AGREEMENT AND PLAN OF MERGER

                             DATED NOVEMBER 23, 1998

                                  BY AND AMONG

                               BESICORP GROUP INC.

                              BGI ACQUISITION CORP.

                                       AND

                               BGI ACQUISITION LLC





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                                TABLE OF CONTENTS
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ARTICLE I

         THE MERGER...............................................................................................1
         1.1             The Merger...............................................................................1
         1.2             Consummation of the Merger...............................................................1
         1.3             Effects of the Merger....................................................................2
         1.4             Certificate of Incorporation; Bylaws.....................................................2
         1.5             Directors and Officers...................................................................2
         1.6             Time and Place of Closing................................................................2
         1.7             Further Assurances.......................................................................2

ARTICLE II

         CONVERSION AND EXCHANGE OF SHARES........................................................................2
         2.1             Conversion of Shares.....................................................................2
         2.2             The Additional Amount....................................................................3
         2.3             Exchange Procedures......................................................................4
         2.4             Adjustment of Merger Consideration.......................................................6
         2.5             Options, Warrants and Restricted Shares..................................................6
         2.6             Escrow Agreement.........................................................................6

ARTICLE III

         PRECLOSING TRANSACTIONS..................................................................................7
         3.1             General..................................................................................7
         3.2             The Distribution.........................................................................7
         3.3             The Power Facility Sales.................................................................8
         3.4             Further Assurances.......................................................................8

ARTICLE IV

         REPRESENTATIONS AND WARRANTIES...........................................................................8
         4.1             General Statement........................................................................9
         4.2             Representations and Warranties of the Company............................................9
                         4.2.1      Organization and Authority....................................................9
                         4.2.2      Authority Relative to this Agreement and Related Matters......................9
                         4.2.3      Required Filings.............................................................10
                         4.2.4      No Conflicts.................................................................10
                         4.2.5      Capitalization...............................................................10
                         4.2.6      Subsidiaries.................................................................11
                         4.2.7      SEC Documents................................................................11
                         4.2.8      Financial Statements.........................................................11
                         4.2.9      Liabilities..................................................................12
                         4.2.10     Absence of Changes or Events.................................................12

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                         4.2.11     Status of Distribution.......................................................13
                         4.2.12     Ownership of Properties......................................................13
                         4.2.13     Tax Matters Definitions......................................................13
                         4.2.14     Returns......................................................................14
                         4.2.15     Tax Liabilities..............................................................14
                         4.2.16     Issues with Taxing Authorities...............................................14
                         4.2.17     Miscellaneous Tax Matters....................................................14
                         4.2.18     Permits......................................................................14
                         4.2.19     Contracts....................................................................15
                         4.2.20     Partnership Contracts........................................................16
                         4.2.21     ERISA Matters................................................................16
                         4.2.22     Labor Relations..............................................................17
                         4.2.23     Absence of Litigation........................................................17
                         4.2.24     Injunctions; Judgments.......................................................17
                         4.2.25     Compliance with Law..........................................................18
                         4.2.26     Environmental Matters........................................................18
                         4.2.27     Owned Real Estate............................................................18
                         4.2.28     Leased Premises..............................................................19
                         4.2.29     Intellectual Property........................................................19
                         4.2.30     Brokers......................................................................19
                         4.2.31     Fairness Opinion.............................................................19
                         4.2.32     Form 10 Registration, Proxy Statement and Information Statement..............19
                         4.2.33     Full Disclosure..............................................................20
         4.3             Representations and Warranties of Parent and Purchaser..................................20
                         4.3.1      Organization and Authority...................................................20
                         4.3.2      Authority Relative to this Agreement.........................................20
                         4.3.3      Required Filings.............................................................20
                         4.3.4      No Conflicts.................................................................20
                         4.3.5      Capitalization...............................................................21
                         4.3.6      Investment Intent............................................................21
                         4.3.7      Financing....................................................................21
                         4.3.8      Proxy Statement..............................................................21

ARTICLE V

         CONDUCT OF BUSINESS PENDING THE MERGER..................................................................21
         5.1             Obligations of Each of the Parties......................................................21
         5.2             Access..................................................................................22
         5.3             The Company's Obligations...............................................................22
         5.4             Proxy Statement; Other Regulatory Matters...............................................24
         5.5             Acquisition Proposals...................................................................25
         5.6             Board Action............................................................................26
         5.7             Indemnification and Insurance...........................................................27
         5.8             Surviving Corporation...................................................................27
         5.9             Parent's Financing......................................................................27
         5.10            Liabilities.............................................................................27

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         5.11            Other Company Covenants.................................................................28
         5.12            Parent Covenant.........................................................................28

ARTICLE VI

         CONDITIONS TO CLOSING; CLOSING DELIVERIES; BASE AMOUNT..................................................28
         6.1             Conditions to Each Party's Obligations..................................................28
         6.2             Conditions to the Company's Obligations.................................................28
         6.3             Conditions to Parent's and Purchaser's Obligations......................................29
         6.4             Closing Deliveries......................................................................30

ARTICLE VII

         TERMINATION/EFFECT OF TERMINATION.......................................................................31
         7.1             Right to Terminate......................................................................31
         7.2             Certain Effects of Termination..........................................................32
         7.3             Remedies................................................................................33
         7.4             Right to Damages; Expense Reimbursement.................................................33

ARTICLE VIII

         MISCELLANEOUS...........................................................................................35
         8.1             Survival of Representations, Warranties and Agreements..................................35
         8.2             Amendment...............................................................................35
         8.3             Publicity...............................................................................35
         8.4             Notices.................................................................................35
         8.5             Expenses; Transfer Taxes................................................................36
         8.6             Entire Agreement........................................................................36
         8.7             Non-Waiver..............................................................................36
         8.8             Counterparts............................................................................37
         8.9             Severability............................................................................37
         8.10            Applicable Law..........................................................................37
         8.11            Binding Effect; Benefit.................................................................37
         8.12            Assignability...........................................................................37
         8.13            Governmental Reporting..................................................................37
         8.14            Defined Terms...........................................................................37
         8.15            Headings................................................................................39
         8.16            Interpretation..........................................................................39

         Schedule 3.2.1  -                  Lease Terms
         Schedule 3.2.2  -                  Schedule of Retained Assets and Permitted Liabilities
         Exhibit A                  -       Form of Indemnification Agreement
         Exhibit B                  -       Form of Escrow Agreement
         Exhibit C                  -       Form of Legal Opinion of Purchaser's Counsel
         Exhibit D                  -       Form of Legal Opinion of Company's Counsel


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         This  AGREEMENT AND PLAN OF MERGER (this  "Agreement")  is entered into
this 23 day of November,  1998,  by and among BGI  Acquisition  LLC, a Wyoming
limited  liability  company  ("Parent"),  BGI  Acquisition  Corp.,  a  New  York
corporation  ("Purchaser"),  and  Besicorp  Group Inc.,  a New York  corporation
formed under the name Bio-Energy Systems Inc. (the "Company").


                                    RECITALS:
                                   

         A. The respective  boards of directors of Purchaser and the Company and
the board of managers of Parent have each  adopted a plan of merger as set forth
in this  Agreement  pursuant  to which  Purchaser  will  merge with and into the
Company on the terms and subject to the  conditions  set forth in this Agreement
(the "Merger") and the New York Business Corporation Law (the "NYBCL").

         B. It is a condition  to the  consummation  of the Merger by  Purchaser
that, prior to the Merger, the Company distribute to its shareholders all of the
outstanding  capital stock of Besicorp  Ltd., a New York  corporation  ("BL") to
which the Company shall have transferred  certain of its assets and liabilities,
and subsidiaries, as described herein.

         C.  Parent,   Purchaser   and  the  Company   desire  to  make  certain
representations,  warranties,  covenants and  agreements in connection  with the
Merger.

         D. It is a condition  to the  willingness  of Parent and  Purchaser  to
enter into this  Agreement,  and to Parent and Purchaser  obligations  hereunder
that BL enter into the  Indemnification  Agreement and the Escrow  Agreement and
that the Escrow Agreement be funded as herein provided.

         E. Capitalized terms used in this Agreement have the meaning identified
 in Section 8.14 of this Agreement.


                               A G R E E M E N T S
                               

         Therefore,  for  good  and  valuable  consideration,  the  receipt  and
sufficiency of which are hereby acknowledged, the parties agree as follows:

                                    ARTICLE I

                                   THE MERGER

         1.1 The Merger. On the terms and subject to the conditions set forth in
this Agreement,  at the Effective Time (as defined herein, and a cross-reference
to defined terms is set forth at Section 8.14 to this Agreement),  in accordance
with this  Agreement  and the  NYBCL,  Purchaser  shall  merge with and into the
Company,  the separate  existence of Purchaser shall cease and the Company shall
continue as the  surviving  corporation.  The  Company,  in its  capacity as the
corporation  surviving  the  Merger,  is  sometimes  referred  to  herein as the
"Surviving Corporation," and Purchaser and the Company are sometimes referred to
collectively herein as the "Constituent Corporations."

         1.2 Consummation of the Merger.  In order to effectuate the Merger,  on
the  Closing  Date  (as  herein  defined),  the  parties  hereto  will  cause  a
certificate  of  merger  (the  "Certificate  of  Merger")  to be filed  with the
Secretary of State of the State of New York and such  counties  within the state
of New York as required  by Section  904 of the NYBCL,  in such form as required
by, and executed in accordance with the

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NYBCL  .  The  Merger  shall  be  effective  as of the  time  of  filing  of the
Certificate  of Merger or if later,  the time  specified in the  Certificate  of
Merger (the "Effective Time") in accordance with Section 906 of the NYBCL.

         1.3 Effects of the Merger.  At and after the Effective Time, the Merger
shall have the effects  provided in this  Agreement  and as set forth in Section
906 of the NYBCL.

         1.4 Certificate of  Incorporation;  Bylaws.  At and after the Effective
Time, the Certificate of Incorporation and By-Laws of the Company,  as in effect
immediately  prior to the Effective Time, shall be adopted as the Certificate of
Incorporation  and By-Laws of the Surviving  Corporation,  and shall  thereafter
continue in effect until amended as provided  therein and in accordance with the
NYBCL.

         1.5  Directors  and  Officers.  At and after the  Effective  Time,  the
directors  and officers of Purchaser  holding  office  immediately  prior to the
Effective Time shall be the directors and officers of the Surviving Corporation,
until their respective  successors shall have been duly elected or appointed and
qualified or until their  earlier  death,  resignation  or removal in accordance
with the Surviving Corporation's Certificate of Incorporation and By-Laws.

         1.6 Time and Place of Closing.  Subject to the provisions of Article VI
and Section  7.1,  the  transactions  contemplated  by this  Agreement  shall be
consummated  (the  "Closing") at 10:00 a.m.,  prevailing  business  time, at the
offices of Robinson Brog Leinwand  Greene  Genovese & Gluck P.C., 1345 Avenue of
the Americas, New York, NY on the day which is three (3) business days after the
first date on which each of the  conditions  to Closing  set forth in Article VI
hereof  shall have been  satisfied  or waived (and  continue to be  satisfied or
waived),  or on such other date, or at such other place, as shall be agreed upon
by the  parties  hereto,  subject  to  Section  7.1.2(a).  The date on which the
Closing shall occur in accordance with the preceding  sentence is referred to in
this Agreement as the "Closing Date."

         1.7 Further  Assurances.  If, at any time after the Effective Time, the
Surviving  Corporation  shall  consider or be advised  that any deeds,  bills of
sale,  assignments  or  assurances  or any other acts or things  are  necessary,
desirable or proper (i) to vest, perfect or confirm, of record or otherwise,  in
the Surviving  Corporation its right,  title and interest in, to or under any of
the rights, privileges,  powers,  franchises,  properties or assets of either of
the Company or  Purchaser,  or (ii)  otherwise to carry out the purposes of this
Agreement,  the Surviving  Corporation  and its proper officers and directors or
their designees  shall be authorized to execute and deliver,  in the name and on
behalf of either  the  Company  or  Purchaser,  all such  deeds,  bills of sale,
assignments  and  assurances  and  do,  in  the  name  and  on  behalf  of  such
corporations,  all such other acts and things as may be necessary,  desirable or
proper to vest, perfect or confirm the Surviving  Corporation's right, title and
interest  in, to and under any of the rights,  privileges,  powers,  franchises,
properties  or  assets  of such  corporations  and  otherwise  to carry  out the
purposes of this Agreement.

                                   ARTICLE II

                        CONVERSION AND EXCHANGE OF SHARES

         2.1  Conversion  of Shares.  At the  Effective  Time,  by virtue of the
Merger, and without any action on the part of the holders thereof:

                      2.1.1 Each share of common stock,  $.10 par value,  of the
Company (the "Common  Stock") issued and  outstanding  immediately  prior to the
Effective Time (other than Common Shares held as treasury  shares by the Company
or its Subsidiaries) shall, by virtue of the Merger and without any action on

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the part of the holder  thereof,  be converted into the right to receive in cash
the sum of  $34.50  plus the  Additional  Amount  (as  herein  defined)  without
interest  (the  "Merger  Consideration").   Each  such  share  of  Common  Stock
outstanding  immediately  prior to the  Effective  Time shall be deemed to be no
longer  outstanding and shall  represent  solely the right to receive the Merger
Consideration upon surrender of the certificate formerly representing the Common
Stock in accordance with the provisions of this section.

                      2.1.2   Each share of Common Stock issued and outstanding
immediately  prior to the Effective  Time which is then held as a treasury share
by the Company or is held by any of the Company's Subsidiaries immediately prior
to the Effective  Time shall,  by virtue of the Merger and without any action on
the part of the Company, be canceled and retired and cease to exist, without any
conversion thereof.

                      2.1.3 Each share of common stock, par value $.01 per share
of  Purchaser  outstanding  immediately  prior to the  Effective  Time  shall be
converted   into  and  exchanged  into  one  validly   issued,   fully-paid  and
non-assessable  share  of  common  stock,  $.10  par  value,  of  the  Surviving
Corporation.

         2.2          The Additional Amount.  In order to provide for the
determination of the Additional Amount as of the Effective Time, the parties
agree as follows:

                      2.2.1 Components of the Base Amount. As used herein:

                      (a) The "Additional Amount" is the amount by which (1) the
         quotient of the Base  Amount as of the  Effective  Time  divided by the
         number of shares of Common Stock outstanding as of immediately prior to
         the Effective Time exceeds (2) $34.50.

                      (b) the "Base Amount" is the dollar  amount  determined by
         [A less B plus C] where

                          A     is equal to (i) $500,000 plus (ii) to the extent
                                not received in cash, the amount of a claimed
                                tax refund for fiscal year 1998 not to exceed
                                $82,387, (iii) the sum of the cash and cash
                                equivalents on hand or in accounts which are
                                solely owned by the Company or a Remaining
                                Subsidiary (free balances only) free of all
                                Encumbrances as of the Effective Time, plus (iv)
                                the product of .9975 of the closing price of a
                                share of Common Stock of Niagra Mohawk
                                Corporation ("NIMO Stock") on the New York Stock
                                Exchange as of the trading day immediately
                                preceding the Closing Date multiplied by the
                                number of shares of NIMO Stock held by the
                                Company as of the Effective Time (not to exceed
                                50,000 shares) less (v), to the extent not
                                already contributed pursuant to the Escrow
                                Agreement, $6,000,000.

                              B is the dollar  amount of the  Adjustment  Amount
                                (as defined below).

                              C is  the  product  of  .8357  multiplied  by  the
                                Specified Current Liabilities (as defined
                                below).

                      (c)  the  "Adjustment  Amount"  is  the  sum  of  (i)  all
         Liabilities  of  the  Company  or a  Remaining  Subsidiary  as  of  the
         Effective  Time  (including  the  Specified  Current   Liabilities  but
         excluding   the  Excluded   Liability   (as  defined   below)  and  the
         intercompany  Liabilities  described in Section 3.2.2) which are in the
         reasonable judgment of Parent both fixed and quantifiable, (ii) without

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         duplication of any item in the preceding  clause (i), that amount which
         Parent and the Company agree,  each acting  reasonably,  represents the
         Damages  (as  defined  in  the  Indemnification  Agreement)  and  other
         damages,  if any,  incurred or reasonably  likely to be incurred by the
         Company,  any Remaining  Subsidiary,  Purchaser or Parent,  directly or
         indirectly  as a result of, or arising out of the breach by the Company
         of any of its  representations or warranties under this Agreement,  and
         (iii) all  transfer,  documentary,  sales,  use,  stamp,  real  estate,
         registration  and other  similar  Taxes  and  similar  fees  (including
         penalties   and  interest)   incurred  by  the  Company,   any  of  its
         Subsidiaries, Purchaser or Parent in connection with the Transactions.

                      (d)   the   "Specified   Current   Liabilities"   are  the
         Liabilities  of the  Company  or any  Remaining  Subsidiary  (actual or
         accrued) for unpaid  federal  income Taxes for the current  fiscal year
         based  on the  consolidated  net  income  of the  Company  through  the
         Effective Time.

                      (e)  the  "Excluded  Liability"  is the  Liability  of the
         Company or its  Subsidiaries  for New York State  income  Taxes for the
         Company's current fiscal year.

                      2.2.2   Determination of Base Amount. The Base Amount will
be  determined  from a  statement  of the  components  of the Base  Amount ( the
"Statement")  as provided in this  Section 2.2. Not later than twenty days prior
to Closing,  the Company  will prepare and deliver to Parent and  Purchaser  the
Statement  setting forth in reasonable  detail the components of the Base Amount
and the calculation of the Additional  Amount. The Statement will be prepared in
accordance with generally accepted accounting  principles applied in preparation
of the Financial  Statements,  it being  understood that items will be reflected
regardless of materiality and all accruals known or contemplated for Liabilities
of the  Company  or a  Remaining  Subsidiary  as of the  Effective Time  will be
reflected.  The Company will provide  appropriate  evidence of the components of
the Base Amount and Additional Amount and will permit,  and fully cooperate with
Purchaser in obtaining full access to the Company's records and its accountant's
work papers for purposes of  independently  verifying the components of the Base
Amount and  Additional  Amount.  The  Statement  will be  certified by the Chief
Executive  Officer and Chief  Financial  Officer of the Company on behalf of the
Company,  contain an  unqualified  representation  and warranty of such officers
that the  information  set forth in the  Statement  is true and  correct  and be
reviewed by the Company's regular independent auditors.  Within five days of the
receipt by Parent and Purchaser of the  Statement,  Parent and  Purchaser  shall
notify the Company in writing of their acceptance or rejection of the Statement.
In the event that Parent and Purchaser  reject the  Statement  such notice shall
set forth a schedule  detailing the disputed  components of the  Statement.  The
Company,  Parent and Purchaser  shall use their reasonable best efforts to reach
agreement on such disputed  components of the Statement prior to the Closing. In
the  event  that the  Company,  Parent  and  Purchaser  are  unable  to reach an
agreement on the Statement within three days prior to Closing this Agreement 
will be deemed terminated pursuant to Section 7.1.1 hereof.

         2.3          Exchange Procedures.
                    
                      2.3.1   Immediately prior to the Effective Time, Parent
will deposit or cause to be deposited  with  Continental  Stock Transfer & Trust
Co., or another paying agent mutually  acceptable to Parent and the Company (the
"Paying  Agent"), in trust for the holders of record of Common Stock immediately
prior to the  Effective  Time (the "Company  Shareholders") cash in an aggregate
amount  equal to the Merger  Consideration  (such  deposit with the Paying Agent
pursuant to this  paragraph is referred to as the "Payment  Fund").  The Payment
Fund shall not be used for any purpose except as provided in this Agreement.


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                      2.3.2 As soon as practicable after the Effective Time, the
Surviving  Corporation  shall  cause the  Paying  Agent to mail to each  Company
Shareholder a letter of  transmittal  and  instructions  for use (the "Letter of
Transmittal")  in effecting the surrender of  certificates  representing  Common
Stock outstanding  immediately prior to the Effective Time  ("Certificates")  in
appropriate and customary form. The Letter of Transmittal  shall be in customary
form, include  provisions  stating that delivery shall be effected,  and risk of
loss and  title to such  Certificates  shall  pass,  only upon  delivery  of the
Certificates  to the  Paying  Agent,  provide  instructions  for  effecting  the
surrender  of such  Certificates  in exchange for the Merger  Consideration  and
provide such other  provisions as Purchaser may  reasonably  specify  (including
those provisions described in this Section 2.3). Upon surrender of a Certificate
for cancellation to the Paying Agent,  together with such Letter of Transmittal,
duly and properly  executed, the holder of such Certificate shall be entitled to
receive  in  exchange   therefore  the  portion  of  the  Merger   Consideration
represented by the Certificate  pursuant to Section 2.1.1 of this Agreement.  If
the Merger  Consideration  (or any portion  thereof) is to be  delivered  to any
person othe than the person in whose name the  Certificate  representing  Common
Stock  surrendered in exchange therefor is registered on the record books of the
Company,  it shall be a  condition  to such  exchange  that the  Certificate  so
surrendered  shall be  properly  endorsed  or  otherwise  be in proper  form for
transfer and that the person  requesting  such  exchange shall pay to the Paying
Agent any  transfer  or other  taxes  required  by reason of the payment of such
consideration  to a person other than the registered  holder of the  Certificate
surrendered,  or shall  establish to the  satisfaction  of the Paying Agent that
such tax has been paid or is not  applicable.  No interest  will be paid or will
accrue on the cash payable upon surrender of any Certificate.  Until surrendered
as  contemplated by this Section 2.3, each  Certificate  shall, at and after the
Effective Time, be deemed to represent only the right to receive, upon surrender
of such  Certificate,  the Merger  Consideration  with  respect to the shares of
Common Stock represented thereby.

                      2.3.3 At and after the Effective  Time,  there shall be no
transfers  on the stock transfer  books of the Company of the Common Stock which
were  outstanding  immediately  prior  to the  Effective  Time.  If,  after  the
Effective Time,  Certificates are presented to the Surviving  Corporation,  they
shall be canceled and exchanged as provided in this Section 2.3. In the event of
a transfer of ownership of shares of Common Stock which is not registered in the
transfer records of the Company, payment may be made with respect to such Common
Stock to such a transferee only if the Certificate  representing  such shares of
Common Stock is  presented to the Paying  Agent,  accompanied  by all  documents
required to evidence and effect such transfer and evidence  that any  applicable
stock transfer taxes have been paid.

                      2.3.4 In the event any  Certificate  shall have been lost,
stolen or destroyed,  upon the making of an affidavit of that fact by the person
claiming such  Certificate  to be lost,  stolen or destroyed and, if required by
the  Surviving  Corporation,  upon the  posting by such person of a bond in such
amount as the Surviving  Corporation may reasonably  direct as indemnity against
any claim that may be made  against it with  respect  to such  Certificate,  the
Paying Agent will issue in respect of such lost,stolen or destroyed Certificate,
the Merger  Consideration with respect to the shares of Common Stock represented
thereby.

                      2.3.5    Any portion of the Payment Fund which remains
unclaimed by the Company  Shareholders  for nine (9) months after the  Effective
Time  shall  be  delivered  to the  Surviving  Corporation  upon  demand  of the
Surviving  Corporation,  and the holders of Common Stock shall  thereafter  look
only to the  Surviving  Corporation  for  payment of their  claim for the Merger
Consideration  in respect of their Common Stock.  Neither Parent,  Purchaser nor
the Surviving  Corporation shall be liable to any holder of Common Stock for any
such  Merger  Consideration  delivered  to a  public  official  pursuant  to any
applicable abandoned property, escheat or similar law.


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                      2.3.6   Purchaser or the Paying Agent shall be entitled to
deduct and withhold from the  consideration  otherwise payable pursuant to this
Agreement  to  any  holder  of  a   Certificate   surrendered   for  the  Merger
Consideration such amount as Purchaser or the Paying Agent is required to deduct
and  withhold  with  respect to the making of such  payment  under the  Internal
Revenue Code as of 1986, as amended (the "Code"),  or any provision of any state
local or foreign  tax law.  To the  extent  that  amounts  are so  deducted  and
withheld,  such amounts  shall be treated for all purposes of this  Agreement as
having been paid to the holder of such Certificate.

                      2.3.7 In the case of 100,000  shares of Common  Stock held
of record by Martin Enowitz or his assigns which the Company  represents are the
subject of a dispute between the Company and Enowitz, appropriate provision will
be  made  in  the  Paying  Agent   agreement  for  the  holding  of  the  Merger
Consideration  payable in respect of such shares in escrow pending resolution of
the  dispute.  Purchaser  agrees  that the  rights of  Purchaser,  Parent or the
Surviving  Corporation  to such Merger  Consideration,  if any, will be assigned
without recourse to BL.

                      2.3.8 The fees and  expenses  of the Paying  Agent will be
paid from earnings on the Payment  Fund.  To the extent  earnings on the Payment
Fund are  insufficient  to pay such fees and  expenses,  such fees and  expenses
shall be paid from the Escrow Fund (as defined in the Escrow Agreement) pursuant
to the Escrow  Agreement.  The Company and Parent and  Purchaser  agree that any
interest  earned on the Payment Fund will be transferred to the Escrow Agent and
become part of the Escrow Fund.

         2.4   Adjustment  of  Merger   Consideration.   In  the  event  of  any
reclassification,  stock split, stock dividend or other general  distribution of
securities,  cash or other  property with respect to Common Stock other than the
Distribution and related transaction (or if a record date with respect to any of
the  foregoing  should  occur) on or after the date of this  Agreement and on or
prior to the date of the Effective Time,  appropriate and equitable adjustments,
if any,  shall be made to the  calculation of the Merger  Consideration  and all
references  herein  shall be  deemed  to be to the  Merger  Consideration  as so
adjusted.

         2.5 Options,  Warrants and  Restricted  Shares.  Prior to the Effective
Time,  the Company  will (a) cause each  outstanding  option to purchase  Common
Stock (each, a "Stock Option")  granted under the Besicorp Group,  Inc.  Amended
and  Restated  1993  Incentive  Plan (the "1993  Plan") or pursuant to any other
stock option plan or restricted  agreement  entered into by the Company with any
employee or director of the Company or any  Subsidiary  thereof,  whether or not
then vested or  exercisable,  to become vested and  exercisable,  (b) cause each
outstanding  warrant to purchase  Common  Stock (each,  a  "Warrant")  to become
exercisable to the extent not currently exercisable, and (c) take such action as
is necessary to cause each holder of a Stock Option or Warrant to exercise  such
Stock Option or Warrant in full including  paying in cash the exercise price (it
being  understood  that neither the Company nor any  Remaining  Subsidiary  will
directly or indirectly  provide or guarantee any financing or loan  arrangements
for the payment of the exercise  price) so that there are no  outstanding  Stock
Options or Warrants at the Effective Time.

         2.6 Escrow Agreement.  At Closing, the Company will cause $6,000,000 in
cash to be delivered to the Escrow Agent under the Escrow Agreement.



                                        6

<PAGE>



                                   ARTICLE III

                             PRECLOSING TRANSACTIONS

         3.1 General.  The Company recognizes that the obligations of Parent and
Purchaser  under this  Agreement are subject to the completion by the Company of
each of the  Distribution and the Power Facility Sales (each, as defined below).
The Company agrees to use its reasonable best efforts to effect the Distribution
and the Power Facility Sales in accordance with this Agreement.

         3.2          The Distribution.
              

                      3.2.1 Actions. Promptly following the execution of this
Agreement,  the  Company  will  cause  the  following  actions  to be  taken  in
accordance with the requirements of applicable law, including the NYBCL, and the
Company's and its Subsidiaries' certificate of incorporation and bylaws with the
objective of effecting the spinoff to  shareholders  of the Company  immediately
prior  to the  Effective  Time of BL and the  Distributed  Subsidiaries  and the
complete separation of BL and the Distributed  Subsidiaries from the Company and
the Remaining Subsidiaries:

                      (a)     the due and valid formation of BL;

                      (b) the  transfer to, and  assumption  by BL of all of the
         assets,  personnel,  employee  benefit  plans  and  Liabilities  of the
         Company (other than the Retained Assets and Permitted  Liabilities) and
         the  Remaining  Subsidiaries  and  the  transfer  to BL of  all  of the
         outstanding capital stock of the Distributed Subsidiaries;

                      (c) the  execution  and  delivery by the Company and BL of
         such agreements and arrangements which are customary in connection with
         spinoffs and which provide for, among other  matters,  the provision of
         transition,  support and administrative  services (including access to,
         and cooperation  regarding historical financial and tax information and
         knowledgeable  personnel)  to the  Company  by BL  without  cost to the
         Company and  indemnification  of the Company by BL and its subsidiaries
         for  any  failure  of BL to  discharge  and  pay  in  full  all  of the
         Liabilities so assumed or the failure of any  Distributed  Subsidiaries
         to  discharge  and pay in full its  Liabilities  when due  including by
         means of the  Indemnification  Agreement and Escrow  Agreement,  all on
         terms reasonably acceptable to Purchaser and Parent;

                      (d)  the  withdrawal  of  the  Remaining  Subsidiaries  as
         general or limited  partners of the  Partnership  or the assignment to,
         and  assumption by a  Distributed  Subsidiary of all of the general and
         limited partnership interests of the Remaining Subsidiary;

                      (e)  distribute  to  the   shareholders   of  the  Company
         immediately prior to the Effective Time all of the outstanding  capital
         stock of BL with a record  date to be  established  by the  Board to be
         coordinated with the Closing;

                      (f)     the establishment of the fair market value of the
         BL capital stock;

                      (g)     provide for the assumption by BL of all Employee
         Benefit Plans;


                                        7

<PAGE>



                      (h)  prior  to  consummation  of the  Distribution,  Reina
         Distributing,  Inc. and BL to enter into a written lease  providing for
         the building and improvements  located thereon at 1151 Flatbush Avenue,
         Kingston,  New York on the terms set  forth in  Schedule  3.2.1 to this
         Agreement;

                      (i) prior to consummation of the Distribution, the Company
         and BL to execute and deliver the Indemnification Agreement in the form
         of Exhibit A hereto (the  "Indemnification  Agreement")  and the Escrow
         Agreement in the form of Exhibit B hereto (the "Escrow Agreement");

                      (j) the preparation and  distribution to its  stockholders
         of record prior to the Effective Time of the Information  Statement and
         the  filing  and  effectiveness  of the  Form  10  Registration  all in
         accordance with applicable law including the Securities Act of 1934, as
         amended (the "Exchange Act"); and

                      (k) all other actions  necessary or  appropriate to effect
         the distribution of BL to the shareholders of the Company.

The foregoing transactions are collectively referred to herein as the
"Distribution."

                      3.2.2   Defined Terms. The "Retained Assets" are those
assets listed on Schedule  3.2.2 hereto and the "Permitted  Liabilities" are the
Specified  Current  Liabilities  and  Excluded  Liability  and the  intercompany
Liabilities  of the Company to a Remaining  Subsidiary as identified in Schedule
3.2.2.

                      3.2.3   Agreements.  The Company agrees to use its best
efforts to effect the  Distribution  in the  manner  contemplated  hereby and to
take, or cause to be taken,  all actions  necessary or  appropriate  so that the
Distribution will be so accomplished no later than the Closing Date.

         3.3 The  Power  Facility  Sales.  The  Company  agrees  to use its best
efforts  to cause the  Partnerships  to  dispose  of the  Carthage  Cogeneration
Facility,  South Glens Falls  Cogeneration  Facility,  Natural Dam  Cogeneration
Facility,  Syracuse Cogeneration Facility and Beaver Falls Cogeneration Facility
for cash and without  any  Liability  of any  Remaining  Subsidiary  (the "Power
Facility Sales"). The Company will consult with Purchaser on a regular basis and
keep  Purchaser  reasonably  informed  as to the  status  and terms of the Power
Facility Sales.

         3.4 Further  Assurances.  If, at any time after the Effective  Time, BL
shall  consider  or be advised  that any deeds,  bills of sale,  assignments  or
assurances or any other acts or things are necessary, desirable or proper (i) to
vest, perfect or confirm, of record or otherwise,  in BL or its Subsidiaries its
right, title and interest in, to or under any of the rights, privileges, powers,
franchises,   properties  or  assets  contributed  to  any  of  the  Distributed
Subsidiaries in connection with the Distribution or (ii) otherwise carry out the
Distribution,  the  Surviving  Corporation  will upon  reasonable  request of BL
execute and deliver all such deeds,  bills of sale,  assignments  and assurances
and do all such other acts and things as may be  necessary,  desirable or proper
to  carry  out  the  Distribution.   Any  expenses  incurred  by  the  Surviving
Corporation under this Section 3.4 shall be paid by BL.


                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES


                                        8

<PAGE>



         4.1  General  Statement.  The  parties  make  the  representations  and
warranties  to  each  other  which  are  set  forth  in  this  Article  IV.  All
representations and warranties of the Company are made subject to the exceptions
noted  in the  schedule  delivered  by  the  Company  to  Parent  and  Purchaser
concurrently  herewith and identified by the parties as the "Company  Disclosure
Schedule."

         4.2  Representations  and  Warranties  of  the  Company.   The  Company
represents and warrants to Parent and Purchaser that, except as set forth in the
Company Disclosure Schedule:

                      4.2.1 Organization and Authority.  Each of the Company and
each  Subsidiary:  (i) is a corporation or partnership  duly organized,  validly
existing and in good standing under the laws of the State of its  incorporation;
and (ii) has all  necessary  corporate  or  partnership  power and  authority to
conduct its  business  as now being  conducted  or as  proposed to be  conducted
through  Closing.  Each of the Company  and each  Remaining  Subsidiary  is duly
qualified as a foreign  corporation and in good standing in each jurisdiction in
which the nature of its business or the nature or location of its assets require
such qualification. All of the Subsidiaries are listed in the Company Disclosure
Schedule.True and complete copies of the certificate of incorporation and bylaws
or agreement of limited partnership,  as the case may be, of each of the Company
and each  Subsidiary  are set forth as exhibits to the Company SEC  Documents or
have been made available to Purchaser.  As used in this Agreement:  "Subsidiary"
means any corporation,  partnership,  joint venture or other legal entity and of
which the Company or BL, as the case may be (either alone or through or together
with any  other  Subsidiary  or  Subsidiaries),  either  (A) owns,  directly  or
indirectly,  25% or more of the capital  stock or other  equity  interests,  the
holders of which are  generally  entitled to vote with  respect to matters to be
voted on in such corporation,  partnership,  joint venture or other legal entity
or a 25% or more of the interest in the assets of the corporation,  partnership,
joint venture or other legal entity upon its  liquidation  or (B) is otherwise a
Significant Subsidiary (as such term is defined in Section 1-02(w) of Regulation
S-X  of  the  Securities  Act of  1933,  as  amended  (the  "Securities  Act"));
"Remaining   Subsidiary"  means  each  of  Beta  Carthage,   Inc.,  a  New  York
corporation,  Beta South Glen Falls, Inc., a New York corporation,  Beta Natural
Dam, Inc., a New York  corporation,  Beta Syracuse Inc. a New York  corporation,
Beta Beaver  Falls Inc.,  a New York  corporation,  Beta Nova,  Inc., a New York
corporation,  Beta N Ltd.,  a New York  corporation,  Beta C&S Ltd.,  a New York
corporation,  and  Reina  Distributing,  Inc.,  a New Yor  corporation,  and the
"Distributed  Subsidiaries" are BL and all other Subsidiaries of the Company now
or hereafter existing other than the Remaining Subsidiaries.

                      4.2.2   Authority Relative to this Agreement and Related
Matters. The Board of Directors of the Company (the "Board"),  at a meeting duly
called and held has (A) determined that the Merger Agreement and Merger are fair
to, and in the best interests of, the Company and its shareholders,  (B) adopted
and approved this  Agreement  and the Merger,  and (C) resolved to submit to the
shareholders  of the Company and  recommend to the  shareholders  of the Company
that they adopt and authorize the Merger  Agreement , the Merger and, if legally
required,  the Distribution  (collectively,  the Merger,  Distribution and Power
Facility Sales and with the other transactions  contemplated hereby and thereby,
the "Transactions"). The Company has full corporate power and authority, subject
to  shareholder  adoption  and  authorization  of  with  respect  to the  Merger
Agreement,  to enter into and perform this Agreement and the other agreements to
be entered into in  connection  with this  Agreement and the  Transactions  (the
"Transaction  Agreements") to which it is a party. The execution and delivery of
this  Agreement and each of the othe  Transaction  Agreements by the Company and
the  performance by the Company of their  respective  obligations  hereunder and
thereunder  have been (or in the case of Transaction  Agreements not yet entered
into,  will be) duly authorized and approved by all requisite  corporate  action
other than the approval of the holders of at least two-thirds of the outstanding
shares of Common  Stock voting at the Meeting with respect to the Merger and, if
legally required, the Distribution.  This Agreement has been and, when executed,
each of the other  Transaction  Agreements  will have been,  duly  executed  and
delivered by duly authorized  officers of the Company and  constitutes,  or will
constitute when

                                       9

<PAGE>



so executed and delivered,  a valid, legal and binding obligation of the Company
or relevant Subsidiary  enforceable against it in accordance with its terms. The
affirmative vote of the holders of at least two-thirds of the outstanding shares
of  Common  Stock  voting  at the  Meeting  with  respect  to the  adoption  and
authorization  of the Merger  Agreement are the only votes of the holders of any
class or  series  of the  Company's  capital  stock  necessary  to  approve  the
Transactions. None of the holders of shares of capital stock of the Company have
the right to  dissent or demand  appraisal  of their  shares  under the NYBCL or
otherwise as a result of any of the Transactions.

                      4.2.3   Required Filings.  No consent, approval or
authorization  of,  expiration or termination of any waiting period  requirement
of,  or  filing,   registration,   qualification,   declaration  or  designation
("Authorization")  with or by,  any  federal,  state,  local or  foreign  court,
administrative   agency,   commission   or  other   governmental   authority  or
instrumentality  ("Governmental  Entity")  is  required  for the  execution  and
delivery  by the  Company  of this  Agreement  or any of the  other  Transaction
Agreements or the consummation by any of the Company or any Subsidiary of any of
the  Transactions,  except for (i) the filing and  recordation by the Company of
the Merger as  required  by the NYBCL,  (ii) the filing  with the United  States
Securities and Exchange Commission (the "SEC") of the Proxy Statement,  the Form
10  Registration  and the  Information  Statement with respect to the Merger and
Distribution, respectively, under the Exchange Act and (iii) filings pursuant to
applicable state securities laws.

                      4.2.4   No Conflicts.  Neither the execution and delivery
of this  Agreement or the other  Transaction  Agreements  by the Company nor the
consummation  by Company of any of the  Transactions,  will (i) conflict with or
result  in a  breach  of any of  the  terms,  conditions  or  provisions  of the
certificate,   articles  or  other   instrument  of   incorporation  or  limited
partnership  or by-laws or agreement  of limited  partnership  or other  similar
instrument or of any statute, law or administrative regulation, or of any order,
writ,  injunction,  judgment  or  decree  of any  Governmental  Entity or of any
arbitration award to which any of the Company or any Subsidiary is a party or by
which the Company or any  Subsidiary is bound,  or (ii) violate,  conflict with,
breach,  constitute  a default (or give rise to an event  which,  with notice or
lapse of time or both,  would  constitute  a  default)  under,  or result in the
termination  of, or  accelerate  the  performance  required by, or result in the
creation of any lien or other claims, equities,  security interests,  preemptive
rights,  judgments  and  other  encumbrances   ("Encumbrance")upon  any  of  the
properties or assets of the Company or any Subsidiary under, any written or oral
note,  bond,  mortgage,  indenture,  deed of trust,  license,  lease,  contract,
agreement or other  instrument or written or oral obligation to which Company is
a party or to which  they or any of their  respective  properties  or assets are
subject (each being an  "Obligation"),  except for such  violations,  conflicts,
breaches, defaults,  terminations,  accelerations or creations of liens or other
Encumbrances  that do not and could not,  individually  or in the  aggregate (x)
have a Material  Adverse  Effect (as  defined  herein)  on the  Company,  or (y)
materially  impair the ability of the Company to perform its  obligations  under
any Transaction Agreement. Without limiting the generality of the foregoing, the
Company is not subject to any Obligation pursuant to which timely performance of
this  Agreement  or any of the  Transactions  may be  prohibited,  prevented  or
materially  delayed.  As used in  this  Agreement,  with  respect  to a  Person,
"Material  Adverse Effect" means an effect which involves $10,000 or more on the
business,  operations  (or  results  of  operations),  condition  (financial  or
otherwise),  properties, assets, liabilities, or prospects of such Person or its
Subsidiaries,  and  "Person"  means  an  individual,  partnership,  corporation,
limited liability company, business, business trust, joint stock company, trust,
unincorporated association,  joint venture,  Governmental Entity or other entity
of whatever  nature or a group,  including any pension,  profit sharing or other
benefit plan or trust.

                      4.2.5  Capitalization. The authorized capital stock of the
Company consists solely of 5,000,000 shares of Common Stock, $0.10 par value per
share,  and  7,500,000  shares of  Preferred  Stock,  par value  $1.00 per share
("Preferred  Stock").  As of November 16, 1998,  (i) 2,969,195  shares of Common
Stock

                                       10

<PAGE>



were  outstanding,  all of which are  entitled to vote as a class,  (ii) 265,763
shares of Common  Stock were held in the  treasury of the  Company,  (iii) Stock
Options  or  Warrants  with  respect to 82,240  shares of Common  Stock had been
granted or issued and are outstanding  under the 1993 Plan and (iv) no shares of
Preferred Stock were outstanding.  There are no other shares of capital stock of
the Company  authorized,  issued or outstanding.  The number of shares of Common
Stock  outstanding  is  subject to  increase  to no more than  3,051,435  shares
outstanding  upon the exercise or conversion of Stock Options and Warrants which
are set forth on Schedule 4.2.5 of the Company Disclosure  Schedule.  All of the
outstanding  shares of Common Stock have been validly  issued and are fully paid
and  nonassessable.  Except  as set  forth  on  Schedule  4.2.5  of the  Company
Disclosure  Schedule,  there are no subscriptions,  options,  stock appreciation
rights,  warrants,  rights (including  preemptive  rights),  calls,  convertible
securities or other  agreements or commitments of any character  relating to the
issued or unissued capital stock or other  securities of the Company  obligating
the Company to issue, or register the sale of, any securities of any kind. There
are no agreements or  obligations  of any kind or character to which the Company
is a party, or as to which the Company has knowledge, with respect to the voting
of  Common  Stock or the  election  of  Directors  to its  Board  ("Directors").
Schedule  4.2.5 of the Company  Disclosure  Schedule  sets forth the name of the
holder,  number of shares underlying and exercise price of each Stock Option and
Warrant outstanding on the date hereof.

                      4.2.6   Subsidiaries.     All of the outstanding shares of
capital stock or other equity  interests of each  Remaining  Subsidiary  (i) are
validly issued,  fully paid and nonassessable and free of any preemptive rights,
and (ii)  except  as  disclosed  in  Schedule  4.2.6 to the  Company  Disclosure
Schedule,  are owned of record and beneficially by the Company free and clear of
all  Encumbrances.  There  are  no  outstanding  subscriptions,  options,  stock
appreciation  rights,  warrants,  rights (including  preemptive rights),  calls,
convertible  securities  or other  agreements  or  commitments  of any character
relating  to the issued or unissued  capital  stock or other  securities  of any
Remaining   Subsidiary   obligating  such  Remaining  Subsidiary  to  issue  any
securities of any kind or which would otherwise affect the  Distribution.  There
are no agreements or  obligations  of any kind or character  with respect to the
voting of shares of capital  stock or the election of directors of any Remaining
Subsidiary.  Schedule 4.2.6 lists (iii) each Subsidiary and the Company's direct
or indirect  ownership  interest in such  Subsidiary and (iv each  Subsidiary of
which the Company or one of its Subsidiaries is a general or limited partner 
(each such Subsidiary of the Company, a "Partnership") and the Company's direct
or indirect ownership interest in such Partnership. Except for the Subsidiaries,
the Company  does not have,  directly  or  indirectly,  any equity or  ownership
interest, or any investment, in any Person.

                      4.2.7   SEC Documents.   The Company has timely filed (and
has delivered to Purchaser a true and complete copy of) each report,  schedule,
registration  statement and definitive  proxy statement  required to be filed or
filed  by the  Company  with the SEC  (including,  without  limitation,  reports
required to be filed  pursuant to Section  13(d) or 13(g) of the  Exchange  Act)
since January 1, 1995 (the "SEC  Documents").  As of their respective dates, the
SEC  Documents  comply in all material  respects  with the  requirements  of the
Securities Act or the Exchange Act, as the case may be, and the applicable rules
and  regulations of the SEC  thereunder,  and none of the SEC  Documents,  as of
their respective dates,  contain any untrue statement of a material fact or omit
to state a material fact required to be stated  therein or necessary to make the
statements  made therein,  in light of the  circumstances  under which they were
made, not misleading.  The Company has corrected and updated,  prior to the date
hereof,  all statements in the SEC Documents  which have required  correction or
updating,  as the case may be, and have filed all  necessary  amendments  to the
Company SEC Documents as required by applicable law.

                      4.2.8   Financial Statements.     Each of the consolidated
financial statements (including the notes thereto) included in the SEC Documents
(the "Financial  Statements")  complies,  as of their respective dates, with all
applicable  accounting  requirements  and rules and  regulations of the SEC with
respect thereto,

                                       11

<PAGE>



has been prepared in accordance with generally  accepted  accounting  principles
("GAAP")  consistently  applied (except as may be indicated in the notes thereto
or, in the case of unaudited statements, as permitted by Form 10-QSB of the SEC)
and presents fairly the  consolidated  financial  position of the Company at the
dates thereof and the  consolidated  results of its  operations,  cash flows and
changes in financial position for the periods indicated therein, subject, in the
case of interim Financial Statements,  to normal, recurring year-end adjustments
which are not material individually or in the aggregate. The books, accounts and
records of the Company are, and have been,  maintained in such Company's  usual,
regular and ordinary manner,  in accordance with generally  accepted  accounting
practices,  and all transactions to which the Company is or has been a party are
properly reflected therein.

                      4.2.9   Liabilities. Neither the Company nor any Remaining
Subsidiary  has any  obligation  or liability  of any kind or nature  whatsoever
(direct or indirect, matured or unmatured,  absolute, accrued, contingent, known
or unknown or  otherwise),  whether or not  required  by GAAP to be  provided or
reserved against on a balance sheet (all the foregoing herein collectively being
referred to as the "Liabilities"), except for:

                      (a)  Liabilities  specifically  provided  for or  reserved
         against in the balance sheet  contained in the Financial  Statements or
         the  balance  sheet  contained  in the most  recent  interim  financial
         statement  in a Company  SEC  Document  filed prior to the date of this
         Agreement (the "Interim Balance Sheet");

                      (b) as of the Effective  Time,  Permitted  Liabilities and
         Liabilities  taken into account in determining the Adjustment Amount as
         agreed to by Purchaser and Parent; and

                      (c)  Liabilities of the Company or a Remaining  Subsidiary
         which have been incurred  since the date of the Interim  Balance Sheet,
         in the ordinary  course of business and  consistent  with past practice
         which are not material.

Without  limiting the  generality of the  foregoing,  upon  consummation  of the
Distribution  neither  the Company nor any  Remaining  Subsidiary  will have any
Liability with respect to the Liabilities of the Distributed Subsidiaries or the
business and operations of the Distributed Subsidiaries.

                      4.2.10  Absence of Changes or Events.  Except as
specifically  disclosed  in the SEC  Documents  filed  prior to the date of this
Agreement  and  furnished to  Purchaser,  since June 30,  1998:  (x) neither the
Company nor any Subsidiary has suffered or been threatened with (and the Company
has no knowledge of any facts which may cause or result in) any material adverse
change  in  its  assets,  properties,   liabilities,   condition  (financial  or
otherwise) or prospects;  and (y) the Company and each  Subsidiary  has operated
only in the usual and ordinary course of business  consistent with past practice
except as contemplated by the Power Facility Sales or the Distribution.  Without
limiting the generality of the foregoing,  since such date,  neither the Company
nor any Subsidiary has:

                      (a) sold,  assigned,  leased,  exchanged,  transferred  or
         otherwise  disposed of any material  portion of its assets or property,
         except in the usual and  ordinary  course of business  consistent  with
         past  practice  other than the sale of shares of common stock of Niagra
         Mohawk Power Corporation ("NIMO") and the Power Facility Sales;


                                       12

<PAGE>



                      (b) suffered any material casualty, damage or loss, or any
         material  interruption  in use,  of any  material  assets  or  property
         (whether or not covered by insurance), on account of fire, flood, riot,
         strike or other hazard or Act of God;

                      (c) paid,  declared  or set aside any  dividends  or other
         distributions  on its  securities of any class or purchased or redeemed
         any of its securities of any class;

                      (d)   made any change in accounting methods or principles;

                      (e) with respect to the  Remaining  Subsidiaries,  made or
         committed to make capital expenditures;

                      (f) with respect to the Remaining Subsidiaries,  increased
         the  compensation  payable  to any  officer or  employee  except in the
         ordinary course of business;

                      (g) with respect to the  Remaining  Subsidiaries,  elected
         any director or hired any officer or employee;

                      (h)  borrowed  any  money  or  issued  any  bonds,  notes,
         debentures or other evidence of indebtedness;

                      (i) acquired by merger,  consolidation  or  acquisition of
         stock or assets any Person or business;

                      (j) adopted,  amended or terminated  any Employee  Benefit
         Plan (as defined herein) except as contemplated by Section 2.5; or

                      (k)  agreed in  writing  or  otherwise  to take any of the
         foregoing actions.

                      4.2.11  Status of Distribution.  The Distribution will not
result  in any  federal  or  state  income  tax  liability  to the  Company.  In
connection with the Distribution,  the Company (a) will have sufficient  capital
so that upon completion of the Distribution, the fair market value of the assets
of the Company less the amount of its stated capital will exceed its Liabilities
and (b) is solvent and will be solvent  prior to and  immediately  following the
consummation of the Distribution.

                      4.2.12  Ownership of Properties. The Company and each
Remaining Subsidiary has good and marketable title to its respective  properties
and assets  purported  to be owned by them  respectively  (including  all assets
reflected  on the  Financial  Statements)  free and  clear of any  Encumbrances,
except:  (i)  statutory  liens for Taxes not yet due,  (ii)  statutory  liens of
carriers,  warehousemen,  mechanics  and  materialmen  incurred in the  ordinary
course of business for sums not yet due;  (iii) liens  incurred or deposits made
in the ordinary course of business, in connection with workers' compensation and
unemployment  insurance;  and (iv) minor  imperfections of title which do not in
the aggregate materially detract from the value or use of the asset in question.
The Company and its Subsidiaries  have in effect insurance  policies of the type
and with coverages  which are customary for companies in the businesses in which
the Company and its Subsidiaries are engaged.

                      4.2.13 Tax Matters Definitions. As used in this Agreement
the following terms shall have the following meanings:

                                       13

<PAGE>



                      (a) the term  "Taxes"  means all  federal,  state,  local,
         foreign and other net income, gross income, gross receipts, sales, use,
         ad valorem,  transfer,  franchise,  profits,  license,  lease, service,
         service  use,  withholding,  payroll,  employment,  excise,  severance,
         stamp, occupation, premium, property, windfall profits, customs, duties
         or other  taxes,  fees,  assessments  or charges of any kind  whatever,
         together  with any  interest  and any  penalties,  additions  to tax or
         additional  amounts with respect thereto,  and the term "Tax" means any
         one of the foregoing Taxes; and

                      (b) the term  "Returns"  means all returns,  declarations,
         reports, statements and other documents required to be filed in respect
         of Taxes, and the term "Return" means any one of the foregoing Returns.

                      4.2.14  Returns.  There have been properly completed and
filed on a timely basis and in correct form all Returns  required to be filed by
the Company. As of the time of filing, the Returns correctly reflected the facts
regarding the income, business, assets, operations,  activities, status or other
matters of such Company or any other  information  required to be shown thereon.
Except as disclosed in Section  4.2.14 to the Company  Disclosure  Schedule,  an
extension  of time within  which to file any Return which has not been filed has
not been requested or granted.

                      4.2.15  Tax Liabilities.  With respect to all amounts in
respect of Taxes imposed upon the Company,  or for which the Company is or could
be liable,  whether to taxing  authorities  (as, for  example,  under law) or to
other persons or entities (as, for example,  under tax  allocation  agreements),
with respect to all taxable  periods or portions of periods  ending on or before
the  Closing  Date,  all  applicable  tax laws and  agreements  have been  fully
complied with, and all amounts  required to be paid by any of the Company or any
of  its  Subsidiaries  (other  than  the  Permitted   Liabilities),   to  taxing
authorities  or others,  on or before the date hereof have been paid. The unpaid
Taxes of the Company do not exceed the reserve for tax liability with respect to
the Company  (excluding  any reserve for deferred  Taxes  established to reflect
timing  differences  between  book and tax  income) set forth or included in the
Company  Disclosure  Schedule  as adjusted  for the passage of time  through the
Closing Date, in accordance with the past practices of the Company.

                      4.2.16  Issues with Taxing Authorities.    No issues have
been raised (and are  currently  pending) by any taxing  authority in connection
with any of the  Returns  filed by the  Company or any of its  Subsidiaries.  No
waivers of statutes of  limitation  with respect to such Returns have been given
by or  requested  from  the  Company  or any of its  Subsidiaries.  The  Company
Disclosure  Schedule  sets forth (i) the taxable years of each of the Company or
any of its Subsidiaries as to which the respective  statutes of limitations with
respect to Taxes have not  expired, and (ii) with  respect to such taxable years
sets forth those years for which  examinations have been completed,  those years
for which  examinations  are presently  being  conducted,  those years for which
examinations have not been initiated, and those years for which required Returns
have not yet been filed. No deficiencies  have been asserted or assessments made
as a result of any such examinations.

                      4.2.17  Miscellaneous Tax Matters.  Neither the Company
nor any Remaining  Subsidiary  (i) is a party to or bound by any tax  indemnity,
tax sharing or tax allocation agreement; (ii) has agreed to make, or is required
to make, any  adjustment  under section 481(a) of the Code by reason of a change
in accounting  method or otherwise.  Neither the Company nor any Subsidiary is a
party to any agreement, contract, arrangement or plan that has resulted or would
result,  separately or in the aggregate, in the payment of any "excess parachute
payments" within the meaning of section 280G of the Code.

                      4.2.18  Permits. The Company and its Remaining
Subsidiaries  hold or  have  received  all  consents,  permits,  authorizations,
approvals, licenses and certifications of Governmental Entities (collectively,

                                       14

<PAGE>



the "Permits")  required in connection with the ownership and operation of their
respective  properties  and the conduct of their  respective  businesses  as now
being conducted, except for such consents, permits,  authorizations,  approvals,
licenses  and  certificates  which  if not  held or  received  would  not have a
Material Adverse Effect on the Company.

                      4.2.19  Contracts.  Except as filed as an exhibit to the
SEC Documents, none of the Company or any Remaining Subsidiary is a party to, or
bound by, any undischarged written or oral:

                      (a)     employment or consulting agreement which is not
terminable by the Company at will without premium or penalty or other payment;

                      (b)     collective bargaining agreement;

                      (c) lease or  sublease,  either  as  lessee or  sublessee,
         lessor or sublessor, of real or personal property or intangibles;

                      (d) loan or  credit  agreement,  pledge  agreement,  note,
         security   agreement,   mortgage,   debenture,   indenture,   factoring
         agreement,   credit  card  agreement,  letter  of  credit  or  banker's
         acceptance;

                      (e)     governmental order or directive;

                      (f)     agreement for the treatment or disposal of
         hazardous materials;

                      (g)     partnership or joint venture agreement;

                      (h)     architect's agreement or construction contract;

                      (i)     lease which is required by GAAP to be classified
         as a capital lease;

                      (j)  reciprocal   easement  or  operating  agreement  with
         respect to any parcel of the Real Estate or any of the Leased Premises;

                      (k)     secrecy or confidentiality agreement;

                      (l)  rate  swap  transaction,  basis  swap,  forward  rate
         transaction,  commodity swap, commodity option,  equity or equity index
         swap, equity or equity index option, bond option, interest rate option,
         foreign  exchange  transaction,  cap  transaction,  floor  transaction,
         collar  transaction,  currency swap  transaction,  cross- currency rate
         swap  transaction,  currency  option or any other  similar  transaction
         (including  any option with respect to any of these  transactions),  or
         any combination of these transactions;

                      (m)     supply or requirements contract;

                      (n) agreement or arrangement not  specifically  enumerated
         above  concerning or which  provides for the receipt or  expenditure of
         any money;


                                       15

<PAGE>



                      (o)  agreement to indemnify or pay or advance  expenses of
         any Person  including any officer,  director,  employee or agent of the
         Company, any Subsidiary or any ERISA Affiliate; or

                      (p) agreement or  arrangement  by which the Company or any
         Remaining  Subsidiary has guaranteed or otherwise has any Liability for
         any Liability of any Distributed Subsidiary.

Such  agreements,  leases,  subleases  and  other  instruments  or  arrangements
required to be disclosed in response to this Section  4.2.19,  the  "Contracts,"
and each a  "Contract".  Each  Contract  is in full force and  binding  upon the
Company and, to the Company's knowledge,  the other parties thereto. None of the
Company  on the one hand,  nor any of the other  parties  thereto,  on the other
hand,  are in default  under any  Contract.  No event,  occurrence  or condition
exists  which,  with the lapse of time,  the giving of notice,  or both,  or the
happening of any further  event or  condition,  would become a default under any
Contract by the Company, on the one hand, or the other contracting party, on the
other hand.  None of the Company  has  released or waived any of its  respective
rights under any Contract. The Company is not subject to any legal obligation to
renegotiate, nor does the Company have knowledge of a claim for a legal right to
renegotiate,  any contract,  loan,  agreement,  lease, sublease or instrument to
which it is now or has been a party.

                      4.2.20  Partnership Contracts.  Each of the Partnerships
has  settled  pursuant  to  valid  and  enforceable  settlement  agreements  all
Liabilities  of each such  Partnership  on terms such that none of the Remaining
Subsidiaries   has  any  Liability  with  respect  to  the  Liabilities  of  the
Partnerships.  Neither the Company nor any of the Remaining Subsidiaries has any
Liability for any of the Liabilities of any Partnership.

                      4.2.21  ERISA Matters.

                      (a) The Company,  its  Subsidiaries,  any affiliate of the
         Company or its  Subsidiaries,  as determined under Code Section 414(b),
         (c),  (m)  or  (o)  (the  "ERISA  Affiliate"),  severally  or  jointly,
         maintains,  administers or contributes  to, and have any liability with
         respect to, only those  employee  benefit  plans (as defined in Section
         3(3) of the Employee Retirement Income Security Act of 1974, as amended
         ("ERISA"),  whether or not excluded from coverage under specific Titles
         or Subtitles of ERISA), bonus, deferred  compensation,  stock purchase,
         stock  option,  stock  appreciation,  severance,  salary  continuation,
         vacation,  holiday,  sick leave,  fringe  benefit,  employee  discount,
         personnel policy, allowances, incentives, insurance, welfare or similar
         plan, program, policy or arrangement which are described in the Company
         Disclosure Schedule (the "Employee Benefit Plans").

                      (b) None of the  Company,  its  Subsidiaries  or any ERISA
         Affiliate  has incurred any liability to the Pension  Benefit  Guaranty
         Corporation  ("PBGC")  as a  result  of the  voluntary  or  involuntary
         termination  of any pension plan subject to Title IV of ERISA;  neither
         the  Company  nor any ERISA  Affiliate  has made a complete  or partial
         withdrawal  from a  multiemployer  plan,  as such  term is  defined  in
         Section 3(37) of ERISA, resulting in withdrawal liability, as such term
         is defined  in  Section  4201 of ERISA  (without  regard to  subsequent
         reduction or waiver of such liability under either Section 4207 or 4208
         or ERISA);  neither the Company nor any ERISA Affiliate would incur any
         withdrawal liability on a complete withdrawal from any Employee Benefit
         Plan as of the Closing Date,  under  applicable  law and  conditions of
         each such  Employee  Benefit  Plan  without  regard to any  limitation,
         reduction or  adjustment  of  liability  under Title IV of ERISA or any
         Employee Benefit Plan provision;  and neither the Company nor any ERISA
         Affiliate has any contingent liability under Section 4024 of ERISA.


                                       16

<PAGE>



                      (c) The aggregate  present  value of all accrued  benefits
         pursuant to each  Employee  Benefit  Plan subject to Title IV of ERISA,
         determined  on  the  basis  of  current   participation  and  projected
         compensation for active  participants,  and including the maximum value
         of all subsidized benefits, and earnings, mortality and other actuarial
         assumptions  set forth in the 1994  actuarial  report for the  Employee
         Benefit  Plan does not exceed the  current  fair  market  value of such
         Employee Benefit Plan's assets, and except as required by Section 4980B
         of the  Code,  neither  the  Company  nor any ERISA  Affiliate  has any
         obligation to provide  benefits to any  individual  not employed by the
         Company or any ERISA Affiliate.

                      (d) Each  Employee  Benefit Plan  complies with and is and
         has been  operated  in  accordance  with its terms and each  applicable
         provision of ERISA, the Code, other federal statutes, state law and the
         regulations and rules thereunder. With respect to each Employee Benefit
         Plan intended to qualify under Section  401(a) of the Code, a favorable
         determination  as to such  qualification  of such Employee Benefit Plan
         and each  amendment  thereto  has  been  made by the  Internal  Revenue
         Service and each such Employee Benefit Plan remains qualified under the
         Code and each trust  funding any Employee  Benefit Plan is and has been
         tax-exempt.  Neither the Company nor any ERISA  Affiliate has failed to
         make any  contributions  or pay any  amounts  required on or before the
         Closing  Date by the terms of any  Employee  Benefit  Plan,  collective
         bargaining agreement, ERISA or any other applicable law.

                      4.2.22  Labor Relations. Neither the Company nor any
Remaining Subsidiary is a party to any collective  bargaining agreement or other
labor union contract applicable to persons employed by the Company and there are
no known organizational  campaigns,  petitions or other unionization  activities
seeking  recognition  of a  collective  bargaining  unit.  There are no strikes,
slowdowns,  work stoppages or material labor relations controversies pending or,
to the  knowledge of the Company,  threatened  between the Company or any of its
Subsidiaries,  and any of their  employees,  and  neither  the  Company  nor any
Subsidiary has experienced any such strike,  slowdown, work stoppage or material
controversy within the past three years.

                      4.2.23  Absence of Litigation.  Except as set forth in the
SEC  Documents  filed  prior  to the date  hereof,  there  is no  litigation  or
proceeding,  in law or in equity,  and there are no proceedings or  governmental
investigations  before  or by  any  Governmental  Entity,  pending  or,  to  the
Company's  knowledge, threatened against the Company or any Remaining Subsidiary
or any of the  officers,  directors or employees of the Company or any Remaining
Subsidiary,  which,  if  decided  adversely  to the  Company  or  any  Remaining
Subsidiary,  officer,  director or employee could have a Material Adverse Effect
on the Company or any Subsidiary or would materially  impair the consummation of
any of the  Transactions.  There  are no facts  which,  if known by a  potential
claimant or  governmental  authority,  would give rise to a claim or  proceeding
which, if asserted or conducted with results  unfavorable to the Company,  would
have a Material  Adverse  Effect on the Company or any  Remaining  Subsidiary or
would materially impair the consummation of any of the Transactions. The Company
has not made any material oral or written warranties with respect to the quality
or absence of defects of its products or services which it has sold or performed
which are in force as of the date hereof,  excep for those  warranties which are
described in the Company Disclosure Schedule.

                      4.2.24  Injunctions; Judgments.   Neither the Company nor
any  Remaining  Subsidiary  is a party  to,  or bound by,  any  judgment,  writ,
injunction,  decree,  order or arbitration award (or agreement entered into with
any  Governmental  Entity in  connection  with any  administrative,  judicial or
arbitration  proceeding)  with respect to or affecting the  properties,  assets,
personnel or business activities of the Company.


                                       17

<PAGE>



                      4.2.25  Compliance with Law. Neither the Company nor any
Subsidiary is in violation of, in noncompliance with, or delinquent with respect
to, any judgment,  writ, injunction,  decree, order or arbitration award or law,
statute,   or  regulation  of  or  agreement  with,  or  any  permit  from,  any
Governmental  Entity  to which  the  property,  assets,  personnel  or  business
activities  of  the  Company  or  any of its  Subsidiaries  are  subject,  which
violation,  noncompliance or delinquency could have a Material Adverse Effect on
the Company or any Remaining  Subsidiary or materially impair the ability of the
Company to carry out or realize the intended benefits of the Transactions.

                      4.2.26  Environmental Matters. The Company and each
Subsidiary  are and at all times have been,  and all real property  currently or
previously owned, leased,  occupied, used by or under the control of the Company
or such  Subsidiary,  and all  operations  or  activities  of the Company or its
Subsidiaries  (including  those conducted on or taking place at any of such real
property) are and at all times have been, in compliance  with and not subject to
any  material   liability  or  obligation   under  any   Environmental   Law  or
Environmental Permit (and any monitoring agreement thereunder).  The Company and
its Subsidiaries have every  Environmental  Permit required under  Environmental
Laws  for  the  operation  of  their  respective  businesses.  As  used  in this
Agreement:  "Environmental  Laws" means all applicable  federal,  state or local
laws, rules, regulations, ordinances or principles of common law relating to the
generation of electricity or to the protection of health and safety,  pollution,
or to environmental  matters of any kind  whatsoever,  including with respect to
the  storage,  treatment,  generation,  transportation,  spillage,  use  for the
generation of  electricity  or thermal  energy,  discharge,  emission,  leakage,
disposal or other release or  threatened  release of any hazardous (or otherwise
regulated  under  Environmental  Law)  material,  substance or waste of any kind
whatsoever  ("Hazardous   Materials")  and  "Environmental  Permits"  means  any
permits, licenses, notifications, certifications, consents or approvals required
under any Environmental Law from a Governmental Entity or third party. There are
no underground storage tanks on any such real property. There is no condition or
circumstance   regarding  the  Company,   any  Subsidiary  or  their  respective
businesses  or any such real property or the  operations or activities  thereon,
which,  with the passing of time or upon notice to any other party,  is possible
of giving rise to a material  violation of, or material  liability or obligation
under, any  Environmental Law or Environmental  Permit.  Neither the Company nor
its  Subsidiaries  nor  any  Person,  the  acts or  omissions  of  which  may be
attributable to, or the  responsibility  of, or liability to, the Company or its
Subsidiaries  has, or has arranged to have,  any Hazardous  Materials,  treated,
stored or  disposed of at, or  transported  to, any  facility  or  property  the
remediation or cleanup of which, or the response costs related thereto, could be
attributed  in  any  manner  to,  or  otherwise  become  responsibilities  of or
liabilities  to, the  Company  or its  Subsidiaries.  There are no  allegations,
claims,  demands,  citations,  notices of violation,  or orders of noncompliance
made against,  issued to or received by the Company or its  Subsidiaries  within
the  past  (5)  years  relating  or  pursuant  to  any   Environmental   Law  or
Environmental  Permit except those which have been corrected or complied with to
the  satisfaction  of the  Governmental  Entity or other  claimant,  and no such
allegation,   claim,  demand,   citation,   notice  of  violation  or  order  of
noncompliance is threatened,  imminent, likely or contemplated.  The Company and
its Subsidiaries  have not  contractually  created or assumed any liabilities or
obligations or  indemnifications  related to Environmental  Law at or related to
any real property currently or formerly owned, operated or leased by the Company
or its Subsidiaries.

                      4.2.27  Owned Real Estate.  All of the real estate and any
interest  in real estate held by the  Company or any  Subsidiary  is  identified
(including  by street  address and  Subsidiary  owner) in the Company Disclosure
Schedule as being so owned (the "Real  Estate").  Each  Remaining  Subsidiary so
indicated as owning Real Estate has insurable title to its Real Estate,  subject
only to general real estate taxes not delinquent and to Encumbrances, covenants,
conditions,  restrictions and easements of record,  none of which makes title to
any of such  Real  Estate  uninsurable  and none of which  are  violated  by the
Remaining  Subsidiary  or  interfere  with such  Remaining  Subsidiary's  use or
occupancy thereof. None of the Real Estate held by a

                                       18

<PAGE>



Remaining  Subsidiary  is  subject  to any  leases  or  tenancies.  None  of the
improvements  comprising the Real Estate or the  businesses  conducted by any of
the Company  thereon,  are in  violation  of any use or  occupancy  restriction,
limitation,  condition or covenant of record or any zoning or building law, code
or ordinance or public utility easement.  No material  expenditures are required
to be made for the repair or maintenance of any  improvements on any of the Real
Estate for or with  respect to any period  ending on or  including  the  Closing
Date.  All  taxes  on any Real  Estate  owned by the  Company  or any  Remaining
Subsidiaries  for or with  respect  to any  period  ending on or  including  the
Closing Date have been paid or accrued in full.

                      4.2.28  Leased Premises.  Neither the Company nor any
Remaining  Subsidiary  leases (or has any  commitment to lease) any real estate.
The Distributed  Subsidiaries lease (or have a commitment to lease) the premises
identified  in the Company  Disclosure  Schedule as being so leased (the "Leased
Premises").  The Leased Premises are leased to the indicated Subsidiary pursuant
to  written  leases,  true,  correct  and  complete  copies  of which  have been
delivered  to  Purchaser  prior to the date hereof or are  contained  in the SEC
Documents.  The improvements  comprising the Leased Premises, and the businesses
conducted by the Company  thereon,  are not in violation of any use or occupancy
restriction,  limitation,  condition  or  covenant  of record  or any  zoning or
building law, code or ordinance or public utility or other easements.

                      4.2.29  Intellectual Property.  No Intellectual Property
has  infringed,  infringes  or in any material way has damaged or damages any of
the rights, title or interests of any third party (nor has any third party given
the  Company  notice  of any  claimed  infringement  or  damage).  "Intellectual
Property"  means all of the following,  whether  owned,  used or licensed by the
Company or any Remaining  Subsidiary:  (i) all common law, federally registered,
state  registered and foreign  trademarks and service marks and all applications
for federal,  state or foreign registration of trademarks or service marks, (ii)
all slogans,  trade dress and trade names,  (iii) all  proprietary  know-how and
methods,  (iv) all trade secrets, (v) all federal and foreign patents and patent
applications,   (vi)  all  copyright  registrations  and  material  unregistered
copyrights, and (vii) all computer software.

                      4.2.30  Brokers.  No broker, finder, investment banker or
other Person (other than Josephthal & Co., whose compensation arrangement is set
forth in the Company Disclosure  Schedule) is entitled to a broker's commission,
finder's  fee,  investment  banker's fee or similar  payment from the Company in
connection with the Merger.

                      4.2.31  Fairness Opinion.  The Company has received the
written opinion of Josephthal & Co. (the "Fairness Opinion") on the date of this
Agreement  to the  effect  that,  as of the date of this  Agreement,  the Merger
Consideration  to be  received  by  stockholders  of the  Company is fair from a
financial point of view. The Company has provided a true and correct copy of the
Fairness Opinion to Purchaser.  The Company is authorized by Josephthal & Co. to
include a copy of such opinion in the Proxy and Information Statement.

                      4.2.32  Form 10 Registration, Proxy Statement and
Information Statement.  None of the information (other than information provided
by Parent and Purchaser)  included or  incorporated by reference in the (i) Form
10 registration statement relating to the registration under the Exchange Act of
shares of common stock of BL to be distributed to shareholders of the Company in
the Distribution (as supplemented or amended, the "Form 10 Registration"),  (ii)
the proxy statement  relating to the  Transactions to be approved at the Meeting
(as  amended  or  supplemented,  the  "Proxy  Statement")  and  the  information
statement  relating  to  the  Distribution  (as  supplemented  or  amended,  the
"Information  Statement") will (x) in the case of the Form 10  Registration,  at
the time it becomes effective, ontain any untrue statement of a material fact or
omit to state any material  fact  required to be stated  therein or necessary in
order to make the statements  therein not misleading or (iii) in the case of the
Proxy Statement and the Information Statement, at the time of the mailing

                                       19

<PAGE>



thereof,  at the time of the  Meeting  and at the  Effective  Time,  contain any
untrue  statement of a material fact or omit to state any material fact required
to be stated  therein or necessary in order to make the statements  therein,  in
light of the circumstances  under which they are made, not misleading.  The Form
10 Registration and the Proxy Statement and the Information  Statement will each
comply as to form in all material  respects with the  provisions of the Exchange
Act and applicable law.

                      4.2.33  Full Disclosure.  The representations, warranties
and  statements  of the Company in this  Agreement or contained in any schedule,
list or document  delivered pursuant to this Agreement do not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements  contained therein,  in light of the circumstances  under
which such representations,  warranties and statements are made, not misleading.
The  copies  of  all  documents  furnished  by  the  Company  pursuant  to or in
connection with this Agreement are true,  complete and correct.  True,  complete
and  accurate  copies  of each document  referred to in the  Company  Disclosure
Schedule are contained  therein or have been furnished to Purchaser prior to the
date hereof.

         4.3 Representations and Warranties of Parent and Purchaser.  Parent and
Purchaser jointly and severally represent and warrant to the Company that:

                      4.3.1   Organization and Authority.  Parent is a limited
liability  company duly organized,  validly  existing and in good standing under
the laws of the State of Wyoming.  Purchaser is a  corporation  duly  organized,
validly  existing and in good standing  under the laws of the State of New York.
Each of Parent and Purchaser has all necessary  corporate power and authority to
conduct its business as now being conducted.


                      4.3.2   Authority Relative to this Agreement.  Each of
Parent and  Purchaser has full  corporate  power and authority to enter into and
perform this Agreement and each of the other Transaction  Agreements to which it
is a party.  The execution and delivery of this  Agreement and each of the other
Transaction  Agreements by Purchaser and Parent and the performance by Purchaser
and Parent of their  respective  obligations  hereunder or thereunder  have been
duly authorized by all requisite  corporate action. This Agreement has been, and
each of the other  Transaction  Agreements  to which it is a party will be, duly
executed and delivered by duly  authorized  officers of Purchaser and Parent and
constitutes,  or will  constitute  when so executed and  delivered,  a valid and
binding obligation of Purchaser and Parent enforceable  against it in accordance
with its terms.

                      4.3.3   Required Filings.  No Authorization is required by
or with respect to Purchaser in  connection  with the  execution and delivery of
this  Agreement  or  the  other  Transaction  Agreements  by  Purchaser  or  the
consummation by Purchaser of the Transactions.

                      4.3.4   No Conflicts.  Neither the execution and delivery
of this Agreement or any of the other  Transaction  Agreements by Parent or
Purchaser, nor the consummation by Parent or Purchaser of the Transactions, will
(i) conflict  with or result in a breach of any of the terms or provision of the
Certificate  of   Incorporation   or  By-Laws  of  Purchaser,   or  Articles  of
Organization of Parent or of any statute or administrative regulation, or of any
order,  writ,  injunction,  judgment  or  decree  of any  court or  governmental
authority or of any arbitration  award to which Purchaser is a party or by which
Parent or Purchaser is bound; or (ii) violate, conflict with, breach, constitute
a default (or give rise to an event which, with notice or lapse of time or both,
would  constitute  a  default)  under,  or  result  in the  termination  of,  or
accelerate the performance required by, or result in the creation of any lien or
other  Encumbrance  upon any of the  properties or assets of Parent or Purchaser
under, any note,  bond,  mortgage,  indenture,  deed of trust,  license,  lease,
agreement or other  instrument  or  obligation to which Parent or Purchaser is a
party or to which Parent or Purchaser or any of its

                                       20

<PAGE>



properties or assets are subject (the "Purchaser Obligations"),  except for such
violations,  conflicts,  breaches,  defaults,  terminations,   accelerations  or
creations of liens or other Encumbrances that do not and will not,  individually
or in the aggregate,  (x) have a Material  Adverse Effect on Parent or Purchaser
or  (y)  materially  impair  Parent  or  Purchaser's   ability  to  perform  its
obligations  under this  Agreement or any of the other  Transaction  Agreements.
Without  limiting the generality of the  foregoing,  Purchaser is not subject to
any Purchaser  Obligation pursuant to which timely performance of this Agreement
or any of the Transactions may be prohibited, prevented or materially delayed.

                      4.3.5   Capitalization.  The authorized capital stock of
Purchaser  consists of 10,000 shares of common stock,  $.01 par value,  of which
1,000 shares are outstanding.  All of the outstanding  shares of common stock of
Purchaser are entitled to vote as a class and are owned of record by Parent.

                      4.3.6   Investment Intent. Each of Parent and Purchaser is
an "accredited investor" within the meaning of Rule 501(a) of Regulation D under
the  Securities  Act, and is acquiring  the Common Stock for its own account for
investment  and with no present  intention of  distributing  or  reselling  such
Common Stock or any part  thereof in any  transaction  which would  constitute a
"distribution" within the meaning of the Securities Act.

                      4.3.7   Financing.  Purchaser has delivered to the Company
a true and correct copy of a letter from a bank (the "Lender"), stating Lender's
interest in providing debt financing  ("Financing") to Parent,  which,  together
with equity to be contributed to Purchaser will be in an amount necessary to pay
the Merger Consideration and consummate the Merger,  subject to the negotiation,
preparation  and execution of binding  documents  with respect to the Financing,
and to the  fulfillment  of the conditions  precedent  contained in such letter.
None of the Financing will be an obligation of or secured by a lien on the 
assets of the Surviving Corporation.  Parent and Purchaser have no present 
intention to liquidate the Surviving Corporation.

                      4.3.8   Proxy Statement.  None of the information included
in the Proxy  Statement  and provided by the Parent and Purchaser in writing for
use in the Proxy Statement will, at the time of the mailing thereof, at the time
of the Meeting and at the  Effective  Time,  contain any untrue  statement  of a
material fact or omit to state any material  fact required to be stated  therein
or  necessary  in  order  to  make  the  statements  therein,  in  light  of the
circumstances under which they are made, not misleading.

                                    ARTICLE V

                     CONDUCT OF BUSINESS PENDING THE MERGER

         5.1 Obligations of Each of the Parties.  From and after the date hereof
and until and including the Effective Time, the following shall apply with equal
force to the Company,  on the one hand, and Parent and  Purchaser,  on the other
hand:

                      5.1.1 Each party shall promptly give the other party
written notice of the existence or occurrence  of any event or condition  which
would make any  representation  or warranty  herein  contained of either party 
untrue or which might  reasonably be expected to prevent the consummation of the
transactions contemplated hereby. In the case of the  Company,  such  notice  
shall  include  a  reasonably  detailed description of such event or condition, 
the representation or warranty to which it relates and an estimate of the 
damages, if any, associated therewith.


                                       21

<PAGE>



                      5.1.2  No party shall intentionally perform any act which,
if  performed,  or omit to perform  any act which,  if omitted to be  performed,
would prevent or excuse the  performance of this Agreement by any party or which
would result in any representation or warranty herein of that party being untrue
in any material  respect at any time after the date hereof through and including
the Closing Date as if then originally made.

                      5.1.3   Subject to the terms and conditions of this
Agreement,  each of the  parties  agrees to use their best  efforts to take,  or
cause to be  taken,  all  actions,  and to do, or cause to be done,  all  things
necessary, proper or advisable to consummate and make effective the Transactions
and the other  transactions  contemplated by this Agreement as  expeditiously as
reasonably  practicable;  provided,  however, that nothing in this Section 5.1.3
shall  in any  event  require  any  party  to (i)  expend  funds  which  are not
commercially  reasonable in relation to the transactions  contemplated hereby or
(ii) take or cause to be taken,  any action which would have a Material  Adverse
Effect with respect to it.

         5.2 Access.  Subject to any  restrictions  under  applicable  law,  the
Company shall continue to give to Purchaser's and Parent's respective  officers,
employees, agents, attorneys,  consultants and accountants reasonable access for
reasonable purposes in light of the transactions  contemplated by this Agreement
during  normal  business  hours  to  all of the  properties,  books,  contracts,
documents,  present and expired insurance policies,  records and personnel of or
with respect to the Company or any  Subsidiary  and shall  furnish to Parent and
Purchaser and such persons as Parent or Purchaser shall designate to the Company
such  information  as Purchaser or such persons may at any time and from time to
time  reasonably  request.  It is  expressly  understood  and  agreed  that  all
information  obtained  pursuant to this  Section 5.2 is subject to the terms and
conditions of the  Confidentiality  Letter dated September 2, 1998,  executed by
Parent  and Parent  expressly  reaffirms  its  obligations  thereunder.  Without
limiting the  generality  of the  foregoing,  the Company will permit Parent and
Purchaser to conduct a Phase I and Phase II environmental  investigation with an
environmental  consultant selected by Purchaser of the Real Estate held by Reina
Distributing, Inc. The Company will pay the costs of such investigation promptly
upon receipt of such consultant's billing statement.

         5.3          The Company's Obligations.  From and after the date hereof
and until and including the Effective Time:

                      5.3.1 The Company  shall,  and shall cause each  Remaining
         Subsidiary  to, carry on its business  with the  objective of effecting
         the  Distribution  and Power  Facility Sales and, in all other respects
         with the objective of winding up the remaining  business of the Company
         and the  Remaining  Subsidiaries  so that the Company and the Remaining
         Subsidiaries  will have no assets other than cash and cash  equivalents
         and the Retained  Assets and no  Liabilities  other than the  Permitted
         Liabilities  and at  Closing,  Liabilities  taken  into  account in the
         calculation of the  Adjustment  Amount as reflected in the Statement as
         finally  agreed to by Purchaser.  Without the prior written  consent of
         Purchaser,  and without  limiting the generality of any other provision
         of this Agreement  including the foregoing,  the Company shall not, and
         shall not permit any Remaining Subsidiary to:

                              (a)      amend its Certificate of Incorporation,
          By-Laws or other organizational documents;

                              (b)  make any  change  in its  authorized  capital
                      stock;  adjust,  split,  combine or reclassify any capital
                      stock;  or, other than issuances of shares of Common Stock
                      pursuant  to  the  valid  exercise  of  Stock  Options  or
                      Warrants outstanding on the date hereof in accordance with
                      Section 2.4 of this  Agreement,  issue any shares of stock
                      of any class, or

                                       22

<PAGE>



                      issue  or  become a party  to any  subscription,  warrant,
                      rights,   options,   convertible   securities   or   other
                      agreements or commitments of any character relating to its
                      issued  or  unissued   capital  stock,   or  other  equity
                      securities,  or grant any stock  appreciation  or  similar
                      rights,  or amend the terms of any Stock Option or Warrant
                      except as contemplated by Section 2.5;

                              (c) incur any  indebtedness  for borrowed money or
                      assume,   guarantee,    endorse   or   otherwise   as   an
                      accommodation  become  responsible  for the obligations of
                      any  other   individual,   corporation  or  other  entity,
                      including the Distributed Subsidiaries;

                              (d) other than in connection with the Distribution
                      or  Power  Facility  Sales,  sell,   transfer,   mortgage,
                      encumber  or  otherwise  dispose  of any  of its  material
                      properties  or assets to any  individual,  corporation  or
                      other entity other than a Subsidiary,  except  pursuant to
                      contracts  or  agreements  in  force  at the  date of this
                      Agreement,  the sale of the NIMO stock, or as specifically
                      set  forth  in  this   Agreement   with   respect  to  the
                      Transactions;

                              (e) other than in connection with the Distribution
                      make any (x)  investments,  either by purchase of stock or
                      securities,  in (y)  contributions  to capital  of, or (z)
                      purchases  of any  property  or  assets  from,  any  other
                      individual, corporation or other entity;

                              (f) except as necessary to effect the Distribution
                      or  eliminate  a  Liability  of the  Company or  Remaining
                      Subsidiary (with respect to which the Company shall notify
                      Purchaser   promptly   in   writing),   and   except   for
                      transactions in the ordinary course of business consistent
                      with past practice and those transactions  contemplated by
                      the provisions of this Agreement,  enter into or terminate
                      any material contract or agreement,  or make any change in
                      any of its material leases or contracts;

                              (g) change its method of  accounting  in effect at
                      December 31, 1997, except as may be required by changes in
                      GAAP upon the advice of its independent accountants;

                              (h)  increase  the  compensation  payable  to  any
                      employee, or enter into any new employment agreements with
                      new or existing  employees  which  create other than an at
                      will  relationship,  in each case,  except in the ordinary
                      course of business  consistent  with past practices  other
                      than  bonuses to  officers  and  employees  which are paid
                      prior to the Effective Time;

                              (i)  pay or  declare  any  dividend  or  make  any
                      distribution   (other  than  the   Distribution)   on  its
                      securities  of any class or  purchase or redeem any of its
                      securities of any class;

                              (j)      make any Tax election or settle or
                      compromise any Tax liability;

                              (k) fail to  maintain  in full  force  and  effect
                      insurance coverage substantially similar to that in effect
                      on the date hereof; or


                                       23

<PAGE>



                              (l)  enter  into  any  business  or  contract  not
                      related to the  Distribution,  Power Facility Sales or the
                      Merger  other than  contracts  which are not  material and
                      which will be fully performed prior to the Effective Time.

                      5.3.2 The Company shall cause the Distributed Subsidiaries
         to carry on their  respective  businesses  only in the ordinary  course
         consistent  with  past  practice  and  shall  not and  shall  cause the
         Distributed  Subsidiaries  not to create any Liabilities of the Company
         or any Remaining  Subsidiary  for the  Liabilities  of the  Distributed
         Subsidiaries following the Effective Time.

                      5.3.3 The Company shall furnish to Purchaser the Company's
         internal  unaudited  statement of condition and statement of income for
         each  month  ending  after  the date of this  Agreement.  Such  monthly
         statements  shall be prepared in accordance with existing  practice and
         shall  fairly  present  in  all  material   respects  the  consolidated
         financial  position and results of operation  for the Company as of and
         for the periods indicated therein in accordance with past practice. The
         Company  will  advise  Purchaser  upon  request as to the status of the
         components  of the  Base  Amount  and  Additional  Amount  and  provide
         reasonable  evidence supporting the determination of the amount of such
         components.

         5.4          Proxy Statement; Other Regulatory Matters.

                      5.4.1   The Company will (i) call a meeting of its
shareholders  (the  "Meeting")  for the  purpose  of voting  upon  adoption  and
authorization  of the  Merger,  (ii)  hold the  Meeting  as soon as  practicable
following the date of this Agreement,  (iii) subject to Section 5.6 recommend to
its  shareholders  the approval of the Merger through its Board of Directors and
(iv) use its best efforts to obtain the necessary  adoption and authorization of
this Agreement by the shareholders of the Company.

                      5.4.2  The  Company  will  (i)  as  soon  as   practicable
following the date of this Agreement,  prepare in correct and  appropriate  form
and file with the SEC the Form 10 Registration and a preliminary Proxy Statement
and Information Statement and (ii) use its reasonable best efforts to respond to
any comments of the SEC or its staff and to cause the Form 10 Registration to be
effective and each of the Proxy and the  Information  Statement to be cleared by
the SEC. The Company will notify  Purchaser of the receipt of any comments  from
the SEC or its staff and of any  request by the SEC or its staff for  amendments
or  supplements  to the  Form 10  Registration,  the  Proxy  or the  Information
Statement or for additional information and will supply Purchaser with copies of
all correspondence between the Company or any of its representatives, on the one
hand, and the SEC or its staff,  on the other hand,  with respect to the Form 10
Registration  or the Proxy  Statement  and  Information  Statement or any of the
Transactions.  The  Company  shall give  Purchaser  and its  counsel  (who shall
provide any comments  thereon as soon as practicable)  the opportunity to review
the Form 10  Registration,  the Proxy  Statement and the  Information  Statement
prior to being filed with the SEC and shall give  Purchaser and its counsel (who
shall provide any comments  thereon as soon as  practicable)  the opportunity to
review all amendments and supplements to the Form 10 Registration, the Proxy and
the  Information   Statement  and  all  responses  to  requests  for  additional
information and replies to comments prior to their being filed with, or sent to,
the SEC. Each of the Company and  Purchaser  agrees to use its  reasonable  best
efforts,  after  consultation with the other parties hereto, to respond promptly
to all such  comments of and  requests  by the SEC.  As promptly as  practicable
after the Proxy Statement and the Information Statement have been cleared by the
SEC, the Company shall mail the Proxy Statement and the  Information  Statement,
respectively,  to the stockholders of the Company.  The Purchaser and the Parent
shall supply to the Company on a timely basis in connection with the preparation
of the Proxy Statement and the Information  Statement all information  necessary
to be included therein with respect to the Purchaser and the Parent.

                                       24

<PAGE>



                      5.4.3   Each party agrees to notify the other of, and to
correct,  any  information  contained  in the Form 10  Registration,  the  Proxy
Statement  and  Information  Statement  furnished by such party to the other for
inclusion  therein,  which information  shall be, at the time of furnishing,  or
become, prior to the Meeting, false or misleading in any material respect. If at
any time prior to the Meeting or any  adjournment  thereof there shall occur any
event that should be set forth in an amendment to the Form 10 Registration Proxy
Statement or the Information Statement, the Company will prepare and mail to its
stockholders such an amendment or supplement.

                      5.4.4 The Company  will file all  reports,  schedules  and
definitive proxy  statements  (including the Proxy Statement and the Information
Statement) (the "Company  Filings") required to be filed by the Company with the
SEC  (including  reports  required by Section 13(d) or 13(g) of the Exchange Act
and will provide copies thereof to the Company promptly upon the filing thereof.
As of its respective date, the Company  represents,  warrants and covenants that
each  the  Company  Filing  will  comply  in  all  material  respects  with  the
requirements of the Exchange Act and the applicable rules and regulations of the
SEC thereunder and none of the Company Filings will contain any untrue statement
of a  material  fact or omit to state a  material  fact  required  to be  stated
therein  or  necessary  to  make  the  statements   therein,  in  light  of  the
circumstances  under which they are made, not  misleading.  Upon learning of any
such false or  misleading  information,  the Company will cause all required the
Company Filings (including the Proxy Statement and the Information Statement) to
be  corrected,  filed  with the SEC and  disseminated  to  holders of the Common
Stock, in each case as and to the extent required by applicable law.

                      5.4.5  Subject to the terms and conditions herein
provided,  the Company and Parent and Purchaser  will cooperate and consult with
one   another  in  (a)   determining   which   consents,   approvals,   Permits,
authorizations or waivers (collectively, "Consents") are required to be obtained
prior to the Effective Time from Governmental Entities or other third parties in
connection  with the execution and delivery of this Agreement  (including  those
Consents with respect to those matters disclosed as a result of Section 4.2.4 of
this  Agreement or with respect to any of the  Transactions  or the  Transaction
Agreements  and the  consummation  of the  transactions  contemplated  hereby or
thereby,  (b)  preparing  all Consents and all other  filings,  submissions  and
presentations required or prudent to obtain all Consents, including by providing
to the  other  party  drafts  of such  material  reasonably  in  advance  of the
anticipated filing or submission dates, and (c) timely seeking all such Consents
(it being  understood  that the parties will make or seek to  Consents,  whether
mandatory or voluntary and that each party will be  responsible  and pay for the
costs, penalties and expenses associated with the Consents required with respect
to it).  The Company will obtain and deliver to Purchaser at or prior to Closing
originals  of full and  complete  releases  of the  Company  and each  Remaining
Subsidiary  from  any and  all  Liabilities  of the  Company  or such  Remaining
Subsidiary  (x)  fo  Liabilities  (other  than  Permitted  Liabilities)  of  any
Distributed   Subsidiary   (the   "Third   Party   Releases")   (y)  to  provide
indemnification by contract, law or otherwise to any current director,  officer,
employee agent or affiliates  except to the extent of the Surviving  Corporation
rights under the Escrow  Agreement or the D&O Insurance,  the form and substance
of  which  shall  be  reasonably   acceptable  to  Purchaser  and  Parent  ("D&O
Releases").

         5.5          Acquisition Proposals.
                      ----------------------

                      5.5.1   From and after the date hereof and until and
including the Effective  Time (or earlier  termination of this  Agreement),  the
Company  shall  immediately  cease and cause to be  terminated  any  activities,
discussions or negotiations with respect to an Acquisition  Proposal (as defined
herein),  and the  Company  shall not,  nor shall it permit any  Subsidiary,  or
authorize  or permit any of its  officers,  directors or employees or holders of
more  than  five  percent  of its  outstanding  shares  of  Common  Stock or any
investment   banker,   financial   advisor,   attorney,   accountant   or  other
representative or agent of the Company or any

                                       25

<PAGE>



Subsidiary,  to,  directly or indirectly,  (i) solicit,  initiate,  or encourage
(including by way of furnishing or otherwise  providing,  or providing access to
nonpublic  information)  any  Acquisition  Proposal;  (ii)  participate  in  any
discussions or negotiations relating to any Acquisition Proposal (or any inquiry
relating to an Acquisition  Proposal) or take any other action to facilitate any
inquiries  or the  making  of  any  proposal  that  constitutes  an  Acquisition
Proposal;  or (iii) enter into any letter of intent,  agreement  in principle or
definitive  agreement  with  respect  to  any  Acquisition  Proposal;  provided,
however,  that nothing  contained in this Section 5.5 shall prohibit the Company
or the  Board  from  furnishing  nonpublic  information  to,  or  entering  into
discussions  or  negotiations  with,  any person or entity  with  respect to any
unsolicited  Acquisition  Proposal  if (but only if):  (a) the Board  determines
reasonably and in good faith,  after due  investigation  and after  consultation
with and based  upon the  advice of its  outside  financial  advisor,  that such
Acquisition  Proposal is a Superior  Proposal (as defined below);  (b) the Board
determines  reasonably  and in good  faith,  after due  investigation  and after
consultation with and based upon the advice of outside counsel, that the failure
to take such action  would cause the Board to violate  its  fiduciary  duties to
stockholders  under applicable law in the context of the  Transactions;  and (c)
the Company (x) provides at least two  business  days' notice to Acquiror to the
effect that it is taking such action and (y) receives from such person or entity
an   executed   confidentiality   agreement   substantially   similar   to   the
Confidentiality  Agreement.  Notwithstanding  the  foregoing,  nothing  in  this
Section 5.5 will restrict the Company from effecting the Power Facility Sales as
contemplated hereby.

                      5.5.2   Notwithstanding anything in this Agreement to the
contrary,  the Company shall promptly advise Parent orally and in writing of the
receipt by it (or by any of the other  entities  or persons  referred  to above)
after the date hereof of any  Acquisition  Proposal  or any inquiry  which could
reasonably lead to an Acquisition Proposal, the material terms and conditions of
such Acquisition  Proposal or inquiry,  and the identity of the person or entity
making any such  Acquisition  Proposal.  The  Company  agrees that it will fully
enforce  (including  by way of  obtaining  an  injunction),  and not  waive  any
provision of, any confidentiality agreement to which it is a party.

                      5.5.3   For purposes of this Agreement: "Acquisition
Proposal"  means  any bona  fide  offe or  proposal  with  respect  to a merger,
consolidation,  share exchange or similar  transaction  involving the Company or
any Subsidiary or any purchase of all or any  significant  portion of the assets
or capital  stock of the  Company  or any  significant  Subsidiary  or any other
business combination  (including the acquisition of any equity interest therein)
involving  the  Company  excluding, however, any  proposal or  transaction  with
respect to the Power  Facilities;  and "Superior  Proposal" means an Acquisition
Proposal which the Board believes in good faith, after due investigation (taking
into account,  among other things,  the  financing  terms and the  likelihood of
consummation)  and based  upon the  advice of its  outside  legal and  financial
advisors, is more favorable to the Company's stockholders from a financial point
of view than the Merger (taking into account the Distribution).

         5.6 Board  Action.  The  Board  shall not (i)  withdraw  or modify  its
approval, adoption or recommendation of this Agreement, the Merger or any of the
Transactions , (ii) approve,  adopt or recommend or publicly propose to approve,
adopt or recommend  an  Acquisition  Proposal,  (iii) cause the Company to enter
into any letter agreement,  agreement in principle or definitive  agreement with
respect to an Acquisition  Proposal,  or (iv) resolve to do any of the foregoing
unless the Company  receives an unsolicited  Acquisition  Proposal in accordance
with Section 5.5 and the Board  determines  reasonably and in good faith,  after
due  investigation  (a) based upon the advice of its outside  financial  advisor
that  a  pending   Acquisition   Proposal  is  more  favorable  to  the  Company
Stockholders  than the Merger and the  Distribution,  taken as a whole, (b) such
Acquisition  Proposal is  reasonably  likely to be  consummated,  (c) there is a
substantial  probability  that the  approval of the Merger and the  Distribution
will not be obtained due to the pending Acquisition Proposal, and (d) based upon
the advice of outside  counsel,  that the  failure of the Board to  withdraw  or
modify its approval,

                                       26

<PAGE>



adoption  or  recommendation  of this  Agreement  or the  Merger,  or approve or
recommend  such  Acquisition  Proposal  would  cause  the Board to  violate  its
fiduciary  duties to  stockholders  under  applicable  law in the context of the
Transactions. In such case, the Board may withdraw or modify its recommendation,
and approve and recommend such Acquisition Proposal, provided the Board provides
to Parent and Purchaser written notice of the Company's  intention to accept the
Superior Proposal at least two business days prior to taking such action and, at
the end of such two  business  day period  (x)  simultaneously  terminates  this
Agreement,  (y)  concurrently  causes the  Company  to enter  into a  definitive
acquisition   agreement   with  respect  to  such  Superior   Proposal  and  (z)
concurrently  pays to Purchaser  the  Termination  Payment and Covered  Expenses
pursuant to Section 7.4.2.  Nothing contained in this Section 5.6 shall prohibit
the  Company  from  taking  and  disclosing  to  its   stockholders  a  position
contemplated by Rule 14e-2(a)  promulgated under the Exchange Act; provided that
the Company does not withdraw or modify its position  with respect to the Merger
or approve or recommend an Acquisition Proposal,  except under the circumstances
described in the immediately preceding sentence and on two business days' notice
to Purchaser to the effect that it is taking such action.

         5.7          Indemnification and Insurance.
                      -----------------------------

                      5.7.1   Purchaser and the Company agree that prior to the
Effective  Time,  the Company will procure and pay for officers' and  directors'
liability insurance ("D&O Insurance") covering each present and former director,
officer,  employee and agent of the Company and each Subsidiary and each present
and former director, officer, employee, agent or trustee of any employee benefit
plan for employees of the Company  (individually,  an "Indemnified  Person", and
collectively,  the  "Indemnified  Persons"),  who is  currently  covered  by the
Company's officers' and directors'  liability insurance or will be so covered on
the Closing Date with respect to actions and omissions  occurring on or prior to
the  Closing  Date  (including,  without  limitation,  any which arise out of or
relate to the transaction  contemplated by this Agreement).  Purchaser shall not
be required to provide or cause the  Surviving  Corporation  to provide any such
insurance for the Indemnified Persons.

                      5.7.2   Purchaser and the Surviving Corporation hereby
jointly and severally  agree that, for the lesser of (a) six (6) years after the
Closing Date, or (b) the period during which the Surviving Corporation maintains
its existence, the provisions of the Certificate of Incorporation and By-Laws of
the Surviving  Corporation  shall  provide  indemnification  to the  Indemnified
Persons on terms,  in a manner,  and with respect to matters,  which are no less
favorable  (in favor of persons  indemnified)  than the Company  Certificate  of
Incorporation  and By-Laws,  as in effect on the date hereof,  and further agree
that such indemnification  provisions shall not be modified or amended except as
required by law, unless such modification or amendment expands the rights of the
Indemnified  Persons to indemnification.  Notwithstanding  the foregoing,  it is
expressly understood and agreed that the obligation of the Surviving Corporation
to  provide  such  indemnification  is  limited  to the  D&O  Insurance  and the
Surviving   Corporation's  rights  under  the  Escrow  Agreement  and  that  the
provisions  of the  Certificate  of  Incorporation  and By-laws of the Surviving
Corporation may be amended accordingly.

         5.8 Surviving Corporation.  The Surviving Corporation or its successors
will maintain its or their existence until at least March 31, 2003.

         5.9          Parent's Financing.  Parent will use its reasonable best
efforts to obtain the proceeds of the Financing.

         5.10  Liabilities.  The Company  agrees to use its best efforts so that
neither the Company nor any Remaining  Subsidiary  will have as of the Effective
Time any Liability other than the Permitted Liabilities and Liabilities, if any,
included in the calculation of the Adjustment  Amount as agreed to by Parent and
Purchaser.


                                       27

<PAGE>


         5.11 Other Company Covenants.  Prior to the Effective Time, the Company
will  (a)  as  soon  as  practicable,   obtain  from  General  Electric  Capital
Corporation  ("GECC") a release from pledge of all of the outstanding  shares of
any Remaining  Subsidiary  which have been pledged to GECC,  and (b) cause to be
paid in full at or  prior  to the  Closing  all  expenses  associated  with  the
transactions  contemplated  hereby  including  fees and  expenses of  investment
bankers,  counsel,  accountants,  consultants and other advisors to the Company,
all severance,  bonus and other compensation  payable in connection with or as a
result of the  Merger  and all other  expenses  of the  Company  and each of the
Remaining Subsidiaries.

         5.12 Parent Covenants. Parent agrees to cause the Surviving Corporation
to amend its  Certificate  of  Incorporation  within  thirty (30) days after the
Closing  Date to change the name of the  Surviving  Corporation  to a name which
does not include the word "Besicorp".  The Surviving  Corporation  agrees to (a)
quitclaim  without  recourse  to BL the net  proceeds  of any  recovery  under a
derivative  claim  against its officers or directors and (b) file all income Tax
Returns for the current fiscal year and pay all Taxes shown to be due thereon.


                                   ARTICLE VI

             CONDITIONS TO CLOSING; CLOSING DELIVERIES; BASE AMOUNT

         6.1 Conditions to Each Party's Obligations.  The respective obligations
of each party to effect the transactions contemplated hereby shall be subject to
the fulfillment at or prior to the Effective Time of the following conditions:

                      6.1.1 The Merger Agreement and, to the extent required
under the NYBCL, the Distribution shall have been adopted and authorized by th
requisite vote of the stockholders of the Company.

                      6.1.2   This Agreement, the Merger and (to the extent
approval thereof is necessary to consummate the  Transactions)  the Transactions
shall have been approved by each Governmental  Entity whose approval is required
for the  consummation of the Merger or such  Transactions,  such approvals shall
remain  in full  force and  effect  and all  waiting  periods  relating  to such
approvals shall have expired.

                      6.1.3  No  Governmental   Entity  or  court  of  competent
jurisdiction shall have enacted,  issued,  promulgated,  enforced or entered any
law, rule, regulation,  executive order, judgment,  decree,  injunction or other
order (whether  temporary,  preliminary or permanent)which is then in effect and
has the effect of making the Merger or any of the Transactions illegal.

         6.2  Conditions to the  Company's  Obligations.  The  obligation of the
Company to consummate  the  transactions  contemplated  hereby is subject to the
fulfillment  (or  waiver)  of all  of  the  following  conditions  prior  to the
Effective Time, upon the  non-fulfillment  (and non-waiver) of any of which this
Agreement may, at the Company's option,  be terminated  pursuant to and with the
effect set forth in Article VII:

                      6.2.1   Each and every representation and warranty made by
Parent and  Purchaser  shall be true and correct when made and as if  originally
made on and as of the Closing Date.


                                       28

<PAGE>



                      6.2.2   All obligations of Parent and Purchaser to be
performed  hereunder  through,  and including  on, the Closing Date  (including,
without limitation, all obligations which Purchaser would be required to perform
at the Closing if the transaction contemplated hereby was consummated shall have
been fully performed.

                      6.2.3   Purchaser shall have delivered to the Company the
written  opinion of  Altheimer & Gray,  counsel for  Purchaser,  dated as of the
Closing Date, in substantially the form of Exhibit C attached hereto.

                      6.2.4   Immediately prior to the Merger Purchaser is, and
assuming that the condition set forth in Section 6.3.1 is satisfied, immediately
following the  effectiveness of the Merger the Surviving  Corporation  shall be,
solvent.

         6.3 Conditions to Parent's and Purchaser's Obligations. The obligations
of Parent and Purchaser to consummate the  transactions  contemplated  hereby is
subject to the fulfillment (or waiver) of all of the following  conditions on or
prior to the Closing Date, upon the  non-fulfillment  (and non-waiver) of any of
which this Agreement may, at Purchaser's  option, be terminated  pursuant to and
with the effect set forth in Article VII:

                      6.3.1   The representations and warranties made by the
Company shall be true and correct when made and as if originally  made on and as
of the Closing Date,  except to the extent reflected in the Statement as finally
agreed to by Parent and Purchaser.

                      6.3.2   All obligations of the Company to be performed
hereunder  through,  and  including  on, the Closing  Date  (including,  without
limitation,  all  obligations  which the Company would be required to perform at
the Closing if the transaction  contemplated hereby was  consummated)shall  have
been fully performed.

                      6.3.3 No suit, proceeding or investigation shall have been
commenced (to Purchaser's  knowledge) by any Governmental  Entity on any grounds
to  restrain,  enjoin or hinder,  or seek  material  damages on account  of, the
consummation of any of the Transactions or the other  transactions  contemplated
hereby.

                      6.3.4 The Company  shall have  delivered to Purchaser  the
written opinion of Robinson Brog Leinwand Greene Genovese & Gluck P.C.,  counsel
to the  Company,  dated as of the Closing  Date,  in  substantially  the form of
Exhibit D attached hereto.

                      6.3.5  Since  June  30,  1998  there  shall  have  been no
changes,  either  individually  or in the  aggregate,  taking  into  account the
completion  of the  Transactions  other  than  the  Merger,  in the  results  of
operations, condition (financial or otherwise),  properties, assets, business or
prospects of the Company or any Subsidiary  which has had or would be reasonably
likely  to have a  Material  Adverse  Effect  on the  Company  or any  Remaining
Subsidiary.

                      6.3.6   There shall not be any action taken, or any
statute,  rule,  regulation  or  order  enacted,  entered,  enforced  or  deemed
applicable to the Merger, by any Governmental Entity which imposes any condition
or restriction  upon Purchaser,  the Surviving  Corporation or its  Subsidiaries
which would in Purchaser's opinion be commercially unreasonable from a financial
standpoint relative to the transactions contemplated by this Agreement.

                      6.3.7   Purchaser shall be satisfied in its reasonable
discretion that each of the Distribution and the Power Facility Sales shall have
been completed as provided in this Agreement and that neither the

                                       29

<PAGE>



Surviving Corporation nor any of the Remaining Subsidiaries has any Liability as
a result of or arising out of the Distribution or Power Facility Sales.

                      6.3.8   The Indemnification Agreement and the Escrow
Agreement  shall have been executed and delivered by BL and shall each be valid,
legal,  binding and  enforceable  obligations  of BL, and the Company shall have
deposited $6,000,000 in cash with the Escrow Agent under the Escrow Agreement.

                      6.3.9 The Base Amount shall be no less than $ 105,275,000.

                      6.3.10  Purchaser  shall have received the proceeds of the
Financing.

                      6.3.11  Neither the Company nor any Remaining Subsidiary
shall  have  any  Liabilities  other  than  the  Permitted  Liabilities  and the
Liabilities taken into account in determining the Adjustment Amount as agreed to
by Purchaser and Parent.

                      6.3.12 The Company shall have received all of the Consents
and obtained the Third Party  Releases  and DB&O  Releases (it being  understood
that this  condition  with respect to the Third Party Releases will be satisfied
if Third Party  Releases with respect to  Liabilities  aggregating  no more than
$50,000 are not obtained).

                      6.3.13  The number of shares of Common Stock outstanding
immediately prior to the Effective Time does not exceed 3,051,435.

                      6.3.14  Purchaser  shall have  received  the  results of a
Phase I and,  if  reasonably  requested  by  Purchaser,  Phase II  environmental
investigation of the Real Estate held by Reina  Distributing,  Inc. with results
satisfactory to Parent and Purchaser in their sole discretion.

         6.4          Closing Deliveries.
                      ------------------

                      6.4.1   At the Closing, the Company shall cause to be
 executed and delivered to Parent and Purchaser all of the following:

                      (a) a  closing  certificate  dated  the  Closing  Date and
         executed on behalf of the Company by a duly  authorized  officer of the
         Company to the effect set forth in Sections 6.3.1, 6.3.2, 6.3.5, 6.3.6,
         6.3.10(g), 6.3.11, 6.3.12 and 6.3.13;

                      (b)  certified  copies of such  corporate  records  of the
         Company  and the  Subsidiaries  and copies of such other  documents  as
         Purchaser or its counsel may  reasonably  have  requested in connection
         with the consummation of the transactions contemplated hereby;

                      (c) D&O Releases and  resignations  of all of the officers
         and directors of each of the Remaining  Subsidiaries and the Company in
         form satisfactory to Purchaser and Parent;

                      (d)    the Indemnification Agreement and Escrow Agreement;
         and

                      (e) the minute books and corporate  records of the Company
         and the Remaining  Subsidiaries and originals of the stock certificates
         evidencing  all  of  the  outstanding  capital  stock  of  each  of the
         Remaining Subsidiaries free of all Encumbrances.

                                       30

<PAGE>




                      6.4.2   At the Closing, Parent and Purchaser shall cause
 to be delivered to the Company all of the following:

                      (a) a  closing  certificate  dated  the  Closing  Date and
         executed on behalf of Parent and Purchaser by a duly authorized officer
         of Parent and  Purchaser  to the effect  set forth in  Sections  6.2.1,
         6.2.2 and 6.2.4; and

                      (b) certified  copies of such corporate  records of Parent
         and Purchaser and copies of such other  documents as the Company or its
         counsel  may  reasonably   have   requested  in  connection   with  the
         consummation of the transactions contemplated hereby.

                                   ARTICLE VII

                        TERMINATION/EFFECT OF TERMINATION

         7.1   Right   to   Terminate.   Anything   to   the   contrary   herein
notwithstanding,  this Agreement and the transaction  contemplated hereby may be
terminated  at any time prior to the  Effective  Time by prompt  notice given in
accordance with Section 8.4:

                      7.1.1  by  the  mutual  written   consent  of  Parent  and
Purchaser and the Company (with the approval of their respective Boards of 
Directors);

                      7.1.2 by Purchaser  and Parent,  or the Company  (with the
approval of the Board) if:

                              (a)       the Effective Time shall not have
         occurred at or before 11:59 p.m. on February 15, 1999 (the "Termination
         Date");  provided,  however, that the right to terminate this Agreement
         under this  Section  7.1.2  shall not be  available  to any party whose
         failure to fulfill any of its obligations under this Agreement has been
         the cause of the failure of the  Effective  Time to have occurred as of
         such time; or

                            (b) upon a vote at the Meeting any of this Agreement
          or any of the Transactions required to be adopted or authorized by the
          shareholders of the Company shall fail to be adopted and authorized.

                      7.1.3   by Parent and Purchaser, by giving written notice
of such termination to the Company, if:

                              (a)       there has been a material breach of any
         material agreement or covenant on the part of the Company which has not
         been cured or adequate  assurance of cure given,  in either case within
         ten (10) business days  following  notice of such breach from Purchaser
         or either of the  Indemnification  Agreement  or the  Escrow  Agreement
         shall not be a valid, legal and binding agreement or enforceable
         against BL;

                              (b)      there has been a breach of a
representation  or warranty of the  Company  the  Damages  from which  Purchaser
reasonably determines would cause the Base Amount to be less than $105,275,000;


                                       31

<PAGE>



                              (c)  the  Board   shall   have  taken  any  action
contemplated by clause (i), (ii), (iii) or (iv) of Section 5.6;

                              (d)      a tender offer or exchange offer for 15%
         or more of the shares of Common Stock of the Company is commenced,  and
         the Board fails to recommend against acceptance of such tender offer or
         exchange  offer by its stockholder  within the time period  required by
         Section  14e-2 of the  Exchange  Act (the  taking of no position by the
         expiration of such period with respect to the acceptance of such tender
         offer  or  exchange  offer  by  its  shareholders  constituting  such a
         failure)  or any  Person  acquires  by any  means  20% or  more  of the
         outstanding shares of Common Stock;

                              (e)      the Company shall have breached any of
its covenants or agreements in Section 5.5;

                              (f)      there shall be pending or threatened any
         proceeding seeking material damages on account of this Agreement or the
         consummation  of the  Merger  or any of the  other  Transactions  which
         Purchaser  determines  in  good  faith,  after  due  investigation  and
         consultation with counsel  representing the Company in such proceeding,
         could  reasonably  be  expected  to result in the  Company  incurring a
         material  amount of damages or expenses  relative to the protections to
         Parent  afforded by the Escrow  Agreement,  after  taking into  account
         applicable insurance coverage; or

                              (g) the Base Amount is less than $105,275,000.

                      7.1.4 by the Company (with the approval of the Board ), by
         giving written notice of such termination to Parent and Purchaser, if:

                              (a)      there has been a material breach of any
         agreement  herein on the part of Purchaser  which has not been cured or
         adequate  assurance  of cure  given,  in either  case  within  ten (10)
         business days following notice of such breach from the Company;

                              (b)      there has been a breach of a
         representation  or warranty of Parent or  Purchaser  herein which could
         reasonably be expected to prevent Parent or Purchaser  from  fulfilling
         their  obligations  under this  Agreement and which,  in the reasonable
         opinion of the Company,  by its nature  cannot be cured  within  twenty
         (20) days (or, if sooner, the Closing Date);

                              (c)      if the Board determines to enter into and
         enters into a definitive  agreement  providing  for a Superior Proposal
         which was obtained consistent with Section 5.5; provided, however, that
         the Company shall have no right to terminate this Agreement  under this
         Section  7.1.4(c)  unless (i) the Company has provided  Purchaser  with
         written notice of the material terms of the Superior  Proposal at least
         two  business  days  prior to such  termination,  and (ii) the  Company
         simultaneously  pays to Purchaser the  Termination  Payment and Covered
         Expenses required under Section 7.4.2.

         7.2          Certain Effects of Termination.  In the event of the
termination of this Agreement as provided in Section 7.1:

                      7.2.1 each party, if so requested by the other party, will
return  promptly  every  document  furnished  to it by or on behalf of the other
party in  connection  with  the  transaction  contemplated  hereby,  whether  so
obtained before or after the execution of this Agreement, and any copies thereof
(except for copies of documents  publicly  available)  which may have been made,
and will use reasonable efforts to cause its

                                       32

<PAGE>



representatives and any representatives of financial  institutions and investors
and  others  to whom such  documents  were  furnished  promptly  to return  such
documents and any copies thereof any of them may have made; and

                      7.2.2   the obligation of Purchaser under the
Confidentiality  Letter  referred to in Section 5.2 shall  continue indefinitely
(subject to its terms) notwithstanding any termination of this Agreement.

This Section 7.2 shall survive any termination of this Agreement.

         7.3 Remedies.  Notwithstanding any termination right granted in Section
7.1, in the event of the  nonfulfillment  of any condition to a party's  closing
obligations,  in  the  alternative,  such  party  may  elect  to do  one  of the
following:

                      (a)  proceed to close  despite the  nonfulfillment  of any
         closing  condition  without  waiving  any  claim  for  any  breach  and
         specifically  in the case of Parent and Purchaser  without  waiving any
         right to proceed under the Indemnification Agreement;

                      (b) decline to close, terminate this Agreement as provided
         in Section 7.1, and thereafter exercise the remedies provided,  or seek
         damages to the extent permitted in Section 7.4; or

                      (c) seek specific  performance  of the  obligations of the
         other party.  Each party hereby agrees that, in the event of any breach
         of this  Agreement by such party,  the remedies  available to the other
         party at law  would be  inadequate  and that such  party's  obligations
         under this Agreement may be specifically enforced.

         7.4          Right to Damages; Expense Reimbursement.
                      ---------------------------------------

                      7.4.1 If this  Agreement is terminated in accordance  with
Section 7.1, neither party will have any claim against the other, subject to the
following sentence and, if applicable,  the remaining provisions of this Section
7.4. A party  terminating  this Agreement in accordance  with Section 7.1 (other
than Section  7.1.1) will retain any and all of such party's legal and equitable
rights  and  remedies  if, but only if, the  circumstances  giving  rise to such
termination  were (i) caused by the other party's willful failure to comply with
a material  covenant set forth herein or (ii) that a material  representation or
warranty of the other party was  materially  false when made and that party knew
or should have reasonably known such  representation  or warranty was materially
false when made.  In either of such events,  termination  shall not be deemed or
construed as limiting or denying any legal or equitable  right or remedy of said
party,  and said party shall also be entitled to recover its costs and  expenses
which are  incurred in pursuing its rights and  remedies  (including  reasonable
attorneys' fees).

                      7.4.2  If  (x)  the  Company   terminates  this  Agreement
pursuant to Section  7.1.4(c) or 5.6 or (y) Purchaser and Parent  terminate this
Agreement  pursuant to 7.1.3(c),  (d)or (e), and Parent and Purchaser are ready,
willing and able to execute or have executed definitive  documentation to effect
the Financing or  substantially  similar  financing  arrangements,  with an able
financing  source,  the  Company  will  (a)  pay  Purchaser  $3,500,000  in cash
immediately upon such termination (the "Termination  Payment"), by wire transfer
of same-day funds to an account designated by Purchaser and (b) reimburse Parent
and Purchaser for their out-of-pocket costs and expenses reasonably incurred and
due to third parties in  connection  with this  Agreement  and the  Transactions
(including fees and disbursements of counsel,  accountants,  financial  advisors
and consultants,  commitment fees, due diligence expenses,  travel costs, filing
fees, and similar fees and

                                       33

<PAGE>



expenses,  all of which shall be  conclusively  established by Purchaser's  good
faith statement therefor) (collectively, "Covered Expenses"), up to a maximum of
$600,000,  by wire  transfer  of  same-day  funds to an  account  designated  by
Purchaser, immediately following receipt of Purchaser's statement evidencing the
Covered Expenses.

                      7.4.3 If this Agreement is terminated  pursuant to Section
7.1.2(b),   (x)  the  Company  will  pay  to  Purchaser  immediately  upon  such
termination Parent and Purchaser's  Covered Expenses up to a maximum of $600,000
by wire transfer of same day funds to an account designated by Purchaser and (y)
if Michael  Zinn or his direct or  indirect  transferees  have failed to vote in
person  or by proxy at least  1,600,000  shares in favor of the  Merger  and any
other matter  presented  to  stockholders  in  connection  with the Merger,  the
Company shall pay the  Termination  Payment to Purchaser  immediately  upon such
termination  by wire  transfer  of same day funds to an  account  designated  by
Purchaser.  If this Agreement is terminated  pursuant to (x) Section 7.1.2(b) or
(y) by the Company,  or Parent and Purchaser pursuant t Section 7.1.2(a) and the
Company,  on or before March 31, 1999, enters into a written agreement to effect
an Acquisition Proposal with, or an Acquisition Proposal is or has been made by,
a party  other than  Parent,  Purchaser  or any of their  Subsidiaries,  and the
Acquisition Proposal is thereafter consummated the Company will pay to Purchaser
the  Termination  Payment  plus the amount of Parent's and  Purchaser's  Covered
Expenses  (to the  extent  not paid  under the first  sentence  of this  Section
7.4.3). The Termination Payment contemplated by the prior sentence shall be paid
in  same-day  funds by wire  transfer  to an  account  designated  by  Purchaser
immediately prior to consummation of such Acquisition Proposal.

                      7.4.4   If this Agreement is terminated by Parent and
Purchaser  pursuant  to Section  7.1.3(a)  (other  than by virtue of a breach of
Sections 5.5 or 5.6),  (b), (f), or (g) the Company shall  reimburse  Parent and
Purchaser  for their  Covered  Expenses  up to a maximum  of  $600,000,  by wire
transfer of same-day  funds to an account  designated  by Parent and  Purchaser,
immediately following receipt of Purchaser's statement evidencing such expenses.
If this  Agreement  is  terminated  as  provided  in the  immediately  preceding
sentence  and the Company,  on or before  March 31, 1999,  enters into a written
agreement to effect an Acquisition  Proposal with, or an Acquisition Proposal is
or has been  made by,  a party  other  than  Parent,  Purchaser  or any of their
Subsidiaries, and the Acquisition Proposal is thereafter consummated the Company
will pay to Purchaser  the  Termination  Payment plus the amount of Parent's and
Purchaser's Covered Expenses (to the extent not paid under the first sentence of
this Section 7.4.4). The Termination Payment  contemplated by the prior sentence
shall be paid in same-day  funds by wire  transfer to an account  designated  by
Purchaser immediately prior to consummation of such Acquisition Proposal.

                      7.4.5 If Purchaser  and Parent  terminate  this  Agreement
solely as a result of the  failure  of the  conditions  set forth in to  Section
6.3.10,  Parent and  Purchaser  shall  reimburse  the  Company  for its  Covered
Expenses  up to  $600,000  by wire  transfer  of same day  funds  to an  account
designated  by the  Company,  immediately  following  receipt  of the  Company's
statement evidencing such expenses.

                      7.4.6   If the Company or Parent and Purchaser fail to
promptly  pay any amounts  owing  pursuant to this  Section  7.4.  when due, the
Company or Parent and Purchaser, as the case may be, shall in addition to paying
such amounts pay all costs  andexpenses  (including,  fees and  disbursements of
counsel)  incurred in collecting  such  amounts,  together with interest on such
amounts (or any unpaid portion  thereof) from the date such payment was required
to be made until the date such  payment is received by the Company or Parent and
Purchaser,  as the case may be, at the rate of 9% per  annum as in  effect  from
time to time during such period.  This Section 7.4 shall survive the termination
of this Agreement.


                                       34

<PAGE>



                                  ARTICLE VIII

                                  MISCELLANEOUS

         8.1 Survival of Representations,  Warranties and Agreements. All of the
representations,  warranties,  and agreements  contained in this Agreement or in
any  certificate or other document  delivered  pursuant to this Agreement  shall
survive  the Merger for a period of five years  following  the  Effective  Time,
subject to the terms of the Indemnification Agreement.

         8.2  Amendment.  This  Agreement may be amended by the parties  hereto,
with the approval of their respective Boards of Directors,  at any time prior to
the Effective Time,  whether before or after approval hereof by the stockholders
of the Company,  but, after such approval by the stockholders of the Company, no
amendment  shall be made without the further  approval of such  stockholders  if
such amendment would violate Section 903 of the NYBCL. This Agreement may not be
amended  except  by an  instrument  in  writing  signed on behalf of each of the
parties hereto.

         8.3 Publicity.  Except as otherwise required by law or applicable stock
exchange rules,  press releases and other publicity  concerning the transactions
contemplated  by this Agreement  shall be made only with the prior  agreement of
the Company and Purchaser.

         8.4 Notices. All notices required or otherwise given hereunder shall be
in writing and may be delivered by hand, by facsimile,  by nationally recognized
private courier,  or by United States mail.  Notices  delivered by mail shall be
deemed given three (3) business days after being  deposited in the United States
mail,  postage prepaid,  registered or certified mail, return receipt requested.
Notices  delivered by hand by  facsimile,  or by nationally  recognized  private
courier  shall be deemed  given on the day of receipt (if such day is a business
day or, if such day is not a business day, the next  succeeding  business  day);
provided,  however, that a notice delivered by facsimile shall only be effective
if and when  confirmation  is received of receipt of the facsimile at the number
provided in this Section 8.4. All notices shall be addressed as follows:

                      If to the Company:

                              Besicorp Group Inc.
                              1151 Flatbush Road
                              Kingston, New York   12401
               Attention: Frederic M. Zinn, Esq., General Counsel
                                Fax: 914-336-7172


                      with a copy to:

               Robinson Brog Leinwand Greene Genovese & Gluck P.C.
                              1345 Avenue of the Americas
                              New York, New York  10105
                              Attention:  A. Mitchell Greene, Esq.
                              Fax:  (212) 956-2164



                                       35

<PAGE>



                      If to Purchaser or the Surviving Corporation:

                              BGI Acquisition LLC
                              950 Third Avenue, 23rd Floor
                              New York, New York   10022
                              Attention:  President
                              Fax:  212-688-7908


                      with a copy to:

                              Altheimer & Gray
                              10 South Wacker Drive, Suite 4000
                              Chicago, Illinois  60606
                              Attention: Paul M. Daugerdas, Esq.
                              Fax:  (312) 715-4800

and/or to such other respective addresses and/or addressees as may be designated
by notice given in accordance with the provisions of this Section 8.4.

         8.5  Expenses;  Transfer  Taxes.  Except  as set forth in  Section  7.4
herein,  each party  hereto  shall bear all fees and  expenses  incurred by such
party  in  connection  with,  relating  to or  arising  out of the  negotiation,
preparation,  execution,  delivery and  performance  of this  Agreement  and the
consummation  of  the  transaction  contemplated  hereby,   including,   without
limitation, financial advisors', attorneys', accountants' and other professional
fees and expenses.

         8.6 Entire Agreement.  This Agreement,  the  Confidentiality  Agreement
referred to in Section 5.2 and the  instruments  to be  delivered by the parties
pursuant to the provisions  hereof  constitute the entire agreement  between the
parties and shall be binding upon and inure to the benefit of the parties hereto
and their respective legal  representatives,  successors and permitted  assigns.
Each Exhibit and schedule  (including the Company Disclosure  Schedule) shall be
considered incorporated into this Agreement.

         8.7 Non-Waiver.  The failure in any one or more instances of a party to
insist upon  performance  of any of the terms,  covenants or  conditions of this
Agreement,  to exercise any right or privilege in this Agreement  conferred,  or
the  waiver  by said  party of any  breach  of any of the  terms,  covenants  or
conditions of this Agreement,  shall not be construed as a subsequent  waiver of
any such terms, covenants,  conditions, rights or privileges, but the same shall
continue and remain in full force and effect as if no such forbearance or waiver
had occurred. No waiver shall be effective unless it is in writing and signed by
an authorized representative of the waiving party.

         8.8   Counterparts.   This   Agreement  may  be  executed  in  multiple
counterparts,  each of which  shall be  deemed to be an  original,  and all such
counterparts shall constitute but one instrument.

         8.9 Severability.  The invalidity of any provision of this Agreement or
portion of a provision  shall not affect the validity of any other  provision of
this Agreement or the remaining portion of the applicable provision.


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         8.10 Applicable Law. This Agreement shall be governed and controlled as
to validity, enforcement, interpretation,  construction, effect and in all other
respects by the internal  laws of the State of New York  applicable to contracts
made in that State.

         8.11 Binding Effect; Benefit. This Agreement shall inure to the benefit
of and be binding upon the parties  hereto,  and their  successors and permitted
assigns. Except as expressly provided herein, nothing in this Agreement, express
or implied,  shall confer on any person other than the parties hereto, and their
respective successors and permitted assigns, any rights,  remedies,  obligations
or  liabilities  under  or by  reason  of  this  Agreement,  including,  without
limitation, third party beneficiary rights.

         8.12  Assignability.  This Agreement  shall not be assignable by either
party without the prior written consent of the other party.

         8.13 Governmental Reporting. Anything to the contrary in this Agreement
notwithstanding,  nothing in this  Agreement  shall be  construed to mean that a
party  hereto or other  person must make or file,  or cooperate in the making or
filing of, any return or report to any  Governmental  Entity in any manner  that
such person or such party reasonably believes or reasonably is advised is not in
accordance with law.

         8.14         Defined Terms.  The following terms are defined in the
following sections of this Agreement:


Defined Term                                               Where Found

Acquisition Proposal                                       5.5.3
Additional Amount                                          2.2.2(a)
Adjustment Amount                                          6.5.2
Agreement                                                  Preamble
Authorization                                              4.2.3
BL                                                         Preamble
Base Amount                                                2.2.1(a)
Board                                                      4.2.2
Certificate of Merger                                      1.2
Certificates                                               2.3.2
Closing                                                    1.6
Closing Date                                               1.6
Code                                                       2.3.6
Common Stock                                               2.1.1
Company                                                    Preamble
Company Disclosure Schedule                                4.1
Company Filings                                            5.4.3
Company Shareholders                                       2.3.1
Consents                                                   5.4.4
Constituent Corporation                                    1.1
Contract                                                   4.2.19
Contracts                                                  4.2.19
Covered Expenses                                           7.4.2
D&O Insurance                                              5.7.1
D&O Releases                                               5.4.5


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Defined Term                                               Where Found
 efined Term                                               Where Found
Directors                                                  4.2.5
Distributed Subsidiaries                                   4.2.1
Distribution                                               3.2.1
Effective Time                                             1.2
Employee Benefit Plans                                     4.2.21(a)
Encumbrance                                                4.2.4
Environmental Laws                                         4.2.26
Environmental Permits                                      4.2.26
ERISA                                                      4.2.21(a)
ERISA Affiliate                                            4.2.21(b)
Escrow Agreement                                           3.2.1((i)
Exchange Act                                               3.2.1(j)
Excluded Liability                                         2.2.1(e)
Fairness Opinion                                           4.2.31
Financial Statements                                       4.2.8
Financing                                                  4.3.7
Form 10 Registration                                       4.2.32
GAAP                                                       4.2.8
GECC                                                       5.11
Governmental Entity                                        4.2.3
Hazardous Material                                         4.2.26
Indemnification Agreement                                  3.2.1(i)
Indemnified Person                                         5.7.1
Indemnified Persons                                        5.7.1
Information Statement                                      4.2.32
Intellectual Property                                      4.2.29
Interim Balance Sheet                                      4.2.9(a)
Leased Premises                                            4.2.28
Lender                                                     4.3.7
Letter of Transmittal                                      2.3.2
Liabilities                                                4.2.9
Material Adverse Effect                                    4.2.4
Meeting                                                    5.4.1
Merger                                                     Preamble
Merger Consideration                                       2.1.1
1993 Plan                                                  2.5
NIMO                                                       4.2.10(a)
NYBCL                                                      Preamble
NYSERDA                                                    5.4.4
Obligation                                                 4.2.4
Parent                                                     Preamble
Partnership                                                4.2.6
Paying Agent                                               2.3.1
Payment Fund                                               2.3.1
PBGC                                                       4.2.21(b)
Permits                                                    4.2.18


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Defined Term                                               Where Found
 efined Term                                               Where Found
Permitted Liabilities                                      3.2.2(b)
Person                                                     4.2.4
Plans                                                      2.5
Power Facility Sales                                       3.3
Preferred Stock                                            4.2.5
Proxy Statement                                            4.2.32
Purchaser                                                  Preamble
Purchaser Obligations                                      4.3.4
Real Estate                                                4.2.27
Remaining Subsidiary                                       4.2.1
Retained Assets                                            3.2.1(a)
Return                                                     4.2.13(b)
Returns                                                    4.2.13(b)
SEC                                                        4.2.3
SEC Documents                                              4.2.7
Securities Act                                             4.2.1
Special Account                                            6.5.1
Specified Current Liabilities                              6.5.1(b)
Statement                                                  3.2.2
Stock Option                                               2.4
Subsidiary                                                 4.2.1
Superior Proposal                                          5.5.3
Surviving Corporation                                      1.1
Tax                                                        4.2.13(a)
Taxes                                                      4.2.13(a)
Termination Date                                           7.1.2(a)
Termination Payment                                        7.4.2
Third Party Releases                                       5.4.5
Transaction Agreements                                     4.2.2
Transactions                                               4.2.2
Warrants                                                   2.5

         8.15  Headings.  The  headings  contained  in  this  Agreement  and the
Agreement's  Table of Contents are for  convenience  of reference only and shall
not affect the meaning or interpretation of this Agreement.

         8.16  Interpretation.  Whenever  the term  "including"  is used in this
Agreement it shall mean "including,  without  limitation,"  (whether or not such
language is  specifically  set forth) and shall not be deemed to limit the range
of possibilities to those items specifically  enumerated.  All joint obligations
herein shall be deemed to be joint and several  whether or not  specifically  so
specified.


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<PAGE>



         IN WITNESS  WHEREOF,  the parties have executed this Agreement and Plan
of Merger on the date first above written.

                                        PARENT:

                                        BGI ACQUISITION LLC

                                        By:  /s/ James Haber
                                             -----------------------------------
                                             James Haber, President of the
                                             Sole Manager of BGI Acquisition LLC


                                        PURCHASER:

                                        BGI ACQUISITION CORP.

                                        By:  /s/ James Haber
                                             -----------------------------------
                                             James Haber
                                             Its:  President


                                        THE COMPANY:

                                        BESICORP GROUP, INC.

                                        By:  /s/ Michael F. Zinn
                                             -----------------------------------
                                             Name: Michael F. Zinn
                                             Its:  President and Chief Executive
                                                   Officer

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