Exhibit 10.3
 
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD,
TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE
SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR JLM INDUSTRIES,
INC. SHALL HAVE RECEIVED AN OPINION OF ITS COUNSEL THAT REGISTRATION OF SUCH
SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE
SECURITIES LAWS IS NOT REQUIRED.
 
WARRANT TO PURCHASE
SHARES OF COMMON STOCK
OF
JLM INDUSTRIES, INC.
Expires: December 31, 2007
 
Number of Shares: 1,666,666
 
Date of Issuance: August 26, 2002
 
FOR VALUE RECEIVED, subject to the provisions hereinafter set forth, the
undersigned, JLM INDUSTRIES, INC., a Delaware corporation (together with its
successors and assigns, the “Issuer”), hereby certifies that THE PHILIP S.
SASSOWER 1996 CHARITABLE REMAINDER ANNUITY TRUST or its registered assigns is
entitled to subscribe for and purchase, during the period specified in this
Warrant, up to 1,666,666 shares (subject to adjustment as hereinafter provided)
of the duly authorized, validly issued, fully paid and nonassessable Common
Stock of the Issuer, at an exercise price per share equal to the Warrant Price
then in effect, subject, however, to the provisions and upon the terms and
conditions hereinafter set forth. Capitalized terms used in this Warrant and not
otherwise defined herein shall have the respective meanings specified in Section
7 hereof.
 
1.  Term.    Subject to the terms and conditions of this Warrant, the right to
subscribe for and purchase shares of Warrant Stock represented hereby shall
commence on January 1, 2003 and shall expire at 5:00 p.m., New York City time,
on December 31, 2007 (such period being the “Term”). Notwithstanding the
foregoing, this Warrant shall immediately expire and be terminated in the event
that the Issuer pays in full, on or prior to December 31, 2002, all of the
principal and interest due to the holder of the Secured Promissory Note (the
“Note”), dated of

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even date herewith by the Issuer in favor of the original Holder of this
Warrant, in the original principal amount of $2,000,000.
 
2.  Method of Exercise Payment; Issuance of New Warrant; Transfer and Exchange.
 
(a)  Time of Exercise.    The purchase rights represented by this Warrant may be
exercised in whole or in part at such times and for such number of shares of
Warrant Stock as follows:
 
(i)  On or after January 1, 2003, this Warrant shall be exercisable for 208.333
shares of Warrant Stock for every $1,000 of the Principal Amount (as defined in
the Note) outstanding under the Note on December 31, 2002.
 
(ii)  On or after May 1, 2003, this Warrant shall be exercisable for an
additional 208.333 shares of Warrant Stock for every $1,000 of the Principal
Amount outstanding under the Note on April 30, 2003.
 
(iii)  On or after September 1, 2003, this Warrant shall be exercisable for an
additional 208.333 shares of Warrant Stock for every $1,000 of the Principal
Amount outstanding under the Note on August 31, 2003.
 
(iv)  On or after January 1, 2004, this Warrant shall be exercisable for an
additional 208.333 shares of Warrant Stock for every $1,000 of the Principal
Amount outstanding under the Note on December 31, 2003.
 
(b)  Method of Exercise.
 
(i)  Cash Exercise.    The Holder hereof may exercise this Warrant, in whole or
in part, by the surrender of this Warrant (with the exercise form attached
hereto duly executed) at the principal office of the Issuer, and by the payment
to the Issuer of an amount of consideration therefor equal to the Warrant Price
in effect on the date of such exercise multiplied by the number of shares of
Warrant Stock with respect to which this Warrant is then being exercised,
payable at such Holder’s election by certified or official bank check or wire
transfer of immediately available funds.
 
(ii)  Net Issue Exercise.    The Holder hereof may exercise this Warrant, in
whole or in part, if the Per Share Market Value of one (1) share of Common Stock
is greater than the Exercise Price (as the date of calculation as set forth
below), in lieu of exercising this Warrant for cash, by electing to receive
shares equal to the value (as determined below) of this Warrant (or the portion
thereof being cancelled) by surrender of this Warrant at the principal office of
the Issuer together with a notice of exercise and notice of such election in
which the Issuer shall issue to the Holder a number of shares of Common Stock
computed using the following formula:

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X=Y(A-B)
A
 
where:
 

 
X=
 
the number of shares of Common Stock to be issued to Holder

 

 
Y=
 
the number of shares of Common Stock purchasable under the Warrant or, if only a
portion of the Warrant is being exercised, the portion of the Warrant being
cancelled (at the date of such calculation)

 

 
A=
 
the Per Share Market Value of one (1) share of Common Stock (at the date of such
calculation)

 

 
B=
 
Exercise Price (as adjusted to the date of such calculation)

 
In any case where the consideration payable upon such exercise is being paid in
whole or in part pursuant to the provisions of clause (ii) of this subsection
(b), such exercise shall be accompanied by written notice from the Holder of
this Warrant specifying the manner of payment thereof and containing a
calculation showing the number of shares of Warrant Stock with respect to which
rights are being surrendered thereunder and the net number of shares to be
issued after giving effect to such surrender.
 
(c)  Issuance of Stock Certificates.    In the event of any exercise of the
rights represented by this Warrant in accordance with and subject to the terms
and conditions hereof, (i) certificates for the shares of Warrant Stock so
purchased shall be dated the date of such exercise and delivered to the Holder
hereof within a reasonable time, not exceeding three Trading Days after such
exercise, and the Holder hereof shall be deemed for all purposes to be the
Holder of the shares of Warrant Stock so purchased as of the date of such
exercise, and (ii) unless this Warrant has expired, a new Warrant representing
the number of shares of Warrant Stock, if any, with respect to which this
Warrant shall not then have been exercised (less any amount thereof which shall
have been canceled in payment or partial payment of the Warrant Price as
hereinabove provided) shall also be issued to the Holder hereof at the Issuer’s
expense within such time.
 
(d)  Transferability of Warrant.    Subject to Section 2(e), this Warrant may be
transferred by a Holder without the consent of the Company. If transferred
pursuant to this paragraph and subject to the provisions of subsection (e) of
this Section 2, this Warrant may be transferred on the books of the Issuer by
the Holder hereof, upon surrender of this Warrant at the principal office of the
Issuer, properly endorsed (by the Holder executing an assignment in the form
attached hereto). This Warrant is exchangeable at the principal office of the
Issuer for Warrants for the purchase of the same aggregate number of shares of
Warrant Stock, each new Warrant to represent the right to purchase such number
of shares of Warrant Stock as the Holder hereof shall designate at the time of
such exchange. Any warrant issued upon a transfer of this Warrant shall be dated
the Original Issue Date and shall have terms identical to the terms of this
Warrant.

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(e)  Compliance with Securities Laws.
 
(i)  The Holder of this Warrant, by acceptance hereof, acknowledges that this
Warrant and the shares of Warrant Stock to be issued upon exercise hereof are
being acquired solely for the Holder’s own account and not as a nominee for any
other party, and for investment, and that the Holder will not offer, sell,
pledge or otherwise dispose of this Warrant or any shares of Warrant Stock to be
issued upon exercise hereof except pursuant to an effective registration
statement, or an exemption from registration, under the Securities Act and any
applicable state securities laws.
 
(ii)  Except as provided in paragraph (iii) below, this Warrant and all
certificates representing shares of Warrant Stock issued upon exercise hereof
shall be stamped or imprinted with a legend in substantially the following form:
 
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD,
TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE
SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR JLM INDUSTRIES,
INC. SHALL HAVE RECEIVED AN OPINION OF ITS COUNSEL THAT REGISTRATION OF SUCH
SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE
SECURITIES LAWS IS NOT REQUIRED.
 
(iii)  The restrictions imposed by this subsection (e) upon the transfer of this
Warrant and the shares of Warrant Stock to be purchased upon exercise hereof
shall terminate (A) when such securities shall have been effectively registered
under the Securities Act, (B) upon the Issuer’s receipt of an opinion of
counsel, in form and substance reasonably satisfactory to the Issuer, addressed
to the Issuer to the effect that such restrictions are no longer required to
ensure compliance with the Securities Act and state securities laws or (C) upon
the Issuer’s receipt of other evidence reasonably satisfactory to the Issuer
that such registration and qualification under state securities laws is not
required. Whenever such restrictions shall cease and terminate as to any such
securities, the Holder thereof shall be entitled to receive from the Issuer (or
its transfer agent and registrar), without expense (other than applicable
transfer taxes, if any), new Warrants (or, in the case of shares of Warrant
Stock, new stock certificates) of like tenor not bearing the applicable legend
required by paragraph (ii) above relating to the Securities Act and state
securities laws.
 
(f)  Continuing Rights of Holder.    The Issuer will, at the time of or at any
time after each exercise of this Warrant, upon the request of the Holder hereof,
acknowledge in writing the extent, if any, of its continuing obligation to
afford to such Holder all rights to which such Holder shall continue to be
entitled after such exercise in accordance with the terms of this Warrant,
provided that if any such Holder shall fail to make any such request, the
failure shall not affect the continuing obligation of the Issuer to afford such
rights to such Holder.

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3.  Stock Fully Paid; Reservation and Listing of Shares; Covenants.
 
(a)  Stock Fully Paid.    The Issuer represents, warrants, covenants and agrees
that all shares of Warrant Stock which may be issued upon the exercise of this
Warrant or otherwise hereunder will, upon issuance, be duly authorized, validly
issued, fully paid and non-assessable and free from all taxes, liens and charges
created by or through Issuer. The Issuer further covenants and agrees that
during the period within which this Warrant may be exercised, the Issuer will at
all times have authorized and reserved for the purpose of the issue upon
exercise of this Warrant a sufficient number of shares of Common Stock to
provide for the exercise of this Warrant.
 
(b)  Reservation.    If any shares of Common Stock required to be reserved for
issuance upon exercise of this Warrant or as otherwise provided hereunder
require registration or qualification with any governmental authority under any
Federal or state law before such shares may be so issued, the Issuer shall in
good faith use its best efforts as expeditiously as possible at its expense to
cause such shares to be duly registered or qualified. If the Issuer shall list
any shares of Common Stock on any securities exchange or market it shall, at its
expense, list thereon, maintain and increase when necessary such listing of, all
shares of Warrant Stock from time to time issued upon exercise of this Warrant
or as otherwise provided hereunder, and, to the extent permissible under the
applicable securities exchange rules, all unissued shares of Warrant Stock which
are at any time issuable hereunder, so long as any shares of Common Stock shall
be so listed. The Issuer shall also so list on each securities exchange or
market, and shall maintain such listing of, any other securities which the
Holder of this Warrant shall be entitled to receive upon the exercise of this
Warrant if at the time any securities of the same class shall be listed on such
securities exchange or market by the Issuer.
 
(c)  Covenants.    The Issuer shall not by any action including, without
limitation, amending the Restated Certificate of Incorporation or the By-laws of
the Issuer, or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other action, avoid or
seek to avoid the observance or performance of any of the terms of this Warrant,
but will at all times in good faith assist in the carrying out of all such terms
and in the taking of all such actions as may be necessary or appropriate to
protect the rights of the Holder hereof against dilution (to the extent
specifically provided herein) or impairment. Without limiting the generality of
the foregoing, the Issuer will (i) not permit the par value, if any, of its
Common Stock to exceed the then effective Warrant Price, (ii) not amend or
modify any provision of the Restated Certificate of Incorporation or By-laws of
the Issuer in any manner that would adversely affect in any way the powers,
preferences or relative participating, optional or other special rights of the
Common Stock or which would adversely affect the rights of the Holder of the
Warrant, (iii) take all such action as may be reasonably necessary in order that
the Issuer may validly and legally issue fully paid and nonassessable shares of
Common Stock, free and clear of any liens, claims, encumbrances and restrictions
(other than as provided herein) upon the exercise of this Warrant, and (iv) use
its best efforts to obtain all such authorizations, exemptions or consents from
any public regulatory body having jurisdiction thereof as may be reasonably
necessary to enable the Issuer to perform its obligations under this Warrant.

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(d)  Loss, Theft, Destruction of Warrants.    Upon receipt of evidence
satisfactory to the Issuer of the ownership of and the loss, theft, destruction
or mutilation of any Warrant and, in the case of any such loss, theft or
destruction, upon receipt of indemnity or security satisfactory to the Issuer
or, in the case of any such mutilation, upon surrender and cancellation of such
Warrant, the Issuer will make and deliver, in lieu of such lost, stolen,
destroyed or mutilated Warrant, a new Warrant of like tenor and representing the
right to purchase the same number of shares of Common Stock.
 
(e)  Rights and Obligations under existing Registration Rights Agreement.    The
shares of Warrant Stock are entitled to the benefits and subject to the terms of
the Registration Rights Agreement, dated as of June 28, 2001, by and among the
Issuer and the investors listed on the signature pages thereof (as amended from
time to time, the “Registration Rights Agreement”), which Agreement is
incorporated by reference herein and shall have the same effect as if set forth
herein; provided, however, that with respect to this Warrant: (i) the “Filing
Date” as defined therein shall be such date requested by the Holder of this
Warrant upon 45 days advance written notice to the Issuer, which Filing Date
shall not in any event be earlier than February 15, 2003. The Issuer shall keep
or cause to be kept a copy of the Registration Rights Agreement, and any
amendments thereto, at its chief executive office and shall furnish, without
charge, copies thereof to the Holder upon request.
 
4.  Adjustment of Warrant Price and Warrant Share Number.    The number and kind
of Securities purchasable upon the exercise of this Warrant and the Warrant
Price shall be subject to adjustment from time to time upon the happening of
certain events as follows:
 
(a)  Recapitalization; Reorganization; Reclassification; Consolidation; Merger
or Sale.
 
(i)  In case the Issuer after the Original Issue Date shall do any of the
following (each, a “Triggering Event”): (a) consolidate with or merge into any
other Person and the Issuer shall not be the continuing or surviving corporation
of such consolidation or merger, or (b) permit any other Person to consolidate
with or merge into the Issuer and the Issuer shall be the continuing or
surviving Person but, in connection with such consolidation or merger, any
Capital Stock of the Issuer shall be changed into or exchanged for Securities of
any other Person or cash or any other property, or (c) transfer, sell or
otherwise dispose all or substantially all of its properties or assets to any
other Person, or (d) effect a capital reorganization or reclassification of its
Capital Stock, then, and in the case of each such Triggering Event, proper
provision shall be made so that, upon the basis and the terms and in the manner
provided in this Warrant, the Holder of this Warrant shall be entitled (x) upon
the exercise hereof at any time after the consummation of such Triggering Event,
to the extent this Warrant is not exercised prior to such Triggering Event, or
is redeemed in connection with such Triggering Event, to receive at the Warrant
Price in effect at the time immediately prior to the consummation of such
Triggering Event in lieu of the Common Stock issuable upon such exercise of this
Warrant prior to such Triggering Event, the Securities, cash and property to
which such Holder would have been entitled upon the consummation of such
Triggering Event if such Holder had exercised the rights represented by this
Warrant immediately prior thereto, subject to adjustments and increases
(subsequent to such corporate action) as nearly equivalent as possible to the

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adjustments provided for in Section 4 hereof or (y) to sell this Warrant (or, at
such Holder’s election, a portion hereof) concurrently with the Triggering Event
to the Person continuing after or surviving such Triggering Event, or to the
Issuer (if Issuer is the continuing or surviving Person) at a sales price equal
to the amount of cash, property and/or Securities to which a holder of the
number of shares of Common Stock which would otherwise have been delivered upon
the exercise of this Warrant would have been entitled upon the effective date or
closing of any such Triggering Event (the “Event Consideration”), less the
amount or portion of such Event Consideration having a fair value equal to the
aggregate Warrant Price applicable to this Warrant or the portion hereof so
sold.
 
(ii)  Notwithstanding anything contained in this Warrant to the contrary, the
Issuer will not effect any Triggering Event unless, prior to the consummation
thereof, each Person (other than the Issuer) which may be required to deliver
any Securities, cash or property upon the exercise of this Warrant as provided
herein shall assume, by written instrument delivered to, and reasonably
satisfactory to, the Holder of this Warrant, (A) the obligations of the Issuer
under this Warrant (and if the Issuer shall survive the consummation of such
Triggering Event, such assumption shall be in addition to, and shall not release
the Issuer from, any continuing obligations of the Issuer under this Warrant)
and (B) the obligation to deliver to such Holder such shares of Securities, cash
or property as, in accordance with the foregoing provisions of this subsection
(a), such Holder shall be entitled to receive, and such Person shall have
similarly delivered to such Holder an opinion of counsel for such Person, which
counsel shall be reasonably satisfactory to such Holder, stating that this
Warrant shall thereafter continue in full force and effect and the terms hereof
(including, without limitation, all of the provisions of this subsection (a))
shall be applicable to the Securities, cash or property which such Person may be
required to deliver upon any exercise of this Warrant or the exercise of any
rights pursuant hereto.
 
(iii)  If with respect to any Triggering Event, the Holder of this Warrant has
exercised its right as provided in clause (y) of subparagraph (i) of this
subsection (a) to sell this Warrant or a portion thereof, the Issuer agrees that
as a condition to the consummation of any such Triggering Event the Issuer shall
secure such right of Holder to sell this Warrant to the Person continuing after
or surviving such Triggering Event and the Issuer shall not effect any such
Triggering Event unless upon or prior to the consummation thereof the amounts of
cash, property and/or Securities required under such clause (y) are delivered to
the Holder of this Warrant. The obligation of the Issuer to secure such right of
the Holder to sell this Warrant shall be subject to such Holder’s reasonable
cooperation with the Issuer, including, without limitation, the giving of
customary representations and warranties to the purchaser in connection with any
such sale. Prior notice of any Triggering Event shall be given to the Holder of
this Warrant in accordance with Section 11 hereof.
 
(b)  Subdivision or Combination of Shares.    If the Issuer, at any time while
this Warrant is outstanding, shall subdivide or combine any shares of Common
Stock, (i) in case of subdivision of shares, the Warrant Price shall be
proportionately reduced (as at the effective date of such subdivision or, if the
Issuer shall take a record of holders of its Common Stock for the purpose of so
subdividing, as at the applicable record date, whichever is earlier) to reflect
the

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increase in the total number of shares of Common Stock outstanding as a result
of such subdivision, or (ii) in the case of a combination of shares, the Warrant
Price shall be proportionately increased (as at the effective date of such
combination or, if the Issuer shall take a record of holders of its Common Stock
for the purpose of so combining, as at the applicable record date, whichever is
earlier) to reflect the reduction in the total number of shares of Common Stock
outstanding as a result of such combination.
 
(c)  Certain Dividends and Distributions.    If the Issuer, at any time while
this Warrant is outstanding, shall:
 
(i)  Stock Dividends.    Pay a dividend in, or make any other distribution to
its stockholders of, shares of Common Stock, the Warrant Price shall be
adjusted, as at the date the Issuer shall take a record of the holders of the
Issuer’s Capital Stock for the purpose of receiving such dividend or other
distribution (or if no such record is taken, as at the date of such payment or
other distribution), to that price determined by multiplying the Warrant Price
in effect immediately prior to such record date (or if no such record is taken,
then immediately prior to such payment or other distribution), by a fraction (1)
the numerator of which shall be the total number of shares of Common Stock
outstanding immediately prior to such dividend or distribution, and (2) the
denominator of which shall be the total number of shares of Common Stock
outstanding immediately after such dividend or distribution (plus in the event
that the Issuer paid cash for fractional shares, the number of additional shares
which would have been outstanding had the Issuer issued fractional shares in
connection with said dividends); or
 
(ii)  Other Dividends.    Pay a dividend on, or make any distribution of its
assets upon or with respect to (including, but not limited to, a distribution of
its property as a dividend in liquidation or partial liquidation or by way of
return of capital), the Common Stock (other than as described in clause (i) of
this subsection (c)), or in the event that the Company shall offer options or
rights to subscribe for shares of Common Stock, or issue any Common Stock
Equivalents, to all of its holders of Common Stock, then on the record date for
such payment, distribution or offer or, in the absence of a record date, on the
date of such payment, distribution or offer, the Holder shall receive what the
Holder would have received had it exercised this Warrant in full immediately
prior to the record date of such payment, distribution or offer or, in the
absence of a record date, immediately prior to the date of such payment,
distribution or offer.
 
(d)  Issuance of Additional Shares of Common Stock.    If the Issuer, at any
time while this Warrant is outstanding, shall issue any Additional Shares of
Common Stock (otherwise than as provided in the foregoing subsections (a)
through (c) of this Section 4), at a price per share less than the Warrant Price
then in effect or without consideration, then the Warrant Price upon each such
issuance shall be adjusted to that price (rounded to the nearest cent)
determined by multiplying the Warrant Price then in effect by a fraction:
 
(i)  the numerator of which shall be equal to the sum of (A) the number of
shares of Common Stock outstanding immediately prior to the issuance of such
Additional Shares of Common Stock plus (B) the number of shares of Common Stock
(rounded to the nearest whole share) which the aggregate consideration for the
total number of such

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Additional Shares of Common Stock so issued would purchase at a price per share
equal to the Warrant Price then in effect, and
 
(ii)  the denominator of which shall be equal to the number of shares of Common
Stock outstanding immediately after the issuance of such Additional Shares of
Common Stock.
 
The provisions of this subsection (d) shall not apply under any of the
circumstances for which an adjustment is provided in subsection (a), (b) or (c)
of this Section 4. No adjustment of the Warrant Price shall be made under this
subsection (d) upon the issuance of any Additional Shares of Common Stock which
are issued pursuant to any Common Stock Equivalent if upon the issuance of such
Common Stock Equivalent (X) any adjustment shall have been made pursuant to
subsection (e) of this Section 4 or (Y) no adjustment was required pursuant to
subsection (e) of this Section 4. No adjustment of the Warrant Price shall be
made under this subsection (d) in an amount less than $.01 per share, but any
such lesser adjustment shall be carried forward and shall be made at the time
and together with the next subsequent adjustment, if any, which together with
any adjustments so carried forward shall amount to $.01 per share or more,
provided that upon any adjustment of the Warrant Price as a result of any
dividend or distribution payable in Common Stock or Convertible Securities or
the reclassification, subdivision or combination of Common Stock into a greater
or smaller number of shares, the foregoing figure of $.01 per share (or such
figure as last adjusted) shall be adjusted (to the nearest one-half cent) in
proportion to the adjustment in the Warrant Price.
 
(e)  Issuance of Common Stock Equivalents.
 
(i)  If the Issuer, at any time while this Warrant is outstanding, shall issue
any Common Stock Equivalent and the price per share for which Additional Shares
of Common Stock may be issuable thereafter pursuant to such Common Stock
Equivalent shall be less than the Warrant Price then in effect, or if, after any
such issuance of Common Stock Equivalents, the price per share for which
Additional Shares of Common Stock may be issuable thereafter is amended or
adjusted, and such price as so amended shall be less than the Warrant Price in
effect at the time of such amendment, then the Warrant Price upon each such
issuance or amendment shall be adjusted as provided in the first sentence of
subsection (d) of this Section 4 on the basis that (1) the maximum number of
Additional Shares of Common Stock issuable pursuant to all such Common Stock
Equivalents shall be deemed to have been issued (whether or not such Common
Stock Equivalents are actually then exercisable, convertible or exchangeable in
whole or in part) as of the earlier of (A) the date on which the Issuer shall
enter into a firm contract for the issuance of such Common Stock Equivalent, or
(B) the date of actual issuance of such Common Stock Equivalent, and (2) the
aggregate consideration for such maximum number of Additional Shares of Common
Stock shall be deemed to be the minimum consideration received or receivable by
the Issuer for the issuance of such Additional Shares of Common Stock pursuant
to such Common Stock Equivalent. No adjustment of the Warrant Price shall be
made under this subsection (e) upon the issuance of any Convertible Security
which is issued pursuant to the exercise of any warrants or other subscription
or purchase rights therefor, if any adjustment shall previously have been made
in the Warrant Price then in effect upon the issuance of such warrants or other
rights pursuant to this subsection (e).

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(i)  Notwithstanding the foregoing, in the event the Warrant Price is required
to be reduced in accordance with this subsection (e), if the aggregate number of
shares of Common Stock issuable upon exercise of this Warrant would exceed the
maximum number of shares of Common Stock which could be issued without obtaining
stockholder approval if and as required pursuant to Nasdaq Stock Market Rule
4350(i)(C) or (D), then, unless such stockholder approval shall have been
obtained, the Warrant Price shall be reduced only to the extent that the number
of shares of Common Stock issuable upon conversion of the Warrant would not
exceed such maximum number of shares of Common Stock which could be issued
without obtaining stockholder approval.
 
(f)  Purchase of Common Stock by the Issuer.    If the Issuer at any time while
this Warrant is outstanding shall, directly or indirectly through a Subsidiary
or otherwise, purchase, redeem or otherwise acquire any shares of Common Stock
at a price per share greater than the Per Share Market Value then in effect,
then the Warrant Price upon each such purchase, redemption or acquisition shall
be adjusted to that price determined by multiplying such Warrant Price by a
fraction (i) the numerator of which shall be the number of shares of Common
Stock outstanding immediately prior to such purchase, redemption or acquisition
minus the number of shares of Common Stock which the aggregate consideration for
the total number of such shares of Common Stock so purchased, redeemed or
acquired would purchase at the Per Share Market Value; and (ii) the denominator
of which shall be the number of shares of Common Stock outstanding immediately
after such purchase, redemption or acquisition. For the purposes of this
subsection (f), the date as of which the Per Share Market Value shall be
computed shall be the earlier of (x) the date on which the Issuer shall enter
into a firm contract for the purchase, redemption or acquisition of such Common
Stock, or (y) the date of actual purchase, redemption or acquisition of such
Common Stock. For the purposes of this subsection (f), a purchase, redemption or
acquisition of a Common Stock Equivalent shall be deemed to be a purchase of the
underlying Common Stock, and the computation herein required shall be made on
the basis of the full exercise, conversion or exchange of such Common Stock
Equivalent on the date as of which such computation is required hereby to be
made, whether or not such Common Stock Equivalent is actually exercisable,
convertible or exchangeable on such date.
 
(g)  Other Provisions Applicable to Adjustments Under this Section 4.    The
following provisions shall be applicable to the making of adjustments in the
Warrant Price hereinbefore provided in Section 4:
 
(i)  Computation of Consideration.    The consideration received by the Issuer
shall be deemed to be the following: to the extent that any Additional Shares of
Common Stock or any Common Stock Equivalents shall be issued for a cash
consideration, the consideration received by the Issuer therefor, or if such
Additional Shares of Common Stock or Common Stock Equivalents are offered by the
Issuer for subscription, the subscription price, or, if such Additional Shares
of Common Stock or Common Stock Equivalents are sold to underwriters or dealers
for public offering without a subscription offering, the public offering price,
in any such case excluding any amounts paid or receivable for accrued interest
or accrued dividends and without deduction of any compensation, discounts,
commissions, or expenses paid or incurred by the Issuer for or in connection
with the underwriting thereof or otherwise in

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connection with the issue thereof; to the extent that such issuance shall be for
a consideration other than cash, then, except as herein otherwise expressly
provided, the fair market value of such consideration at the, time of such
issuance as determined in good faith by the Board. The consideration for any
Additional Shares of Common Stock issuable pursuant to any Common Stock
Equivalents shall be the consideration received by the Issuer for issuing such
Common Stock Equivalents, plus the additional consideration payable to the
Issuer upon the exercise, conversion or exchange of such Common Stock
Equivalents. In case of the issuance at any time of any Additional Shares of
Common Stock or Common Stock Equivalents in payment or satisfaction of any
dividend upon any class of Capital Stock of the Issuer other than Common Stock,
the Issuer shall be deemed to have received for such Additional Shares of Common
Stock or Common Stock Equivalents a consideration equal to the amount of such
dividend so paid or satisfied. In any case in which the consideration to be
received or paid shall be other than cash, the Board shall notify the Holder of
this Warrant of its determination of the fair market value of such consideration
prior to payment or accepting receipt thereof. If, within thirty days after
receipt of said notice, the Holder shall notify the Board in writing of its
objection to such determination, a determination of the fair market value of
such consideration shall be made by an Independent Appraiser selected by the
Holder with the approval of the Board (which approval shall not be unreasonably
withheld), whose fees and expenses shall be paid by the Issuer.
 
(ii)  Readjustment of Warrant Price.    Upon the expiration or termination of
the right to convert, exchange or exercise any Common Stock Equivalent the
issuance of which effected an adjustment in the Warrant Price, if such Common
Stock Equivalent shall not have been converted, exercised or exchanged in its
entirety, the number of shares of Common Stock deemed to be issued and
outstanding by reason of the fact that they were issuable upon conversion,
exchange or exercise of any such Common Stock Equivalent shall no longer be
computed as set forth above, and the Warrant Price shall forthwith be readjusted
and thereafter be the price which it would have been (but reflecting any other
adjustments in the Warrant Price made pursuant to the provisions of this Section
4 after the issuance of such Common Stock Equivalent) had the adjustment of the
Warrant Price been made in accordance with the issuance or sale of the number of
Additional Shares of Common Stock actually issued upon conversion, exchange or
issuance of such Common Stock Equivalent and thereupon only the number of
Additional Shares of Common Stock actually so issued shall be deemed to have
been issued and only the consideration actually received by the Issuer (computed
as in clause (i) of this subsection (g)) shall be deemed to have been received
by the Issuer.
 
(iii)  Outstanding Common Stock.    The number of shares of Common Stock at any
time outstanding shall (A) not include any shares thereof then directly or
indirectly owned or held by or for the account of the Issuer or any of its
Subsidiaries, and (B) be deemed to include all shares of Common Stock then
issuable upon conversion, exercise or exchange of any then outstanding Common
Stock Equivalents or any other evidences of indebtedness, shares of Capital
Stock or other Securities which are or may be at any time convertible into or
exchangeable for shares of Common Stock or Other Common Stock.
 
(h)  Other Action Affecting Common Stock.    In case after the Original Issue
Date the Issuer shall take any action affecting its Common Stock, other than an
action described

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in any of the foregoing subsections (a) through (g) of this Section 4,
inclusive, and the failure to make any adjustment would not fairly protect the
purchase rights represented by this Warrant in accordance with the essential
intent and principle of this Section 4, then the Warrant Price shall be adjusted
in such manner and at such time as the Board may in good faith determine to be
equitable in the circumstances.
 
(i)  Adjustment of Warrant Share Number.    Upon each adjustment in the Warrant
Price pursuant to any of the foregoing provisions of this Section 4, the Warrant
Share Number shall be adjusted, to the nearest one hundredth of a whole share,
to the product obtained by multiplying the Warrant Share Number immediately
prior to such adjustment in the Warrant Price by a fraction, the numerator of
which shall be the Warrant Price immediately before giving effect to such
adjustment and the denominator of which shall be the Warrant Price immediately
after giving effect to such adjustment. If the Issuer shall be in default under
any provision contained in Section 3 of this Warrant so that shares issued at
the Warrant Price adjusted in accordance with this Section 4 would not be
validly issued, the adjustment of the Warrant Share Number provided for in the
foregoing sentence shall nonetheless be made and the Holder of this Warrant
shall be entitled to purchase such greater number of shares at the lowest price
at which such shares may then be validly issued under applicable law. Such
exercise shall not constitute a waiver of any claim arising against the Issuer
by reason of its default under Section 3 of this Warrant.
 
(j)  Form of Warrant after Adjustments.    The form of this Warrant need not be
changed because of any adjustments in the Warrant Price or the number and kind
of Securities purchasable upon the exercise of this Warrant.
 
5.  Notice of Adjustments.    Whenever the Warrant Price or Warrant Share Number
shall be adjusted pursuant to Section 4 hereof (for purposes of this Section 5,
each an “adjustment”), the Issuer shall cause its Chief Financial Officer to
prepare and execute a certificate setting forth, in reasonable detail, the event
requiring the adjustment, the amount of the adjustment, the method by which such
adjustment was calculated (including a description of the basis on which the
Board made any determination hereunder), the calculations made in connection
therewith and the Warrant Price and Warrant Share Number after giving effect to
such adjustment, and shall cause copies of such certificate to be delivered to
the Holder of this Warrant promptly after each adjustment. Any dispute between
the Issuer and the Holder of this Warrant with respect to the matters set forth
in such certificate may at the option of the Holder of this Warrant be submitted
to one of the national or regional accounting firms selected by the Holder,
provided that the Issuer shall have ten days after receipt of notice from such
Holder of its selection of such firm to object thereto, in which case such
Holder shall select another such firm and the Issuer shall have no such right of
objection. The firm selected by the Holder of this Warrant as provided in the
preceding sentence shall be instructed to deliver a written opinion as to such
matters to the Issuer and such Holder within thirty days after submission to it
of such dispute. Such opinion shall be final and binding on the parties hereto.
The fees and expenses of such accounting firm shall be paid by the Issuer.
 
6.  Fractional Shares.    No fractional shares of Warrant Stock will be issued
in connection with and exercise hereof, but in lieu of such fractional shares,
the Issuer shall make a

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cash payment therefor equal in amount to the product of the applicable fraction
multiplied by the Per Share Market Value then in effect.
 
7.  Definitions.    For the purposes of this Warrant, the following terms have
the following meanings:
 
“Additional Shares of Common Stock” means all shares of Common Stock issued by
the Issuer after the Original Issue Date, and all shares of Other Common Stock,
if any, issued by the Issuer after the Original Issue Date, except the Warrant
Stock, Common Stock reserved for issuance upon exercise of existing stock
options issued under any employee incentive stock option, and Common Stock
issued upon exercise of options and warrants authorized by the Board prior to
the Closing Date.
 
“Board” shall mean the Board of Directors of the Issuer.
 
“Capital Stock” means and includes (i) any and all shares, interests,
participations or other equivalents of or interests in (however designated)
corporate stock, including, without limitation, shares of preferred or
preference stock, (ii) all partnership interests (whether general or limited) in
any Person which is a partnership, (iii) all membership interests or limited
liability company interests in any limited liability company, and (iv) all
equity or ownership interests in any Person of any other type.
 
“Restated Certificate of Incorporation” means the Restated Certificate of
Incorporation of the Issuer as in effect on the Original Issue Date, and as
hereafter from time to time amended, modified, supplemented or restated in
accordance with the terms hereof and thereof and pursuant to applicable law.
 
“Common Stock” means the Common Stock, $.01 par value, of the Issuer and any
other Capital Stock into which such stock may hereafter be changed.
 
“Common Stock Equivalent” means any Convertible Security or warrant, option or
other right to subscribe for or purchase any Additional Shares of Common Stock
or any Convertible Security.
 
“Convertible Securities” means evidences of indebtedness, shares of Capital
Stock or other Securities which are or may be at any time convertible into or
exchangeable for Additional Shares of Common Stock. The term “Convertible
Security” means one of the Convertible Securities.
 
“Governmental Authority” means any governmental, regulatory or self-regulatory
entity, department, body, official, authority, commission, board, agency or
instrumentality, whether Federal, state or local, and whether domestic or
foreign.
 
“Holder” mean the Person who shall from time to time own this Warrant.

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“Independent Appraiser” means a nationally recognized or major regional
investment banking firm or firm of independent certified public accountants of
recognized standing (which may not include the firm that regularly examines the
financial statements of the Issuer) that is regularly engaged in the business of
appraising the Capital Stock or assets of corporations or other entities as
going concerns, and which is not affiliated with either the Issuer or the Holder
of any Warrant.
 
“Issuer” means JLM Industries, Inc., a Delaware corporation, and its successors.
 
“Original Issue Date” means August 26, 2002.
 
“Other Common Stock” means any other Capital Stock of the Issuer of any class
which shall be authorized at any time after the date of this Warrant (other than
Common Stock) and which shall have the right to participate in the distribution
of earnings and assets of the Issuer without limitation as to amount.
 
“OTC Bulletin Board” means the over-the-counter electronic bulletin board.
 
“Person” means an individual, corporation, limited liability company,
partnership, joint stock company, trust, unincorporated organization, joint
venture, Governmental Authority or other entity of whatever nature.
 
“Per Share Market Value” means on any particular date (a) the last sales price
per share of the Common Stock on such date the Nasdaq National Market or other
registered national stock exchange on which the Common Stock is then listed or
if there is no such price on such date, then the closing bid price on such
exchange or quotation system on the date nearest proceeding such date, or (b) if
the Common Stock is not listed then on The Nasdaq National Market or any
registered national stock exchange, the closing bid price for a share of Common
Stock in the over-the-counter market, as reported by the OTC Bulletin Board or
in the National Quotation Bureau Incorporated (or similar organization or agency
succeeding to its functions of reporting prices) at the close of business on
such date, or (c) if the Common Stock is not then reported by the OTC Bulletin
Board or the National Quotation Bureau Incorporated (or similar organization or
agency succeeding to its functions of reporting prices), then the average of the
“Pink Sheet” quotes for the relevant conversion period, as determined in good
faith by the holder, or (d) if the Common Stock is not then publicly traded, the
fair market value of a share of Common Stock as determined by an Independent
Appraiser selected in good faith by the Holder; provided, however, that the
Issuer, after receipt of the determination by such Independent Appraiser, shall
have the right to select an additional Independent Appraiser, in which case, the
fair market value shall be equal to the average of the determinations by each
such Independent Appraiser; and provided, further that all determinations of the
Per Share Market Value shall be appropriately adjusted for any stock dividends,
stock splits or other similar transactions during such period. The Issuer shall
pay all costs and expenses of each Independent Appraiser. The determination of
fair market value by an Independent Appraiser shall be based upon the fair
market value of the Issuer determined on a going concern basis as between a
willing buyer and a willing seller and taking into account all relevant factors
determinative of value, and shall be final and binding on all parties. In
determining the fair market value of any shares of Common

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Stock, no consideration shall be given to any restrictions on transfer of the
Common Stock imposed by agreement or by Federal or state securities laws, or to
the existence or absence of, or any limitations on, voting rights.
 
“Registration Rights Agreement” has the meaning specified in Section 3(e)
hereof.
 
“Securities” means any debt or equity securities of the Issuer, whether now or
hereafter authorized, any instrument convertible into or exchangeable for
Securities or a Security, and any option, warrant or other right to purchase or
acquire any Security.
 
“Securities Act” means the Securities Act of 1933, as amended, or any similar
federal statute then in effect.
 
“Security” means one of the Securities.
 
“Subsidiary” means any corporation a majority of whose outstanding Voting Stock
shall at the time be owned directly or indirectly by the Issuer or by one or
more of its Subsidiaries, or by the Issuer and one or more of its Subsidiaries.
 
“Trading Day” means (a) a day on which the Common Stock is traded on The Nasdaq
National Market as reported by Bloomberg L.P., or (b) if the Common Stock is not
listed on The Nasdaq National Market, a day on which the Common Stock is traded
on any other registered national stock exchange, or (c) if the Common Stock is
not quoted on the OTC Bulletin Board, a day on which the Common Stock is quoted
in the over-the-counter market as reported by the National Quotation Bureau
Incorporated (or any similar organization or agency succeeding its functions of
reporting prices); provided, however, that in the event that the Common Stock is
not listed or quoted as set forth in (a), (b) and (c) hereof, then Trading Day
shall mean any day except Saturday, Sunday and any day which shall be a legal
holiday or a day on which banking institutions in the State of New York are
authorized or required by law or other government action to close.
 
“Term” has the meaning specified in Section 1 hereof.
 
“Warrant Value” shall be equal to (A) the aggregate Per Share Market Value of
the Warrant Stock issuable upon exercise of this Warrant (or the specified
portion hereof) on the date of exercise, less (B) the aggregate Exercise Price
of the Warrant Stock immediately prior to the exercise of the Warrant.
 
“Voting Stock”, as applied to the Capital Stock of any corporation, means
Capital Stock of any class or classes (however designated) having ordinary
voting power for the election of a majority of the members of the Board of
Directors (or other governing body) of such corporation, other than Capital
Stock having such power only by reason of the happening of a contingency.

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“Warrant Price” means $1.20 per share, provided, however, that if the
Registration Statement (as defined in the Registration Rights Agreement) is not
declared effective within one hundred twenty (180) days after the Filing Date,
the Warrant Price shall be reduced by 1.5% and by an additional 1.5% for each
thirty day period thereafter until the Registration Statement has been declared
effective, which shall be pro rated for such periods less than thirty (30) days.
 
“Warrant Share Number” means at any time the aggregate number of shares of
Warrant Stock which may at such time be purchased upon exercise of this Warrant,
after giving effect to all prior adjustments and increases to such number made
or required to be made under the terms hereof.
 
“Warrant Stock” means Common Stock issuable upon exercise of this Warrant.
 
8.  Other Notices.    In case at any time:
 
(A)  the Issuer shall make any distributions to the holders of Common Stock; or
 
(B)  the Issuer shall authorize the granting to all holders of its Common Stock
of rights to subscribe for or purchase any shares of Capital Stock of any class
or of any Common Stock Equivalents or Convertible Securities or other rights; or
 
(C)  there shall be any reclassification of the Capital Stock of the Issuer; or
 
(D)  there shall be any capital reorganization by the Issuer; or
 
(E)  there shall be any (i) consolidation or merger involving the Issuer or (ii)
sale, transfer or other disposition of all or substantially all of the Issuer’s
property, assets or business (except a merger or other reorganization in which
the Issuer shall be the surviving corporation and its shares of Capital Stock
shall continue to be outstanding and unchanged and except a consolidation,
merger, sale, transfer or other disposition involving a wholly-owned
Subsidiary); or
 
(F)  there shall be a voluntary or involuntary dissolution, liquidation or
winding-up of the Issuer or any partial liquidation of the Issuer or
distribution to holders of Common Stock;
 
then, in each of such cases, the Issuer shall give written notice to the Holder
of the date on which (i) the books of the Issuer shall close or a record shall
be taken for such dividend, distribution or subscription rights or (ii) such
reorganization, reclassification, consolidation, merger, disposition,
dissolution, liquidation or winding-up, as the case may be, shall take place.
Such notice also shall specify the date as of which the holders of Common Stock
of record shall participate in such dividend, distribution or subscription
rights, or shall be entitled to exchange their certificates for Common Stock for
securities or other property deliverable upon such

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reorganization, reclassification, consolidation, merger, disposition,
dissolution, liquidation or winding-up, as the case may be. Such notice shall be
given at least twenty days prior to the action in question and not less than
twenty days prior to the record date or the date on which the Issuer’s transfer
books are closed in respect thereto. The Issuer shall give to the Holder notice
of all meetings and actions by written consent of its stockholders, at the same
time in the same manner as notice of any meetings of stockholders is required to
be given to stockholders who do not waive such notice (or, if such requires no
notice, then two Trading Days written notice thereof describing the matters upon
which action is to be taken). The Holder shall have the right to send two
representatives selected by it to each meeting, who shall be permitted to
attend, but not vote at, such meeting and any adjournments thereof. This Warrant
entitles the Holder to receive copies of all financial and other information
distributed or required to be distributed to the holders of the Common Stock.
 
9.  Amendment and Waiver.    No term, covenant, agreement or condition in this
Warrant may be amended, or compliance therewith waived (either generally or in a
particular instance and either retroactively or prospectively), without a
written instrument or written instruments executed by the Issuer and the Holder.
 
10.  Governing Law.    THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO
PRINCIPLES OF CONFLICTS OF LAW.
 
11.  Notices.    Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earlier of (i) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile
telephone number specified for notice prior to 5:00 p.m., New York City time, on
a business day, (ii) the business day after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile telephone
number specified for notice later than 5:00 p.m., New York City time, on any
date and earlier than 11:59 p.m., New York City time, on such date, (iii) the
business day following the date of mailing, if sent by nationally recognized
overnight courier service or (iv) actual receipt by the party to whom such
notice is required to be given. The addresses for such communications shall be
with respect to the Holder of this Warrant or of Warrant Stock issued pursuant
hereto, addressed to such Holder at its last known address or facsimile number
appearing on the books of the Issuer maintained for such purposes, or with
respect to the Issuer, addressed to:
 
JLM Industries, Inc.
8675 Hidden River Parkway
Tampa, FL 33637
Attn: Chief Financial Officer
Tel.: (813) 632-3300
Fax: (813) 632-3301
 
or to such other address or addresses or facsimile number or numbers as any such
party may most recently have designated in writing to the other parties hereto
by such notice. Copies of notices to the Holder shall be sent to:

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Brown Raysman Millstein Felder & Steiner LLP
900 Third Avenue
New York, New York 10022
Attn.: David M. Warburg, Esq.
Tel.: (212) 895-2240
Fax: (212) 895-2900
 
12.  Warrant Agent.    The Issuer shall, by written notice to each Holder of
this Warrant, appoint an agent having an office in New York, New York for the
purpose of issuing shares of Warrant Stock on the exercise of this Warrant
pursuant to subsection (b) of Section 2 hereof, exchanging this Warrant pursuant
to subsection (d) of Section 2 hereof or replacing this Warrant pursuant to
subsection (d) of Section 3 hereof, or any of the foregoing, and thereafter any
such issuance, exchange or replacement, as the case may be, shall be made at
such office by such agent.
 
13.  Remedies.    The Issuer stipulates that the remedies at law of the Holder
of this Warrant in the event of any default or threatened default by the Issuer
in the performance of or compliance with any of the terms of this Warrant are
not and will not be adequate and that, to the fullest extent permitted by law,
such terms may be specifically enforced by a decree for the specific performance
of any agreement contained herein or by an injunction against a violation of any
of the terms hereof or otherwise.
 
14.  Successors and Assigns.    This Warrant and the rights evidenced hereby
shall inure to the benefit of and be binding upon the successors and assigns of
the Issuer, the Holder hereof and (to the extent provided herein) the holders of
Warrant Stock issued pursuant hereto, and shall be enforceable by any such
Holder hereof or holder of Warrant Stock.
 
15.  Modification and Severability.    If, in any action before any court or
agency legally empowered to enforce any provision contained herein, any
provision hereof is found to be unenforceable, then such provision shall be
deemed modified to the extent necessary to make it enforceable by such court or
agency. If any such provision is not enforceable as set forth in the preceding
sentence, the unenforceability of such provision shall not affect the other
provisions of this Warrant, but this Warrant shall be construed as if such
unenforceable provision had never been contained herein.
 
16.  Headings.    The headings of the Sections of this Warrant are for
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant.
 
IN WITNESS WHEREOF, the Issuer has executed this Warrant as of the day and year
first above written.
 
JLM INDUSTRIES, INC.
By:
 
/s/    MICHAEL MOLINA

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Michael Molina
Chief Financial Officer

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EXERCISE FORM
 
JLM INDUSTRIES, INC.
 
The undersigned             , pursuant to the provisions of the within Warrant,
hereby elects to purchase              shares of Common Stock of             
covered by the within Warrant.
 
Signature:
 
 

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Address:
 
 

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Dated:
 
ASSIGNMENT
 
FOR VALUE RECEIVED,            hereby sells, assigns and transfers
unto            the within Warrant and all rights evidenced thereby and does
irrevocably constitute and appoint            , attorney, to transfer the said
Warrant on the books of the within named corporation.
 
Signature:
 
 

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Address:
 
 

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Dated:
 
PARTIAL ASSIGNMENT
 
FOR VALUE RECEIVED,            hereby sells, assigns and transfers
unto            the right to purchase        shares of Warrant Stock evidenced
by the within Warrant together with all rights therein, and does irrevocably
constitute and appoint                , attorney, to transfer that part of the
said Warrant on the books of the within named corporation.
 
Signature:
 
 

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Address:
 
 

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Dated:

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FOR USE BY THE ISSUER ONLY:
 
This Warrant No. W-    cancelled (or transferred or exchanged) this    day
of                ,            , shares of Common Stock issued therefor in the
name of                                , Warrant No. W-    issued
for            shares of Common Stock in the name
of                                .