Document:

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                                                                   Exhibit 4.3

               AMENDMENT NO. 2 TO LOAN AND WARRANT AGREEMENT AND
                         REGISTRATION RIGHTS AGREEMENT

         This AMENDMENT NO. 2 TO LOAN AND WARRANT AGREEMENT AND REGISTRATION
RIGHTS AGREEMENT (this "Amendment") is made and entered into as of December
14, 2006, by and among Zoltek Companies, Inc., a Missouri corporation
("Zoltek"), and the lenders identified on the signature pages hereto (each, a
"Lender" and, collectively, the "Lenders").

                                   RECITALS
                                   --------

         1.       Zoltek and the Lenders are parties to a Loan and Warrant
                  Agreement, dated as of September 29, 2005, as amended by
                  that certain Amendment No. 1 to Loan and Warrant Agreement
                  and Registration Rights Agreement dated as of April 28, 2006
                  (as amended, the "September Purchase Agreement"), pursuant
                  to which Zoltek issued and sold to the Lenders an aggregate
                  of $60,000,000 of Notes and certain Warrants (each as
                  defined in the September Purchase Agreement). The Notes and
                  Warrants issued under the September Purchase Agreement are
                  referred to in this Amendment as the "September Notes" and
                  "September Warrants," respectively. Capitalized terms used
                  and not defined in this Amendment shall have the respective
                  meanings set forth in the September Purchase Agreement.

         2.       In connection with the September Purchase Agreement, Zoltek
                  and the Lenders entered into a Registration Rights
                  Agreement, dated as of September 29, 2005, as amended by
                  that certain Amendment No. 1 to Loan and Warrant Agreement
                  and Registration Rights Agreement dated as of April 28, 2006
                  (as amended, the "September Registration Rights Agreement"),
                  pursuant to which Zoltek undertook certain registration
                  obligations to the Lenders.

         3.       Zoltek and the Lenders now wish to further modify certain of
                  the terms of the September Purchase Agreement and the
                  September Registration Rights Agreement.

         NOW, THEREFORE, in consideration of the foregoing Recitals and other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Zoltek and each Lender, severally and not jointly, agree
as follows:

1. Exercise of September Warrants. Subject to the terms hereof, each Lender
   ------------------------------
         agrees to exercise 100% of the warrants issued to the Lender in
         September 2005, December 2005 and February 2006 for an aggregate
         of 827,789 shares of Common Stock (pertaining to September Warrants
         to acquire an aggregate of 827,789 shares of Common Stock) on the
         Business Day following the date of this Agreement ("Closing Date").

         1.1 In consideration for such exercise, Zoltek shall issue to each
         Lender a warrant in the form of Exhibit B attached hereto (the
                                         ---------
         "Additional Warrants"), registered in the name

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         of such Lender, pursuant to which such Lender shall have the right to
         acquire the number of shares of Common Stock indicated opposite such
         Lender's name on Schedule A hereto under the heading "Additional
                          ----------
         Warrants" at an Exercise Price of $28.06 per share.

2. Closing. Subject to the terms hereof and Section 7 and notwithstanding any
   -------
         provision of the September Purchase Agreement to the contrary, each
         Lender and Zoltek agree that the closing of the issuance of the
         Additional Warrants (the "Closing") shall occur on the Closing Date.

         2.1.     In connection with the Closing, Zoltek shall issue to each
                  Lender a warrant in the form of Exhibit B hereto, registered
                                                  ---------
                  in the name of such Lender pursuant to which such Lender
                  shall have the right to acquire the number of shares of
                  Common Stock indicated opposite such Lender's name on
                  Schedule A hereto under the heading "Additional Warrants."
                  ----------

         2.2.     The Additional Warrants will not be exercisable into shares
                  of Common Stock until the Company has obtained Nasdaq
                  Approval. For the purposes of this Amendment, the term
                  "Nasdaq Approval" shall mean the date in which the Company
                  receives approval from Nasdaq to issue all of the Additional
                  Warrants and the underlying shares of Common Stock
                  contemplated by this Amendment. Zoltek shall use its best
                  efforts to obtain the Nasdaq Approval as promptly as
                  possible. To the extent Nasdaq requires Zoltek to obtain the
                  consent of its shareholders, Zoltek hereby agrees that the
                  provisions of Section 11(iii) of the September Warrants
                  shall apply and are hereby incorporated into this Amendment.

3. Registration. Zoltek will use commercially reasonable efforts to prepare and
   ------------
         file a registration statement to cover all shares of Common Stock
         issuable under the Additional Warrants and the Registrable Securities
         issued to the Lenders in July 2006 and October 2006 pursuant to the
         September Loan Agreement (the "Additional Registration Statement").
         Such Additional Registration Statement shall constitute a
         "Registration Statement" under the September Registration Rights
         Agreement, and shall be subject to all the rights and obligations of
         and upon each of Zoltek and the "Lenders" thereunder. With respect to
         the Additional Registration Statement, as contemplated by Section
         2(b) of the September Registration Rights Agreement, the Filing Date
         shall be the 20th calendar day following the Closing Date. The
         calculation of the Effectiveness Date with respect to the Additional
         Registration Statement contemplated by Section 2(b) of the September
         Registration Rights Agreement shall be the earlier of: (i) the 90th
         day following the Closing Date; provided, however, that, if the
                                         --------  -------
         Commission reviews and has written comments to the filed Registration
         Statement that would require the filing of a pre-effective amendment
         thereto with the Commission, then the Effectiveness Date under this
         clause (i) shall be the 120th day following the date hereof and (ii)
         the fifth Trading Day following the date on which Zoltek is notified
         by the Commission that the initial Registration Statement will not be
         reviewed or is no longer subject to further review and comments.
         Notwithstanding any provision of Section 2(c) of the September
         Registration

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         Rights Agreement to the contrary, in the event Zoltek breaches any of
         its obligations with respect to the Additional Registration Statement
         under this Section 3 or the September Registration Rights Agreement,
         Zoltek shall issue to the Lenders an amount of unregistered Common
         Stock equal to 35% of the total number of shares of Common Stock into
         which the New Warrants and the convertible notes and warrants
         originally issued to the Lenders in July 2006 and October 2006
         pursuant to the September Loan Agreement would be convertible or
         exercisable, as the case may be.

4. Certain Waivers.
   ---------------

         4.1.     In consideration of the transactions contemplated herein,
                  with respect to the inability of the Company to maintain the
                  availability of the Registration Statement on Form S-1 (the
                  "Resale Registration Statement") filed by the Company and
                  declared effective by the SEC with respect to registration
                  of the resale of Registrable Securities issued to the
                  Lenders in September 2005, December 2005, February 2006 and
                  May 2006 pursuant to the September Loan Agreement, and
                  Registrable Securities issued to the Lender pursuant to the
                  2003 Securities Purchase Agreement, the 2004 Securities
                  Purchase Agreement, the 2004 Loan Agreement and the 2005
                  Loan Agreement (the "Prior Transactions"), (i) the Lenders
                  hereby agree to waive and release Zoltek from any Event and
                  any liquidated or other damages to which the Lenders may be
                  entitled under the September Registration Rights Agreement
                  and the Prior Registration Rights Agreements or otherwise,
                  and (ii) the Lenders hereby waive any Event of Default
                  arising or continuing under all notes, debentures and
                  warrants issued pursuant to the September Purchase Agreement
                  and the Prior Transactions. For the purposes of this Section
                  4, the term "Prior Registration Rights Agreements" shall
                  mean each of the registration rights agreements among Zoltek
                  and the Lenders executed in connection with the Prior
                  Transactions. Notwithstanding the foregoing, in the event
                  that the foregoing Resale Registration Statement has not
                  been made available for use by the Lenders on or prior to
                  December 31, 2006, this waiver shall be null and void and
                  shall not be deemed to extend to any such failure and all
                  provisions of the September Registration Rights Agreement
                  and the Prior Registration Rights Agreements applicable with
                  respect to failure to maintain the availability of the
                  Resale Registration Statement for use by the Lenders shall
                  be reinstated.

         4.2.     In consideration of the transactions contemplated herein,
                  with respect to the fact that the Company did not file a
                  Registration Statement or have a Registration Statement
                  declared effective with respect to registration of the
                  resale of Registrable Securities issued to the Lenders
                  pursuant to the September Loan Agreement (i) the Lenders
                  hereby waive and release Zoltek from any Event and any
                  liquidated or other damages to which the Lenders may be
                  entitled under the September Registration Rights Agreement
                  or otherwise, and (ii) the Lenders hereby waive any Event of
                  Default arising or continuing under all notes, debentures
                  and warrants issued pursuant to the September Purchase
                  Agreement and the Prior Transactions. Notwithstanding the
                  foregoing, in the event that

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                  Zoltek has not satisfied its obligations with respect to the
                  Additional Registration Statement under Section 3 above,
                  this waiver shall be null and void and shall not be deemed
                  to extend to any such failure and all provisions to maintain
                  the availability of the Resale Registration Statement for
                  use by the Lenders shall be reinstated.

         4.3.     In consideration of the transactions contemplated herein,
                  with respect to the delay by the Company in filing with the
                  SEC proxy materials calling a meeting of its shareholders
                  seeking approval of the Shareholder Proposal prior to the
                  Proxy Filing Date or obtain shareholder approval of the
                  Shareholder Proposal by the Shareholder Approval Date as
                  provided in Section 5(b)(iii) of the September Notes, the
                  Lenders hereby waive any Event of Default arising or
                  continuing under all notes, debentures and warrants issued
                  pursuant to the September Purchase Agreement and the Prior
                  Transactions. Notwithstanding the foregoing, in the event
                  that proxy materials calling a meeting of its shareholders
                  seeking approval of the Shareholder Proposal are not filed
                  prior to January 15, 2007, this waiver shall be null and
                  void and shall not be deemed to extend to any such failure
                  and all provisions of the September Purchase Agreement shall
                  be reinstated.

         4.4.     In consideration of the transactions contemplated herein,
                  the Lenders hereby amend the provisions of Section 4.16 and
                  any other provision of the September Purchase Agreement
                  which would prohibit or restrict the ability of Zoltek to
                  utilize the net proceeds from the sale of the securities
                  under the September Purchase Agreement to satisfy a
                  judgement, settle or post a bond with respect to the action
                  filed in the United States District Court for the Eastern
                  District of Missouri by SP Systems Inc. against a subsidiary
                  of Zoltek in an amount not to exceed $36,000,000.

5. Continued Validity of Transaction Documents under Purchase Agreements. The
   ---------------------------------------------------------------------
         parties hereto agree that the September Purchase Agreement, the
         September Registration Rights Agreement and the Transaction Documents
         entered into in connection therewith (as amended by this Amendment),
         remain in full force and effect, modified to the extent and only to
         the extent necessary to give effect to this Amendment and the
         transactions herein contemplated.

6. Miscellaneous.
   -------------

         6.1.     Fees and Expenses. Zoltek has agreed to reimburse Rockmore
                  -----------------
                  Investment Master Fund, Ltd ("Rockmore") $15,000 for its
                  legal fees and expenses in connection with this Amendment.
                  Accordingly, the amount Rockmore must pay to Zoltek upon
                  exercise of the warrants under Section 1 shall be reduced by
                  $15,000. Except for the foregoing, each party hereto will
                  bear the fees and expenses of its own counsel and advisors
                  in connection with the negotiation and entering into of this
                  Amendment. Zoltek shall pay all transfer agent fees, stamp
                  taxes and other taxes and duties levied in connection with
                  the issuance of any Securities.

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<PAGE>

         6.2.     Entire Agreement. This Amendment and the Transaction
                  ----------------
                  Documents, together with the exhibits and schedules thereto,
                  contain the entire understanding of the parties with respect
                  to the subject matter hereof and supersede all prior
                  agreements and understandings, oral or written, with respect
                  to such matters, which the parties acknowledge have been
                  merged into such documents, exhibits and schedules.

         6.3.     Equal Treatment of Lenders. No consideration shall be
                  --------------------------
                  offered or paid to any person to amend or consent to a
                  waiver or modification of any provision of any of the
                  Transaction Documents unless the same consideration is also
                  offered to all of the parties to the Transaction Documents.
                  For clarification purposes, this provision constitutes a
                  separate right granted to each Lender by Zoltek and
                  negotiated separately by each Lender, and is intended to
                  treat for Zoltek and the Lenders as a class and shall not in
                  any way be construed as the Lenders acting in concert or as
                  a group with respect to the purchase, disposition or voting
                  of Securities or otherwise.

         6.4.     Public Announcement. Zoltek shall, by 5:00 p.m. Eastern time
                  -------------------
                  on December 15, 2006, issue a press release disclosing the
                  material terms of the transactions contemplated hereby and
                  by 4:30 p.m. Eastern time on the second Business Day
                  following the date hereof, file a Current Report on Form
                  8-K, attaching such press release and the relevant
                  Transaction Documents thereto, each reasonably acceptable to
                  each Lender. Zoltek and each Lender shall consult with each
                  other in issuing any other press releases with respect to
                  the transactions contemplated hereby, and neither Zoltek nor
                  any Lender shall issue any such press release or otherwise
                  make any such public statement without the prior consent of
                  Zoltek, with respect to any press release of any Lender, or
                  without the prior consent of each Lender, with respect to
                  any press release of Zoltek, which consent shall not
                  unreasonably be withheld, except if such disclosure is
                  required by law, in which case the disclosing party shall
                  promptly provide the other party with prior notice of such
                  public statement or communication. Notwithstanding the
                  foregoing, Zoltek shall not publicly disclose the name of
                  any Lender, or include the name of any Lender in any filing
                  with the Commission or any regulatory agency or Trading
                  Market, without the prior written consent of such Lender,
                  except (i) as required by federal securities law in
                  connection with the registration statement contemplated by
                  the Registration Rights Agreement and (ii) to the extent
                  such disclosure is required by law or Trading Market
                  regulations, in which case Zoltek shall provide the Lenders
                  with prior notice of such disclosure permitted under
                  subclause (i) or (ii).

         6.5.     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
                  as specified in the September Purchase Agreement. The
                  address for such notices and communications shall be as set
                  forth on the signature pages attached to the September
                  Purchase Agreement.

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         6.6.     Amendments; Waivers. No provision of this Amendment may be
                  -------------------
                  waived or amended except in a written instrument signed, in
                  the case of an amendment, by Zoltek and each Lender or, in
                  the case of a waiver, by the party against whom enforcement
                  of any such waiver is sought. No waiver of any default with
                  respect to any provision, condition or requirement of this
                  Amendment shall be deemed to be a continuing waiver in the
                  future or a waiver of any subsequent default or a waiver of
                  any other provision, condition or requirement hereof, nor
                  shall any delay or omission of either party to exercise any
                  right hereunder in any manner impair the exercise of any
                  such right.

         6.7.     Amendment Controls. If any topic is addressed in the
                  ------------------
                  September Purchase Agreement and the September Registration
                  Rights Agreement (or any document related thereto), on the
                  one hand, and in this Amendment, on the other hand, this
                  Amendment shall control.

         6.8.     Construction. The headings herein are for convenience only,
                  ------------
                  do not constitute a part of this Amendment and shall not be
                  deemed to limit or affect any of the provisions hereof. The
                  language used in this Amendment will be deemed to be the
                  language chosen by the parties to express their mutual
                  intent, and no rules of strict construction will be applied
                  against any party.

         6.9.     Governing Law. All questions concerning the construction,
                  -------------
                  validity, enforcement and interpretation of this Amendment
                  shall be governed by and construed and enforced in
                  accordance with the internal laws of the State of New York,
                  without regard to the principles of conflicts of law
                  thereof. The parties agree that Section 8.8 of the September
                  Purchase Agreement shall apply to this Amendment as if set
                  forth in its entirety herein.

         6.10.    Survival. The representations and warranties contained
                  --------
                  herein shall survive the delivery, exercise and/or
                  conversion of the Securities, as applicable for the
                  applicable statue of limitations.

         6.11.    Execution. This Amendment may be executed in two or more
                  ---------
                  counterparts, all of which when taken together shall be
                  considered one and the same document and shall become
                  effective when counterparts have been signed by each party
                  and delivered to the other party, it being understood that
                  both parties need not sign the same counterpart.

         6.12.    Severability. If any provision of this Amendment is held to
                  ------------
                  be invalid or unenforceable in any respect, the validity and
                  enforceability of the remaining terms and provisions of this
                  Amendment shall not in any way be affected or impaired
                  thereby and the parties will attempt to agree upon a valid
                  and enforceable provision that is a reasonable substitute
                  therefor, and upon so agreeing, shall incorporate such
                  substitute provision in this Amendment.

         6.13.    Independent Nature of Lenders' Obligations and Rights. The
                  -----------------------------------------------------
                  obligations of each Lender hereunder are several and not
                  joint with the obligations of any other

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                  Lender, and no Lender shall be responsible in any way for
                  the performance of the obligations of any other Lender.
                  Nothing contained herein, and no action taken by any Lender
                  pursuant hereto, shall be deemed to constitute the Lenders
                  as a partnership, an association, a joint venture or any
                  other kind of entity, or create a presumption that the
                  Lenders are in any way acting in concert or as a group with
                  respect to such obligations or the transactions contemplated
                  hereby. Each Lender shall be entitled to independently
                  protect and enforce its rights, including, without
                  limitation, the rights arising out of this Amendment and it
                  shall not be necessary for any other Lender to be joined as
                  an additional party in any proceeding for such purpose. The
                  Lenders have not relied upon the same legal counsel in their
                  review and negotiation of this Amendment. Zoltek has elected
                  to provide all Lenders with the same terms and form of
                  Amendment for the convenience of Zoltek and not because it
                  was required or requested to do so by the Lenders. Each
                  Lender represents that it has been represented by its own
                  separate legal counsel in its review and negotiations of
                  this Amendment and each party represents and confirms that
                  Malhotra & Associates LLP represents only Rockmore in
                  connection with this Amendment.

                           (Signature Pages Follow)

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         IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed by their respective authorized signatories as of the date
first indicated above.

ZOLTEK COMPANIES, INC.

By: /s/ Kevin Schott
   ---------------------------------------------
   Name:  Kevin Schott
   Title: Chief Financial Officer

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                    SIGNATURE PAGE FOR PURCHASERS FOLLOWS]

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         IN WITNESS WHEREOF, the undersigned have caused this Amendment to be
duly executed by their respective authorized signatories as of the date first
indicated above.

Name of Investing Entity: ______Omicron Master Trust
Signature of Authorized Signatory of Investing Entity: _________________________
Name of Authorized Signatory: __________________________________________________
Title of Authorized Signatory: _________________________________________________
Email Address of Authorized Entity:_____________________________________________

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SCHEDULE A
----------

                      ---------------------------------------
                                                ADDITIONAL
                                                 WARRANTS
                      ---------------------------------------
                            Rockmore
                           Investment
                        Master Fund, Ltd         144,219
                      ---------------------------------------
                        Omicron Master
                            Trust                311,065
                      ---------------------------------------
                          Smithfield
                         Fiduciary LLC           124,168
                      ---------------------------------------
                        Iroquois Capital,
                              L.P.                82,779
                      ---------------------------------------
                       Cranshire Capital,
                              L.P.                82,779
                      ---------------------------------------
                           Midsummer
                        Investment Ltd.           82,779
                      ---------------------------------------
                              Total              827,789
                      ---------------------------------------<PAGE>

                                                                   Exhibit 4.4

                                                             Execution Version

                                   EXHIBIT B
                                   ---------

NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THESE SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE
SECURITIES MAY BE PLEDGED IN A MANNER CONSISTENT WITH THE SECURITIES ACT IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT SECURED BY SUCH SECURITIES.

                            ZOLTEK COMPANIES, INC.

                                    WARRANT

Warrant No. [  ]                 Date of Original Issuance: December __, 2006

         Zoltek Companies, Inc., a Missouri corporation (the "COMPANY"),
hereby certifies that, for value received, [ ] or its registered assigns (the
"HOLDER"), is entitled to purchase from the Company up to a total of [ ]
shares of common stock, par value $0.01 per share (the "COMMON STOCK"), of the
Company (each such share, a "WARRANT SHARE" and all such shares, the "WARRANT
SHARES") at an exercise price equal to $28.06 per share (as adjusted from time
to time as provided in Section 9, the "EXERCISE PRICE"), at any time and from
time to time from and after the date hereof and through and including December
____, 2012 (the "EXPIRATION DATE"), and subject to the following terms and
conditions:

         1. Definitions. In addition to the terms defined elsewhere in this
            -----------
Warrant, capitalized terms that are not otherwise defined herein shall have
the meanings given to such terms in the Loan and Warrant Agreement, dated as
of September 29, 2005, as amended by Amendment No. 1, dated as of April 28,
2006, and Amendment No. 2, dated as of December 14, 2006, to which the Company
and the original Holder are parties (the "PURCHASE AGREEMENT").

         2. Registration of Warrant. The Company shall register this Warrant,
            -----------------------
upon records to be maintained by the Company for that purpose (the "WARRANT
REGISTER"), in the name of the

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record Holder hereof from time to time. The Company may deem and treat the
registered Holder of this Warrant as the absolute owner hereof for the purpose
of any exercise hereof or any distribution to the Holder, and for all other
purposes, absent actual notice to the contrary.

         3. Registration of Transfers. The Company shall register the transfer
            -------------------------
of any portion of this Warrant in the Warrant Register, upon surrender of this
Warrant, with the Form of Assignment attached hereto duly completed and
signed, to the Company at its address specified herein. Upon any such
registration or transfer, a new Warrant to purchase Common Stock, in
substantially the form of this Warrant (any such new Warrant, a "NEW
WARRANT"), evidencing the portion of this Warrant so transferred shall be
issued to the transferee and a New Warrant evidencing the remaining portion of
this Warrant not so transferred, if any, shall be issued to the transferring
Holder. The acceptance of the New Warrant by the transferee thereof shall be
deemed the acceptance by such transferee of all of the rights and obligations
of a holder of a Warrant.

         4. Exercise and Duration of Warrants.
            ---------------------------------

                  (a) This Warrant shall be exercisable by the registered
Holder at any time and from time to time on or after the date hereof to and
including the Expiration Date. At 6:30 p.m., New York City time on the
Expiration Date, the portion of this Warrant not exercised prior thereto shall
be and become void and of no value, provided, that if the closing sales price
                                    --------
of the Common Stock on the Expiration Date is greater than 102% of the
Exercise Price on the Expiration Date, then this Warrant shall be deemed to
have been exercised in full (to the extent not previously exercised) on a
"cashless exercise" basis at 6:30 P.M. New York City time on the Expiration
Date. The Company may not call or redeem all or any portion of this Warrant
without the prior written consent of the Holder.

                  (b) Notwithstanding anything to the contrary herein this
Warrant will not be exercisable until the Company has obtained Nasdaq
Approval. For the purposes of this Warrant, the term "Nasdaq Approval" shall
mean the date in which the Company receives approval from Nasdaq to issue all
of the Warrants and the underlying shares of Common Stock into which the
Warrants are exercisable.

                  (c) Notwithstanding anything to the contrary herein, at the
option of the Holder, the Expiration Date may be extended for the number of
Trading Days during any period occurring after the Effectiveness Date in which
(i) trading in the Common Stock is suspended by any Trading Market, (ii) the
Registration Statement is not effective, or (iii) the prospectus included in
the Registration Statement may not be used by the Holders for the resale of
Registrable Securities thereunder.

         5. Delivery of Warrant Shares.
            --------------------------

                  (a) To effect exercises hereunder, the Holder shall not be
required to physically surrender this Warrant unless the aggregate Warrant
Shares represented by this Warrant is being exercised. Upon delivery of the
Exercise Notice to the Company (with the attached Warrant Shares Exercise Log)
at its address for notice set forth herein and upon payment of the Exercise
Price multiplied by the number of Warrant Shares that the Holder

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<PAGE>

intends to purchase hereunder, the Company shall promptly (but in no event
later than three Trading Days after the Date of Exercise (as defined herein))
issue and deliver to the Holder, a certificate for the Warrant Shares issuable
upon such exercise, which, unless otherwise required by the Purchase
Agreement, shall be free of restrictive legends. The Company shall, upon
request of the Holder and subsequent to the date on which a registration
statement covering the resale of the Warrant Shares has been declared
effective by the Securities and Exchange Commission, use its best efforts to
deliver Warrant Shares hereunder electronically through The Depository Trust
Corporation or another established clearing corporation performing similar
functions, if available, provided, that, the Company may, but will not be
required to change its transfer agent if its current transfer agent cannot
deliver Warrant Shares electronically through the Depository Trust
Corporation. A "DATE OF EXERCISE" means the date on which the Holder shall
have delivered to Company: (i) the Exercise Notice (with the Warrant Exercise
Log attached to it), appropriately completed and duly signed and (ii) if such
Holder is not utilizing the cashless exercise provisions set forth in this
Warrant, payment of the Exercise Price for the number of Warrant Shares so
indicated by the Holder to be purchased.

                  (b) If by the third Trading Day after a Date of Exercise the
Company fails to deliver the required number of Warrant Shares in the manner
required pursuant to Section 5(a), then the Holder will have the right to
rescind such exercise.

                  (c) If by the third Trading Day after a Date of Exercise the
Company fails to deliver the required number of Warrant Shares in the manner
required pursuant to Section 5(a), and if after such third Trading Day and
prior to the receipt of such Warrant Shares, the Holder purchases (in an open
market transaction or otherwise) shares of Common Stock to deliver in
satisfaction of a sale by the Holder of the Warrant Shares which the Holder
anticipated receiving upon such exercise (a "BUY-IN"), then the Company shall
(1) pay in cash to the Holder the amount by which (x) the Holder's total
purchase price (including brokerage commissions, if any) for the shares of
Common Stock so purchased exceeds (y) the amount obtained by multiplying (A)
the number of Warrant Shares that the Company was required to deliver to the
Holder in connection with the exercise at issue by (B) the closing bid price
of the Common Stock at the time of the obligation giving rise to such purchase
obligation and (2) at the option of the Holder, either reinstate the portion
of the Warrant and equivalent number of Warrant Shares for which such exercise
was not honored or deliver to the Holder the number of shares of Common Stock
that would have been issued had the Company timely complied with its exercise
and delivery obligations hereunder. The Holder shall provide the Company
written notice indicating the amounts payable to the Holder in respect of the
Buy-In.

                  (d) The Company's obligations to issue and deliver Warrant
Shares in accordance with the terms hereof are absolute and unconditional,
irrespective of any action or inaction by the Holder to enforce the same, any
waiver or consent with respect to any provision hereof, the recovery of any
judgment against any Person or any action to enforce the same, or any setoff,
counterclaim, recoupment, limitation or termination, or any breach or alleged
breach by the Holder or any other Person of any obligation to the Company or
any violation or alleged violation of law by the Holder or any other Person,
and irrespective of any other circumstance which might otherwise limit such
obligation of the Company to the Holder in connection with the issuance of
Warrant Shares. Nothing herein shall limit a Holder's right to pursue any
other remedies available to it hereunder, at law or in equity including,
without limitation, a decree of specific performance and/or injunctive relief
with respect to the Company's failure to timely

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<PAGE>

deliver certificates representing shares of Common Stock upon exercise of the
Warrant as required pursuant to the terms hereof.

         6. Charges, Taxes and Expenses. Issuance and delivery of certificates
            ---------------------------
for shares of Common Stock upon exercise of this Warrant shall be made without
charge to the Holder for any issue or transfer tax, withholding tax, transfer
agent fee or other incidental tax or expense in respect of the issuance of
such certificates, all of which taxes and expenses shall be paid by the
Company; provided, however, that the Company shall not be required to pay any
tax which may be payable in respect of any transfer involved in the
registration of any certificates for Warrant Shares or Warrants in a name
other than that of the Holder. The Holder shall be responsible for all other
tax liability that may arise as a result of holding or transferring this
Warrant or receiving Warrant Shares upon exercise hereof.

         7. Replacement of Warrant. If this Warrant is mutilated, lost, stolen
            ----------------------
or destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation hereof, or in lieu of and substitution
for this Warrant, a New Warrant, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction and customary
and reasonable indemnity (which may include a surety bond for any Holder other
than the original Holder of the Warrant), if requested. Applicants for a New
Warrant under such circumstances shall also comply with such other reasonable
regulations and procedures and pay such other reasonable third-party costs as
the Company may prescribe. If a New Warrant is requested as a result of a
mutilation of this Warrant, then the Holder shall deliver such mutilated
Warrant to the Company as a condition precedent to the Company's obligation to
issue the New Warrant.

         8. Reservation of Warrant Shares. The Company covenants that it will
            -----------------------------
at all times reserve and keep available out of the aggregate of its authorized
but unissued and otherwise unreserved Common Stock, solely for the purpose of
enabling it to issue Warrant Shares upon exercise of this Warrant as herein
provided, the number of Warrant Shares which are then issuable and deliverable
upon the exercise of this entire Warrant, free from preemptive rights or any
other contingent purchase rights of persons other than the Holder (taking into
account the adjustments and restrictions of Section 9). The Company covenants
                                            ---------
that all Warrant Shares so issuable and deliverable shall, upon issuance and
the payment of the applicable Exercise Price in accordance with the terms
hereof, be duly and validly authorized, issued and fully paid and
nonassessable.

         9. Certain Adjustments. The Exercise Price and number of Warrant
            -------------------
Shares issuable upon exercise of this Warrant are subject to adjustment from
time to time as set forth in this Section 9.
                                  ---------

                  (a) Stock Dividends and Splits. If the Company, at any time
                      --------------------------
while this Warrant is outstanding, (i) pays a stock dividend on its Common
Stock or otherwise makes a distribution on any class of capital stock that is
payable in shares of Common Stock, (ii) subdivides outstanding shares of
Common Stock into a larger number of shares, or (iii) combines outstanding
shares of Common Stock into a smaller number of shares, then in each such case
the Exercise Price shall be multiplied by a fraction of which the numerator
shall be the number of shares of Common Stock outstanding immediately before
such event and of which the denominator shall be the number of shares of
Common Stock outstanding immediately after such

<PAGE>
<PAGE>

event. Any adjustment made pursuant to clause (i) of this paragraph shall
become effective immediately after the record date for the determination of
shareholders entitled to receive such dividend or distribution, and any
adjustment pursuant to clause (ii) or (iii) of this paragraph shall become
effective immediately after the effective date of such subdivision or
combination. If any event requiring an adjustment under this paragraph occurs
during the period that an Exercise Price is calculated hereunder, then the
calculation of such Exercise Price shall be adjusted appropriately to reflect
such event.

                  (b) Pro Rata Distributions. If the Company, at any time
                      ----------------------
while this Warrant is outstanding, distributes to all holders of Common Stock
(i) evidences of its indebtedness, (ii) any security (other than a
distribution of Common Stock covered by the preceding paragraph), (iii) rights
or warrants to subscribe for or purchase any security, or (iv) any other asset
(in each case, "DISTRIBUTED PROPERTY"), then, at the request of any Holder
delivered before the 90th day after the record date fixed for determination of
shareholders entitled to receive such distribution, the Company will deliver
to such Holder, within five Trading Days after such request (or, if later, on
the effective date of such distribution), the Distributed Property that such
Holder would have been entitled to receive in respect of the Warrant Shares
for which such Holder's Warrant could have been exercised immediately prior to
such record date. If such Distributed Property is not delivered to a Holder
pursuant to the preceding sentence, then upon any exercise of the Warrant that
occurs after such record date, such Holder shall be entitled to receive, in
addition to the Warrant Shares otherwise issuable upon such conversion, the
Distributed Property that such Holder would have been entitled to receive in
respect of such number of Warrant Shares had the Holder been the record holder
of such Warrant Shares immediately prior to such record date. Notwithstanding
the foregoing, this Section 9(b) shall not apply to any distribution of rights
or securities in respect of adoption by the Company of a shareholder rights
plan which events shall be covered by the anti-dilution provisions of Section
9(a).

                  (c) Fundamental Transactions. If, at any time while this
                      ------------------------
Warrant is outstanding, (1) the Company effects any merger or consolidation of
the Company with or into another Person, (2) the Company effects any sale of
all or substantially all of its assets in one or a series of related
transactions, (3) any tender offer or exchange offer approved or authorized by
the Board of Directors of the Company (whether by the Company or another
Person) is completed pursuant to which holders of Common Stock are permitted
to tender or exchange their shares for other securities, cash or property, or
(4) the Company effects any reclassification of the Common Stock or any
compulsory share exchange pursuant to which the Common Stock is effectively
converted into or exchanged for other securities, cash or property (in any
such case, a "FUNDAMENTAL TRANSACTION"), then the Holder shall have the right
thereafter to receive, upon exercise of this Warrant, the same amount and kind
of securities, cash or property as it would have been entitled to receive upon
the occurrence of such Fundamental Transaction if it had been, immediately
prior to such Fundamental Transaction, the holder of the number of Warrant
Shares then issuable upon exercise in full of this Warrant (the "ALTERNATE
CONSIDERATION"). For purposes of any such exercise, the determination of the
Exercise Price shall be appropriately adjusted to apply to such Alternate
Consideration based on the amount of Alternate Consideration issuable in
respect of one share of Common Stock in such Fundamental Transaction, and the
Company shall apportion the Exercise Price among the Alternate Consideration
in a reasonable manner reflecting the relative value of any different
components of the Alternate Consideration. If holders of Common Stock are
given any choice as to the securities, cash or property to be received in a
Fundamental Transaction, then the Holder shall be

<PAGE>
<PAGE>

given the same choice as to the Alternate Consideration it receives upon any
exercise of this Warrant following such Fundamental Transaction. At the
Holder's option and request, any successor to the Company or surviving entity
in such Fundamental Transaction shall, either (1) issue to the Holder a new
warrant substantially in the form of this Warrant and consistent with the
foregoing provisions and evidencing the Holder's right to purchase the
Alternate Consideration for the aggregate Exercise Price upon exercise
thereof, or (2) purchase the Warrant from the Holder for a purchase price,
payable in cash within five Trading Days after such request (or, if later, on
the effective date of the Fundamental Transaction), equal to the Black Scholes
value of the remaining unexercised portion of this Warrant on the date of such
request as well as assumptions reasonably mutually acceptable to the Company
and the Holder, provided, that for purposes of such calculation, the market
                --------
price of the Common Stock shall be the closing bid price of the Common Stock
on the Trading Day immediately preceding the public announcement of the
Fundamental Transaction and the volatility factor shall be determined by
reference to the 12 month average industry volatility measures. The terms of
any agreement pursuant to which a Fundamental Transaction is effected shall
include terms requiring any such successor or surviving entity to comply with
the provisions of this paragraph (c) and insuring that the Warrant (or any
such replacement security) will be similarly adjusted upon any subsequent
transaction analogous to a Fundamental Transaction.

                  (d) Subsequent Equity Sales.
                      -----------------------

                           (i) While any portion of this Warrant is
outstanding, if the Company issues any shares of Common Stock or the Company
or any subsidiary thereof issues any rights, warrants, options or other
securities or debt that is convertible into, exchangeable for (any such
securities, "COMMON STOCK EQUIVALENTS") entitling any Person to acquire shares
of Common Stock, at a price per share less than the Exercise Price (if the
holder of the Common Stock or Common Stock Equivalent so issued shall at any
time, whether by operation of purchase price adjustments, reset provisions,
floating conversion, exercise or exchange prices or otherwise, or due to
warrants, options or rights issued in connection with such issuance, be
entitled to receive shares of Common Stock at a price less than the Exercise
Price, such issuance shall be deemed to have occurred for less than the
Exercise Price), then the Exercise Price shall be adjusted to equal the
conversion, exchange or purchase price for such Common Stock or Common Stock
Equivalents (including any reset provisions thereof) at issue and which
adjusted Exercise Price shall continue for as long as this Warrants remain
outstanding. Such adjustment shall be made whenever such Common Stock or
Common Stock Equivalents are issued. The Company shall notify the Holder in
writing, no later than the Trading Day following the issuance of any Common
Stock or Common Stock Equivalent subject to this section, indicating therein
the applicable issuance price, or of applicable reset price, exchange price,
conversion price and other pricing terms.

                           (ii) For purposes of this subsection 9(d), the
following subsections (d)(ii)(l) to (d)(ii)(6) shall also be applicable:

                                    (1) Issuance of Rights or Options. In case
                                        -----------------------------
at any time the Company shall in any manner grant (directly and not by
assumption in a merger or otherwise) any warrants or other rights to subscribe
for or to purchase, or any options for the purchase of, Common Stock or any
stock or security convertible into or exchangeable for Common Stock

<PAGE>
<PAGE>

(such warrants, rights or options being called "OPTIONS" and such convertible
or exchangeable stock or securities being called "CONVERTIBLE SECURITIES")
whether or not such Options or the right to convert or exchange any such
Convertible Securities are immediately exercisable, and the price per share
for which Common Stock is issuable upon the exercise of such Options or upon
the conversion or exchange of such Convertible Securities (determined by
dividing (i) the sum (which sum shall constitute the applicable consideration)
of (x) the total amount, if any, received or receivable by the Company as
consideration for the granting of such Options, plus (y) the aggregate amount
of additional consideration payable to the Company upon the exercise of all
such Options, plus (z), in the case of such Options which relate to
Convertible Securities, the aggregate amount of additional consideration, if
any, payable upon the issue or sale of such Convertible Securities and upon
the conversion or exchange thereof, by (ii) the total maximum number of shares
of Common Stock issuable upon the exercise of such Options or upon the
conversion or exchange of all such Convertible Securities issuable upon the
exercise of such Options) shall be less than the Exercise Price in effect
immediately prior to the time of the granting of such Options, then the total
number of shares of Common Stock issuable upon the exercise of such Options or
upon conversion or exchange of the total amount of such Convertible Securities
issuable upon the exercise of such Options shall be deemed to have been issued
for such price per share as of the date of granting of such Options or the
issuance of such Convertible Securities and thereafter shall be deemed to be
outstanding for purposes of adjusting the Exercise Price. Except as otherwise
provided in subsection 9(d)(ii)(3), no adjustment of the Exercise Price shall
be made upon the actual issue of such Common Stock or of such Convertible
Securities upon exercise of such Options or upon the actual issue of such
Common Stock upon conversion or exchange of such Convertible Securities.

                                    (2) Issuance of Convertible Securities. In
                                        ----------------------------------
case the Company shall in any manner issue (directly and not by assumption in
a merger or otherwise) or sell any Convertible Securities, whether or not the
rights to exchange or convert any such Convertible Securities are immediately
exercisable, and the price per share for which Common Stock is issuable upon
such conversion or exchange (determined by dividing (i) the sum (which sum
shall constitute the applicable consideration) of (x) the total amount
received or receivable by the Company as consideration for the issue or sale
of such Convertible Securities, plus (y) the aggregate amount of additional
consideration, if any, payable to the Company upon the conversion or exchange
thereof, by (ii) the total number of shares of Common Stock issuable upon the
conversion or exchange of all such Convertible Securities) shall be less than
the Exercise Price in effect immediately prior to the time of such issue or
sale, then the total maximum number of shares of Common Stock issuable upon
conversion or exchange of all such Convertible Securities shall be deemed to
have been issued for such price per share as of the date of the issue or sale
of such Convertible Securities and thereafter shall be deemed to be
outstanding for purposes of adjusting the Exercise Price, provided that (a)
except as otherwise provided in subsection 9(d)(ii)(3), no adjustment of the
Exercise Price shall be made upon the actual issuance of such Common Stock
upon conversion or exchange of such Convertible Securities and (b) no further
adjustment of the Exercise Price shall be made by reason of the issue or sale
of Convertible Securities upon exercise of any Options to purchase any such
Convertible Securities for which adjustments of the Exercise Price have been
made pursuant to the other provisions of subsection 9(d).

<PAGE>
<PAGE>

                                    (3) Change in Option Price or Conversion
                                        ------------------------------------
Rate. Upon the happening of any of the following events, namely, if the
----
purchase price provided for in any Option referred to in subsection
9(d)(ii)(l) hereof, the additional consideration, if any, payable upon the
conversion or exchange of any Convertible Securities referred to in
subsections 9(d)(ii)(l) or 9(d)(ii)(2), or the rate at which Convertible
Securities referred to in subsections 9(d)(ii)(l) or 9(d)(ii)(2) are
convertible into or exchangeable for Common Stock shall change at any time
(including, but not limited to, changes under or by reason of provisions
designed to protect against dilution), the Exercise Price in effect at the
time of such event shall forthwith be readjusted to the Exercise Price which
would have been in effect at such time had such Options or Convertible
Securities still outstanding provided for such changed purchase price,
additional consideration or conversion rate, as the case may be, at the time
initially granted, issued or sold. On the termination of any Option for which
any adjustment was made pursuant to this subsection 9(d) or any right to
convert or exchange Convertible Securities for which any adjustment was made
pursuant to this subsection 9(d) (including without limitation upon the
redemption or purchase for consideration of such Convertible Securities by the
Company), the Exercise Price then in effect hereunder shall forthwith be
changed to the Exercise Price which would have been in effect at the time of
such termination had such Option or Convertible Securities, to the extent
outstanding immediately prior to such termination, never been issued.

                                    (4) Stock Dividends. Subject to the
                                        ---------------
provisions of this Section 9(d), in case the Company shall declare a dividend
or make any other distribution upon any stock of the Company (other than the
Common Stock) payable in Common Stock, Options or Convertible Securities, then
any Common Stock, Options or Convertible Securities, as the case may be,
issuable in payment of such dividend or distribution shall be deemed to have
been issued or sold without consideration.

                                    (5) Consideration for Stock. In case any
                                        -----------------------
shares of Common Stock, Options or Convertible Securities shall be issued or
sold for cash, the consideration received therefor shall be deemed to be the
net amount received by the Company therefor, after deduction therefrom of any
expenses incurred or any underwriting commissions or concessions paid or
allowed by the Company in connection therewith. In case any shares of Common
Stock, Options or Convertible Securities shall be issued or sold for a
consideration other than cash, the amount of the consideration other than cash
received by the Company shall be deemed to be the fair value of such
consideration as determined in good faith by the Board of Directors of the
Company, after deduction of any expenses incurred or any underwriting
commissions or concessions paid or allowed by the Company in connection
therewith. In case any Options shall be issued in connection with the issue
and sale of other securities of the Company, together comprising one integral
transaction in which no specific consideration is allocated to such Options by
the parties thereto, such Options shall be deemed to have been issued for such
consideration as determined in good faith by the Board of Directors of the
Company. If Common Stock, Options or Convertible Securities shall be issued or
sold by the Company and, in connection therewith, other Options or Convertible
Securities (the "ADDITIONAL RIGHTS") are issued, then the consideration
received or deemed to be received by the Company shall be reduced by the fair
market value of the Additional Rights (as determined using the Black-Scholes
option pricing model or another method mutually agreed to by the Company and
the Holder). The Board of Directors of the Company shall respond promptly, in
writing, to an inquiry by the Holders as to the fair market value of the
Additional Rights. In the event that the Board of

<PAGE>
<PAGE>

Directors of the Company and the Holders are unable to agree upon the fair
market value of the Additional Rights, the Company and the Holders shall
jointly select an appraiser, who is experienced in such matters. The decision
of such appraiser shall be final and conclusive, and the cost of such
appraiser shall be borne evenly by the Company and the Holder.

                                    (6) Record Date. In case the Company shall
                                        -----------
take a record of the holders of its Common Stock for the purpose of entitling
them (i) to receive a dividend or other distribution payable in Common Stock,
Options or Convertible Securities or (ii) to subscribe for or purchase Common
Stock, Options or Convertible Securities, then such record date shall be
deemed to be the date of the issue or sale of the shares of Common Stock
deemed to have been issued or sold upon the declaration of such dividend or
the making of such other distribution or the date of the granting of such
right of subscription or purchase, as the case may be.

                           (iii) Notwithstanding the foregoing, no adjustment
will be made under this Section 9(d) as a result of: (i) the issuance of
securities upon the exercise or conversion of any Common Stock Equivalents
issued by the Company prior to the date of this Agreement (but will apply to
any amendments, modifications and reissuances thereof), (ii) the grant of
options or warrants, or the issuance of additional securities, under any duly
authorized company stock option, stock incentive plan, restricted stock plan
or stock purchase plan in existence on the First Closing Date, (iii) the
issuance of Common Stock in payment of interest on the 2005 Notes, 2004 Notes,
the 2003 Debentures, the 2004 Debentures or the Notes, (iv) the issuance of
Common Stock Equivalents pursuant to a Strategic Transaction, or (v) the
issuance of Common Stock pursuant to the provisions of Section 2(c) of the
Registration Rights Agreement.

                  (e) Number of Warrant Shares. Simultaneously with any
                      ------------------------
adjustment to the Exercise Price pursuant to paragraph (a) of this Section,
the number of Warrant Shares that may be purchased upon exercise of this
Warrant shall be increased or decreased proportionately, so that after such
adjustment the aggregate Exercise Price payable hereunder for the adjusted
number of Warrant Shares shall be the same as the aggregate Exercise Price in
effect immediately prior to such adjustment.

                  (f) Calculations. All calculations under this Section 9
                      ------------                              ---------
shall be made to the nearest cent or the nearest 1/100th of a share, as
applicable. The number of shares of Common Stock outstanding at any given time
shall not include shares owned or held by or for the account of the Company,
and the disposition of any such shares shall be considered an issue or sale of
Common Stock.

                  (g) Notice of Adjustments. Upon the occurrence of each
                      ---------------------
adjustment pursuant to this Section 9, the Company at its expense will
                            ---------
promptly compute such adjustment in accordance with the terms of this Warrant
and prepare a certificate setting forth such adjustment, including a statement
of the adjusted Exercise Price and adjusted number or type of Warrant Shares
or other securities issuable upon exercise of this Warrant (as applicable),
describing the transactions giving rise to such adjustments and showing in
detail the facts upon which such adjustment is based. Upon written request,
the Company will promptly deliver a copy of each such certificate to the
Holder and to the Company's transfer agent.

<PAGE>
<PAGE>

                  (h) Notice of Corporate Events. If the Company (i) declares
                      --------------------------
a dividend or any other distribution of cash, securities or other property in
respect of its Common Stock, including without limitation any granting of
rights or warrants to subscribe for or purchase any capital stock of the
Company or any Subsidiary, (ii) authorizes or approves, enters into any
agreement contemplating or solicits shareholder approval for any Fundamental
Transaction or (iii) authorizes the voluntary dissolution, liquidation or
winding up of the affairs of the Company, then the Company shall deliver to
the Holder a notice describing the material terms and conditions of such
transaction, at least 20 calendar days prior to the applicable record or
effective date on which a Person would need to hold Common Stock in order to
participate in or vote with respect to such transaction, and the Company will
take all steps reasonably necessary in order to insure that the Holder is
given the practical opportunity to exercise this Warrant prior to such time so
as to participate in or vote with respect to such transaction; provided,
however, that the failure to deliver such notice or any defect therein shall
not affect the validity of the corporate action required to be described in
such notice.

         10. Payment of Exercise Price. The Holder may pay the Exercise Price
             -------------------------
in one of the following manners:

                  (a) Cash Exercise. The Holder may deliver immediately
                      -------------
available funds; or

                  (b) Cashless Exercise. The Holder may notify the Company in
                      -----------------
an Exercise Notice of its election to utilize cashless exercise, in which
event the Company shall issue to the Holder the number of Warrant Shares
determined as follows:

                                    X = Y [(A-B)/A]

                           where:

                                    X = the number of Warrant Shares to be
                                    issued to the Holder.

                                    Y = the number of Warrant Shares with
                                    respect to which this Warrant is being
                                    exercised.

                                    A = the average of the closing prices for
                                    the five Trading Days immediately prior to
                                    (but not including) the Exercise Date.

                                    B = the Exercise Price.

For purposes of Rule 144 promulgated under the Securities Act, it is intended,
understood and acknowledged that the Warrant Shares issued in a cashless
exercise transaction shall be deemed to have been acquired by the Holder, and
the holding period for the Warrant Shares shall be deemed to have commenced,
on the date this Warrant was originally issued.

         11. Limitations on Exercise.
             -----------------------

                           (i) Notwithstanding anything to the contrary
contained herein, the number of shares of Common Stock that may be acquired by
a Holder upon any exercise of Warrants (or otherwise in respect hereof) shall
be limited to the extent necessary to insure that, following such exercise (or
other issuance), the total number of shares of Common Stock then

<PAGE>
<PAGE>

beneficially owned by such Holder and its Affiliates and any other Persons
whose beneficial ownership of Common Stock would be aggregated with such
Holder's for purposes of Section 13(d) of the Exchange Act, does not exceed
4.999% (the "THRESHOLD PERCENTAGE") or 9.999% (the "MAXIMUM PERCENTAGE") of
the total number of issued and outstanding shares of Common Stock (including
for such purpose the shares of Common Stock issuable upon such conversion).
For such purposes, beneficial ownership shall be determined in accordance with
Section 13(d) of the Exchange Act and the rules and regulations promulgated
thereunder. Each delivery of an Exercise Notice hereunder will constitute a
representation by the Holder that it has evaluated the limitation set forth in
this paragraph and determined that issuance of the full number of Warrant
Shares requested in such Exercise Notice is permitted under this paragraph.
The Company's obligation to issue shares of Common Stock in excess of the
limitation referred to in this Section shall be suspended (and shall not
terminate or expire notwithstanding any contrary provisions hereof) until such
time, if any, as such shares of Common Stock may be issued in compliance with
such limitation, but in no event later than the Expiration Date. By written
notice to the Company, the Holder may waive the provisions of this Section or
increase or decrease the Maximum Percentage to any other percentage specified
in such notice, but (i) any such waiver or increase will not be effective
until the 61st day after such notice is delivered to the Company, and (ii) any
such waiver or increase or decrease will apply only to the Holder and not to
any other holder of Warrants.

                           (ii) Notwithstanding anything to the contrary in
this Warrant, if the Company has not previously obtained Shareholder Approval
(as defined below), then the Company may not issue shares of Common Stock in
excess of the (a) the Issuable Maximum or (b) a number of shares above which
the issuance of one additional share would cause a Change of Control (a
"CHANGE OF CONTROL THRESHOLD") upon exercise of this Warrant at an exercise
price which is less than the Closing Price on the Trading Day immediately
preceding the Original Issue Date (the "THRESHOLD PRICE"). The "Issuable
Maximum" means, as of any date, a number of shares of Common Stock equal to
19.99% of the outstanding shares of Common Stock immediately preceding the
First Closing Date, less such number of shares of Common Stock as have been
issued at a price below the Threshold Price (1) upon exercise of the Warrants
and warrants issued under the 2003 Securities Purchase Agreement, the 2004
Securities Purchase Agreement, 2004 Loan Agreement or the 2005 Loan Agreement,
(2) upon conversion of the 2003 Debentures, the 2004 Debentures, the 2004
Notes, and the 2005 Notes and (3) upon conversion of the Notes, or in payment
of interest thereunder. Each Holder shall be entitled to a portion of the
Issuable Maximum or Change of Control Threshold, as applicable, equal to the
quotient obtained by dividing: (x) the principal amount of Notes issued and
sold to such Holder on the Original Issue Date by (y) the aggregate principal
amount of all Notes issued and sold by the Company on the Original Issue Date.
If any Holder shall no longer hold Notes, then such Holder's remaining portion
of the Issuable Maximum or Change of Control Threshold, as applicable, (other
than those represented by the remaining portion of this Warrant and the other
warrants referenced in clause (1) above) shall be allocated pro-rata among the
remaining Holders, giving effect to the Company's desire to allocate among the
class of securities known as the Notes this limitation. If on any Date of
Exercise, or at such time as a Holder shall notify the Company that the
condition in (A) following this clause shall be in effect: (A) the aggregate
number of shares of Common Stock that would then be issuable upon exercise in
full of this Warrant would exceed the Issuable Maximum or would exceed the
Change of Control Threshold on such date, and (B) the Company shall not have
previously obtained the vote of shareholders

<PAGE>
<PAGE>

applicable to approve the issuance of shares of Common Stock in excess of the
Issuable Maximum or Change of Control Threshold, as applicable, pursuant to
the terms hereof (the "SHAREHOLDER APPROVAL"), then, the Company shall, on
such Date of Exercise or on any Date of Exercise prior to the receipt by the
Company of the Shareholder Approval, shall issue upon exercise hereof a number
of shares of Common Stock equal to the Issuable Maximum or Change of Control
Threshold, as applicable, and, with respect to the remainder of this Warrant
for which an exercise would result in an issuance of shares of Common Stock in
excess of the Issuable Maximum or Change of Control Threshold, the Company
must seek Shareholder Approval in accordance with subsection (iii) below. The
Company and the Holder understand and agree that shares of Common Stock issued
to and then held by the Holder as a result of exercises of this Warrant shall
not be entitled to cast votes on any resolution to obtain Shareholder Approval
pursuant hereto.

                           (iii) Shareholder Approval.
                                 --------------------

                                    (1) If required under applicable Nasdaq
regulations, the Company shall use its best efforts to obtain as soon as
possible but in no event later than 90 days following the date of the Loan
Agreement or 120 days in the event the proxy materials shall be reviewed by
the Commission, shareholder approval of the issuance of the Underlying Shares
(the "SHAREHOLDER PROPOSAL"), which approval shall meet the requirements of
Nasdaq's Rule 4350(i) of Nasdaq set forth in the NASD Manual (the "SHAREHOLDER
APPROVAL DATE").

                                    (2) As soon as practicable following the
date of the Loan Agreement, but in no event more than 30 days following the
date of the Loan Agreement, the Company shall prepare and file with the
Commission proxy materials calling a special meeting (the "SPECIAL MEETING")
of its shareholders seeking approval of the Shareholder Proposal. The Company
shall use its reasonable best efforts to cause such proxy materials to reach
the "no further comment" stage as soon as possible (the "CLEARANCE DATE") and
to hold the Special Meeting as soon as possible following the Clearance Date,
but in no event later than 45 days following the Clearance Date.

                                    (3) The Board of Directors shall recommend
approval thereof by the Company's shareholders. The Company shall mail and
distribute its proxy materials for the Special Meeting to its shareholders at
least 30 days prior to the date of the Special Meeting and shall actively
solicit proxies to vote for the Shareholder Proposal. The Company shall
provide the Holders an opportunity to review and comment on such proxy
materials by providing (which may be by e-mail) copies of such proxy materials
and any revised preliminary proxy materials to the Holders at least three (3)
days prior to their filing with the Commission. The Company shall provide the
Holders (which may be by e-mail) copies of all correspondence from or to the
Commission or its staff concerning the proxy materials for the Special Meeting
promptly after the same is sent or received by the Company and summaries of
any comments of the Commission's staff which the Company receives orally
promptly after receiving such oral comments. The Company shall (i) furnish to
the Holders and their counsel (which may be by e-mail) a copy of its
definitive proxy materials for the Special Meeting and any amendments or
supplements thereto promptly after the same are first used, mailed to
shareholders or filed with the Commission, (ii) inform the Holders of the
progress of solicitation of proxies for such meeting and (iii) inform the
Holders of any adjournment of the Special Meeting and shall report

<PAGE>
<PAGE>

the result of the vote of shareholders on the Shareholder Proposal at the
conclusion of the Special Meeting.

                                    (4) If for any reason the Shareholder
Proposal is not approved at the Special Meeting, the Company will take such
additional acts or actions as are necessary to hold an additional Special
Meeting to consider the Shareholder Proposal and in conjunction therewith
shall hire a nationally recognized proxy solicitation firm, selected by the
Holders which is reasonably satisfactory to the Company, to assist it in
obtaining the necessary shareholder votes to approve the Shareholder Proposal.
The Company shall bear all costs and expenses of the preparation and filing of
any and all proxy materials and Special Meetings, including but not limited to
the costs and expenses of the proxy solicitation firm if needed.

         12. No Fractional Shares. No fractional shares of Warrant Shares will
             --------------------
be issued in connection with any exercise of this Warrant. In lieu of any
fractional shares which would, otherwise be issuable, the Company shall pay
cash equal to the product of such fraction multiplied by the closing price of
one Warrant Share as reported by the applicable Trading Market on the date of
exercise.

         13. Notices. Any and all notices or other communications or
             -------
deliveries hereunder (including, without limitation, any Exercise Notice)
shall be in writing and shall be deemed given and effective on the earliest of
(i) the date of transmission, if such notice or communication is delivered via
facsimile at the facsimile number specified in this Section prior to 6:30 p.m.
(New York City time) on a Trading Day, (ii) the next Trading Day after the
date of transmission, if such notice or communication is delivered via
facsimile at the facsimile number specified in this Section on a day that is
not a Trading Day or later than 6:30 p.m. (New York City time) on any Trading
Day, (iii) the Trading Day following the date of mailing, if sent by
nationally recognized overnight courier service, or (iv) upon actual receipt
by the party to whom such notice is required to be given. The addresses for
such communications shall be: (i) if to the Company, to Zoltek Companies,
Inc., 3101 McKelvey Road, St. Louis, Missouri 63044, Attn: Chief Financial
Officer, Facsimile No.: (314) 291-9082, or (ii) if to the Holder, to the
address or facsimile number appearing on the Warrant Register or such other
address or facsimile number as the Holder may provide to the Company in
accordance with this Section.

         14. Warrant Agent. The Company shall serve as warrant agent under
             -------------
this Warrant. Upon 30 days' notice to the Holder, the Company may appoint a
new warrant agent. Any corporation into which the Company or any new warrant
agent may be merged or any corporation resulting from any consolidation to
which the Company or any new warrant agent shall be a party or any corporation
to which the Company or any new warrant agent transfers substantially all of
its corporate trust or shareholders services business shall be a successor
warrant agent under this Warrant without any further act. Any such successor
warrant agent shall promptly cause notice of its succession as warrant agent
to be mailed (by first class mail, postage prepaid) to the Holder at the
Holder's last address as shown on the Warrant Register.

         15. Miscellaneous.
             -------------

                  (a) This Warrant shall be binding on and inure to the
benefit of the parties hereto and their respective successors and assigns.
Subject to the preceding sentence, nothing in this Warrant shall be construed
to give to any Person other than the Company and the Holder any

<PAGE>
<PAGE>

legal or equitable right, remedy or cause of action under this Warrant. This
Warrant may be amended only in writing signed by the Company and the Holder
and their successors and assigns.

                  (b) All questions concerning the construction, validity,
enforcement and interpretation of this Warrant shall be governed by and
construed and enforced in accordance with the internal laws of the State of
New York, without regard to the principles of conflicts of law thereof. Each
party agrees that all legal proceedings concerning the interpretations,
enforcement and defense of this Warrant and the transactions herein
contemplated ("PROCEEDINGS") (whether brought against a party hereto or its
respective Affiliates, employees or agents) shall be commenced exclusively in
the state and federal courts sitting in the City of New York, Borough of
Manhattan (the "NEW YORK COURTS"). Each party hereto hereby irrevocably
submits to the exclusive jurisdiction of the New York Courts for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any Proceeding, any claim that it is not
personally subject to the jurisdiction of any New York Court, or that such
Proceeding has been commenced in an improper or inconvenient forum. Each party
hereto hereby irrevocably waives personal service of process and consents to
process being served in any such Proceeding by mailing a copy thereof via
registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it under this Warrant
and agrees that such service shall constitute good and sufficient service of
process and notice thereof. Nothing contained herein shall be deemed to limit
in any way any right to serve process in any manner permitted by law. Each
party hereto hereby irrevocably waives, to the fullest extent permitted by
applicable law, any and all right to trial by jury in any legal proceeding
arising out of or relating to this Warrant or the transactions contemplated
hereby. If either party shall commence a Proceeding to enforce any provisions
of this Warrant, then the prevailing party in such Proceeding shall be
reimbursed by the other party for its attorney's fees and other costs and
expenses incurred with the investigation, preparation and prosecution of such
Proceeding.

                  (c) The headings herein are for convenience only, do not
constitute a part of this Warrant and shall not be deemed to limit or affect
any of the provisions hereof.

                  (d) In case any one or more of the provisions of this
Warrant shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Warrant shall not
in any way be affected or impaired thereby and the parties will attempt in
good faith to agree upon a valid and enforceable provision which shall be a
commercially reasonable substitute therefor, and upon so agreeing, shall
incorporate such substitute provision in this Warrant.

                 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK,
                            SIGNATURE PAGE FOLLOWS]

<PAGE>
<PAGE>

         IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by its authorized officer as of the date first indicated above.

                                    ZOLTEK COMPANIES, INC.

                                    By:
                                       -------------------------------------
                                       Name:
                                       Title:

<PAGE>
<PAGE>

                                EXERCISE NOTICE

To ZOLTEK COMPANIES, INC.:

         The undersigned hereby irrevocably elects to purchase _____________
shares of common stock, par value $0.01 per share, of ZOLTEK COMPANIES, INC.
("COMMON STOCK"), pursuant to Warrant No. [ ], originally issued _____, 2006
(the "WARRANT"), and, if such Holder is not utilizing the cashless exercise
provisions set forth in the Warrant, encloses herewith $________ in cash,
certified or official bank check or checks or other immediately available
funds, which sum represents the aggregate Exercise Price (as defined in the
Warrant) for the number of shares of Common Stock to which this Exercise
Notice relates, together with any applicable taxes payable by the undersigned
pursuant to the Warrant.

         By its delivery of this Exercise Notice, the undersigned represents
and warrants to the Company that in giving effect to the exercise evidenced
hereby the Holder will not beneficially own in excess of the number of shares
of Common Stock (determined in accordance with Section 13(d) of the Securities
Exchange Act of 1934) permitted to be owned under Section 11 of this Warrant
to which this notice relates.

         The undersigned requests that certificates for the shares of Common
Stock issuable upon this exercise be issued in the name of

                                              PLEASE INSERT SOCIAL SECURITY OR
                                              TAX IDENTIFICATION NUMBER

                        (Please print name and address)

<PAGE>
<PAGE>

<TABLE>
                                             Warrant Shares Exercise Log
                                             ---------------------------

<CAPTION>
--------------------------------------------------------------------------------------------------------------------
                                                                                               Number of Warrant
                              Number of Warrant Shares      Number of Warrant Shares           Shares Remaining to
Date                          Available to be Exercised     Exercised                          be Exercised
--------------------------------------------------------------------------------------------------------------------
<C>                           <C>                           <C>                                <C>

--------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>
<PAGE>

                              FORM OF ASSIGNMENT

         [To be completed and signed only upon transfer of Warrant]

         FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto ________________________________ the right represented by the
within Warrant to purchase ____________ shares of Common Stock of ZOLTEK
COMPANIES, INC. to which the within Warrant relates and appoints
________________ attorney to transfer said right on the books of the Company
with full power of substitution in the premises.

Dated:   _______________, ____

                                       ---------------------------------------
                                       (Signature must conform in all respects
                                       to name of holder as specified on the
                                       face of the Warrant)

                                       ---------------------------------------
                                       Address of Transferee

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

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

In the presence of:

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

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