The respective obligations of each party hereto to effectuate the
Contribution and to perform all other obligations set forth herein, other than
the effectuation of the Distribution, are subject to (i) the satisfaction or
waiver (as provided for therein) of all of the conditions set forth in Section
5.1 of the Plan of Merger and (ii) the absence of a Prior Merger Order Reversal.
5.5 Conditions to the Obligations of Besicorp to the Contribution.
The obligations of Besicorp to effectuate the Contribution and to
perform all other obligations set forth herein, other than the effectuation of
the Distribution, are subject to the satisfaction or waiver of the condition
that WOM shall have effected its assumption of the Contributed Liabilities, as
contemplated in Section 1.2 hereto.
5.6 Conditions to the Obligations of WOM to the Contribution.
The obligations of WOM to effectuate the transactions contemplated
herein, other than the Distribution, and to perform all other obligations set
forth herein (other than those relating to the Distribution) are subject to the
satisfaction or waiver of the condition that Besicorp shall have contributed to
WOM the Contributed Assets, as contemplated in Section 1.1 hereto.
5.7 Other Approvals.
All authorizations, consents, orders or approvals of, or declarations
or filings with, or expirations or waiting periods imposed by, any governmental
entity or other public or private entity necessary to effectuate the
Contribution, including the Contribution of the Contributed Assets and the
assumption of the Contributed Liabilities, or the failure of which to obtain
would have a material adverse effect on either WOM or Besicorp, shall have been
filed, occurred, or been obtained prior to the Contribution.
6. THE DISTRIBUTION - CLOSING AND CLOSING CONDITIONS
6.1 Distribution Closing and Distribution Date.
Subject to Section 6.4, the closing of all of the transactions
completed by this Agreement (other than those contemplated by Article 1 of this
Agreement) (the "Distribution Closing") shall take place at 10:00 A.M. local
time on the first business day after the date when all of the conditions
required pursuant to Section 6.4 to be satisfied prior to the Distribution
Closing have been satisfied or waived, or such other time after all of the
conditions required pursuant to Article 6 to be satisfied prior to the
Distribution Closing have been satisfied or waived (the "Distribution Date") and
at such place as shall be agreed upon by the parties.
6.2 Company Deliveries at the Distribution Closing.
At the Distribution Closing, Besicorp shall execute and deliver to WOM:
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(a) certificate of an officer of Besicorp indicating that the Record
Date has occurred, the Distribution has commenced, the Instruction has been
delivered and all of the actions to be taken by Besicorp prior to the
Distribution pursuant to this Agreement have been taken; and
(b) all such documents and other instruments as WOM shall reasonably
require to effectuate the Distribution or as evidence of Besicorp's compliance
with all of the conditions precedent to the Distribution.
In addition at the Distribution Closing, Besicorp shall deliver to the
Distribution Agent the share certificates evidencing all of the shares of WOM
Common Stock held by Besicorp immediately prior to the Distribution Closing.
6.3 WOM Deliveries at the Distribution Closing.
At the Distribution Closing, WOM shall execute and deliver to
Besicorp:
(a) a certificate of an officer of WOM indicating that all of
the actions to be taken by WOM prior to the Distribution pursuant to the
Distribution pursuant to this Agreement have been taken; and
(b) all such documents and other instruments as Besicorp shall
reasonably require from WOM to effectuate the Distribution or as evidence of
WOM's compliance with all its conditions precedent to the Distribution.
In addition at the Distribution Closing, WOM shall deliver to the
Distribution Agent the share certificates necessary to effectuate the
Distribution.
6.4 General Conditions to the Distribution.
The respective obligations of each party hereto to effectuate the
Distribution and to perform all other obligations pursuant to Article 3 hereto
are subject to (i) the effectuation of the Contribution, (ii) the Form 10-SB
being effective and no stop order with respect thereto being in effect, (iii)
the absence of a Prior Merger Order Reversal and (iv) the satisfaction or waiver
(as provided for therein) of all of the conditions set forth in Section 5.1 of
the Plan of Merger.
7. ACCESS TO INFORMATION
7.1 Cooperation with Respect to Government Filings and Reports.
Each of Besicorp and WOM agrees to provide the other party (at the sole
expense of Besicorp) with access during reasonable business hours and for a
reasonable business purpose and such cooperation and information, including, but
not limited to, all records, books, contracts,
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instruments, computer data and other data, including all historical financial
and tax information, and personnel with relevant knowledge of such information,
as may be reasonably requested by the other in connection with the preparation
or filing of any government report or other government filing, contemplated by
this Agreement or in conducting any other government proceeding relating to pre-
Distribution events. Such cooperation and information shall include, without
limitation, promptly forwarding copies of appropriate notices and forms or other
communications received from or sent to any government authority to the
appropriate party. Each party shall make its employees and facilities (if any)
available during normal business hours and on reasonable prior notice shall
provide explanation of any documents or information provided hereunder. Each of
Besicorp and WOM waives to the fullest extent permitted any attorney-client
privilege that would restrict such cooperation and information.
7.2 Cooperation with Confidentiality.
Each of Besicorp and WOM agrees to use its best efforts to protect the
confidentiality of all non-public information, attorney-client privileged
information, attorney work product information and other privileged information
concerning the other party and neither party shall waive any claim that
information is privileged without the written consent of the other party.
8. MISCELLANEOUS
8.1 Termination.
This Agreement may be terminated at any time by mutual written consent
of Besicorp and WOM. This Agreement shall terminate upon the occurrence of a
Prior Merger Order Reversal before this Distribution. This Agreement shall
terminate upon termination of the Plan of Merger prior to the Merger. If this
Agreement is terminated after the Contribution but before the Distribution on
account of the termination of the Plan of Merger prior to the Merger or the
occurrence of a Prior Merger Order Reversal, the parties hereto agree to use
their best efforts to promptly, to the extent practical, unwind the
Contribution.
8.2 Entire Agreement.
This Agreement, together with the schedules and exhibits hereto, sets
forth the entire understanding of the parties with respect to its subject matter
and supersedes all prior understandings of the parties hereto with respect to
its subject matter.
8.3 No Third Party Rights.
No person or entity other than the parties hereto, including, but not
limited to, any former or present employee of WOM or Besicorp (including,
without limitation, any assignee or beneficiary thereof) shall have any rights
with respect to any obligations of any entity under this Agreement
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(including, without limitation, the documents and instruments referred to
herein), and nothing in this Agreement (including, without limitation, Article 1
hereof and the documents and instruments referred to herein), expressed or
implied, is intended to confer on any such employee any rights or remedies.
8.4 Amendments; Waivers.
This Agreement (including the Schedules and Exhibits hereto) may be
amended by the parties at any time. Any such amendment shall be in writing
signed on behalf of the party or parties to be charged. At any time prior to the
Distribution Date, either Besicorp or WOM may waive compliance by the other
party with any of the agreements or conditions contained in this Agreement. Any
agreement on the part of a party to any such waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such party. The waiver of
any party to this Agreement or otherwise shall not constitute a waiver of any
future breach of such provision or any other provision.
8.5 Communications.
All notices, consents and other communications given under this
Agreement shall be in writing and shall be deemed to have been duly given (i)
when delivered by hand or by Federal Express or similar overnight courier to,
(ii) or the fourth day (other than Sundays or holidays during which there are no
regular postal deliveries) after being deposited in any United States Post
Office enclosed in a postage prepaid registered or certified envelope addressed
to, or (iii) when successfully transmitted by telecopier (with a confirming copy
of such communication to be sent as provided in clauses (i) or (ii) above) to,
the party for whom intended, at the address, or telecopier number for such party
set forth below, or to such other address, or telecopier number as may be
furnished by such party by notice in the manner provided herein; provided,
however, that any notice of change of address, or telecopier number shall be
effective only upon receipt.
If to Besicorp:
Besicorp Ltd.
1151 Flatbush Road
Kingston, New York 12401
Attention: Michael F. Zinn
Fax: (914) 336-7172
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If to WOM:
WOM, Inc.
1151 Flatbush Road
Kingston, New York 12401
Attention: Frederic M. Zinn, Esq.
Fax: (914) 336-7172
8.6 Successors and Assigns.
This Agreement shall be binding on, enforceable against and inure to
the benefit of the parties hereto and their respective successors (including,
after the Effective Time, the Surviving Corporation as the successor to
Besicorp) and permitted assigns, and nothing herein is intended to confer any
right, remedy or benefit upon any other person. Neither party may assign its
rights or delegate its obligations under this Agreement without the express
written consent of the other party.
8.7 Governing Law; Jurisdiction.
This agreement shall in all respects be governed by and construed in
accordance with the laws of the State of New York without regard to any
applicable conflicts of law principles. Each of the parties hereto expressly and
irrevocably submits to the non-exclusive personal jurisdiction of the United
States District Court and to the jurisdiction of any other competent court of
the State of New York located in the County of Ulster, in connection with all
disputes arising out of or in connection with this Agreement or the transactions
contemplated herein and agrees not to commence any litigation relating thereto
except in such courts. Each party hereby waives the right to any other
jurisdiction or venue for any litigation arising out of or in connection with
this Agreement or the transactions contemplated herein to which any of them may
be entitled by reason of its present or future domicile. The parties agree that
service of process may be made by U.S. registered mail, return receipt
requested, to a party at its address set forth in Section 8.5. However, the
foregoing shall not limit the right of a party to effect service of process on
the other party by any other legally available method.
8.8 Savings Clause.
If any provision of this Agreement is held to be invalid or
unenforceable by any court or tribunal of competent jurisdiction, the remainder
of this Agreement shall not be affected thereby, and such provision shall be
carried out as nearly as possible according to its original terms and intent to
eliminate such invalidity or unenforceability.
8.9 Expenses.
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Except as otherwise provided herein, Besicorp shall bear all of the
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 effectuation of the transactions contemplated hereby, including, without
limitation, financial advisors', attorneys', accountants' and other professional
fees and expenses.
8.10 Counterparts.
This Agreement may be executed in multiple counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
8.11 Construction.
Headings contained in this Agreement are for convenience only and shall
not be used in the interpretation of this Agreement. References herein to the
Agreement shall be deemed to include all Schedules and Exhibits hereto, and
references herein to Articles, Sections, Schedules and Exhibits are to the
articles, sections, schedules and exhibits of this Agreement. As used herein,
the singular includes the plural, and the masculine, feminine and neuter gender
each includes the other where the context so indicates.
8.12 No Limitation on Plan of Merger.
Notwithstanding any implication to the contrary which may be implied
from this Agreement, nothing in this Agreement shall be deemed to limit any of
the Surviving Corporation's rights or responsibilities set forth in the Plan of
Merger.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
WOM, Inc.
By: /s/ Michael F. Zinn
------------------------
Name: Michael F Zinn
Title: President
Besicorp Ltd.
By: /s/ Frederic M Zinn
---------------------
Name: Frederic M. Zinn
Title: Senior Vice President
14
BY-LAWS
of
WOM, INC.
ARTICLE I - OFFICES
The principal office of WOM, Inc. (the "Corporation") shall be at such
place within or without the State of New York as the Board of Directors of the
Corporation (the "Board") may from time to time determine; the Corporation may
also have offices at such other places within or without the State of New York
as the Board may from time to time determine or the business of the Corporation
may require.
ARTICLE II - SHAREHOLDERS
1. PLACE OF MEETINGS.
Meetings of shareholders shall be held at the principal office of the
Corporation or at such other place within or without the State of New York as
the Board shall authorize.
2. ANNUAL MEETING.
The annual meeting of the shareholders for the election of directors
and for the transaction of such other business as may properly come before the
meeting shall be held on such date and hour as the Board shall determine.
3. SPECIAL MEETINGS.
Special meetings of the shareholders may be called by the Board or by
the President and shall be called by the President or the Secretary at the
request in writing of a majority of the Board or at the request in writing of
shareholders owning a majority in amount of the shares issued and outstanding.
Such request shall state the purpose or purposes of the proposed meeting.
Business transacted at a special meeting shall be confined to the purposes
stated in the notice. Such meeting shall be held on such date and at such place
and hour as shall be designated in the notice thereof.
4. FIXING RECORD DATE.
For the purpose of determining the shareholders entitled to notice of
or to vote at any meeting of shareholders or any adjournment thereof, or to
express consent to or dissent from any proposal without a meeting, or for the
purpose of determining shareholders entitled to receive payment of any
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dividend or other distribution or the allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock,
or for the purpose of any other action, the Board shall fix, in advance, a date
as the record date for any such determination of shareholders. A determination
of shareholders entitled to notice of or to vote at a meeting of the
shareholders shall apply to any adjournment of the meeting; provided, however,
that the Board may fix a new record date for the adjourned meeting. Such date
shall not be more than sixty nor less than ten days before the date of such
meeting, nor more than sixty days prior to any other action. If no record date
is fixed it shall be determined in accordance with the provisions of law.
5. NOTICE OF MEETINGS OF SHAREHOLDERS.
Written notice of each meeting of shareholders shall state the purpose
or purposes for which the meeting is called, the place, date and hour of the
meeting and, unless it is the annual meeting of shareholders, shall indicate
that it is being issued by or at the direction of the person or persons calling
the meeting. Except as otherwise expressly required by these By-laws, notice
shall be given either personally or by mail to each shareholder entitled to vote
at such meeting, not less than ten nor more than sixty days before the date of
the meeting. If action is proposed to be taken that might entitle shareholders
to payment for their shares, the notice shall include a statement of that
purpose and to that effect. If mailed, the notice is given when deposited in the
United States mail, with postage thereon prepaid, directed to the shareholder at
his address as it appears on the record of shareholders, or, if he shall have
filed with the Secretary a written request that notices to him be mailed to some
other address, then directed to him at such other address. Notice of any
adjourned meeting of the shareholders shall not be required to be given if the
time and place thereof are announced at the meeting at which the adjournment is
taken and a new record date for the adjourned meeting is not thereafter fixed.
6. WAIVERS.
Notice of meeting need not be given to any shareholder who signs a
waiver of notice, in person or by proxy, whether before or after the meeting.
The attendance of any shareholder at a meeting, in person or by proxy, without
protesting prior to the conclusion of the meeting the lack of notice of such
meeting, shall constitute a waiver of notice by him.
7. QUORUM OF SHAREHOLDERS.
Except as otherwise expressly required by law or the certificate of
incorporation of the Corporation, as amended from time to time (the "Certificate
of Incorporation"), if shareholders holding of record a majority of the shares
of stock of the Corporation entitled to be voted shall be present in person or
by proxy, a quorum for the transaction of business at any meeting of the
shareholders shall exist, provided that when a specified item of business is
required to be voted on
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by a class or classes, the holders of a majority of the shares of such class or
classes shall constitute a quorum for the transaction of such specified item of
business.
When a quorum is once present to organize a meeting, it is not broken
by the subsequent withdrawal of any shareholders.
In the absence of a quorum at any such meeting or any adjournment or
adjournments thereof, a majority in voting interest of those present in person
or by proxy and entitled to vote thereat may adjourn such meeting from time to
time until shareholders holding the amount of stock requisite for a quorum shall
be present in person or by proxy. At any such adjourned meeting at which a
quorum is present any business may be transacted which might have been
transacted at the meeting as originally called.
8. PROXIES.
Every shareholder entitled to vote at a meeting of shareholders or to
express consent or dissent without a meeting may authorize another person or
persons to act for him by proxy.
Every proxy must be signed by the shareholder or his attorney-in-fact.
No proxy shall be valid after expiration of eleven months from the date thereof
unless otherwise provided in the proxy. Every proxy shall be revocable at the
pleasure of the shareholder executing it, except as otherwise provided by law.
9. QUALIFICATION OF VOTERS.
Except as otherwise provided in the Certificate of Incorporation, each
shareholder shall, at each meeting of the shareholders, be entitled to one vote,
in person or by proxy, for each share of stock of the Corporation which has
voting power on the matter in question and which is held by him and registered
in his name on the stock record of the Corporation.
10. ORGANIZATION OF MEETINGS.
At each meeting of the shareholders, one of the following shall act as
chairman of the meeting and preside thereat in the following order of
precedence:
(a) the Chairman of the Board, if there is one;
(b) the President;
(c) the Executive Vice President;
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(d) any other Vice President; or
(e) any other officer or a shareholder of record designated by
a majority in voting interest of the shareholders present in person or by proxy
and entitled to vote thereat.
The Secretary of the Corporation or, if he shall be absent from or
presiding over the meeting, the Assistant Secretary designated by the Secretary
or the Board, or if both the Secretary and the Assistant Secretaries be absent
from or presiding over the meeting the person whom the chairman of the meeting
shall appoint, shall act as secretary of the meeting and keep the minutes
thereof.
11. ORDER OF BUSINESS.
The order of business at each meeting of the shareholders shall be
determined by the chairman of the meeting, but such order of business may be
changed by a majority in voting interest of those present in person or by proxy
at such meeting and entitled to vote thereat.
12. VOTE OF SHAREHOLDERS.
Except as otherwise required by statute or by the Certificate of
Incorporation:
(a) directors shall be elected by a plurality of the votes
cast at a meeting of shareholders by the holders of shares entitled to vote in
the election; and
(b) all other corporate action shall be authorized by a
majority of the votes cast.
13. INSPECTORS.
Either the Board or, in the absence of a designation of inspectors by
the Board, the chairman of the meeting may, in its or his discretion, appoint
one or more inspectors, who need not be shareholders, who shall receive and take
charge of ballots and proxies and decide all questions relating to the
qualification of those asserting the right to vote and the validity of ballots
and proxies. In the event of the failure or refusal to serve of any inspector
designated by the Board, the chairman of the meeting shall appoint an inspector
to act in place of each such inspector designated by the Board.
14. WRITTEN CONSENT OF SHAREHOLDERS.
Any action that may be taken by vote may be taken without a meeting on
written consent, setting forth the action so taken, signed by the holders of all
the outstanding shares entitled to vote thereon or signed by such lesser number
of holders as may be provided for in the Certificate of Incorporation.
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ARTICLE III - DIRECTORS
1. GENERAL POWERS.
The property, business, affairs and policies of the Corporation shall
be managed by or under the direction of the Board.
2. NUMBER & TERM.
The number of directors of the Corporation shall be initially one, and
may be increased or decreased from time to time by a majority vote of the then
number of directors, provided that such number of directors shall comply with
the requirements of applicable law. Such number of directors, as fixed from time
to time, is sometimes referred to as the "Entire Board." Directors shall be
elected by a plurality vote at the annual meeting of shareholders or at any
meeting of shareholders held in lieu of such annual meeting, which meeting, for
the purposes of these By-laws, shall deemed the annual meeting, so long as a
quorum is present, and at such meeting each director shall be elected to serve
until the next annual meeting and until his successor shall be elected and shall
qualify, or until his earlier death, resignation or renewal. No decrease in the
number of directors shall become effective if the tenure of any director then in
office would be terminated thereby.
3. NEWLY CREATED DIRECTORSHIPS AND VACANCIES.
Newly created directorships resulting from an increase in the number of
directors and vacancies occurring in the Board for any reason except the removal
of directors by vote of the shareholders may be filled by a vote of a majority
of the directors then in office, although less than a quorum exists, or the sole
remaining director, unless otherwise provided in the Certificate of
Incorporation. Vacancies occurring by reason of the removal of directors by vote
of the shareholders shall be filled by vote of the shareholders unless otherwise
provided in the Certificate of Incorporation. A director elected to fill a
vacancy caused by resignation, death or removal shall be elected to hold office
for the unexpired term of his predecessor.
4. REMOVAL OF DIRECTORS.
Any director may be removed at any time for cause or without cause by
vote of the holders of record of a majority in voting interest of shares then
entitled to vote at an election of directors at a duly constituted meeting of
shareholders. The vacancy in the Board caused by any such removal may be filled
by the shareholders at such meeting or subsequently at another duty constituted
meeting of shareholders. Any director may also be removed at any time for cause
by vote of a majority of the Board.
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5. RESIGNATION.
A director may resign at any time by giving written notice to the
Board, the President or the Secretary of the Corporation. Unless otherwise
specified in the notice, the resignation shall take effect upon receipt thereof
by the Board or such officer, and the acceptance of the resignation shall not be
necessary to make it effective.
6. QUORUM OF DIRECTORS, ACTION BY THE BOARD.
Except as otherwise expressly required by these By-laws or by law, a
majority of the Entire Board and a majority of the members of any committee
shall be present in person at any meeting thereof in order to constitute a
quorum for the transaction of business at such meeting; the vote of a majority
of the directors present at any such meeting at which a quorum is present shall
be necessary for the passage of any resolution or for an act to be the act of
the Board or such committee. In the absence of a quorum, a majority of the
directors present thereat may adjourn such meeting from time to time until a
quorum shall be present thereat. Notice of any adjourned meeting need not be
given.
7. PLACE AND TIME OF BOARD MEETINGS.
(a) Regular meetings of the Board or any committee thereof shall be
held at such times and places or places as the Board or the committee may from
time to time determine. Special meetings of the Board or any committee thereof
shall be held at such times and places as the callers thereof may determine.
Meetings may be held at the office of the Corporation or at other places, either
within or without the State of New York.
(b) Any one or more members of the Board or any committee thereof, may
participate in a meeting of the Board or such committee, by means of a
conference, telephone or other communications equipment allowing all persons
participating in the meeting to hear each other at the same time and
participation by such means shall constitute presence in the meeting for all
purposes of these By-laws.
8. MEETINGS.
(a) Annual Meetings. As soon as practicable after each annual meeting
of shareholders and election of directors, the Board shall meet for the purpose
of organization, the election of officers and the transaction of other business.
(b) Regular Meetings. Regular meetings of the Board or any committee
thereof shall be held as the Board or such committee shall from time to time
determine.
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(c) Special Meetings. Special meetings of the Board may be called by
order of the President and shall be called by order of the President or
Secretary on request of two or more of the directors then in office.
9. NOTICE OF MEETINGS OF THE BOARD, ADJOURNMENT.
(a) No notice of regular meetings of the Board or of any committee
thereof need be given. The President or the Secretary shall give one day prior
notice to each director of the time and place of each annual or special meeting
of the Board or adjournment thereof or adjournment of a regular meeting. Such
notice shall be given to each director in person or by telephone, telegraph or
fax or by ordinary mail post marked at least three days' prior to the annual or
special meeting and sent to such director at his residence or usual business
address. Notice of a meeting need not be given to any director who submits a
waiver of notice whether before or after the meeting or who attends the meeting
without protesting prior thereto or at its commencement, the lack of notice to
him. Notice of any special meeting need not specify the purpose or purposes of
such meeting and may be waived by any director by written waiver or by personal
attendance thereat.
(b) Any meeting of the Board or any committee thereof shall be a legal
meeting without any notice thereof having been given if a quorum shall be
present and all the directors then in office either shall be present thereat or
shall execute waivers of notice.
(c) A majority of the directors present, whether or not a quorum is
present, may adjourn any meeting to another time and place. Notice of the
adjournment shall be given to all directors who were absent at the time of the
adjournment and, unless such time and place are announced at the meeting, to the
other directors.
10. ORGANIZATION OF MEETINGS.
At each meeting of the Board, one of the following shall act as
chairman of the meeting and preside thereat in the following order of
precedence:
(a) the Chairman of the Board, if there is one; or
(b) the President, if a director; or
(c) any director chosen by a majority of the directors present thereat.
The chairman of the meeting shall appoint a person present at each
meeting to act as secretary of such meeting and keep the minutes thereof. The
order of business at each meeting of the Board shall be determined by the
chairman of such meeting.
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11. COMMITTEES OF DIRECTORS.
(a) The Board may, by resolution or resolutions adopted by a majority
of the Entire Board, designate, from among its members, one or more committees
which, to the extent provided in said resolution or resolutions, shall, except
as otherwise provided by statute, have and may exercise the powers of the Board
in the management of the business and affairs of the Corporation, and may have
power to authorize the seal of the Corporation to be affixed to all papers which
may require it. Such committee or committees shall have such name or names as
may be determined from time to time by resolution adopted by the Board.
(b) The Board may by resolution designate Directors to act as alternate
members of a committee to replace absent members at meetings of the committees.
The committees shall report all proceedings to the Board and to the President as
required from time to time.
12. COMPENSATION.
Each director who is not an employee of the Corporation, in
consideration of his serving as a director, may receive from the Corporation
such amount per annum and such fees and expenses incurred for attendance at
meetings of the Board or of the committee, or both, as the Board may from time
to time determine. Nothing contained in this Section shall be construed to
preclude any director from serving the Corporation in any other capacity and
receiving compensation therefor.
13. WRITTEN CONSENTS.
Unless otherwise restricted by the Certificate of Incorporation, any
action required to be taken by the Board or any committee thereof may be taken
without a meeting if all members of the Board or such committee consent in
writing to the adoption of the resolution authorizing the action. The resolution
and written consents thereto by the members of the Board or such committee shall
be filed with the minutes of the proceedings of the Board or such committee.
ARTICLE IV - OFFICERS
1. OFFICES, ELECTION, TERM.
(a) Unless otherwise provided for in the certificate of incorporation,
the officers shall be a President, one or more Vice-Presidents, a Secretary and
a Treasurer, and such other officers as the Board determine from time to time,
who shall have such duties, powers and functions as hereinafter provided. Each
such officer shall be elected by the Board. Two or more offices may be held by
the same person except no one person shall hold both the offices of President
and Secretary. The Board
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may elect or appoint (and may authorize the President to appoint) such other
officers (including one or more Vice Presidents, Assistant Vice Presidents,
Assistant Secretaries and Assistant Treasurers) as it deems necessary who shall
have such authority and shall perform such duties as the Board, or the
President, may from time to time prescribe.
(b) All officers shall be elected or appointed to hold office until the
meeting of the Board following the next annual meeting of shareholders.
(c) Each officer shall hold office for the term for which he is elected
or appointed and until his successor has been elected or appointed and qualified
or until his earlier death, resignation or removal.
2. REMOVAL, RESIGNATION, SALARY, ETC.
(a) Any officer may resign at any time by giving written notice of his
resignation to the President or the Secretary of the Corporation. Any such
resignation shall take effect at the time specified therein or when received by
the President or Secretary, as shall be determined by the Board.
(b) Any officer, agent or employee may be removed, with or without
cause, at any time by the Board or by the officer who appointed him.
(c) A vacancy in any office may be filled for the unexpired portion of
the term in the same manner as provided in these By-laws for the election or
appointment to such office.
(d) The salaries of all officers shall be fixed by the Board.
3. PRESIDENT.
The President shall be the chief executive officer of the Corporation,
and, subject to the control of the Board, shall have the management, general
direction and supervision over the business and affairs of the Corporation. The
President shall, if present, preside at all meetings of shareholders and of the
Board, and shall also have the powers and duties delegated to him by these
By-laws and such other powers and duties as the Board may from time to time
determine.
4. VICE-PRESIDENTS.
During the absence or disability of the President, the Vice-President,
or if there are more than one, the Executive Vice-President, shall have all the
powers and functions of the President. Each Vice-President shall perform such
other duties as the Board shall prescribe.
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5. SECRETARY.
The Secretary shall:
(a) attend all meetings of the shareholders and of the Board and
any committees, if any, thereof;
(b) record all votes and minutes of all meetings in a book to be
kept for that purpose;
(c) give or cause to be given notice of all meetings of shareholders
and of special meetings of the Board;
(d) keep in safe custody the seal of the Corporation and, when
authorized by the Board, affix it or cause it to be affixed to any instrument
when the same has been signed on behalf of the Corporation by a duly authorized
officer;
(e) when required, prepare or cause to be prepared and available at
each meeting of shareholders a certified list in alphabetical order of the names
of shareholders entitled to vote thereat, indicating the number of shares of
each respective class held by each;
(f) keep all the documents and records of the Corporation as required
by law or otherwise in a proper and safe manner and be custodian of all
contracts, deeds, documents and other corporate papers, records (except
accounting records) and indicia of title to properties (other than securities)
owned by the Corporation as shall not be committed to the custody of another
officer by the Board or by the President;
(g) perform all duties and have all powers incident to the office of
Secretary and perform such other duties as shall be assigned to him by the Board
or the President.
6. ASSISTANT SECRETARIES.
During the absence or disability of the Secretary, the Assistant
Secretary, or if there are more than one, the one so designated by the Secretary
or by the Board, shall exercise all the powers and functions of the Secretary.
7. TREASURER.
The Treasurer shall:
(a) have the custody of the corporate funds and securities;
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(b) keep full and accurate accounts of receipts and disbursements in
the corporate books;
(c) deposit all money and other valuables in the name and to the credit
of the Corporation in such depositories as may be designated by the Board;
(d) disburse the funds of the Corporation as may be ordered or
authorized by the Board and preserve proper vouchers for such disbursements;
(e) render to the President and Board at the regular meetings of the
Board, or whenever they require it, an account of all his transactions as
Treasurer and of the financial condition of the Corporation;
(f) render a full financial report at the annual meeting of the
shareholders if so requested;
(g) be furnished by all corporate officers and agents at his request,
with such reports and statements as he may require as to all financial
transactions of the Corporation;
(h) perform such other duties as are given to him by these By-laws or
as from time to time are assigned to him by the Board or the President.
8. ASSISTANT TREASURER.
During the absence or disability of the Treasurer, the Assistant
Treasurer, or if there are more than one, the one so designated by the Treasurer
or by the Board, shall have all the powers and functions of the Treasurer.
9. SURETIES AND BONDS.
In case the Board shall so require, any officer or agent of the
Corporation shall execute to the Corporation a bond in such sum and with such
surety or sureties as the Board may direct, conditioned upon the faithful
performance of his duties to the Corporation and including responsibility for
negligence and for the accounting for all property, funds or securities of the
Corporation which may come into his hands.
ARTICLE V - WAIVER OF NOTICES
Whenever notice is required to be given by the Certificate of
Incorporation, by these By-laws or by law, a waiver thereof in writing, signed
by the person entitled to such notice, or by an attorney thereunto authorized,
shall be deemed equivalent to notice, whether given before or after the time
specified therein. Attendance of a person at a meeting shall constitute a waiver
of notice of such
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meeting, except where the person attends the meeting for the express purpose of
objecting, prior to the conclusion of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened.
ARTICLE VI - SHARES
1. CERTIFICATES.
No certificates shall be issued with respect to the shares of stock of
the Corporation.
2. STOCK RECORD.
A stock record in one or more counterparts shall be kept of the name of
the person, firm or corporation owning shares of the stock of the Corporation
issued, the number of shares owned by each such person, firm or corporation, the
date thereof and, in the case of cancellation, the date of cancellation.
3. TRANSFERS OF SHARES.
(a) Upon delivery to the Corporation or the transfer agent of the
Corporation of evidence duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer shares of the stock of the
Corporation, it shall be the duty of the Corporation to transfer such shares;
every such transfer shall be entered on the transfer book of the Corporation
which shall be kept at its principal office.
(b) Registration of transfer of shares of the Corporation shall be made
only on the books of the Corporation by the registered holder thereof, or by his
attorney thereunto authorized by power of attorney duly executed and filed with
the Secretary, and on the delivery of proper evidence of succession, assignment
or authority to transfer. The Corporation shall be entitled to treat the holder
of record of any shares as the holder in fact thereof and, accordingly, shall
not be bound to recognize, any equitable or other claim to or interest in such
share on the part of any other person whether or not it shall have express or
other notice thereof, except as expressly provided by the laws of New York.
4. REGULATIONS.
The Board may make such rules and regulations as it may deem expedient,
not inconsistent with these By-laws, concerning the issue, transfer and
registration of shares of stock of the Corporation.
ARTICLE VII - DIVIDENDS
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Subject to the provisions of the Certificate of Incorporation and to
applicable law, dividends on the outstanding shares of the Corporation may be
declared in such amounts and at such time or times as the Board may determine.
Dividends may be paid in cash, in property or in shares or other securities of
the Corporation or another corporation.
ARTICLE VIII - CORPORATE SEAL
The Board shall provide a corporate seal which shall bear the full name
of the Corporation and the year and state of its incorporation. The seal may be
used by causing it to be impressed directly on the instrument or writing to be
sealed, or upon adhesive substance affixed thereto. The seal on any corporate
obligation for the payment of money may be a facsimile, engraved or printed.
ARTICLE IX - EXECUTION AND DELIVERY OF DOCUMENTS;
DEPOSITS; PROXIES; BOOKS AND RECORDS
1. EXECUTION AND DELIVERY OF DOCUMENTS; DELEGATION.
The Board shall designate the officers, employees and agents of the
Corporation who shall have power to sign, countersign, execute, verify,
acknowledge and deliver deeds, contracts, mortgages, bonds, debentures, checks,
drafts and other orders for the payment of money and other instruments and
documents for and in the name of the Corporation and may authorize such
officers, employees and agents to delegate such power (including authority to
redelegate) by written instrument to other officers, employees or agents of the
Corporation.
2. DEPOSITS.
All funds of the Corporation not otherwise employed shall be deposited
from time to time to the credit of the Corporation or otherwise as the Board,
the President or any other officer of the Corporation to whom power in that
respect shall have been delegated by the Board or these By-laws shall select.
3. PROXIES IN RESPECT OF STOCK OR OTHER SECURITIES OF OTHER CORPORATIONS.
The President or any officer of the Corporation designated by the Board
shall have the authority from time to time to appoint and instruct an agent or
agents of the Corporation to exercise, in the name and on behalf of the
Corporation, the powers and rights which the Corporation may have as the holder
of stock or other securities in any other corporation, to vote or consent in
respect of such stock or securities and to execute or cause to be executed in
the name and on behalf of the Corporation and under its corporate seal or
otherwise, such written proxies, powers of attorney or
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other instruments as he may deem necessary or proper in order that the
Corporation may exercise such powers and rights.
4. BOOKS AND RECORDS.
The books and records of the Corporation may be kept at such places
within or without the State of New York as the Board may from time to time
determine.
ARTICLE X - FISCAL YEAR
The Board shall determine the fiscal year of the Corporation.
ARTICLE XI - REFERENCES TO CERTIFICATE OF INCORPORATION
Reference to the Certificate of Incorporation in these By-laws shall
include all amendments thereto or changes thereof unless specifically excepted.
ARTICLE XII - BY-LAW CHANGES
1. AMENDMENT, REPEAL, AND ADOPTION.
Except as otherwise provided in the Certificate of Incorporation, the
By-laws may be amended, repealed or adopted by vote of the holders of the shares
at the time entitled to vote in the election of any directors. By-laws may also
be amended, repealed or adopted by the Board except as otherwise provided in the
Certificate of Incorporation, as prohibited by law and to the extent the By-laws
indicate that any By-law may only be amended, repealed or adopted by the
shareholders; provided that this Article may only be amended by the shareholders
of the Corporation.
2. ELECTION OF DIRECTORS.
If any By-law regulating an impending election of directors is adopted,
amended or repealed by the Board, there shall be set forth in the notice of the
next meeting of shareholders for the election of directors the By-law so
adopted, amended or repealed, together with a concise statement of the changes
made.
ARTICLE XIII - INDEMNIFICATION
1. INDEMNIFICATION.
(a) The Corporation shall indemnify any person (a "Covered Person")
made, or threatened to be made, a party to an action or proceeding (other than
one by or in the right of the Corporation to procure a judgment in its favor),
whether civil or criminal, including an action by or in the right
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of any other corporation of any type of kind, domestic or foreign, or any
partnership, joint venture, trust, employee benefit plan or other enterprise,
which any director or officer of the Corporation served in any capacity at the
request of the Corporation, by reason of the fact that he, his testator or
intestate, was a director or officer of the Corporation, or served such other
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise in any capacity, against all liabilities, including judgments, fines,
amounts paid in settlement and reasonable expenses (including attorneys' fees)
incurred as a result of such action or proceeding, or any appeal therein,
provided that the Covered Person shall not agree to any settlement which imposes
liability on the Covered Person or the Corporation without the consent of the
Corporation (which consent shall not be unreasonably withheld), and provided,
further that no indemnification may be made to or on behalf of any Covered
Person if a judgment or other final adjudication adverse to him or her
established that his or her acts were committed in bad faith or were the result
of active and deliberate dishonesty and were material to the cause of action so
adjudicated, or that he or she personally gained in fact a financial profit or
other advantage to which he or she was not legally entitled.
2. NON-EXCLUSIVITY.
The rights to indemnification provided by Section 1 of this Article
XIII shall not be deemed exclusive of any other rights to which those seeking
indemnification of expenses may be entitled including under any By-law,
agreement, vote of shareholders or disinterested directors or otherwise, both as
to action in his or her official capacity and as to action in another capacity
while holding such office.
3. SURVIVAL OF INDEMNIFICATION.
The indemnification and advance payment of expenses and rights thereto
provided by, or granted pursuant to, Section 1 of this Article XIII shall,
unless otherwise provided when authorized or ratified, continue as to a person
who has ceased to be director, officer, employee, partner or agent and shall
inure to the benefit of the personal representatives, heirs, executors and
administrators of such person.
4. INSURANCE.
The Corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee, partner (limited or general) or agent of another
corporation or of a partnership, joint venture, limited liability company,
trust, employee benefit plan or other enterprise, against any liability asserted
against such person or incurred by such person in any such capacity, or arising
out of such person's status as such, and related expenses, whether or not the
Corporation would have the power to indemnify such person against such
liability under the provisions of the BCL.
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