JLM INDUSTRIES INC, S-1/A, 1997-07-21

JLM INDUSTRIES INC
S-1/A, 1997-07-21
CHEMICALS & ALLIED PRODUCTS

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 21, 1997

REGISTRATION STATEMENT NO. 333-27843
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------

AMENDMENT NO. 2

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
JLM INDUSTRIES, INC.
(Exact name of Registrant as specified in its charter)
---------------------

<TABLE>
<S> <C> <C>
DELAWARE 5169 06-1163710
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or Classification Code Number) Identification Number)
organization)
</TABLE>

---------------------
8675 HIDDEN RIVER PARKWAY
TAMPA, FLORIDA 33637
(813) 632-3300
(Address, including zip code, and telephone number including area code, of
Registrant's principal executive offices)
---------------------
JOHN L. MACDONALD, PRESIDENT
JLM INDUSTRIES, INC.
8675 HIDDEN RIVER PARKWAY
TAMPA, FLORIDA 33637
(813) 632-3300
(Name, address, including zip code, and telephone number including area code, of
agent for service)

COPIES OF COMMUNICATIONS TO:

<TABLE>
<C> <C>
RICHARD M. LEISNER, ESQUIRE G. DAVID BRINTON, ESQUIRE
TRENAM, KEMKER, SCHARF, BARKIN ROGERS & WELLS
FRYE, O'NEILL & MULLIS 200 PARK AVENUE
2700 BARNETT PLAZA NEW YORK, NEW YORK 10166-0153
TAMPA, FLORIDA 33601-1102 (212) 878-8000
(813) 223-7474
</TABLE>

---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
---------------------
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]

If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]

If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
---------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
<PAGE> 2

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.

SUBJECT TO COMPLETION, DATED JULY 21, 1997

2,300,000 SHARES

JLM INDUSTRIES, INC.
[JLM LOGO] COMMON STOCK
---------------------

Of the 2,300,000 shares of common stock (the "Common Stock") offered
hereby, 2,156,000 shares are being sold by JLM Industries, Inc. ("JLM" or the
"Company"), and 144,000 shares are being sold by the Selling Stockholder (the
"Offering"). The Company will not receive any of the proceeds from the sale of
shares by the Selling Stockholder. See "Principal and Selling Stockholders."

Prior to the Offering, there has been no public market for the Common Stock
of the Company. It is currently anticipated that the initial public offering
price of the Common Stock will be between $12.00 and $14.00 per share. See
"Underwriting" for a discussion of the factors to be considered in determining
the initial public offering price. The Company has applied to have the Common
Stock approved for quotation on the Nasdaq National Market under the symbol
"JLMI".

THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 7.
---------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
=========================================================================================================================
PROCEEDS TO
PRICE TO UNDERWRITING PROCEEDS TO SELLING
PUBLIC(1) DISCOUNT(1) COMPANY(2) STOCKHOLDER
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share.................... $ $ $ $
Total(3)..................... $ $ $ $
========================================================================================================================
</TABLE>

(1) See "Underwriting" for information concerning indemnification of the
Underwriters and for other information.

(2) Before deducting expenses of the Offering payable by the Company estimated
at $600,000.

(3) The Company has granted an option to the Underwriters exercisable within
45-days of the date hereof, to purchase up to 345,000 additional shares of
Common Stock for the purpose of covering over-allotments, if any. If the
Underwriters exercise such option in full, the total Price to Public,
Underwriting Discount, Proceeds to Company and Proceeds to Selling
Stockholder will be $ , $ , $ and $ ,
respectively. See "Underwriting."
---------------------

The shares of Common Stock offered hereby are offered severally by the
Underwriters when, as and if delivered to and accepted by them, subject to their
right to withdraw, cancel or reject orders in whole or in part and subject to
certain other conditions. It is expected that delivery of the certificates
representing the shares of Common Stock will be made against payment on or about
, 1997, at the office of Oppenheimer & Co., Inc.,
Oppenheimer Tower, World Financial Center, New York, NY 10281.
---------------------

OPPENHEIMER & CO., INC. A.G. EDWARDS & SONS, INC.

The date of this Prospectus is , 1997.
<PAGE> 3

[TWO-PAGE MAP OF THE WORLD]

JLM INDUSTRIES, INC
WORLDWIDE SUPPLIER OF COMMODITY CHEMICALS

LEGEND INDICATING HEADQUARTERS, CURRENT OWNED AND JOINT VENTURE
MANUFACTURING FACILITIES, PLANNED JOINT VENTURE MANUFACTURING FACILITY,
TERMINALING FACILITIES, PLANNED JOINT VENTURE TERMINALING FACILITY, SALES
OFFICES.

DISTRIBUTED TO MORE THAN 600 CUSTOMERS WORLDWIDE

[PHOTO OF PHENOL AND ACETONE MANUFACTURING FACILITY, BLUE ISLAND, ILLINOIS]

[PHOTO OF MANUFACTURING JOINT VENTURE, MOUNT VERNON, INDIANA]

[PHOTO OF TERMINALING FACILITY, WILMINGTON, NORTH CAROLINA]

CERTAIN PERSONS PARTICIPATING IN THE OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK. SUCH
TRANSACTIONS MAY INCLUDE THE PURCHASE OF SHARES OF COMMON STOCK FOLLOWING THE
PRICING OF THE OFFERING TO COVER A SYNDICATE SHORT POSITION IN THE COMMON STOCK,
OR FOR THE PURPOSE OF MAINTAINING THE PRICE OF THE COMMON STOCK, AND THE
IMPOSITION OF PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE
"UNDERWRITING."

2
<PAGE> 4

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and consolidated financial statements and related notes appearing
elsewhere in this Prospectus. Unless otherwise indicated, all information
presented in this Prospectus (i) assumes an offering price of $13.00 and (ii)
assumes that the Underwriters' over-allotment option will not be exercised.
Unless the context indicates otherwise, all references in this Prospectus to
"JLM" or the "Company" include JLM Industries, Inc. and its consolidated
subsidiaries and references to the "Selling Stockholder" shall mean John L.
Macdonald. All references in this Prospectus to fiscal years are to the
Company's fiscal years ended on December 31.

THE COMPANY

JLM is a leading marketer and distributor of certain commodity chemicals,
principally acetone and phenol. The Company believes it is the second largest
marketer of acetone and the fifth largest marketer of phenol in North America.
JLM is also a global distributor of olefins, principally propylene, as well as a
variety of other commodity and specialty chemicals. In order to provide stable
and reliable sources of supply for its products, the Company (i) maintains
long-established supplier relationships with several major chemical companies,
(ii) manufactures phenol and acetone at its Blue Island Plant and (iii) sources
acetone from its joint venture manufacturing operation. The Company's principal
products are used in the production of adhesives, coatings, forest product
resins, paints, pharmaceuticals, plastics, solvents and synthetic rubbers. The
Company sells its products worldwide to over 600 customers, including Ashland
Chemical, Inc., B.F. Goodrich Co., Borden, Inc., Hoechst Celanese Corporation,
E.I. DuPont de Nemours and Company, Eli Lilly & Co., Georgia Pacific
Corporation, ICI Acrylics Inc., Minnesota Mining and Manufacturing Company,
Neste Resins Corporation, Rohm & Haas Company and Shell Chemicals Canada, Inc.
In 1996, sales to these customers accounted for approximately 21.0% of the
Company's revenues. No single customer accounted for more than 10% of the
Company's revenues in 1996.

Since its founding in 1986 as a distributor of excess co-product acetone,
JLM has grown rapidly by expanding its product sourcing arrangements and product
offerings, adding manufacturing capacity and providing superior customer service
and consistent product quality and availability. From 1992 to 1996, JLM's EBITDA
increased from $2.1 million to $13.5 million, a compound annual growth rate of
approximately 59.6% (see Footnote 2 to the Summary Consolidated Financial
Information.)

In order to support its worldwide marketing and distribution capabilities,
the Company continually seeks to acquire assets and establish relationships to
provide a consistent and reliable source of products. The Company acquired a
manufacturing facility in 1995 in Blue Island, Illinois (the "Blue Island
Plant") that produces phenol and acetone. In addition, in 1987, JLM entered into
a joint venture with General Electric Company and an affiliate of CITGO that
manufactures phenol and acetone in Mt. Vernon, Indiana (the "Mt. Vernon Plant").
In connection with the joint venture, the Company entered into a long-term
agreement to purchase all acetone produced at the Mt. Vernon Plant not used by
GE Petrochemicals, Inc. In 1996, the Blue Island Plant and the Mt. Vernon Plant
collectively supplied approximately 63.0% of the total acetone sold by JLM, and
the Blue Island Plant supplied approximately 74.0% of the total phenol sold by
JLM.

In addition to its manufacturing facility and joint venture, JLM sources
products through long-established supplier relationships with many of the
leaders in the worldwide chemical industry including ARCO Chemical Company,
Goodyear Tire & Rubber Co., Monsanto Company and Repsol, S.A. (Spain), one of
the largest chemical companies in Spain. The Company also has an exclusive
arrangement to distribute solvents in North America for Sasol Chemical
Industries (PTY) Ltd., one of the largest chemical companies in South Africa,
and recently entered into an agreement to become a U.S. distributor of styrene
for GE Petrochemicals, Inc.

To further enhance its product sourcing, marketing and distribution
capabilities, the Company has acquired terminaling and storage facilities in
Wilmington, North Carolina (the "JLM Terminal") and Bayport, Texas (the "OTC
Terminal"). The JLM Terminal consists of 10 storage tanks with a total capacity
of 15 million gallons and is capable of handling a broad range of products
including acetone, methanol, ethanol and propanol. The OTC Terminal is a joint
venture with an affiliate of Ultramar Diamond Shamrock that operates primarily
as an export facility for propylene manufactured in the U.S. The OTC Terminal
has an annual throughput capacity of
3
<PAGE> 5

approximately 900 million pounds and a total storage capacity of approximately
22 million pounds. These terminaling and storage facilities give the Company the
ability to take immediate physical delivery of a substantial volume of product
which is of value to the Company's suppliers and ensures that the Company will
have product available for its customers. These facilities also give the Company
the ability to offer chemical storage, terminaling and logistics services, and
have allowed the Company to capitalize on a trend by many large chemical
producers to outsource these operations. The Company believes its ability to
multi-source products through its manufacturing facility, joint venture and
supplier relationships, as well as its ownership of terminaling and storage
facilities distinguish it from its competitors and enhance its ability to market
significant volumes of products.

Product sourcing and marketing efforts are handled principally by the
Company's sales team of 33 full time employees. JLM maintains offices in the
U.S., Canada, the Netherlands, Venezuela and Thailand and recently opened two
affiliate offices in India and an office in Colombia. JLM has also established
sales arrangements with companies in Spain, Italy, Brazil, Peru and Taiwan. In
addition, the Company recently purchased a 25.0% interest in SK Chemicals Asia
Pte. Ltd., a Singapore-based company ("SK Asia"), and has agreed to purchase a
12.7% interest in SK Chemical Trading Pte. Ltd., another Singapore-based company
("SK Trading"), both of which are participating in a Vietnamese joint venture
that intends to construct a chemical plant in Vietnam that will produce dioctyl
phthalate, a chemical used in the production of plastics such as polyvinyl
chloride ("PVC"). The Vietnamese joint venture also intends to construct
terminaling and storage facilities in Vietnam and Malaysia. See "Business
Strategy."

BUSINESS STRATEGY

The Company's principal objective is to continue to expand the number of
sources and breadth of its chemical products and the markets in which it
distributes these products to enhance its position as a leading supplier in the
worldwide chemical industry. JLM's continued growth is largely dependent on the
successful implementation of its business strategy. There can be no assurance
that the Company will be able to successfully implement its business strategy or
that, if implemented, such strategy will be successful. See "Risk Factors." Key
elements of the Company's business strategy include:

- Expand Sources of Supply through Joint Ventures, Acquisitions and
Strategic Relationships. The Company will continue to seek to identify
and pursue domestic and international opportunities to expand its sources
of supply for products in or consistent with its core business. These
opportunities may include additional joint ventures, acquisitions and
strategic relationships. Consistent with this strategy, the Company formed
the Mt. Vernon joint venture with General Electric Company and an
affiliate of CITGO in 1987, acquired the Blue Island Plant in 1995 and
established a long-term supplier relationship with Sasol Chemical
Industries (PTY), Ltd., a South African Company, in 1988. Certain phenol
producers have recently announced their intentions to add approximately 3
billion pounds of annual production capacity starting in the year 2000.
JLM currently is exploring opportunities to participate in certain of
these expansions in order to secure additional sources of phenol and
acetone.

- Increase Sales of Existing Products; Add New Products. The Company will
continue to develop its existing relationships and establish new
relationships to increase the overall volume and types of products it
distributes by (i) increasing the amount distributed by the Company of an
existing supplier's output of a given chemical, (ii) distributing
additional products for existing suppliers and (iii) adding new chemical
producers to its supplier base. During 1996, the Company entered into
agreements to distribute approximately 70 million additional pounds of
chemicals for both existing and new suppliers in 1997, including ARCO
Chemical Company, Goodyear Tire & Rubber Co. and Monsanto Company. In
addition, the Company recently expanded the product line it distributes
for Sasol Chemical Industries (PTY) Ltd. In 1997, the Company has entered
into new agreements with CONDEA Vista Company to distribute butanol and
with GE Petrochemicals, Inc. to become a distributor of styrene in the
U.S.

the growing chemical markets of Asia and South America. The Company
recently opened two affiliate offices in India and one in Colombia. In
addition, JLM recently purchased a minority interest in SK Asia and has
agreed to purchase a minority interest in SK Trading, both of which are
participating in a Vietnamese joint venture that intends to construct a
dioctyl phthalate chemical plant in Vietnam and terminaling and storage
facilities in Vietnam and Malaysia. The Company believes its indirect
participation in the Vietnamese joint venture will provide it with
increased access to the Asian market.

- Continue to Provide Superior Customer Service. JLM believes that its
continued success will be in large part due to its emphasis on providing
superior customer service. The Company believes it is well positioned to
take advantage of current trends within the chemical industry as chemical
producers continue to outsource their terminaling and logistics operations
and reduce the number of outside distributors used. The Company focuses on
providing sourcing, inventory and logistics solutions for its customers
and endeavors to provide both its customers and suppliers with a level of
service that is unmatched in the industry.

The Company was incorporated in 1986 as a Delaware corporation. Its
principal executive offices are located at 8675 Hidden River Parkway, Tampa,
Florida 33637, and its telephone number is (813) 632-3300.

THE OFFERING

<TABLE>
<S> <C>
Common Stock offered by the Company................. 2,156,000 shares
Common Stock offered by the Selling Stockholder..... 144,000 shares
Common Stock to be outstanding after the Offering... 6,899,936 shares(1)
Use of proceeds..................................... To repay approximately $17.0 million in
long-term debt, to fund working capital
and for general corporate purposes. See
"Use of Proceeds."
Proposed Nasdaq National Market symbol.............. "JLMI"
</TABLE>

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

(1) Excludes 459,200 shares of Common Stock issuable upon the exercise of stock
options or upon the vesting of shares of restricted stock which are to be
granted effective upon completion of the offering. See "Management -- Equity
Based Compensation Plans."

5
<PAGE> 7

SUMMARY CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
----------------------------------------------------- -------------------------
1992 1993 1994 1995 1996 1996 1997
-------- -------- -------- -------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Revenues........................ $199,751 $174,322 $218,570 $289,371 $ 236,521 $ 57,861 $ 80,518
Gross profit.................. 9,092 9,132 11,663 23,910 28,239 6,690 6,847
Operating income................ 1,764 1,956 2,383 8,734 11,001 2,675 2,929
Income from continuing
operations before discontinued
operations and extraordinary
item.......................... $ 1,397 $ 1,157 $ 1,109 $ 3,629 $ 4,357 $ 322 $ 1,560
INCOME PER SHARE:
Income from continuing
operations before discontinued
operations and extraordinary
item.......................... $ 0.28 $ 0.23 $ 0.22 $ 0.72 $ 0.89 $ 0.06 $ 0.33
Discontinued operations......... (0.05) (0.06) (0.05) (0.09) (0.09) (0.02) (0.02)
Extraordinary item.............. -- -- 0.03 -- -- -- --
-------- -------- -------- -------- --------- -------- ---------
Net income per share............ $ 0.23 $ 0.17 $ 0.20 $ 0.63 $ 0.80 $ 0.04 $ 0.31
======== ======== ======== ======== ========= ======== =========
Weighted average number of
shares outstanding............ 5,011 5,011 5,011 5,011 4,878 5,011 4,744
Pro forma income per share from
continuing operations before
discontinued operations and
extraordinary item(1)......... $ 0.85 $ 0.29
Pro forma shares
outstanding(1)................ 6,284 6,150
OTHER FINANCIAL DATA:
Depreciation and amortization
expense....................... $ 322 $ 352 $ 572 $ 1,522 $ 2,524 $ 532 $ 678

EBITDA(2)....................... 2,086 2,308 2,955 10,256 13,525 3,207 3,607
</TABLE>

<TABLE>
<CAPTION>
MARCH 31, 1997
-------------------------
ACTUAL AS ADJUSTED(1)
-------- --------------
<S> <C> <C>
BALANCE SHEET DATA:
Working capital (deficit)................................... $ (825) $ 11,697
Total assets................................................ 108,745 117,199
Total debt.................................................. 38,602 22,562
Total stockholders' equity.................................. 14,736 40,021
</TABLE>

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

(1) The weighted average number of shares outstanding has been adjusted to
include the number of shares (1,406,121) that the Company would need to
issue at an assumed offering price per share of $13.00 (which results in
assumed net proceeds per share of $12.09) to repay the indebtedness
described in "Use of Proceeds."

(2) EBITDA represents the operating income of the Company plus depreciation and
amortization. EBITDA is not a measure of financial performance under
generally accepted accounting principles ("GAAP") and may not be comparable
to other similarly titled measures by other companies. EBITDA does not
represent net income or cash flows from operations as defined by GAAP and
does not necessarily indicate that cash flows will be sufficient to fund
cash needs. As a result, EBITDA should not be considered an alternative to
net income as an indicator of operating performance or to cash flows as a
measure of liquidity. EBITDA is included in this Prospectus because it is a
basis upon which the Company assesses its financial performance, and certain
covenants in the Company's borrowing arrangements are tied to similar
measures. Supplemental selected consolidated cash flow information is
included below:

6
<PAGE> 8

RISK FACTORS

In addition to the other information in this Prospectus, the following
factors should be considered carefully in evaluating the Company and its
business before purchasing the Common Stock offered by this Prospectus. The
following is not intended as, and should not be considered, an exhaustive list
of relevant factors. This Prospectus contains forward-looking statements. All
forward-looking statements included in this Prospectus are based on current
expectations and information available to the Company on the date hereof, and
the Company assumes no obligation to update any such forward-looking statements.
These forward-looking statements involve risks and uncertainties, including,
among others, those set forth below. The Company's actual results could differ
materially from those anticipated in such forward-looking statements.

CYCLICALITY OF THE WORLDWIDE CHEMICAL MARKETS; POSSIBLE EXCESS PRODUCTION
CAPACITY

The Company's activities include the manufacture and sale of phenol and
acetone and the marketing of propylene. In 1996, sales of acetone, phenol and
propylene accounted for approximately 39.0%, 18.0% and 8.0%, respectively, of
the Company's total revenues. The markets for acetone, phenol and propylene are
cyclical. This cyclicality primarily results from changes in the balance between
supply and demand, the price of feedstocks and the level of general economic
activity. Historically, these markets have experienced alternating periods of
tight supply resulting in generally rising prices and profit margins, followed
by periods of large capacity additions resulting in oversupply and generally
declining prices and profit margins. Although the markets for acetone, phenol
and propylene were favorable to the Company in 1996, there can be no assurance
that this will continue to be the case or that the Company would remain
profitable if a shift in the market was to cause prices to decline and profit
margins to shrink for these products.

According to industry sources, current world phenol and acetone capacity is
approximately 13.8 billion pounds and 8.5 billion pounds, respectively.
Approximately 80.0% of global acetone production is as a co-product in the
manufacture of phenol, and, as a result, phenol demand largely determines
acetone production levels. Certain phenol producers have announced their
intentions to add approximately 3 billion pounds of annual production capacity
starting in the year 2000. In the event that each of the announced capacity
additions is completed, the resulting increase in levels of phenol and acetone
production could exceed anticipated demand for such chemicals, resulting in
declining prices which could have a material adverse effect on the Company's
results of operations and financial condition. However, the Company believes
that some of the announced capacity additions may not be completed as scheduled
because estimated world demand would not justify such an increase in the level
of phenol and acetone production.

FLUCTUATIONS IN THE COST AND AVAILABILITY OF RAW MATERIALS

In 1996, approximately 12.5% of the Company's revenues and 62.0% of the
Company's operating income were derived from the sale of products manufactured
at the Blue Island Plant. An adequate supply of raw materials at competitive
prices is critical to the economic success of the Company's manufacturing
operations. JLM does not produce propylene and benzene, the key raw materials
used for the production of cumene, the primary feedstock for the production of
acetone and phenol. The Company generally obtains propylene via direct pipeline
from a single supplier under a long-term contract. The Company currently obtains
benzene from three suppliers under supply contracts at market rates. The Company
believes that there are a number of alternative sources of supply for propylene
and benzene. However, if the Company's current propylene supplier was unable to
meet its obligations or if the Company's propylene supply agreement could not be
renewed on terms substantially similar to those under the current agreement, the
Company would be required to incur increased costs for propylene which would
have a material adverse effect on the Company's results of operations and
financial condition.

The ability to pass on increases in raw material prices to the Company's
customers is, to a large extent, dependent on market conditions. There may be
periods of time in which increases in raw material prices are not recovered by
the Company due to an inability to increase the selling prices of its products
because of weakness in demand for, or oversupply of, such products. Therefore,
increases in raw material prices could have a material

7
<PAGE> 9

adverse effect on the Company's results of operations and financial condition.
See "Business -- Manufacturing and Product Sourcing."

RISKS ASSOCIATED WITH DISTRIBUTION SUPPLY CONTRACTS

Certain products distributed by the Company are obtained through supply
relationships with other chemical producers. Typically, the Company's supply
contracts have one-year terms with evergreen provisions that automatically renew
the contracts for additional one year terms unless notice of termination is
provided (which notice may be, under certain agreements, as short as 30 days).
The Company has long-established relationships with many of its suppliers. There
can be no assurance, however, that the Company's relationships or agreements
with such suppliers will not be terminated and, if terminated, can be replaced.

Since 1994, the Company has sourced on average approximately 250 million
pounds of acetone annually from the Mt. Vernon Plant. In 1996, the amount of
acetone made available to JLM was reduced by approximately 15 million pounds and
it is anticipated that over the next four years the amount of acetone made
available to JLM will be further reduced by approximately 35 to 40 million
pounds. This reduction is the result of increased consumption of acetone by GE
Petrochemicals, Inc. See"Business -- Manufacturing and Sourcing."

Due to the cyclical nature of the prices of many of the commodity chemical
products the Company distributes, the Company endeavors to enter into
distribution agreements with its external suppliers that provide the Company a
fixed percentage profit per unit volume of product or otherwise reduce the
Company's exposure to fluctuations in the selling price of the products it
distributes for other manufacturers. There can be no assurance that in the
future the Company will be able to enter into contracts that provide it with
similar protection against price volatility. The inability to do so could have a
material adverse effect on the Company's results of operations and financial
condition. See "Business -- Sales and Marketing."

In addition, certain of the Company's agreements with its suppliers require
the Company to purchase a minimum amount of chemical product or to pay certain
agreed upon amounts for such minimum quantities if not taken by the Company.
These agreements involve financial risk to the Company and could require the
Company to expend significant amounts of capital without receiving corresponding
revenues which could have a material adverse effect on the Company's results of
operations and financial condition.

RISKS OF INTERNATIONAL SALES

In 1996, approximately 33.0% of the Company's revenues were attributable to
operations conducted abroad and to export sales. As part of its business
strategy, JLM intends to selectively pursue international expansion. In certain
countries where JLM currently operates or intends to expand its operations, the
Company could be subject to certain political and economic uncertainties,
including labor unrest, political instability, restrictions on transfers of
funds, high export duties and quotas, domestic and international customs and
tariffs, unexpected changes in regulatory environments and potentially adverse
tax consequences. There can be no assurance that these factors will not have a
material adverse effect on the Company's ability to increase or maintain its
international sales or on its results of operations and financial condition.

FOREIGN EXCHANGE FLUCTUATIONS

A portion of the Company's revenues is denominated in currencies other than
the U.S. dollar. Accordingly, the Company's results of operations and financial
condition may be effected by fluctuations in the rate of exchange between such
currencies and the U.S. dollar. Moreover, the Company may incur costs in
connection with conversions between currencies. Although the Company attempts to
monitor its exposure to currency fluctuations by continuously reviewing actual
and anticipated changes in exchange rates and general economic conditions in the
countries in which the Company operates, as well as its actual and anticipated
sources and uses of various foreign currencies, there can be no assurance that
exchange rate fluctuations will not have a material adverse effect on the
Company's results of operations and financial condition. For a further
discussion of the effect of foreign currency exchange fluctuations on the
Company's operations, see "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Effects of Inflation; Foreign Currency
Exchange Rates."

8
<PAGE> 10

DEPENDENCE ON KEY CUSTOMERS

A small number of the Company's customers historically have accounted for a
significant percentage of the Company's sales of acetone and phenol. Loss of one
or more of these significant customers could have a material adverse effect on
the Company's results of operations and financial condition. In the past, the
Company has not experienced significant difficulties in replacing the sales
volumes accounted for by the periodic loss of significant customers. However,
there can be no assurance that the historic levels of business from current
customers will be maintained in the future or that such customers could be
replaced quickly enough to avoid adversely impacting revenues and profitability.

IMPLEMENTATION OF BUSINESS STRATEGY

The Company has experienced rapid growth since its inception. JLM's
continued growth is largely dependent on the successful implementation of its
business strategy. There can be no assurance that the Company will be able to
successfully implement its business strategy or that if implemented, such
strategy will be successful. If the Company is unable to implement its business
strategy, the Company's results of operations and financial condition could be
adversely affected. See "Business -- Business Strategy."

POTENTIAL COSTS OF ENVIRONMENTAL COMPLIANCE

The Company is subject to federal, state, local and foreign environmental
laws, rules, regulations, and ordinances concerning emissions and discharges,
and the generation, handling, storage, transportation, treatment, disposal and
import and export of hazardous materials ("Environmental Laws"). The operation
of chemical manufacturing and storage facilities and the distribution of
chemical products entail risks under Environmental Laws, many of which provide
for substantial remediation costs in the event of discharges of contaminants and
fines and criminal sanctions for violations. In addition, compliance with
existing and future Environmental Laws may require significant capital
expenditures by the Company. Although it is the Company's policy to comply with
all Environmental Laws and the Company believes that it is currently in material
compliance with all Environmental Laws, there can be no assurance that material
environmental liabilities will not be incurred by the Company or that compliance
with Environmental Laws will not require material capital expenditures by the
Company, each of which could have a material adverse effect on the Company's
results of operations and financial condition.

Elevated levels of contaminants, which may be the result of historical use
and/or migration from neighboring properties, have been detected at the JLM
Terminal and at the Blue Island Plant. Under the terms of the purchase of the
JLM Terminal, the Company is indemnified by Unocal, the prior owner of the
property, for up to $7.5 million in environmental liabilities which it will seek
to enforce if any liabilities for violating Environmental Laws arise at the JLM
Terminal. There can be no assurance, however, that a claim for indemnification
will be successful. The Company has no right to indemnification from the prior
owner of the Blue Island Plant. If the Company is required to conduct a
remediation of the Blue Island Plant or remediation for which it is not
indemnified at the JLM Terminal, the level of expenditure that may be required
to satisfy the Company's environmental liabilities could have a material adverse
effect on its financial condition or results of operations.

Levels of organic compounds slightly in excess of regulatory reporting
thresholds were detected in the ground water at the Company's Polychem facility.
The Company has been addressing the issues and the analytical data most recently
collected indicate very low levels of target contaminants. Accordingly, the
Company is presently investigating whether the site was initially properly
listed on the Hazardous Sites Inventory or whether the site can be removed from
the list. Costs for completion of any required remediation have not been
determined and there can be no assurance that if the Company is required to
complete further remediation at the Polychem facility that the costs would not
have a material adverse effect on the Company's financial condition or results
of operations. See "Business -- Environmental Regulation."

COMPETITION

The worldwide chemical market is intensely competitive. The Company faces
competition from a substantial number of global and regional competitors, many
of which have greater financial, production and other resources

9
<PAGE> 11

than the Company. Among the Company's competitors are some of the world's
largest chemical companies and major integrated petroleum companies that have
their own raw material resources. Barriers to entry in the industry, apart from
capital availability, may be low, particularly with respect to commodity
products. The entrance of new competitors in the industry, including companies
who currently serve as suppliers to the Company, may reduce the Company's
ability to maintain current sales or price levels. The Company's competitive
position is based principally on customer service and support, breadth of
product line, product quality, facility location and the selling prices of its
products. There can be no assurance that the Company will have sufficient
resources to maintain its current competitive position or market share. See
"Business -- Competition."

DEPENDENCE ON KEY PERSONNEL; ABILITY TO RECRUIT PERSONNEL

The future success of the Company is largely dependent on the efforts and
abilities of its senior management and certain other key personnel, particularly
John L. Macdonald, the Company's founder, President and Chief Executive Officer.
The Company's success will depend in large part on its ability to retain these
individuals and other current members of its senior management team and to
attract and retain qualified personnel in the future. All members of the
Company's senior management are employed by the Company on an "at-will" basis
and the Company has not entered into any employment agreement with any member of
its senior management. The Company does maintain a "key-person" life insurance
policy on Mr. Macdonald in the amount of $850,000. However, the loss of Mr.
Macdonald or other members of senior management or of certain other key
employees or the Company's inability to retain other qualified employees could
have an adverse impact on the Company's results of operations and financial
condition. See "Management."

VOTING CONTROL BY PRINCIPAL STOCKHOLDER

Immediately following completion of the Offering, John L. Macdonald,
President and Chief Executive Officer of the Company, will be the beneficial
owner of 4,371,648 shares of Common Stock, which represents approximately 63.4%
of the issued and outstanding shares of Common Stock (approximately 60.3% of the
issued and outstanding shares of Common Stock if the Underwriters'
over-allotment option is exercised in full). Mr. Macdonald has, and will
continue to have, sufficient voting power to elect the entire Board of Directors
of the Company and, in general, to determine (without the consent of the
Company's other stockholders) the outcome of any corporate transaction or other
matters submitted to the stockholders for approval. See "Management" and
"Principal and Selling Stockholders."

BROAD MANAGEMENT DISCRETION IN USE OF PROCEEDS; RISKS ASSOCIATED WITH POTENTIAL
ACQUISITIONS

Except for the repayment of approximately $17.0 million of outstanding
indebtedness (see "Use of Proceeds"), the Company currently has no specific
plans for use of a significant portion of the net proceeds of the Offering.
Accordingly, management of the Company will have broad discretion with respect
to the use of these funds. In particular, the Company could use a portion of
these funds to acquire or invest in complementary businesses, products and
assets. Future acquisitions or joint venture investments by the Company may
result in potentially dilutive issuances of equity securities, the incurrence of
additional debt and amortization expenses related to goodwill and other
intangible assets, which could materially adversely affect the Company's
business and results of operations. In addition, acquisitions and joint ventures
involve numerous risks, including difficulties in the assimilation of the
operations, products and personnel of the acquired company, the diversion of
management's attention from other business concerns, risks of entering markets
in which the Company has no direct prior experience and the potential loss of
key employees. There can be no assurance that the Company will be able to
identify attractive or willing acquisition or joint venture candidates, or that
the Company will be able to complete an acquisition or joint venture investment
if such candidates are identified. The Company has no present agreements or
commitments with respect to any material acquisitions of other businesses,
products or assets, except for its commitment to acquire a 12.7% interest in SK
Trading. The Company is also investigating opportunities to participate in
certain recently announced phenol capacity expansions, although, it has not
reached any agreement or understanding with respect to any such participation.
See "Use of Proceeds."

10
<PAGE> 12

ABSENCE OF DIVIDENDS; RESTRICTIONS ON DIVIDENDS

The Company has never paid any cash dividends on the Common Stock and does
not anticipate cash dividends on the Common Stock at any time in the foreseeable
future. See "Dividend Policy." In addition, pursuant to certain of the Company's
credit agreements, the Company and its subsidiaries are restricted from paying
dividends. The Company has pledged its interests in certain of its subsidiaries
as security for certain of the Company's obligations.

NO PRIOR MARKET FOR COMMON STOCK; POSSIBLE VOLATILITY OF STOCK PRICE

Prior to the Offering there has been no public market for the Common Stock
and there can be no assurance that an active market will develop or be sustained
after the consummation of the Offering. Consequently, the initial public
offering price of the Common Stock offered hereby was determined by negotiations
among the Company, the Selling Stockholder and the Underwriters and may not be
indicative of future prices. See "Underwriting" for information relating to the
method of determining the initial public offering price.

The market price for the Common Stock may be significantly affected by such
factors as the Company's operating results, changes in any earnings estimates
publicly announced by the Company or by analysts, announcements of significant
business developments by the Company or its competitors and various factors
affecting the overall economic environment. In addition, the stock market has
experienced a high level of price and volume volatility, and market prices for
the stock of many companies, especially newly public companies, have experienced
wide price fluctuations not necessarily related to the fundamentals or operating
performance of such companies. These broad market fluctuations may adversely
affect the market price of the Company's Common Stock. See "Underwriting."

SHARES ELIGIBLE FOR FUTURE SALE

Future sales of a substantial number of shares of the Company's Common
Stock in the public market could adversely affect the market price of the Common
Stock and could impair the Company's ability to raise capital through the sale
of equity or equity-related securities. Upon completion of the Offering, the
Company will have 6,899,936 shares of Common Stock outstanding. Of such shares,
2,300,000 shares of Common Stock, representing approximately 33.3% of the issued
and outstanding shares of Common Stock (2,645,000 shares of Common Stock
representing 36.5% of the issued and outstanding shares of Common Stock if the
Underwriters' over-allotment option is exercised in full) will be freely
tradeable without restriction or further registration under the Securities Act,
unless purchased by "affiliates" of the Company as that term is defined in Rule
144 under the Securities Act ("Rule 144"). The remaining 4,599,936 shares of
Common Stock representing approximately 66.7% of the issued and outstanding
shares of Common Stock (approximately 63.5% of the issued and outstanding shares
of Common Stock if the Underwriters' over-allotment option is exercised in full)
are beneficially owned by affiliates of the Company and are therefore
"restricted securities" as that term is defined in Rule 144 and as such are
subject to certain holding period, volume limitations and other restrictions
prescribed by Rule 144. The Company, its officers, directors and certain
stockholders, who collectively hold all of such "restricted securities," have
agreed that they will not dispose of any shares of Common Stock for a period of
180 days after the date of the Underwriting Agreement relating to the Offering
without the written consent of the representatives of the Underwriters. Upon
expiration of such 180 day period, an aggregate of 228,288 shares will become
eligible for sale without restriction pursuant to Rule 144(k) or Rule 701 under
the Securities Act and approximately 4,371,648 additional shares will be
eligible for sale subject to the timing, volume and manner of sale restrictions
of Rule 144. See "Shares Eligible for Future Sale" and "Underwriting."

ANTI-TAKEOVER MEASURES

Certain provisions of the Company's Certificate of Incorporation and Bylaws
may be deemed to have anti-takeover effects and may delay, deter or prevent a
change in control of the Company that stockholders might otherwise consider in
their best interests. These provisions (i) allow only the Board of Directors,
the Chairman of the Board of Directors or the Chief Executive Officer of the
Company to call special meetings of the stockholders, (ii) establish certain
advance notice procedures for nomination of candidates for election as

11
<PAGE> 13

directors and for stockholder proposals to be considered at stockholders'
meetings, (iii) generally authorize the issuance of one or more classes of
"blank check" preferred stock, with such designations, rights and preferences as
may be determined from time to time by the Board of Directors and (iv) require
approval of holders of 80.0% of the outstanding voting power to amend or repeal
items (i), (ii) and (iv) above. See "Description of Capital Stock."

IMMEDIATE AND SUBSTANTIAL DILUTION

The amount by which the initial public offering price per share of Common
Stock exceeds the pro forma net tangible book value per share of Common Stock
after the Offering constitutes dilution to investors in the Offering. Persons
purchasing in the Offering will experience an immediate dilution of net tangible
book value of $7.39 per share. See "Dilution."

USE OF PROCEEDS

The net proceeds to the Company from its sale of 2,156,000 shares of Common
Stock offered hereby, based on an assumed initial public offering price of
$13.00 per share (the midpoint of the range of prices set forth on the cover of
this Prospectus), after deducting estimated offering expenses and underwriting
discounts, are estimated to be approximately $25.5 million ($29.6 million if the
Underwriters' over-allotment option is exercised in full). The Company will use
approximately $17.0 million of the net proceeds to repay certain long-term debt
and will have the remaining $8.5 million available to use for working capital
and general corporate purposes. A portion of the net proceeds may also be used
to acquire or invest in complementary businesses or products. Except for its
commitment of $500,000 to acquire a 12.7% interest in SK Trading the Company has
no present agreements or commitments and is not currently engaged in any
definitive negotiations with respect to any such transactions. In addition,
while JLM is investigating opportunities to participate in certain recently
announced phenol capacity expansions, it has not reached any agreement or
understanding with respect to any such participation and any discussions, to
date, have been merely exploratory in nature.

The indebtedness expected to be repaid as of March 31, 1997, consists of
(i) approximately $14.4 million incurred to finance the acquisition of the Blue
Island Plant and related capital expenditures, which accrues interest on the
unpaid principal balance at LIBOR plus 3.5% (9.2% per annum as of March 31,
1997) and matures in June 2002, (ii) approximately $1.7 million used to finance
the construction of the Company's headquarters in Tampa, which accrues interest
on the unpaid principal balance at 9.59% per annum and matures in June 2004 and
(iii) approximately $0.9 million incurred to finance the acquisition of the JLM
Terminal which accrues interest on the unpaid principal balance at 10.9% per
annum and matures in June 2000. The above amounts include prepayment penalties
and accrued interest totaling $1.1 million as of March 31, 1997.

Pending use of the net proceeds for the above purposes, the Company intends
to invest such funds in short-term, interest-bearing, investment grade
obligations.

The Company will not receive any proceeds from the sale of shares by the
Selling Stockholder.

DIVIDEND POLICY

The Company has never declared or paid cash dividends on its Common Stock
and does not anticipate that it will pay dividends in the foreseeable future.
The Company currently intends to retain future earnings, if any, for the future
operation and expansion of the Company's business. Any determination to pay
dividends in the future will be at the discretion of the Company's Board of
Directors and will be dependent upon the Company's results of operations,
financial restrictions, restrictions imposed by applicable law and other factors
deemed relevant by the Board of Directors. Furthermore, the Company and its
subsidiaries are restricted from paying dividends under certain credit
agreements to which they are a party. See "Risk Factors -- Absence of Dividends;
Restrictions on Dividends."

12
<PAGE> 14

CAPITALIZATION

The following table sets forth (i) the actual capitalization of the Company
as of March 31, 1997 and (ii) the capitalization of the Company as adjusted to
give effect to the Offering after deducting the estimated underwriting discount
and estimated offering expenses payable by the Company and the anticipated
application by the Company of the estimated net proceeds therefrom. See "Use of
Proceeds." The table should be read in conjunction with the Selected
Consolidated Financial Data and Consolidated Financial Statements of the Company
and Notes thereto included elsewhere herein.

<TABLE>
<CAPTION>
MARCH 31, 1997
---------------------
AS
ACTUAL ADJUSTED(2)
------- -----------
(IN THOUSANDS)
<S> <C> <C>
Total short-term debt(1).................................... $22,276 $19,001
======= =======
Long-term debt, excluding current maturities:
Bank debt................................................. $15,421 $ 2,657
Loan payable to stockholder............................... 905 905
------- -------
Total long-term debt.............................. 16,326 3,562
Stockholders' equity:
Common stock.............................................. 50 69
Additional paid-in capital................................ 490 25,415
Retained earnings......................................... 14,870 14,689
Foreign currency translation adjustment................... (152) (152)
Treasury stock............................................ (522) --
------- -------
Total stockholders' equity........................ 14,736 40,021
------- -------
Total capitalization........................................ $31,062 $43,583
======= =======
</TABLE>

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

(1) Consists of the current portion of long-term debt and loans payable.

(2) Adjusted to give effect to the issuance of 2,156,000 shares of Common Stock
by the Company at an assumed initial public offering price of $13.00 per
share and the application of a portion of the estimated net proceeds as of
the beginning of the period to repay certain indebtedness as described under
"Use of Proceeds." Also reflects the retirement of all shares of treasury
stock.

13
<PAGE> 15

DILUTION

As of March 31, 1997, the net tangible book value of the Company was
approximately $13.2 million, or $2.79 per share of outstanding Common Stock.
"Net tangible book value per share" represents the total amount of tangible
assets of the Company reduced by the amount of total liabilities and divided by
the number of shares of Common Stock outstanding after giving effect to the
stock split described in Note 18 of Notes to Consolidated Financial Statements.
After giving effect to the sale by the Company of the 2,156,000 shares of Common
Stock in the Offering at an assumed initial public offering price of $13.00 per
share and after deducting estimated underwriting discounts and offering
expenses, the net tangible book value of the Company at March 31, 1997 would
have been approximately $38.7 million or $5.61 per share of Common Stock,
representing an immediate increase in net tangible book value of approximately
$2.82 per share of Common Stock to existing stockholders and an immediate
dilution of approximately $7.39 per share of Common Stock to new investors in
the Offering. Dilution per share represents the difference between the price per
share paid by new investors and the net tangible book value per share
immediately after the Offering. The following table illustrates the per share
dilution:

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share...................... $ 13.00
Net tangible book value per share at March 31, 1997....... $ 2.79
Increase in net tangible book value per share attributable
to new investors in the Offering....................... 2.82
-------
Net tangible book value per share after the Offering................. 5.61
-------
Net tangible book value per share dilution to new investors in the
Offering........................................................... $ 7.39
=======
</TABLE>

The following table sets forth the number of shares of Common Stock
purchased from the Company, the total consideration paid to the Company and the
average price per share of Common Stock paid by existing stockholders and by new
investors purchasing shares of Common Stock in the Offering:

<TABLE>
<CAPTION>
CONSIDERATION PAID
SHARES PURCHASED TO THE COMPANY AVERAGE
------------------- --------------------- PRICE PER
NUMBER(1) PERCENT AMOUNT PERCENT SHARE
--------- ------- ----------- ------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders................ 4,743,936 68.8% $ 540,000 1.9% $ 0.11
New investors........................ 2,156,000 31.2 28,028,000 98.1 13.00
--------- ----- ----------- -----
Total...................... 6,899,936 100.0% $28,568,000 100.0%
========= ===== =========== =====
</TABLE>

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

(1) Based on 6,899,936 shares of Common Stock outstanding as of March 31, 1997,
after giving effect to the Offering. Excludes 459,200 shares of Common Stock
issuable upon the exercise of outstanding stock options or upon the vesting
of shares of restricted stock which are to be granted effective upon
completion of the Offering.

14
<PAGE> 16

SELECTED CONSOLIDATED FINANCIAL DATA

Set forth below is certain selected consolidated historical financial
information of the Company and its subsidiaries as of December 31, 1992, 1993,
1994, 1995 and 1996 and for the years then ended and for the three months ended
March 31, 1996 and 1997. Such information has been derived from the Company's
Consolidated Financial Statements and related Notes thereto as of such dates and
with respect to such periods, which Consolidated Financial Statements have been
audited by Deloitte & Touche LLP, independent auditors. Such firm's report on
the Company's Consolidated Financial Statements as of December 31, 1995 and 1996
and for each of the three years ended December 31, 1994, 1995 and 1996, is
included elsewhere in this Prospectus. See the Consolidated Financial Statements
and related Notes included elsewhere in this Prospectus and "Management's
Discussion and Analysis of Financial Condition and Results of Operations." The
selected consolidated financial data presented below as of and for the three
months ended March 31, 1996 and 1997 is unaudited and was prepared by management
of the Company on the same basis as the audited Consolidated Financial
Statements included elsewhere in this Prospectus and, in the opinion of
management of the Company, includes all adjustments necessary to present fairly
the information set forth therein.

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
--------------------------------------------------------- --------------------
1992 1993 1994 1995 1996 1996 1997
--------- --------- --------- --------- --------- -------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Revenues......................... $ 199,751 $ 174,322 $ 218,570 $ 289,371 $ 236,521 $ 57,861 $ 80,518
Cost of sales.................... 190,659 165,190 206,907 265,461 208,282 51,171 73,671
--------- --------- --------- --------- --------- -------- ---------
Gross profit................... 9,092 9,132 11,663 23,910 28,239 6,690 6,847
Selling, general and
administrative expenses........ 7,328 7,176 9,280 15,176 17,238 4,015 3,918
--------- --------- --------- --------- --------- -------- ---------
Operating income............... 1,764 1,956 2,383 8,734 11,001 2,675 2,929
Interest income
(expense) -- net............... 246 (128) (371) (1,757) (2,815) (641) (628)
Other income -- net.............. 126 318 453 152 197 64 41
Foreign currency exchange (loss)
gain -- net.................... -- -- (319) (1,075) (527) (799) 63
--------- --------- --------- --------- --------- -------- ---------
Income before minority interest
and income taxes............. 2,136 2,146 2,146 6,054 7,856 1,299 2,405
Minority interest in (loss)
income of subsidiaries......... (3) (20) (64) 5 (82) (7) (9)
--------- --------- --------- --------- --------- -------- ---------
Income from continuing
operations before income
taxes, discontinued
operations and extraordinary
item......................... 2,133 2,126 2,082 6,059 7,774 1,292 2,396
Income tax provision............. 736 969 973 2,430 3,417 970 836
--------- --------- --------- --------- --------- -------- ---------
Income from continuing
operations before
discontinued operations and
extraordinary item........... $ 1,397 $ 1,157 $ 1,109 $ 3,629 $ 4,357 $ 322 $ 1,560
========= ========= ========= ========= ========= ======== =========
Net income..................... $ 1,134 $ 858 $ 1,049 $ 3,182 $ 3,929 $ 239 $ 1,476
========= ========= ========= ========= ========= ======== =========
INCOME PER SHARE:
Income from continuing operations
before discontinued operations
and extraordinary item......... $ 0.28 $ 0.23 $ 0.22 $ 0.72 $ 0.89 $ 0.06 $ 0.33
Discontinued operations.......... (0.05) (0.06) (0.05) (0.09) (0.09) (0.02) (0.02)
Extraordinary item............... -- -- 0.03 -- -- -- --
--------- --------- --------- --------- --------- -------- ---------
Net income per share............. $ 0.23 $ 0.17 $ 0.20 $ 0.63 $ 0.80 $ 0.04 $ 0.31
========= ========= ========= ========= ========= ======== =========
Weighted average number of shares
outstanding.................... 5,011 5,011 5,011 5,011 4,878 5,011 4,744
Pro forma income per share from
continuing operations before
discontinued operations and
extraordinary item(1).......... $ 0.85 $ 0.29
Pro forma shares
outstanding(1)................. 6,284 6,150
OTHER FINANCIAL DATA:
Depreciation and amortization
expense........................ $ 322 $ 352 $ 572 $ 1,522 $ 2,524 $ 532 $ 678
EBITDA(2)........................ 2,086 2,308 2,955 10,256 13,525 3,207 3,607

</TABLE>

15
<PAGE> 17

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
---------------------------------------------------- ------------------
1992 1993 1994 1995 1996 1996 1997
-------- -------- -------- -------- -------- ------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital (deficit)........... $ 1,843 $ 1,047 $ 1,498 $ (274) $ (61) $ 5,119 $ (825)
Total assets........................ 37,642 35,945 55,031 86,498 87,292 81,455 108,745
Total debt.......................... 6,353 5,182 6,561 23,204 31,043 27,350 38,602
Total stockholders' equity.......... 6,295 6,462 7,411 10,519 13,444 10,618 14,736
</TABLE>

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

(2) EBITDA represents the operating income of the Company plus depreciation and
amortization. EBITDA is not a measure of financial performance under
generally accepted accounting principles ("GAAP") and may not be comparable
to other similarly titled measures by other companies. EBITDA does not
represent net income or cash flows from operations as defined by GAAP and
does not necessarily indicate that cash flows will be sufficient to fund
cash needs. As a result, EBITDA should not be considered an alternative to
net income as an indicator of operating performance or to cash flows as a
measure of liquidity. EBITDA is included in this Prospectus because it is a
basis upon which the Company assesses its financial performance, and certain
covenants of the Company's borrowing agreements are tied to similar
measures. Supplemental selected consolidated cash flow information is
included below:

<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
---------------------------------------------------- ------------------
1992 1993 1994 1995 1996 1996 1997
-------- -------- -------- -------- -------- ------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Net cash provided by (used in):
Operating activities................... $ (1,244) $ 3,487 $ 6,064 $ 2,746 $ 26 $(3,565) $ (5,894)
Investing activities................... (2,687) (3,229) (1,218) (4,661) (6,631) (1,480) (443)
Financing activities................... 4,900 (2,086) 85 (469) 6,705 4,411 7,485
Capital expenditures..................... 2,513 3,161 1,221 2,320 7,347 1,445 371
</TABLE>

16
<PAGE> 18

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

The following discussion should be read in conjunction with "Selected
Consolidated Financial Data" and the Consolidated Financial Statements of the
Company and the Notes thereto included in this Prospectus. In particular, for
information regarding the Company's operations in different industry segments
and geographic locations see Note 17 of Notes to Consolidated Financial
Statements.

This Prospectus contains forward-looking statements. All forward-looking
statements included in this Prospectus are based on current expectations and
information available to the Company on the date hereof, and the Company assumes
no obligation to update any such forward-looking statements. These
forward-looking statements involve risks and uncertainties including, among
others: (i) the cyclical nature of the worldwide chemical market, (ii) the
possibility of excess production capacity, (iii) fluctuations in the cost and
availability of raw material prices, (iv) the political and economic
uncertainties associated with international operations, (v) fluctuations in
foreign exchange, (vi) the risks associated with potential acquisitions and
(vii) the ability to successfully implement other features of the Company's
business strategy. See "Risk Factors." The Company's actual results could differ
materially from those anticipated in such forward-looking statements.

GENERAL

A majority of the Company's revenue is derived from the sale of commodity
chemicals, prices for which are subject to cyclical fluctuations. The Company
endeavors to enter into supply contracts that provide a fixed percentage profit
per unit of product sold. As a result, the Company believes that revenues may
not be an accurate indicator of the Company's overall financial performance.
Rather, revenues should be considered along with operating income and net income
to accurately measure the Company's financial performance. For example as
average acetone, phenol and propylene selling prices declined from 1995 to 1996,
the Company's revenues declined by approximately 18.3% over the same period.
However, in 1996 operating income and net income increased 26.0% and 23.5%,
respectively, in comparison to the prior year's results.

The Company's business consists of a manufacturing and a marketing segment.
The Company's manufacturing segment includes the operations of the Blue Island
Plant and the sale of acetone manufactured at the Mt. Vernon Plant. The
Company's marketing segment includes its distribution, storage and terminaling
operations and all other sourcing operations.

17
<PAGE> 19

Set forth below, for the periods indicated, is certain information
regarding the contributions by the manufacturing and marketing segments to the
Company's revenues, gross profit, operating income, gross margin and operating
margin. The marketing segment revenues include an assumed selling commission
determined in accordance with industry standards for the sale of products that
are manufactured at the Blue Island Plant. In addition, the marketing segment
operating income reflects the expenses associated with the sale of such
products. The marketing segment also includes an assumed allocation of revenues,
costs of goods sold and expenses associated with the sale of products sourced
from the Mt. Vernon Plant, which allocation has been determined on a basis
consistent with the assumed commission for sale of products manufactured at the
Blue Island Plant. Results for any one or more periods are not necessarily
indicative of annual results or continuing trends.

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------------------------------ ---------------------------------
1994 1995 1996 1996 1997
---------------- ---------------- ---------------- --------------- ---------------
(IN THOUSANDS, EXCEPT PERCENTAGES)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Marketing............. $193,836 88.7% $229,505 79.3% $176,274 74.5% $39,983 69.1% $64,186 79.7%
Manufacturing......... 24,734 11.3 59,866 20.7 60,247 25.5 17,878 30.9 16,332 20.3
-------- ----- -------- ----- -------- ----- ------- ----- ------- -----
Total revenues.......... $218,570 100.0% $289,371 100.0% $236,521 100.0% $57,861 100.0% $80,518 100.0%
Gross profit:
Marketing............. $ 8,919 76.5% $ 14,154 59.2% $ 15,241 54.0% $ 3,053 45.6% $ 3,265 47.7%
Manufacturing......... 2,744 23.5 9,756 40.8 12,998 46.0 3,637 54.4 3,582 52.3
-------- ----- -------- ----- -------- ----- ------- ----- ------- -----
Total gross profit...... $ 11,663 100.0% $ 23,910 100.0% $ 28,239 100.0% $ 6,690 100.0% $ 6,847 100.0%
Segment operating
income:
Marketing............. $ 4,045 86.7% $ 5,186 45.7% $ 5,011 39.8% $ 959 30.5% $ 1,367 39.0%
Manufacturing......... 621 13.3 6,164 54.3 7,586 60.2 2,186 69.5 2,137 61.0
-------- ----- -------- ----- -------- ----- ------- ----- ------- -----
Total segment operating
income................ $ 4,666 100.0% $ 11,350 100.0% $ 12,597 100.0% $ 3,145 100.0% $ 3,504 100.0%
Corporate expense....... (2,283) -- (2,616) -- (1,596) -- (470) -- (575) --
-------- ----- -------- ----- -------- ----- ------- ----- ------- -----
Total operating
income................ $ 2,383 100.0% $ 8,734 100.0% $ 11,001 100.0% $ 2,675 100.0% $ 2,929 100.0%

</TABLE>

<TABLE>
<CAPTION>
AS A PERCENTAGE OF SEGMENT REVENUES
--------------------------------------------------------------------------------
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------------------------ -----------------------------
1994 1995 1996 1996 1997
-------------- -------------- -------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross margin:
Marketing.................... 4.6% 6.2% 8.6% 7.6% 5.1%
Manufacturing................ 11.1 16.3 21.6 20.3 21.9
----- ----- ----- ----- -----
Total gross margin........... 5.3% 8.3% 11.9% 11.6% 8.5%
Segment operating margin:
Marketing.................... 2.1% 2.3% 2.8% 2.4% 2.1%
Manufacturing................ 2.5 10.3 12.6 12.2 13.1
----- ----- ----- ----- -----
Total segment operating
margin....................... 2.1% 3.9% 5.3% 5.4% 4.4%
</TABLE>

Marketing Segment

The marketing segment revenues are influenced largely by the volume of new
and existing products sold by the Company. The volume of products sold depends
on a number of factors, including growth in the homebuilding and automobile
sectors and the overall economic environment. The Company's supply agreements,
primarily relating to acetone, frequently contain a term providing for a fixed
percentage profit per unit of product sold. In addition, the Company's supplier
and customer contracts have a provision permitting the Company to purchase or
sell additional product at the Company's option, typically plus or minus 5.0% of
the contractual volume amount. As a result, during a period of pricing
volatility, the Company has the opportunity to improve its profitability by
exercising the appropriate option to either build inventory in a rising price
environment or to sell product for future delivery in a declining price
environment.

18
<PAGE> 20

In 1995, the Company instituted changes in its shipping and handling of
olefins in order to increase its olefins marketing gross profit margins.
Specifically, the Company now attempts to secure free on board ("FOB") shipping
terms for its bulk commodity sales and, when unable to do so, attempts to
negotiate extended free time for unloading vessels at the port of destination.
By doing so, the Company has reduced the risks of incurring charges for delays
in unloading vessels at the port of destination. In 1995, as a result of the
implementation of these changes, the Company experienced lower revenues, but
improved gross margins, from its olefins marketing activities.

In May 1997, the Company and its joint venture partners agreed to
restructure their investments in Olefins Terminal Corporation ("OTC"). As a
result, the Company and Ultramar Diamond Shamrock ("UDS") bought out the
interest of a third joint venture partner and each became a 50% owner of OTC.
The Company accounts for its investment in OTC through the equity method of
accounting. (See Note 5 of Notes to Consolidated Financial Statements). As part
of the restructuring, OTC's $3.6 million of existing indebtedness was refinanced
and the take-or-pay terminaling agreement between OTC and the Company's olefins
marketing operations was cancelled and a new terminaling arrangement
implemented. The original take-or-pay terminaling agreement resulted in charges
to JLM's pre-tax income of $1.3 million in 1994, $1.3 million in 1995, and $1.4
million in 1996, and the Company did not generate significant revenues at the
terminaling facility to offset these charges. Under the new arrangement,
effective as of January 1, 1997, the Company will pay terminal throughput fees
only when it utilizes the terminaling facility thus generating offsetting
revenues. The Company expects that this arrangement should improve the Company's
gross profit potential (as compared to historical results) because the Company
will no longer be required to incur terminal fees without accompanying revenues.

The Company's Venezuelan operations, which accounted for 4.3% of 1996 total
revenues, expose it to the risk of hyperinflation and currency devaluation. In
accordance with Statement of Financial Accounting Standards ("SFAS") No. 52,
Foreign Currency Translation, the effects of fluctuations in exchange rates in
translating the net assets of the financial statements in a hyperinflationary
economy require any gains or losses to be included in current net income. During
the period 1994 through April 1996, exchange controls, followed by rapid
devaluation, created translation losses which were charged against earnings in
each of the respective accounting periods. In April 1996, exchange controls were
lifted and have contributed to stabilizing the currency. See "Effect of
Inflation; Foreign Currency Exchange Rates" below for a further discussion of
the impact of exchange rates on the Company's results of operations.

Manufacturing Segment

The results of operations of the Company's manufacturing segment are
influenced by a number of factors, including economic conditions, competition
and the cost of raw materials, principally propylene and benzene. The Company's
ability to pass along raw material price increases to its customers is limited
because the commodity nature of the chemicals manufactured at the Blue Island
Plant restricts the Company's ability to increase prices.

As a result of an anticipated propylene price increase, in 1996 the Company
entered into a financial hedging contract in order to minimize its exposure in
the first quarter of 1997 to fluctuations in the price of propylene. Gains and
losses for such contracts are recognized as an adjustment of cost of sales at
the time the finished products are sold. As a result, in the first quarter of
1997 the Company had a gain on the hedging contract of approximately $0.5
million, which reduced cost of sales for this period by a corresponding amount.

The development of financial instruments to hedge against changes in the
prices of propylene and benzene has only recently occurred and the Company has
just begun using such instruments. The Company may seek periodically in the
future, to the extent available, to enter into financial hedging contracts for
the purchase of propylene and benzene in an effort to manage its raw material
purchase costs (see Note 2 of Notes to Consolidated Financial Statements). There
can be no assurance that the use of such instruments by the Company will be
successful. The Company can be exposed to losses in connection with such
contracts equal to the amount by which the fixed hedge price on the contract is
above the market price for such chemicals at the time of purchase.

19
<PAGE> 21

Since its acquisition in 1995, the Blue Island Plant has operated at or
near full capacity and, in order to economically expand its production capacity,
it would be necessary to increase its capacity to that of a worldscale facility.
However, physical limitations at the Blue Island Plant prohibit such an increase
and, as a result, the Company has no plans to expand the Blue Island Plant. In
1996, the first full year of ownership of the Blue Island Plant, approximately
60.2% of the Company's total segment operating income was derived from the
manufacturing segment.

Since 1994, the Company has sourced, on average, approximately 250 million
pounds annually of acetone from the Mt. Vernon Plant. The Company is required to
purchase all of the acetone produced at the Mt. Vernon Plant and not consumed by
GE Plastics. In 1996, the amount of acetone available to JLM was reduced by
approximately 15 million pounds and it is anticipated that over the next four
years the amount of acetone available to JLM will be further reduced by
approximately 35 to 40 million pounds. The reduction in the amount of acetone
sourced from the Mt. Vernon Plant is the result of increased consumption by GE
Plastics. In view of capacity limitations affecting the Blue Island Plant and
the anticipated reduction in product sourced from the Mt. Vernon Plant, the
Company anticipates any growth in the manufacturing segment will come as a
result of additional acquisitions or joint ventures.

Tax Matters

JLM accounts for income taxes on a consolidated basis and accrues for tax
liabilities based on its U.S. earnings. The Company's foreign subsidiaries file
tax returns in the country where incorporated. To the extent these subsidiaries
are profitable, taxes are payable based on that country's prevailing tax rate.
Upon repatriation of non-U.S. earnings, the U.S. allows a foreign tax credit to
be applied against the Company's U.S. consolidated return for the foreign taxes
paid by the Company's foreign subsidiaries. If losses are incurred, countries in
which the Company's foreign subsidiaries are incorporated generally allow the
losses to be carried forward and applied against income earned in subsequent
years. The Company's Venezuelan operation has incurred losses which have
generated net operating loss carryforwards ("NOL's") and, based on Venezuelan
tax guidelines, these NOL's may be carried forward for three years. However,
these losses are not deductible for U.S. federal income tax purposes and as a
result cannot be offset against U.S. pre-tax profits.

In an effort to reduce its U.S. federal and state income tax liability, in
1994 the Company established a foreign sales corporation ("FSC"). Under the
Internal Revenue Code, FSCs are granted tax incentives for exporting U.S.
produced goods overseas, and as such, there are specific tax benefits to the
Company for the products it exports. If specific conditions are met under the
Internal Revenue Code, up to 65.0% of the commission income earned by the FSC
from these export transactions may be exempted from U.S. taxation. Since the
formation of the FSC, the Company has met these requirements, thereby reducing
its taxable income.

Phenol, Acetone and Propylene Pricing and Volumes

Phenol, acetone and propylene are the principal commodity chemicals sold by
JLM and together accounted for approximately 65.0% of revenues in 1996. Set
forth below, for the periods indicated, is certain information regarding the
Company's quarterly average selling prices and volumes for acetone, phenol and
propylene. The Company believes that, for the periods indicated, its average
selling prices have generally followed market prices, which are driven by
changes in the balance between supply and demand, the price of feedstocks and
the level of general economic activity. Results for any one or more periods are
not necessarily indicative of annual results or continuing trends.

20
<PAGE> 22

QUARTERLY SALES PRICE PER POUND AND VOLUME OF PRODUCT SOLD

<TABLE>
<CAPTION>
ACETONE PHENOL PROPYLENE
--------------- -------------- --------------
$ LBS $ LBS $ LBS
---- ----- ---- ---- ---- ----
(POUNDS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
1994
First quarter................................... 0.12 97.8 0.21 31.1 0.14 71.2
Second quarter.................................. 0.14 97.9 0.28 10.9 0.16 85.4
Third quarter................................... 0.16 97.6 0.27 9.8 0.24 38.9
Fourth quarter.................................. 0.24 77.6 0.31 8.1 0.30 56.6
1995
First quarter................................... 0.25 92.1 0.42 8.4 0.29 13.9
Second quarter.................................. 0.27 100.8 0.36 16.9 -- --
Third quarter................................... 0.30 93.6 0.33 30.3 0.20 5.5
Fourth quarter.................................. 0.30 101.7 0.30 33.6 0.13 9.2
1996
First quarter................................... 0.25 115.5 0.30 29.9 0.12 9.0
Second quarter.................................. 0.23 106.3 0.28 38.1 0.23 34.2
Third quarter................................... 0.20 110.0 0.34 30.1 0.22 12.4
Fourth quarter.................................. 0.19 92.1 0.36 31.9 0.20 42.1
1997
First quarter................................... 0.18 114.2 0.35 30.4 0.25 90.4
</TABLE>

Based upon information currently available to the Company, it is believed
that prices for acetone and phenol will strengthen during the remainder of 1997
and that propylene prices will show continued volatility. See
"Business -- Industry Overview."

RESULTS OF OPERATION

Three Months Ended March 31, 1997 Compared to Three Months Ended March 31,
1996

Revenues. Revenues increased $22.6 million to $80.5 million for the three
months ended March 31, 1997 from $57.9 million for the comparable period in
1996, an increase of 39.2%. Revenues for the marketing segment increased $24.2
million to $64.2 million for the three months ended March 31, 1997 from $40.0
million for the comparable period in 1996, an increase of 60.5%. The increase in
marketing segment revenues was principally the result of increased sales of
propylene, principally in Asia. Revenues for the manufacturing segment decreased
by $1.6 million to $16.3 million for the three months ended March 31, 1997 from
$17.9 million for the comparable period in 1996, a decrease of 8.6%. The
decrease in manufacturing segment revenues was principally the result of a
decline in selling prices for acetone, which was only partially offset by an
increase in selling prices for phenol. Sales volumes of acetone from the Mt.
Vernon Plant and acetone and phenol from the Blue Island Plant were
substantially the same for the three months ended March 31, 1997 and 1996.

Gross Profit. Gross profit increased $0.1 million to $6.8 million for the
three months ended March 31, 1997 from $6.7 million for the comparable period in
1996, an increase of 2.3%. As a percentage of revenues, gross profit decreased
to 8.5% for the three months ended March 31, 1997 from 11.6% for the comparable
period in 1996. Gross profit for the marketing segment increased $0.2 million to
$3.3 million for the three months ended March 31, 1997 from $3.1 million for the
comparable period in 1996, an increase of 6.9%, principally as a result of the
new terminaling arrangement with OTC (See Note 18 of Notes to Consolidated
Financial Statements). Gross profit for the manufacturing segment decreased by
$0.1 million to $3.6 million for the three months ended March 31, 1997 from $3.7
million for the comparable period in 1996, a decrease of 1.5%. The increase in
total gross profit was principally the result of increases in the selling prices
for phenol in the first quarter of 1997, reductions in manufacturing costs
associated with the successful implementation of a new manufacturing technique
in the production of cumene at the Blue Island Plant and a reduction in raw
material costs resulting from a successful hedge of its propylene purchases.
During the three months ended March 31, 1997, approximately 13 million pounds of
propylene purchases were covered by a fixed financial hedge for which the
Company had a gain of $492,970, which reduced its cost of sales for this period
by a corresponding amount. The reduction in cost of sales resulting from the
propylene hedge was partially offset by an increase in the cost of

21
<PAGE> 23

benzene, which the Company elected not to hedge. Gross profit in both the
manufacturing and marketing segments was also adversely impacted by decreases in
acetone selling prices.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses decreased $0.1 million to $3.9 million for the three
months ended March 31, 1997 from $4.0 million for the comparable period in 1996,
a decrease of 2.4%. This decrease was principally as a result of reduced
compensation cost associated with a reduction in sales personnel.

Operating Income. Operating income increased $0.2 million to $2.9 million
for the three months ended March 31, 1997 from $2.7 million for the comparable
period in 1996, an increase of 9.5%. This increase was principally the result of
the factors that increased gross profit discussed above together with the
reduction in selling, general and administrative expenses achieved in the first
three months of 1997.

Interest Expense -- Net. Interest expense decreased slightly by $13,000 to
$628,000 for the three months ended March 31, 1997 from $641,000 for the
comparable period in 1996, a decrease of 2.0%.

Foreign Currency Exchange (Loss) Gain. Foreign currency exchange increased
$862,000 to a gain of $63,000 for the three months ended March 31, 1997 from a
loss of $799,000 for the comparable period in 1996. This gain was principally
the result of the Company's activities in Venezuela.

Income Tax Provision. The Company's provision for income taxes decreased
$0.2 million to $0.8 million for the three months ended March 31, 1997 from $1.0
million for the comparable period in 1996, a decrease of 13.8%. The Company's
effective tax rate for the three months ended March 31, 1997 was 36.0% as
compared to 99.5% for the comparable period of 1996. The rate for 1997 was
significantly lower than that of prior periods due to the increased proportion
of international sales associated with the Company's foreign sales corporation.
Excluding Venezuelan operations, the effective tax rate for the three months
ended March 31, 1997 would have been approximately 35.3% compared to the
effective tax rate for the three months ended March 31, 1996 of 46.9%.

Net Income. Net income increased $1.3 million to $1.5 million for the
three months ended March 31, 1997 from $0.2 million for the comparable period in
1996. The increase in net income was due to the factors stated above.

Year Ended December 31, 1996 Compared to Year Ended December 31, 1995

Revenues. Revenues decreased $52.9 million to $236.5 million for the year
ended December 31, 1996 from $289.4 million for the prior year, a decrease of
18.3%. Revenues for the marketing segment decreased $53.2 million to $176.3
million for the year ended December 31, 1996 from $229.5 million for the prior
year, a decrease of 23.2%. Substantially all of the decrease was a result of
changes made by the Company in its olefins marketing strategy to reduce its
exposure to shipping and handling charges. To a lesser extent, the decrease was
also attributable to a decrease of $12.9 million in opportunistic sales of
certain products in 1995 that did not recur in 1996 and a decrease in revenues
of $6.8 million from Venezuelan operations primarily as a result of the
devaluation of the local currency. These decreases more than offset the increase
in revenues of $9.0 million from a full year of the Company's European
operations in 1996 as compared to nine months in 1995. Revenues for the
manufacturing segment increased $0.3 million to $60.2 million for the year ended
December 31, 1996, from $59.9 million for the prior year, an increase of 0.6%.
This increase was principally the result of a decline in sale of acetone from
the Mt. Vernon Plant which was offset by the $17.8 million increase in sales
resulting from a full year of the Blue Island Plant's operations in 1996
compared to seven months in 1995.

Gross Profit. Gross profit increased $4.3 million to $28.2 million for the
year ended December 31, 1996 from $23.9 million for the prior year, an increase
of 18.1%. As a percentage of revenues, total gross profit increased to 11.9% in
1996 compared to 8.3% for the prior year, primarily due to the full-year
contribution of higher gross margin products from the Blue Island Plant and
higher distribution margins. Gross profit for the marketing segment increased
$1.0 million to $15.2 million for the year ended December 31, 1996, from $14.2
million for the prior year, an increase of 7.7%. Despite generally lower selling
prices on many products, margins were significantly higher in 1996 as compared
to the prior year principally as a result of the exercise by the Company of its
options on certain acetone sales contracts. Gross profit for the manufacturing
segment increased

22
<PAGE> 24

$3.2 million to $13.0 million for the year ended December 31, 1996 from $9.8
million for the prior year, an increase of 33.2%, primarily as a result of
including a full year of operations of the Blue Island Plant which generally
carry higher gross margins.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $2.0 million to $17.2 million for the year
ended December 31, 1996 from $15.2 million for the prior year, an increase of
13.6%. The increase was primarily the result of including a full year of
operations of the Blue Island Plant. To a lesser extent, the marketing segment
experienced increased distribution costs in 1996 as compared to 1995, which more
than offset reduced compensation costs for this period.

Operating Income. Operating income increased $2.3 million to $11.0 million
for the year ended December 31, 1996 from $8.7 million for the prior year an
increase of 26.0%. The increase was principally the result of the increase in
gross profit, which was partially offset by the increase in selling, general and
administrative expenses.

Interest Expense -- Net. Interest expense increased $1.0 million to $2.8
million for the year ended December 31, 1996 from $1.8 million for the prior
year principally due to the additional interest expense associated with the
inclusion of the Blue Island Plant for the full year and to a lesser extent to
increased borrowings used to fund working capital requirements associated with
the Company's marketing segment.

Foreign Currency Exchange (Loss) Gain. Foreign currency exchange decreased
$0.6 million to a loss of $0.5 million for the year ended December 31, 1996 from
a loss of $1.1 million for the prior year. Substantially all of these losses
were the result of the Company's activities in Venezuela. In December 1995, the
Company began using the market rate, in accordance with SFAS No. 52, to
recognize foreign currency exchange gains and losses for its Venezuelan
subsidiary rather than using the official Venezuelan rate. The effect of using
the market rate resulted in an additional $0.4 million foreign exchange loss
during 1995. During the first quarter of 1996, the market rate for U.S. dollars
rose from 350 to 470 bolivars per dollar, at which time it stabilized for the
remainder of 1996. See "Effect of Inflation; Foreign Currency Exchange Rates"
discussed below.

Income Tax Provision. The Company's provision for income taxes increased
$1.0 million to $3.4 million for the year ended December 31, 1996 from $2.4
million for the prior year, an increase of 40.6%, principally as a result of the
Company's inability to apply $1.2 million of pre-tax losses from its Venezuelan
operations to reduce its U.S. taxable income. The Company's effective income tax
rate increased to 44.4% for 1996 as compared to 40.1% for 1995.

Net Income. Net income increased $0.7 million to $3.9 million for the year
ended December 31, 1996 from $3.2 million for the prior year, an increase of
23.5%, principally as a result of the factors discussed above.

Year Ended December 31, 1995 Compared to Year Ended December 31, 1994

Revenues. Revenues increased $70.8 million to $289.4 million for the year
ended December 31, 1995 from $218.6 million for the prior year, an increase of
32.4%. Revenues for the marketing segment increased $35.7 million to $229.5
million for the year ended December 31, 1995 from $193.8 million for the prior
year, an increase of 18.4%. The increase in the marketing segment's revenues
resulted primarily from the start-up of the Company's European subsidiary in
April 1995, and from the expansion of the Company's Venezuelan operations. In
addition, the marketing segment benefitted from higher sales volumes and selling
prices of its two largest products, acetone and phenol. Revenues for the
manufacturing segment increased $35.2 million to $59.9 million for the year
ended December 31, 1995 from $24.7 million for the prior year, an increase of
142.0%. The increase in manufacturing segment revenues was principally the
result of increased selling prices for acetone from the Mt. Vernon Plant and the
inclusion of seven months of operations of the Blue Island Plant after its
acquisition in June 1995.

Gross Profit. Gross profit increased $12.2 million to $23.9 million for
the year ended December 31, 1995 from $11.7 million for the prior year, an
increase of 105.0%. The marketing segment's gross profit increased $5.2 million
to $14.2 million for the year ended December 31, 1995 from $8.9 million for the
prior year, an increase of 58.7% as a result of increased revenues as explained
above and higher margins. As a percentage of revenues, total gross profit
increased to 8.3% in 1995 as compared to 5.3% for 1994 primarily as a result of
the higher gross

23
<PAGE> 25

margins of the Company's manufacturing segment and Venezuelan operations. The
manufacturing segment's gross profit increased $7.1 million to $9.8 million for
the year ended December 31, 1995 from $2.7 million for the prior year, an
increase of 255.5%, primarily resulting from including operations of the Blue
Island Plant for a portion of the year.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $5.9 million to $15.2 million for the year
ended December 31, 1995 from $9.3 million for the prior year, an increase of
63.5%, primarily as a result of including the expenses associated with the Blue
Island Plant and the expansion of JLM's international operations, principally in
Venezuela as described above.

Operating Income. Operating income increased $6.3 million to $8.7 million
for the year ended December 31, 1995 from $2.4 million for the prior year, an
increase of 266.5%. The increase was primarily due to including the operations
of the Blue Island Plant which more than offset the increase in selling, general
and administrative expenses.

Interest Expense -- Net. Interest expense increased $1.4 million to $1.8
million for the year ended December 31, 1995 from $0.4 million for the prior
year. The increase was principally the result of the borrowings made to effect
the acquisition of the Blue Island Plant and to a lesser extent the result of
increased borrowings used to fund working capital requirements associated with
the expanded marketing segment.

Foreign Currency Exchange (Loss) Gain. Foreign currency exchange increased
$0.8 million to a loss of $1.1 million for the year ended December 31, 1995 from
a loss of $0.3 million for the prior year. The loss was primarily due to
Venezuelan operations.

Income Taxes. The Company's provision for income taxes increased $1.4
million to $2.4 million for the year ended December 31, 1995 from $1.0 million
for the prior year, an increase of 149.7%, principally due to the increase in
income. The Company's effective income tax rate decreased to 40.1% in 1995 as
compared to 45.1% in 1994, as a result of the increase in foreign currency loss
which is not deductible for tax purposes.

Net Income. Net income increased $2.1 million to $3.2 million for the year
ended December 31, 1995 from $1.1 million for the prior year, an increase of
203.3%. The increase in net income was due to the factors stated above.

LIQUIDITY AND CAPITAL RESOURCES

Net cash used in operating activities increased $2.3 million to $5.9
million for the period ended March 31, 1997 from $3.6 million for the prior
period in 1996. This increase was primarily the result of increases in the
Company's working capital accounts which more than offset an increase in net
income of $1.2 million. Net cash used in investing activities decreased $1.1
million to $0.4 million for the period ended March 31, 1997 from $1.5 million
for the prior period in 1996.

Net cash provided by financing activities increased $3.1 million to $7.5
million for the period ended March 31, 1997 as compared to $4.4 million provided
in the prior period of 1996. As of March 31, 1997, the Company had net
borrowings on its loans payable and long-term debt of $7.6 million. For the
period ended March 31, 1997, Aurora and Phoenix made distributions to their
stockholders of $73,698. As of March 31, 1997, the Company had a borrowing
capacity of $21.0 million under various credit agreements as described in Note 7
of Notes to the Consolidated Financial Statements.

Net cash provided by operating activities decreased $2.7 million to $26,402
for the year ended December 31, 1996 as compared to $2.7 million in the prior
year. This decrease was primarily the result of changes in the Company's working
capital accounts which more than offset an increase in net income of $0.7
million. Net cash used in investing activities increased $1.9 million to $6.6
million for the year ended December 31, 1996 as compared to $4.7 million the
prior year. In 1996, $7.3 million of cash was used for capital expenditures as
compared to $2.3 million in the prior year. In 1996, $3.7 million of the capital
expenditures related to the zeolite efficiency upgrades at the Blue Island
Plant. The Company also received proceeds of $0.8 million in 1996 in connection
with the sale of certain assets held for sale.

24
<PAGE> 26

Net cash provided by financing activities increased $7.2 million to $6.7
million for the year ended December 31, 1996 compared to $0.5 million used in
the prior year. In 1996, the Company had net borrowings on its loans payable,
long-term debt and stockholder loans of $7.2 million. In addition, Aurora and
Phoenix made distributions to their stockholders of $0.5 million. As of December
31, 1996, the Company had a borrowing capacity of $38.2 million under various
credit agreements as described in Note 7 of Notes to the Consolidated Financial
Statements.

Concurrent with the Offering, the Company will repay $17.0 million of
outstanding indebtedness and expects to have available borrowing capacity of
$53.8 million under its credit agreements. The Company will also have $8.4
million of available cash on hand. For information regarding the material terms
of the Company's credit facilities, see Notes 7 and 8 to Notes to Consolidated
Financial Statements.

The Company is currently constructing an additional storage tank at the JLM
Terminal. The proposed storage tank will increase JLM's current storage capacity
at the JLM Terminal by 3 million pounds. The Company expects construction on the
storage tank to be completed in July 1997 with a total anticipated construction
cost of $0.6 million. Costs associated with evaluation, planning, design and
construction are ongoing and have been funded through the Company's current
credit facilities.

In April 1997, the Company entered into an agreement to purchase a 12.7%
interest in SK Chemical Trading Pte. Ltd. The agreement provides that upon
commencing construction of a chemical plant in Vietnam, the Company is required
to pay an additional $0.5 million as additional consideration for its ownership
interest in SK Chemical Trading Pte. Ltd. The Company expects to fund this
payment through the Company's current credit facilities. See
"Business -- Business Strategy."

JLM believes its liquidity and capital resources, including its ability to
borrow additional amounts under its credit agreements, are sufficient to meet
its needs through 1998 and to permit it to continue to implement its business
strategy.

ENVIRONMENTAL

It is the Company's policy to comply with all Environmental Laws and the
Company believes that it is currently in substantial compliance with all
applicable Environmental Laws pertaining to the operations of its facilities and
treatment of wastes that are generated by operations at those facilities. In
1996, the Company's expenditures relating to maintaining compliance with
Environmental Laws were approximately $0.7 million. In 1997, the Company has
budgeted approximately $1.2 million for environmental compliance costs
consisting of approximately $0.5 million for a one-time capital expenditure
relating to the installation of a thermal oxidizer at the Blue Island Plant in
response to new regulatory requirements and approximately $0.7 million of
expenditures relating to ongoing compliance with Environmental Laws. These
expenditures will be funded primarily from cash flow from operations. There can
be no assurance, however, that the actual levels of expenditures relating to
environmental compliance will not exceed the budgeted amounts either as a result
of changes in Environmental Laws to make them more stringent or the discovery of
any additional or unknown environmental confirmations relating to the Company's
operations. Any requirement compelling the Company to spend significant amounts
in excess of those budgeted for environmental compliance matters could have a
material adverse effect on the Company's financial condition or results of
operations.

Elevated levels of certain petroleum-related substances, organic chemicals
and metals, which the Company believes are a result of either use by the prior
owner of the site and/or migration from neighboring facilities, have been
detected in groundwater and/or soils at the JLM Terminal. The prior owner of the
site is currently implementing remedial work to address onsite petroleum
contamination and has agreed to indemnify the Company for up to $7.5 million for
environmental liabilities at the JLM Terminal. Low levels of various organic
compounds, which are the result of either historical use of the site prior to
the Company's acquisition thereof and/or migration from neighboring facilities
have also been detected in the soils and groundwater at the Blue Island Plant.
However the Company has not been required, and it does not believe that it will
be required, to plan, undertake, or fund any remedial activities at the Blue
Island Plant. Low levels of organic compounds slightly in excess of regulatory
reporting thresholds were detected in the ground water at the Company's Polychem
facility. The Company has been addressing the environmental issues that exist at
that facility and analytical data most

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recently collected indicate very low levels of target contaminants. The Company
is presently investigating whether the site should remain on the list of
Hazardous Sites Inventory.

The Company does not currently believe that a material amount of funds will
be required to complete remediation at any site. If the Company is required to
conduct remediation at the Blue Island Plant or remediation for which it is not
indemnified at the JLM Terminal or to complete remediation at the Polychem
facility, however, the level of expenditure that may be required to satisfy the
Company's environmental liabilities could have a material adverse effect on its
financial condition or results of operations. See "Business -- Environmental
Regulation."

EFFECT OF INFLATION; FOREIGN CURRENCY EXCHANGE RATES

Inflation generally affects the Company by increasing the cost of labor,
equipment and raw materials. The Company does not believe that inflation has had
any material effect on the Company's business over the last three years.

A portion of the Company's revenues are denominated in foreign currencies,
principally Venezuelan bolivars, Dutch gilders and Canadian dollars. As a
result, the Company's operations may be effected by exchange rate fluctuations.
If foreign currency denominated revenues are greater than costs, the translation
of foreign currency denominated costs and revenues into U.S. dollars will
improve profitability when the foreign currency strengthens against the U.S.
dollar and will reduce profitability when the foreign currency weakens. In
addition, the remeasurement of foreign currency denominated assets and
liabilities into U.S. dollars gives rise to foreign exchange gains or losses
which are included in the determination of net income. The Company attempts to
monitor its exposure to currency fluctuations by continuously reviewing actual
and anticipated changes in the exchange rate between the U.S. dollar and the
principal foreign currencies in which portions of the Company's revenues are
denominated. The Company also analyzes the actual and anticipated economic
condition in each of the foreign countries in which it has operations, as well
as its own actual and anticipated sources and uses of foreign currencies.

In instances where the Company has entered into an agreement either
obligating it to make a payment in a foreign currency or entitling it to receive
a payment in a foreign currency, the Company may enter into a forward currency
contract to eliminate the effect of foreign currency fluctuations on such
payables or receivables. The Company only enters into forward foreign exchange
contracts with respect to specific payables and receivables and such contracts
only involve amounts equal to the amount of such payables and receivables.
Accordingly, the Company generally does not realize any gain or loss on account
of such contracts.

In May 1994, the Venezuelan government, following a period of rapid
devaluation in their currency, the bolivar, implemented certain exchange
controls including a frozen exchange rate for converting the bolivar into other
currencies. This "official" rate was initially established at 170 bolivars per
U.S. dollar. In December 1995, the Venezuelan government changed the official
exchange rate to 290. In April 1996, the exchange controls were lifted, and the
exchange rate immediately rose to 470 bolivars per U.S. dollar, remaining in a
range of 470 to 480 through December 1996. These periods of devaluation in the
bolivar adversely impacted JLM's Venezuelan operating results by lowering profit
margins and generating foreign currency losses which are reported in the
Consolidated Financial Statements. As of the date hereof, the bolivar has
remained relatively stable during the last 12 months.

EFFECT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

The Financial Accounting Standards Board recently issued SFAS No. 128,
Earnings Per Share. The objective of SFAS No. 128 is to simplify the computation
of earnings per share and to make the U.S. standard for computing earnings per
share more compatible with the earnings per share standards of other countries.
JLM does not anticipate that SFAS No. 128 will have a significant impact on pro
forma income per share.

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BUSINESS

OVERVIEW

JLM is a leading marketer and distributor of certain commodity chemicals,
principally acetone and phenol. The Company believes that it is the second
largest marketer of acetone and the fifth largest supplier of phenol in North
America. JLM is also a global distributor of olefins, principally propylene, as
well as a variety of other commodity and specialty chemicals. In order to
provide stable and reliable sources of supply for its products, the Company (i)
maintains long-established supplier relationships with several major chemical
companies (ii) manufactures phenol and acetone at its Blue Island Plant and
(iii) sources acetone from its joint venture manufacturing operation. The
Company's principal products, acetone, phenol and propylene are used in the
production of adhesives, coatings, forest product resins, paints,
pharmaceuticals, plastics, solvents and synthetic rubbers. The Company sells its
products worldwide to over 600 customers including Ashland Chemical, Inc.
("Ashland"), B.F. Goodrich Co. ("B.F. Goodrich"), Borden, Inc. ("Borden"),
Hoechst Celanese Corporation, E.I. DuPont de Nemours and Company ("DuPont"),
Dutch State Mines ("DSM"), Eli Lilly & Co., Georgia Pacific Corporation
("Georgia Pacific"), ICI Acrylics Inc. ("ICI Acrylics"), Minnesota, Mining and
Manufacturing Company, Neste Resins Corporation ("Neste"), Rohm & Haas Company
("Rohm & Haas") and Shell Chemicals Canada, Inc. ("Shell Chemicals Canada"). In
1996, sales to the foregoing customers accounted for approximately 21.0% of the
Company's revenues. In 1996, no single customer accounted for more than 10% of
the Company's revenues.

In 1977, John L. Macdonald, the Chief Executive Officer and President of
the Company, co-founded Gill and Duffus Chemicals, Inc., the domestic chemical
trading operation of the London-based Gill and Duffus Holding PLC. As part of a
management buy-out in 1982, Mr. Macdonald purchased Gill and Duffus Chemicals,
Inc., and subsequently merged into Steuber Company, Inc., the domestic
operations of the Steuber Group, a worldwide chemical distribution company. In
1986, Mr. Macdonald purchased the U.S. assets of the Steuber Group and formed
JLM as the successor.

Since 1986, the Company has grown rapidly by expanding its product sourcing
arrangements and product offerings, acquiring manufacturing and terminaling
facilities and providing superior customer service and product quality and
availability. Among the Company's most significant corporate milestones are (i)
its investment in 1987 in the Mt. Vernon Partnership, (ii) the formation in 1992
of OTC, (iii) the acquisition of the JLM Terminal in 1992 and (iv) the
acquisition of Blue Island Plant in 1995. In addition, the Company entered into
its first exclusive marketing agreement with Sasol Chemical Industries (PTY)
Ltd. (South Africa) ("SasolChem") in 1987 and began its expansion into the
international markets with the opening of offices in Canada in 1987, Venezuela
in 1992 and Europe in 1995.

INDUSTRY OVERVIEW

Phenol

Phenol is produced through the oxidation of cumene, which is produced from
propylene and benzene. Acetone is produced as a co-product during this
manufacturing process in the approximate ratio of 0.6 pounds of acetone for
every 1.0 pound of phenol. Approximately 80.0% of global acetone production is
produced as a co-product in the manufacture of phenol, and, as a result, phenol
demand largely determines acetone production levels. The markets for phenol and
acetone are cyclical and sensitive to changes in the balance between supply and
demand, the price of feedstocks and the level of general economic activity.

According to industry sources, current world phenol capacity is
approximately 13.8 billion pounds (4.5 billion pounds in North America). The two
largest end markets for phenol are phenolic resins, which is the Company's only
market for phenol, and bisphenol A ("BPA"). Phenolic resins are used extensively
as bonding agents and adhesives for wood products such as plywood and granulated
wood panels, and account for approximately 37.0% of total phenol demand. BPA is
used as a raw material in the manufacture of high performance plastics such as
those used in automobiles, household appliances, electronics and protective
coatings applications. BPA, the fastest growing application for phenol,
currently accounts for approximately 28.0% of phenol demand and is expected to
grow to approximately 33.0% by the year 2000. Phenol for the production of

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<PAGE> 29

BPA requires a greater degree of purification and is produced almost exclusively
by manufacturers of BPA for their internal consumption. Any phenol not consumed
internally by such manufacturers generally is sold to other end users. The
Company believes sales of excess phenol by BPA producers will be relatively
limited as the demand for BPA continues to increase, which should have a
positive effect on phenol prices generally.

Phenol selling prices and margins were at cyclical highs during 1995 and
1996. The Company expects worldwide and North American phenol demand to grow by
approximately 3.2% and 2.5% per year, respectively, through 1999. The growth in
demand is anticipated to be highest in Southeast Asia and, to a lesser extent,
the United States. The Company also expects there to be little change in the
levels of phenol production through 1998. As a result, production utilization
rates should remain relatively high. Capacity expansions by several major phenol
producers of approximately 3 billion pounds worldwide (1.2 billion pounds in the
U.S.) starting in the year 2000 have recently been announced. It is unclear how
many of these projects will ultimately be completed and the Company believes
that it is possible that some of these announced capacity additions will not be
built as scheduled.

Acetone

The largest end market for acetone is as a raw material in the production
of methyl methacrylate ("MMA"), which is used as a chemical intermediate to
produce acrylic sheeting and other chemical products, and as an ingredient for
surface coating resins for the automotive and construction markets. Acetone is
also used as a raw material in the production of BPA and as an industrial
solvent.

The U.S. Federal government has recently exempted acetone from all
regulations as a volatile organic compound ("VOC"). To date, 32 states have
followed the Federal government's ruling and the Company expects acetone to be
exempted from VOC regulation by all 50 states in the near future. The Company
believes that the exemption of acetone from VOC regulation will lead to
increased demand for acetone based coatings and solvents.

According to industry sources, current world acetone production capacity is
approximately 8.5 billion pounds (2.9 billion pounds in North America). Selling
prices and margins for acetone were at cyclical highs in 1995 and early 1996,
similar to those for phenol, driven by growth in the use of acetone for the
production of MMA, BPA (for engineering plastics), and a rejuvenated market for
acetone based solvents. World demand is expected to grow approximately 2.5%
annually through 1999. Recently announced capacity additions in Europe and the
U.S. for phenol, if completed, would increase the capability for acetone
production, which could be partially offset by closure of on-purpose production
over the next few years. The Company expects acetone demand in North America to
grow approximately 2.8% annually through 1999, driven primarily by growth in the
BPA market of approximately 4.9% annually, renewed growth in acetone-based
solvents of 3.0% annually, and a continued recovery in the MMA market.

Propylene

According to industry sources, current world propylene capacity is
approximately 100 billion pounds with global demand for propylene expected to
grow approximately 5.0% per year through 1999. North American capacity is
currently approximately 30 billion pounds with North American demand expected to
grow approximately 2.5% per year through 1999. The U.S. is expected to take a
significant role in producing and sourcing propylene to international consumers.

Over 50.0% of globally produced propylene is used in the manufacture of
polypropylene which, in turn, is used primarily in plastic film and molded parts
in consumer items, including automobile components, brushes, carpeting, rope and
tape.

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<PAGE> 30

BUSINESS STRATEGY

- Expand Sources of Supply through Joint Ventures, Acquisitions and
Strategic Relationships. The Company will continue to seek to identify
and pursue domestic and international opportunities to expand its sources
of supply for products in or consistent with its core business. These
opportunities may include additional joint ventures, acquisitions and
strategic relationships. Consistent with this strategy, the Company formed
the Mt. Vernon joint venture with General Electric Company ("GE ") and an
affiliate of CITGO in 1987, acquired the Blue Island Plant in 1995 and
established a long term supplier relationship with SasolChem in 1988.
Certain phenol producers have recently announced their intentions to add
approximately 3 billion pounds of annual production capacity starting in
the year 2000. JLM is currently exploring opportunities to participate in
certain of these expansions in order to secure additional sources of
phenol and acetone.

- Increase Sales of Existing Products; Add New Products. The Company will
continue to develop its existing relationships and establish new
relationships to increase the overall volume and types of products it
distributes by (i) increasing the amount distributed by the Company of an
existing supplier's output of a given chemical, (ii) distributing
additional products for existing suppliers and (iii) adding new chemical
producers to its supplier base. During 1996, the Company entered into
agreements to distribute approximately 70 million additional pounds of
chemicals for both existing and new suppliers in 1997, including ARCO
Chemical Company ("ARCO Chemical"), Goodyear Tire & Rubber Co.
("Goodyear") and Monsanto Company ("Monsanto"). In addition, the Company
recently expanded the product line it distributes for SasolChem. To date
in 1997, the Company has entered into agreements with CONDEA Vista Company
("CONDEA Vista") to distribute butanol and with GE Plastics to become a
U.S. distributor of styrene.

- Continue International Expansion. The Company currently has
international operations in South America, Europe and Asia. JLM intends to
continue to utilize its chemical market experience, distribution and
logistics capabilities and industry relationships to increase its
international presence, particularly in the growing chemical markets of
Asia and South America. JLM recently purchased a minority interest in SK
Asia and has agreed to purchase a minority interest in SK Trading, both of
which are participating in a Vietnamese joint venture that intends to
construct a chemical plant in Vietnam that will produce dioctyl phthlate,
a chemical used in the manufacture of plastics such as PVC. The Vietnamese
joint venture also intends to construct terminaling and storage facilities
in Vietnam and Malaysia. The Company believes that its indirect
participation in the Vietnamese joint venture also will provide it with
increased access to the Asian market.

PRODUCTS AND CUSTOMERS

JLM markets more than 50 chemical products to over 600 customers worldwide.
In 1996, sales of acetone, phenol and propylene accounted for approximately
65.0% of the Company's total revenues. Set forth below is certain information
about the Company's sales of acetone, phenol, propylene and certain other
products, including representative customers for such products.

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<PAGE> 31

Acetone

In 1996, JLM distributed approximately 424 million pounds of acetone, of
which approximately 63.0% was sourced from the Blue Island Plant and the Mt.
Vernon Plant. The largest end market application of acetone is as a raw material
in the production of MMA, an important chemical intermediate used to make
aircraft windows, lighting fixtures, medical/dental parts, storm doors and
taillight lenses. Additional end market applications for acetone include
adhesives, pharmaceuticals, solvents, paints and plastics. JLM's acetone
customers include Ashland, B.F. Goodrich, DuPont, ICI Acrylics and Rohm & Haas.

Phenol

In 1996, the Company distributed approximately 130 million pounds of
phenol, of which approximately 74.0% was sourced from the Blue Island Plant. The
two largest end market applications for phenol are phenolic resins, which are
used in adhesives and bonding agents in plywood and other forest products, and
BPA. JLM's phenol customers include Borden, Georgia Pacific and Neste.

Propylene

In 1996, the Company distributed approximately 98 million pounds of
propylene. The largest end market application for propylene is as a raw material
in the production of polypropylene which is used in the manufacture of appliance
parts, automobile components, brushes, carpeting, rope and tape. Propylene is
also used in the production of foams for furniture, insulation, elastomers,
molded goods and pharmaceuticals. The Company also markets other olefins,
including butadiene and ethylene. The Company's olefins customers include
Dupont, Exxon Corporation ("Exxon"), GE and Goodyear. JLM's propylene customers
include Borealis Exploration Limited, DSM and The Dow Chemical Corporation ("Dow
Chemical").

Other Products

In addition to acetone, phenol and propylene, the Company markets and
distributes other commodity and specialty chemicals including acetophenone,
benzoic acid, butadiene, cumene, DDVP, esters, ethylene, fumaric acid, ketones,
lindane and methanol. Some of JLM's customers for these products include BASF
Corp., Dow Chemical, DSM, Goodyear, Lilly Industries Inc., PPG Industries Inc.,
Repsol, S.A. (Spain) ("Repsol") and Shell Chemicals Canada.

During each of the past three years, no single distribution relationship,
customer or group of affiliated customers has accounted for more than 10.0% of
the Company's revenues.

MANUFACTURING AND PRODUCT SOURCING

In order to support its worldwide marketing and distribution capabilities,
the Company continually seeks to acquire assets and establish relationships to
provide consistent and reliable sources of products. JLM sources a majority of
its products from its Blue Island Plant and the Mt. Vernon Plant. In 1996, the
Blue Island Plant and Mt. Vernon Plant collectively supplied approximately 63.0%
of the total acetone sold by JLM and the Blue Island Plant supplied
approximately 74.0% of the total phenol sold by JLM.

Blue Island

The Company manufactures cumene, phenol, acetone and certain co-products
including alpha methyl styrene ("AMS") and acetophenone at the Blue Island
Plant. The Blue Island Plant has an annual manufacturing capacity of
approximately 145 million pounds of cumene, 95 million pounds of phenol, 58
million pounds of acetone, 5 million pounds of AMS and 1 million pounds of
acetophenone. The phenol produced at the Blue Island Plant can only be used in
the production of phenolic resins and not in the production of BPA.

The Blue Island Plant is strategically located south of Chicago, Illinois,
near primary barge and rail transportation terminals that facilitate economic
and efficient delivery of raw materials and shipment of finished products. In
addition, this location affords the Company significant freight cost advantages
in servicing its

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customer base (which is primarily located in the Midwest) in comparison to
competitors located on the U.S. Gulf Coast.

The Blue Island Plant utilizes a newly installed state-of-the-art UOP
zeolite catalyst to produce cumene, the key raw material used to manufacture
phenol and acetone. This process has improved the efficiency, profitability and
quality of the cumene production and has eliminated the need to purchase
supplemental cumene from outside sources. Additionally, the new technology has
improved the purity of the Company's AMS and, as a result, the Company's average
margin for AMS has increased significantly.

The raw materials required for the production of cumene are propylene and
benzene. The Company, under a long-term supply agreement which expires in 2005,
obtains propylene via direct pipeline from the Clark Oil refinery located
adjacent to the Blue Island Plant. The Company believes that the terms of its
propylene supply contract provide it with a significant raw material cost
advantage over many of its competitors, in part because the Company does not
have to pay for any transportation costs for the propylene purchased under the
supply agreement. The Company purchases benzene from three major petrochemical
producers, generally under supply contracts at market rates.

Currently, the Blue Island Plant is operating at full capacity and in order
to economically expand production capacity, it would be necessary to increase
its capacity to that of a worldscale facility. However, physical limitations at
the Blue Island Plant prohibit such an increase and as a result the Company has
no plans to expand the Blue Island Plant. The Company is continually exploring
opportunities to expand its manufacturing capabilities through acquisitions or
joint ventures. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Liquidity."

Mt. Vernon Partnership

In addition to its ownership of the Blue Island Plant, JLM participates in
a manufacturing joint venture with GE and an affiliate of CITGO (the "Mt. Vernon
Partnership") which owns and operates the Mt. Vernon Plant. The Company owns a
2.0% partnership interest in the Mt. Vernon Partnership, an Indiana limited
partnership, that was formed to purchase the Mt. Vernon Plant from GE in
November 1987. The Company's principal purpose for entering into the partnership
was to secure a long-term source of supply for acetone. In 1988, the Company
entered into a long-term acetone sales agreement with the Mt. Vernon
Partnership. Under the terms of the acetone agreement, the Company is obligated
through the year 2002, and thereafter unless the agreement is terminated upon
prior notice, to purchase all of the acetone produced at the Mt. Vernon Plant
and not consumed by GE Petrochemicals, Inc. ("GE Plastics"). The agreement
further provides that the Mt. Vernon Partnership cannot terminate the agreement
as long as JLM is a partner in the Mt. Vernon Partnership. The initial term of
this agreement expires in 2002 and continues thereafter for successive one-year
terms unless one year's notice is otherwise provided by either party.

The Company has been since 1988 and believes that it will in the future be
able to continue to profitably market all the acetone offered to it under this
agreement. Since 1994, the Company has sourced on average approximately 250
million pounds of acetone annually from the Mt. Vernon Plant. In 1996, the
amount of acetone available to JLM from the Mt. Vernon Plant was reduced by
approximately 15 million pounds and it is anticipated over the next four years
that the amount of acetone available to JLM will be further reduced by
approximately 35 to 40 million pounds as a result of increased consumption by GE
Plastics.

Under the terms of the partnership agreement for the Mt. Vernon
Partnership, the management of the business and affairs of the partnership is
controlled by the partners owning at least 66.0% of the partnership interests.
The Mt. Vernon Partnership has entered into an operation and maintenance
agreement with GE pursuant to which GE manages, operates and maintains the Mt.
Vernon Plant. The partnership agreement generally provides GE with the right at
any time to require the sale of JLM's interest in the Mt. Vernon Partnership to
a third party selected by GE and the right after December 31, 2008 to directly
purchase JLM's interest in the partnership.

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Supplier Relationships

In addition to its manufacturing facility and joint venture, JLM sources
its products through long-established supplier relationships with many of the
largest and most well-known chemical companies worldwide. Suppliers to JLM
include ARCO Chemicals, Goodyear, Monsanto, Repsol and SasolChem. The structure
of the Company's long-term relationships with its outside suppliers helps the
Company mitigate the impact of cyclical market fluctuations in product supply
and price to which typical spot traders or distributors are exposed. In a
majority of JLM's supply contracts, the purchase price paid by JLM is not
determined until after JLM sells the product, and is generally based on a fixed
percentage profit per unit of product sold. In contrast, the typical spot trader
or distributor may agree to a fixed purchase price prior to the sale, taking the
market risk of effecting a successful resale of the product. In addition, spot
traders do not typically enter into long-term supply contracts or relationships,
thereby reducing their ability to service the needs of both customers and
suppliers.

In 1988, the Company entered into an agreement to purchase acetone from
SasolChem, which was to remain in effect until either party gave six months
notice of termination. In 1992, the Company entered into new agreements with
SasolChem to purchase additional quantities of acetone, methyl-ethyl ketone and
n-propanol. These new agreements are on terms substantially similar to its
existing acetone agreement with SasolChem. The Company has since expanded its
relationship with SasolChem to include the purchase and distribution of methyl-
isobutyl ketone and ethanol in North America.

The Company has recently entered into an agreement to distribute styrene
monomer for GE Plastics. Styrene is the primary component used in the production
of synthetic rubbers and plastics. Additionally, the Company has entered into
agreements with ARCO Chemical Company, CONDEA Vista and Monsanto to distribute
n-propanol, butanol and ethyl acetate, respectively.

TERMINALING AND STORAGE

The Company, with an affiliate of UDS, participates in a joint venture
which owns and operates the OTC Terminal at the mouth of the Houston, Texas ship
channel in Bayport, Texas. The facility is located on 2.4 acres of land and has
throughput capacity of approximately 900 million pounds. The facility includes
twin storage spheres with a total capacity of approximately 22 million pounds of
propylene and is capable of handling and storing gaseous products at a full
range of temperature and pressure conditions. The OTC Terminal is believed to be
the only independent propylene export terminal in the U.S. and its Gulf Coast
location is well suited to enable U.S. producers to place their products into
the global market. See "Properties."

The OTC Terminal is operated by Baytank (Houston) Inc. ("Baytank"), a major
terminal owner and operator, under a long-term contract. OTC also leases from
Baytank the land upon which the OTC Terminal is located. The Company has been
engaged by OTC to provide certain administrative and managerial services to OTC,
including on-site supervision of terminal operations and certain bookkeeping and
administrative matters.

The Company has additional terminal and storage facilities located at the
JLM Terminal on the Cape Fear River in Wilmington, North Carolina. The JLM
Terminal is located on 14 acres of land, is accessible to ship, barge, rail and
truck, is capable of handling a broad range of products including methanol,
oxygenated solvents and inorganic chemicals, and has a total capacity of 15
million gallons. The facility includes three tank truck loading bays, six
loading bays for jumbo rail cars, laboratory services and a computerized weigh
scale. Of the total storage capacity at the JLM Terminal, approximately 2.5
million gallons of capacity are used by the Company and the remainder are
subject to long-term leases to third parties expiring from 1998 to 2002. See
"Properties."

The Company maintains inventory at approximately 15 locations across North
America and in a number of locations in Europe and South America. In addition to
the Company's owned terminal and storage facilities located at the JLM Terminal
and OTC Terminal, the Company has approximately 3.5 million gallons of liquid
storage capacity and approximately 500,000 pounds of palletized storage capacity
pursuant to short-term leases at various locations in the U.S. The Company
believes its storage facilities are adequate for the Company's current and
anticipated near-term needs. Should the need arise for substantial amounts of
additional storage facilities in the future, the Company does not currently
anticipate any material difficulties in obtaining sufficient new storage
facilities through purchase or lease at prevailing commercially reasonable
rates. The Company operates a fleet of

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more than 100 rail cars and has long-term working relationships with a number of
national barge lines and tank truck carriers. See "Properties."

SALES AND MARKETING

The Company focuses on bulk quantity sales (generally not smaller than
truck load lots) of commodity chemicals to over 600 customers worldwide in a
broad range of industries. Product sourcing and marketing efforts are handled
principally by the Company's sales team of 33 full time employees. Individual
salespersons are assigned principal responsibility for specific supplier or
customer relationships and for specific products. In addition, each salesperson
is required to be familiar with all of the Company's products, suppliers and
customers. As a result, the Company believes it is able to respond to customer
and supplier needs as well as to take advantage of changing market conditions
more effectively than its competitors.

JLM maintains offices in the U.S., Canada, the Netherlands, Venezuela and
Thailand and recently opened two affiliate offices in India and one in Columbia.
JLM also has an alliance with a distributor in Spain and operates through agency
relationships in Italy, Brazil, Peru and Taiwan. In addition, the Company
recently purchased a 25.0% interest in SK Asia, and has agreed to purchase a
12.7% interest in SK Trading, two Singapore-based companies participating in a
Vietnamese joint venture. The Vietnamese joint venture intends to construct a
chemical plant in Vietnam that will produce dioctyl phthlate, a chemical used in
the production of plastics such as PVC. The Vietnamese joint venture also
intends to construct terminaling and storage facilities in Vietnam and Malaysia.

Approximately 2.7% of the Company's revenues in 1996 were from sales of
specialty chemicals. Prices for specialty chemicals are generally subject to
smaller fluctuations than are those for commodity chemicals and specialty
chemical sales generally carry higher gross margins. In establishing supply and
distribution relationships in specialty chemicals, the Company attempts to
leverage existing relationships and knowledge of the needs and objectives of
both suppliers and customers.

The Company's position as a large volume marketer, combined with JLM's
knowledge of customer and supplier needs and objectives, affords it
opportunities to effect product exchanges. Engaging in product exchange
transactions allows the Company to solve customer or supplier problems and take
profitable advantage of identified market trends. The Company's ability to
engage in swap transactions is enhanced by its terminal and storage capabilities
which also enable the Company to accumulate inventory to take advantage of
market trends.

In its olefins marketing activities, JLM focuses on the international
marketing of olefin petrochemical gases which require specialized shipping,
handling and storage. The Company's olefins marketing activities to date have
been largely trading oriented. However, the Company believes that its long-term
relationships with key industry participants and its access to terminal and
storage facilities will enable the Company to become a large volume marketer of
olefins. The Company has long-term supply and sales contracts with a number of
major olefins producers and consumers in North America, South America, Europe
and Asia. For example, the Company has supply relationships with Repsol and
Copene-Petroquimica do Nordeste S.A. to source butadiene for the U.S. and with
UDS, Exxon and Lyondell Petrochemical Company to export propylene from the U.S.
Some of the Company's significant olefins customers include DuPont, Exxon, GE
and Goodyear.

COMPETITION

The Company operates in a highly competitive industry. Many of the
Company's competitors have significantly greater financial, production and other
resources than the Company. Many of the Company's competitors are large,
integrated chemical manufacturers, some of whom have their own basic raw
material resources. The Company competes to a lesser extent with certain
chemical distribution companies and chemical traders.

The Company competes in its marketing and distribution activities by
providing superior customer service. In the opinion of the Company, the key
elements of effective customer service include reliable and timely delivery of
products, satisfying customer needs for quality and quantity and competitive
pricing. The Company's long-term supplier relationships, terminal and storage
facilities, transportation capabilities and industry and

33
<PAGE> 35

product knowledge support the Company's efforts to provide superior customer
service. In addition, the Blue Island Plant's Midwest location gives it
significant freight cost advantages in selling to its customers in the Midwest
over its competitors' production facilities located in the Southeast.

EMPLOYEES

As of March 31, 1997, the Company and its consolidated subsidiaries had
approximately 161 full-time employees. Of these, 82 employees were in management
and administration, 33 in sales and marketing and 46 were in production and
distribution. Approximately 27 of the Company's domestic employees at the Blue
Island Plant are covered by a collective bargaining agreement with the Oil,
Chemical and Atomic Workers Union. This agreement expires on October 31, 1998.
The Company considers its relations with both its union and non-union employees
to be satisfactory.

PROPERTIES

The following table sets forth certain information as of March 31, 1997,
relating to the Company's principal facilities:

<TABLE>
<CAPTION>
APPROXIMATE
FACILITY PRINCIPAL ACTIVITIES; LOCATION SQUARE FEET OWNED/LEASED
- -------- ------------------------------ ----------- ------------
<S> <C> <C> <C>
Corporate Headquarters Administration Headquarters; 25,000 Owned
Tampa, Florida
Blue Island Plant Manufacturing; 958,000 Owned
Blue Island, Illinois
OTC Terminal Terminaling and Storage; 104,000 Co-owned
Houston, Texas
JLM Terminal Terminaling and Storage; 609,000 Owned
Wilmington, North Carolina
North America Sales Offices Blue Island, Illinois * Owned
Houston, Texas * Owned
Wilmington, North Carolina * Owned
Toronto, Canada * Leased
International Sales Offices Rotterdam, Netherlands * Leased
Caracas, Venezuela * Leased
Maracaibo, Venezuela * Leased
Valencia, Venezuela * Leased
</TABLE>

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

* Less than 25,000 square feet

ENVIRONMENTAL REGULATION

The Company and its operations are subject to federal, state, local and
foreign environmental laws, rules, regulations, and ordinances concerning
emissions to the air, discharges to surface and subsurface waters, and the
generation, handling, storage, transportation, treatment, disposal and import
and export of hazardous materials ("Environmental Laws"). Compliance with such
Environmental Laws may result in significant capital expenditures by the
Company. Moreover, under certain Environmental Laws, the Company may be liable
for remediation of contamination at certain of its current and former
properties. For example, under the Comprehensive Environmental Response,
Compensation and Liability Act of 1990, as amended ("CERCLA") and similar state
laws, the Company and prior owners and operators of the Company's properties may
be liable for the costs of removal or remediation of certain hazardous or toxic
materials on, under or emanating from the properties, regardless of their
knowledge of, or responsibility for, the presence of such materials. CERCLA and
similar state laws also impose liability for investigation, cleanup costs and
damage to natural resources on persons who dispose of or arrange for the
disposal of hazardous substances at third-party sites. In addition, under the
Resource Conservation and Recovery Act of 1976 ("RCRA"), the holder of a permit
to treat or store hazardous waste can

34
<PAGE> 36

be required to remediate environmental pollution from solid waste management
areas at the permitted facility regardless of when the contamination occurred.

Although it is impossible to predict precisely what effect Environmental
Laws will have on the Company in the future, the Company believes, based on past
experience and Management's best assessment of future events, that any
environmental liabilities will be determined and incurred over an extended
period of time, allowing the Company to fund them through its operating cash
flow and mitigating their impact on the Company's results of operations.
Accordingly, the Company further believes that the effect of any such
environmental liabilities would not be material in relation to the Company's
consolidated financial position at December 31, 1995 and 1996 and March 31,
1997. Depending on future operating results, however, the environmental
liabilities to be recorded in a given annual or quarterly period may result in
charges that materially affect the Company's results of operations for that
period.

Although elevated levels of certain petroleum-related substances, organic
chemicals and metals have been detected in groundwater and/or soils at the
Company's Wilmington, North Carolina terminal facilities, the Company believes
that the presence of such substances is the result of either historical use
prior to the Company's acquisition of the site from Union Oil Company of
California ("Unocal") in 1992 and/or migration from neighboring facilities
(including an adjacent Superfund site that is currently being remediated).
Unocal, the prior owner of the site, is currently implementing a state approved
Remedial Action Plan ("RAP") to address onsite petroleum contamination. The
Company is not subject to any requirements under the RAP and believes that the
prior owner or the owners of the neighboring properties bear responsibility for
any additional remediation of petroleum-related contaminants. Except for the
ongoing remediation, no significant cleanup activities have been conducted at
the JLM Terminal since it was acquired by the Company in 1992. Should remedial
activities be conducted to address contaminants that are not petroleum-related,
the Company has insufficient information regarding the types, concentrations,
and possible cleanup levels of onsite contaminants to reasonably estimate costs
that may be associated with such remediation. In addition, the Company may be
entitled to be indemnified for such costs under the 1992 Asset Purchase
Agreement between the Company and Unocal. Pursuant to indemnification provisions
set forth in the agreement, Unocal agreed to indemnify the Company up to $7.5
million for environmental liabilities at the JLM Terminal.

The Company believes that the low levels of various organic compounds
detected in soils and groundwater at the Blue Island plant are the result of
historical use of the site prior to its acquisition by the Company in 1995
and/or migration from neighboring facilities. The concentrations of some of
these compounds exceed established state groundwater standards and/or cleanup
objectives. However, the Company also believes that the likelihood of either
state or federal environmental regulatory agencies seeking remediation in the
near term is low, based on the location of the facility, the character of the
area (each of which are factors in assessing risk), and the fact that the site
is pending removal from the federal list of contaminated sites. To date, the
Company has not been required to plan, undertake, or fund any remedial
activities.

Levels of organic compounds slightly in excess of regulatory reporting
thresholds were detected in groundwater at the Polychem plant owned by the
Company. The Company has been addressing the problem, and recent analytical
results show that the levels of contaminants have decreased to acceptable
levels. Accordingly, the Company has requested that state authorities permit
closure of the remediation at the site.

The Company does not believe that a material amount of funds will be
required to complete remediation at any site.

LEGAL PROCEEDINGS

The Company is not a party to any legal proceedings, other than claims and
lawsuits arising in the normal course of the Company's business. The Company
does not believe that such claims and lawsuits, individually or in the
aggregate, will have a material adverse effect on its business.

The Internal Revenue Service (the "IRS") has concluded a federal income tax
examination of the Company's 1988, 1989 and 1990 tax years and has proposed
adjustments for such years. The Company has filed a protest of the proposed
adjustments and is awaiting a determination by the Service with respect to the

35
<PAGE> 37

Company's protest. The Company believes that the outcome of the examination will
not have a material adverse effect on the financial condition or results of
operations of the Company.

The IRS has also commenced a federal income tax examination for the
Company's 1992, 1993 and 1994 tax years. The examination is in its final stages,
and the Service has not asserted any income tax deficiencies or definitively
indicated all the issues that will be involved in the examination. The issues
that have been raised by the Service thus far do not indicate that any impact on
the taxable years at issue would be material. However, there can be no assurance
that additional issues impacting future taxable years will not be raised and
resolved adversely to the Company during the course of the examination or
subsequent proceedings.

36
<PAGE> 38

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The Company's Board of Directors is composed of four members. Upon the
completion of the Offering, the size of the Board of Directors will be increased
to seven members and three additional directors will be named to fill the
additional positions. Directors generally serve for one-year terms and until
their successors are duly elected and qualified. Upon consummation of the
Offering, the Certificate of Incorporation and Bylaws of the Company will
provide that the size of the Board of Directors may be changed (but not to fewer
than three or more than nine members) by resolution adopted by the Board of
Directors of the Company.

The following table sets forth certain information regarding the Company's
existing directors, executive officers, the three nominees who will be elected
as additional directors effective upon the consummation of the Offering and a
key employee of the Company. Each of the nominees for director named below has
agreed to serve as a director of the Company upon his election to the Board.

<TABLE>
<CAPTION>
DIRECTORS AND EXECUTIVE OFFICERS AGE POSITIONS
- -------------------------------- --- ---------
<S> <C> <C>
John L. Macdonald............................ 53 President, Chief Executive Officer and Director
Thaddeus J. Lelek............................ 48 Vice President and Director
Wilfred J. Kimball........................... 58 Vice President and Director
Frank A. Musto............................... 40 Vice President, Chief Financial Officer and
Director
John T. White................................ 66 Vice President and General Counsel
Michael J. Molina............................ 45 Vice President -- Tax and Audit and Secretary
Linda L. Sato................................ 36 Vice President and Treasurer
NOMINEES FOR DIRECTORS
- ----------------------
Roger C. Kahn................................ 45 Director
J. Robert Mehall............................. 55 Director
Jerry L. Weinstein........................... 61 Director
KEY EMPLOYEE
- ------------
Thomas Johannes van der Weijde............... 46 Vice President, JLM International, Inc.
</TABLE>

John L. Macdonald founded the Company in April 1986 and has served as the
President, Chief Executive Officer and a director of the Company throughout its
history. Mr. Macdonald also co-founded Gill and Duffus Chemical, Inc., in 1978
and served as its President and Chief Executive Officer until the conclusion of
a leveraged buyout in 1983 in which Gill and Duffus Chemical, Inc., merged with
the Steuber Company, Inc. Mr. Macdonald received a B.A. from Colorado College
and has more than 28 years experience in the chemical industry.

Thaddeus J. Lelek has been with the Company since its formation in 1986,
serving in a variety of senior marketing positions. In 1986 he was elected as
Vice President of JLM Marketing. Mr. Lelek has more than 27 years of experience
in the chemical industry. Mr. Lelek is principally responsible for formulating
and implementing the Company's marketing strategies and programs for North
American sales. From 1983 to 1986, Mr. Lelek was also responsible for marketing
in North America for Steuber Company, Inc. and from 1980 to 1983, Mr. Lelek
headed up the national sales effort for distribution for Gill and Duffus
Chemicals, Inc. Mr. Lelek was also employed in various capacities, including
National Sales Manager for certain products, for Gulf Oil Chemicals, Inc., from
1970 to 1979. Mr. Lelek graduated with a B.S. in Chemical Engineering from
Worchester Polytechnic Institute.

Wilfred J. Kimball was hired as Vice President of JLM Chemicals and Vice
President of the Company following the acquisition by the Company in 1995 of the
Blue Island Plant from BTL Specialty Resins Corp. ("BTL Corporation"). Mr.
Kimball is primarily responsible for the operation of the Company's Blue Island
Plant. In addition, he is responsible for the operations of JLM Terminal and the
day to day direction of certain of the Company's sales force and support staff.
From 1990 to 1995 Mr. Kimball was President of BTL Corporation and in this
capacity was primarily responsible for the Blue Island Plant. From 1985 to 1990,
Mr. Kimball served

37
<PAGE> 39

in various executive capacities with BTL Corporation, including Vice President
of Manufacturing and Engineering and President of Plyophen Chemicals, a division
of BTL Corporation. Prior to 1985, Mr. Kimball served for 22 years in various
capacities with Union Carbide Canada LTD. Mr. Kimball received a B.S. in
Chemical Engineering from the University of Brunswick.

Frank A. Musto has been with the Company since its formation in 1986. Mr.
Musto was elected as Vice President and Chief Financial Officer in 1994. Mr.
Musto is principally responsible for the Company's banking relationships,
current cash management systems and investment of excess funds. Prior to joining
the Company, from 1979 to 1981, and from 1983 to 1985, Mr. Musto was the Marine
Accountant, Controller and Treasurer for the Steuber Company, Inc. From 1981 to
1982, Mr. Musto was the controller for Amerpol International, New York City, a
custom house broker, freight forwarder and agent for the government controlled
fishing fleet in Poland. Mr. Musto graduated from Bernard M. Baruch College with
a B.B.A. in Accounting.

John T. White has served as Vice President and General Counsel of the
Company since 1990. Mr. White is the Company's chief legal officer and is
principally responsible for the legal affairs of the Company and its
consolidated subsidiaries. From 1987 to 1989, Mr. White was Senior Vice
President for Paribas Corporation, a North American investment banking firm.
From 1970 to 1987, Mr. White was a partner with the New York City law firm of
Wender, Murase & White, and from 1962 to 1970 Mr. White was a partner in the
international law firm of Baker & McKenzie, resident in the firm's New York City
office. Mr. White received a bachelor's degree from Harvard College, a Juris
Doctorate from Columbia and a L.L.M. from New York University.

Michael J. Molina joined the Company in 1986 as controller. In 1995, he was
promoted to his current position as Vice President -- Tax and Audit. Mr. Molina
is primarily responsible for taxes, audits and management information systems.
From 1992 to 1995, Mr. Molina served as Vice President of Administration. Mr.
Molina received a B.A. from Johns Hopkins University and a M.B.A. from Pace
University.

Linda L. Sato has been employed by the Company since 1986 when she was
hired as the Company's Assistant Controller. In 1994 she was designated as Vice
President and Controller. In 1996, Ms. Sato was promoted to Vice President and
Treasurer. Ms. Sato graduated from the University of Connecticut with a B.A. in
Accounting.

Roger C. Kahn has been a Managing Director of Oppenheimer & Co., Inc. in
investment banking since 1989 and is currently the head of its Industrial
Products Group.

J. Robert Mehall has been Executive Vice President -- Corporate
Development, Petrochemicals/NGLs and Crude Oil Supply for Ultramar Diamond
Shamrock since 1996. From 1982 to 1996 Mr. Mehall was Executive Vice President
and Senior Vice President of Diamond Shamrock, Inc.

Jerry L. Weinstein has been Vice President of Owens Corning -- Specialty &
Foam Products Division since 1994. From 1980 until 1994, Mr. Weinstein was
President and Chief Executive Officer of UC Industries, Inc., an independent
manufacturer of plastic products for the building materials industry.

Thomas Johannes van der Weijde has been employed by the Company since
January 1995 when he was hired as Vice President of JLM International, Inc. Mr.
van der Weijde is principally responsible for directing the Company's
international sales operations (other than for olefins). From 1988 to 1995, Mr.
van der Weijde was employed by Repsol, the Spanish state oil company, as
Managing Director -- Europe. From 1979 to 1988, Mr. van der Weijde was employed
by Carless Refining and Marketing B.V. Rotterdam, initially as the European
Sales Manager and later as Managing Director. Mr. van der Weijde received a
Bachelors degree in Physics from the University of Amsterdam.

None of the executive officers or directors are related to one another.
Executive officers are elected by and serve at the discretion of the Board of
Directors.

DIRECTORS COMPENSATION

Directors who are not employees of the Company ("Non-Employee Directors")
will receive an annual retainer fee of $10,000 and an automatic grant of options
to purchase 1,000 shares of Common Stock each year in accordance with the
Company's Non-Employee Directors' Stock Plan (the "Directors' Plan").

38
<PAGE> 40

COMMITTEES OF THE BOARD OF DIRECTORS

Upon the consummation of the Offering, the Board of Directors will create
an Audit Committee and Compensation Committee.

The Audit Committee's principal responsibilities will be to recommend
annually a firm of independent auditors to the Board of Directors, to review the
annual audit of the Company's Consolidated Financial Statements and to meet with
the independent auditors of the Company from time to time in order to review the
Company's general policies and procedures with respect to audits and accounting
and financial controls.

The principal responsibilities of the Compensation Committee will include
the establishment of compensation policies for the executive officers of the
Company and administration of any stock-based compensation plans.

EXECUTIVE COMPENSATION

Summary Compensation Table

The following table sets forth all compensation awarded to, earned by, or
paid for services rendered to the Company in all capacities during the year
ended December 31, 1996 for each of the named executive officers (as defined
under applicable Securities and Exchange Commission Rules) of the Company (the
"Named Executive Officers"):

<TABLE>
<CAPTION>
ANNUAL COMPENSATION(1)
-------------------------- ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(2)
- --------------------------- ---- -------- -------- ---------------
<S> <C> <C> <C> <C>
John L. Macdonald 1996 $168,486 $250,000 $ 9,486
President and CEO
Thaddeus J. Lelek 1996 108,333 10,000 --
Vice President
Wilfred J. Kimball 1996 135,483 15,000 39,141
Vice President
Frank A. Musto 1996 91,683 26,000 9,500
Vice President and
Chief Financial Officer
John T. White 1996 113,866 27,500 --
Vice President and
General Counsel
</TABLE>

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

(1) The Company was not subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended, in 1995 or 1994. Accordingly, information
with respect to 1995 or 1994 is not required to be disclosed. Other Annual
Compensation consisting of perquisites does not exceed the minimum amounts
required to be reported pursuant to Securities and Exchange Commission Rules
and the column has therefore been deleted. No options, SARs or other
long-term compensation awards were granted in 1996.

(2) For Mr. Macdonald and Mr. Musto consists of the amounts contributed by the
Company to the Company's Defined Contribution Plan. For Mr. Kimball consists
of $9,500 contributed by the Company to the Company's Deferred Plan, $26,641
of relocation compensation and $3,000 of car allowance.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Board of Directors has not previously had a compensation committee and
the functions of the compensation committee historically have been performed by
the Board of Directors the sole member of which was John L. Macdonald, the
Company's Chief Executive Officer and President. The Board of Directors will
establish a compensation committee effective upon completion of the Offering.
See "Committees of the Board of Directors."

EQUITY BASED COMPENSATION PLANS

JLM will adopt the 1997 Employee Stock Purchase Plan (the "Stock Purchase
Plan"), the Long-Term Incentive Plan (the "JLM LTIP") and the Directors' Plan.
The Compensation Committee will administer the

39
<PAGE> 41

Stock Purchase Plan and the JLM LTIP and make the determination as to the grant
of awards, options and/or rights under the respective plans. No member of the
Compensation Committee may receive grants or awards under the plans. The Board
of Directors of JLM will administer the Directors' Plan.

Stock Purchase Plan. An aggregate of 75,000 shares of Common Stock are
reserved for issuance under the plan. Under the Stock Purchase Plan, all
employees will be given the opportunity to purchase shares of JLM Common Stock
two times a year at a price equal to 85.0% of the market price of the stock
immediately prior to the beginning of each offering period. The Stock Purchase
Plan provides for two offering periods, the months of March and September, in
each of the years 1997-2006.

JLM LTIP. An aggregate of 750,000 shares of Common Stock are reserved for
issuance under the plan. Under the JLM LTIP, restricted stock, incentive stock
options, nonqualified stock options and stock appreciation rights or any
combination thereof may be granted to JLM employees. In general, the exercise
price of the options granted under the plan will be determined at the discretion
of the committee administering the plan, which price may not be less than the
market price of JLM Common Stock on the date the option is granted. Options will
normally vest 33 1/3% each year after issuance over a period of three years and
will expire after 10 years. The committee may condition awards of restricted
stock and stock appreciation rights upon satisfaction of performance criteria or
other conditions.

Director's Plan. An aggregate of 25,000 shares of Common Stock are
reserved for issuance under the plan. Each year Non-Employee Directors who are
elected or continuing as Non-Employee Directors as of the conclusion of the
Company's annual meeting of stockholders will receive options to purchase 1,000
shares of Common Stock. The exercise price of the Options will vest fully at the
end of one year and will expire after five years.

CERTAIN TRANSACTIONS

JLM Stables, Inc., a subsidiary of the Company, operated a horse farm in
Ocala, Florida and in connection therewith, leased from John L. Macdonald, 100
acres of land consisting of riding areas and grazing pasture, a stable building
and farm manager's house. Pursuant to the lease, JLM Stables, Inc. paid certain
costs associated with owning and operating the leased property including
utilities, maintenance and insurance. In 1994, 1995 and 1996, the Company's
total rental payments to Mr. Macdonald were $48,000 per year. Effective November
1, 1996, the Company entered into a new three-year lease with Mr. Macdonald,
providing for rental payments of $4,000 per month. During the three month period
ended March 31, 1997, the Company paid to Mr. Macdonald $12,000 in connection
with this lease. In December 1996, the Company made a decision to terminate its
involvement with the horse farm business, and is taking steps to sell all assets
used in those activities. In connection with the termination of the horse farm
operations, Mr. Macdonald purchased certain horses from the Company for an
aggregate purchase price of approximately $324,000 and terminated the lease
effective April 30, 1997.

On November 19, 1996, Mr. Macdonald loaned the Company approximately
$941,000. The loan is unsecured, bears interest at the prime rate, currently
8.5%, compounded annually and matures on January 1, 1999. As March 31, 1997, the
unpaid principal balance of the loan was approximately $905,000. During 1994,
1995 and 1996, the Company was indebted to Mr. Macdonald on an open account
basis for approximately $605,000, $886,000 and $905,000, respectively. All such
indebtedness was repaid prior to entering into the November loan transaction.

In 1995 and 1996, the Company purchased approximately $479,000 and
$319,000, respectively, of chemical products from Kemlink JV, a New York joint
venture partnership owned 50.0% by Kemlink, L.L.C., a Delaware limited liability
company of which Mr. Macdonald is a 97.0% owner. All purchases in 1995 and 1996
were at prices comparable to those paid to unrelated parties. In addition,
during these years, the Company sold approximately $1.6 million and $1.3
million, respectively, of chemical products to Kemlink JV. The Company did not
purchase from or sell any chemicals to Kemlink in 1994. Effective December 31,
1996, the Company ceased doing business with Kemlink JV, which was terminated by
its partners, and Kemlink, L.L.C.

40
<PAGE> 42

The Company's Spanish distributor is Chemical Trading, S.L. ("CTSL"), which
is owned 100.0% by Eduardo Delgadillo, a stockholder of the Company. The Company
and CTSL have an arrangement pursuant to which the Company pays CTSL's operating
expenses. The Company treats the difference between such payments and the amount
of commissions and other amounts due to CTSL as a loan. Under such arrangement
CTSL was indebted to the Company for approximately $140,000, $569,000 and
$322,000, as of December 31, 1994, 1995 and 1996, respectively, and
approximately $421,000 as of March 31, 1997. Such indebtedness is carried on an
open account basis and during 1996, approximately $522,000 was repaid without
interest through the sale at fair market value to the Company by Mr. Delgadillo
of 48 shares (267,264 shares after giving effect to the stock split in July
1997) of the Company's Common Stock (representing approximately 5.1% of the
issued and outstanding shares of Common Stock at such date) owned by him. During
the period from 1994 to 1996, Mr. Delgadillo was the beneficial owner of between
9.9% and 4.8% of the Company's outstanding Common Stock.

In 1994, 1995, 1996 and 1997, the Company leased certain office space from
Aurora, a Texas corporation of which John L. Macdonald is an 80% stockholder.
Aurora markets certain solvent chemicals, primarily phenol, benzene, and
acetone. The lease is on a month to month basis with a rental of $2,100 per
month. In 1994, 1995, 1996 and for the period ending March 31, 1997, lease
payments were approximately $18,000, $25,000, $25,000 and $6,300, respectively.
The lease with Aurora was terminated upon consummation of the purchase by the
Company of all of the common stock of Aurora. In 1994, 1995, 1996 and for the
period ending March 31, 1997, the Company sold approximately $3.0 million, $5.6
million, $1.4 million and $0.2 million, respectively, of chemical products to
Aurora.

The Company entered into an Agreement for Sale and Purchase of Common Stock
held by Mr. Macdonald and an unrelated third party to purchase for a total
purchase price of approximately $1.25 million all of the issued and outstanding
shares of Aurora. Under the terms of the agreement, the Company purchased Mr.
Macdonald's ownership interest in Aurora for a $1.0 million promissory note that
matures on June 1, 2002 and bears interest at a rate of 10.0% per annum. The
other shareholder received consideration of $250,000 for the purchase of his
ownership interest. Of such amount, $150,000 was paid at closing in cash and
$100,000 was paid by a three year promissory note which bears interest at the
prime rate and is payable in three equal annual installments.

In 1994, 1995, 1996 and 1997, the Company leased chemical tank railcars
from Phoenix, a Connecticut corporation of which the sole stockholder is John L.
Macdonald. The Company made payments in 1994, 1995, 1996 and for the period
ending March 31, 1997 to Phoenix in respect of such leases of approximately
$160,000, $162,000, $203,000 and $6,000, respectively. The Company entered into
an Agreement for Sale and Purchase of Common Stock with Mr. Macdonald to
purchase for a total purchase price of $500,000 all of the issued and
outstanding shares of Phoenix. Under the terms of the agreement, the Company
purchased Mr. Macdonald's ownership interest in Phoenix for $500,000, of which
$250,000 was offset against advances owed to the Company by Mr. Macdonald and
$250,000 paid by means of a promissory note that matures on June 1, 2002 and
bears interest at a rate of 10.0% per annum.

The Company believes that each of the certain transactions described above
were on terms no less favorable to the Company than those which could have been
obtained in arm's length transactions with unaffiliated third parties. However,
except as indicated above, the Company did not obtain independent objective
information to support its belief in this respect. After the consummation of the
Offering, the Company will not enter into any transaction with any officer,
director or stockholder except on terms that are no less favorable to the
Company than those which could be obtained in an arm-length transaction with an
unaffiliated party unless the approval of a majority of disinterested directors
is obtained.

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<PAGE> 43

PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock as of the date of the
Prospectus and as adjusted to reflect the sale of shares offered hereby,
assuming no exercise of the Underwriters' over-allotment option, by (i) each
person known by the Company to own beneficially more than 5.0% of the
outstanding Common Stock, (ii) each director and each nominee for director of
the Company, (iii) each of the Named Executive Officers, (iv) all officers,
directors and nominees for directors as a group, and (v) the Selling
Stockholder. The persons named in the table have sole voting and investment
powers with respect to all shares of Common Stock shown as beneficially owned by
them. For purposes of the table, a person or group of persons is deemed to have
"beneficial ownership" of any shares as of a given date which such person has
the right to acquire within 60 days after such date.

<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP
PRIOR TO THE OFFERING(1)(2) SHARES AFTER THE OFFERING(1)
--------------------------- OFFERED -----------------------
NUMBER PERCENTAGE FOR SALE NUMBER PERCENTAGE
----------- ------------ -------------- --------- ----------
<S> <C> <C> <C> <C> <C>
John L. Macdonald(3)........... 4,515,648 95.2% 144,000 4,371,648 63.4
8675 Hidden River Parkway
Tampa, Florida 33627
Thaddeus J. Lelek.............. -- -- -- -- --
Wilfred J. Kimball............. -- -- -- -- --
Frank A. Musto................. -- -- -- -- --
John T. White.................. -- -- -- -- --
Roger C. Kahn.................. -- -- -- -- --
J. Robert Mehall............... -- -- -- -- --
Jerry L. Weinstein............. -- -- -- -- --
All Directors, Nominees for
Directors and Executive
Officers As a Group (10
persons)..................... 4,515,648 95.2% -- 4,371,648 63.4
</TABLE>

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

(1) Does not include an aggregate of 258,000 shares of Common Stock issuable to
the Company's directors and executive officers upon the exercise of stock
options to be granted to such persons effective upon the completion of the
Offering. Such options will have an exercise price equal to the price on the
date of grant and will vest in equal one-third increments in arrears over
three years from the date of grant. Also does not include an aggregate of
47,000 shares of restricted Common Stock to be awarded to five executive
officers, effective upon the completion of the Offering. Such shares of
restricted Common Stock will be subject to a substantial risk of forfeiture
that will lapse in equal one-fourth increments in arrears over four years
from the date of award.

(2) Does not include 228,288 shares (4.8%) of Common Stock owned by the
Company's minority stockholder.
(3) The Selling Stockholder, John L. Macdonald, serves as the Company's
President and Chief Executive Officer. Mr. Macdonald also serves as a
director of the Company. Includes 167,040 shares of Common Stock held by two
irrevocable trusts created for the benefit of Mr. Macdonald's children for
which Mr. Macdonald disclaims beneficial ownership.

DESCRIPTION OF CAPITAL STOCK

GENERAL

The following description of the Company's capital stock is qualified in
its entirety by reference to the Certificate of Incorporation and Bylaws of the
Company, which are included as exhibits to the Registration Statement of which
this Prospectus forms a part.

AUTHORIZED CAPITAL STOCK

The total number of shares of all classes of stock that the Company has
authority to issue under its Certificate of Incorporation is 35,000,000 shares,
of which 30,000,000 shares represent shares of Common Stock and 5,000,000 shares
represent shares of Preferred Stock (the "Preferred Stock").

42
<PAGE> 44

COMMON STOCK

As of July 3, 1997, there were 4,743,936 shares of Common Stock
outstanding. Subject to any preferential rights of any Preferred Stock created
by the Board of Directors, each outstanding share of Common Stock will be
entitled to such dividends, if any, as may be declared from time to time by the
Board out of funds legally available therefor. See "Dividend Policy." Each
outstanding share is entitled to one vote on all matters submitted to a vote of
stockholders except on matters which are required to be voted exclusively by
holders of Preferred Stock or any class of shares of Preferred Stock. In the
event of liquidation, dissolution or winding up of the Company, holders of
Common Stock are entitled to receive on a pro rata basis any assets remaining
after provision for payment of creditors and after payment of any liquidation
preferences to holders of Preferred Stock. There are no redemption provisions
applicable to the Common Stock. All outstanding shares of Common Stock are fully
paid and non-assessable and the shares of Common Stock to be issued upon
completion of the Offering will be fully paid and non-assessable.

PREFERRED STOCK

The Company's Certificate of Incorporation authorizes 5,000,000 shares of
Preferred Stock. The Board has the authority to prescribe for each series of
Preferred Stock it establishes the number of shares in that series, the voting
rights (if any) to which such shares in that series are entitled, the
consideration for such shares in that series and the designations, powers,
preferences and relative, participating, optional or other special rights, and
such qualifications, limitations or restrictions of the shares in that series,
without further action or vote by the Stockholders. Depending upon the rights of
such Preferred Stock, the issuance of Preferred Stock could have an adverse
effect on holders of Common Stock by delaying or preventing a change in control
of the Company, making removal of the present management of the Company more
difficult or resulting in restrictions upon the payment of dividends and other
distributions to the holders of Common Stock. The issuance of Preferred Stock
with voting and conversion rights may adversely affect the voting power of the
holders of Common Stock, including the loss of voting control to others. At
present, the Company has no plans to issue any of the Preferred Stock.

CERTAIN EFFECTS OF AUTHORIZED BUT UNISSUED CAPITAL STOCK

Under the Company's Certificate of Incorporation, upon consummation of this
Offering, assuming no exercise of the Underwriters' over-allotment option, there
will be 22,250,064 shares of Common Stock available for future issuance without
stockholder approval. These additional shares may be used for a variety of
corporate purposes, including future public offerings to raise additional
capital or to facilitate corporate acquisitions. In addition, the Board has the
authority to issue shares of Preferred Stock.

One of the effects of the existence of unissued and unreserved Common Stock
or Preferred Stock may be to enable the Board to issue shares to persons
friendly to current management, which issuance could render more difficult or
discourage an attempt to obtain control of the Company by means of a merger,
tender offer, proxy contest or otherwise, and thereby protect the continuity of
the Company's management and possibly deprive the stockholders of opportunities
to sell their shares of Common Stock at prices higher than prevailing market
prices. Such additional shares also could be used to dilute the stock ownership
of persons seeking to obtain control of the Company. The Company currently does
not have any plans to issue additional shares of Common Stock or Preferred Stock
other than in connection with employee compensation plans.

NO PREEMPTIVE RIGHTS

No holder of any class of stock of the Company authorized at the time of
the Offering will have any preemptive or conversion rights of any other right to
subscribe to any securities of the Company of any kind or class.

CERTAIN PROVISIONS OF THE DELAWARE GENERAL CORPORATION LAW

The Company is subject to Section 203 of the Delaware General Corporation
Law ("DGCL"). Pursuant to Section 203, with certain exceptions, a Delaware
corporation may not engage in any of a broad range of business

43
<PAGE> 45

combinations, such as mergers, consolidations and sales of assets, with an
"interested stockholder" for a period of three years from the date that such
person became an interested stockholder unless (a) the transaction that results
in the person's becoming an interested stockholder or the business combination
is approved by the board of directors of the corporation before the person
becomes an interested stockholder, (b) upon consummation of the transaction
which results in the stockholder becoming an interested stockholder, the
interested stockholder owns 85.0% or more of the voting stock of the corporation
outstanding at the time the transaction commenced, excluding shares owned by
persons who are directors and also officers and shares owned by certain employee
stock plans or (c) on or after the date the person becomes an interested
stockholder, the business combination is approved by the corporation's board of
directors and by holders of at least two-thirds of the corporation's outstanding
voting stock, excluding shares owned by the interested stockholder, at a meeting
of stockholders. Under Section 203, an "interested stockholder" is defined as
any person, other than the corporation and any direct or indirect majority-owned
subsidiary, that is (a) the owner of 15.0% or more of the outstanding voting
stock of the corporation or (b) an affiliate or associate of the corporation and
was the owner of 15.0% or more of the outstanding voting stock of the
corporation at any time within the three-year period immediately prior to the
date on which it is sought to be determined whether such person is an interested
stockholder. Section 203 does not apply to a corporation that so provides in an
amendment to its certificate of incorporation or Bylaws passed by a majority of
its outstanding shares, but such stockholder action does not become effective
for 12 months following its adoption and would not apply to persons who were
already interested stockholders at the time of the amendment. The Company's
Certificate of Incorporation does not exclude the Company from the restrictions
imposed under Section 203.

Under certain circumstances, Section 203 makes it more difficult for a
person who would be an "interested stockholder" to effect various business
combinations with a corporation for a three-year period. The provisions of
Section 203 may encourage companies interested in acquiring the Company to
negotiate in advance with the Company's Board of Directors, because the
stockholder approval requirement would be avoided if the Board of Directors
approves either the business combination or the transaction which results in the
stockholder becoming an interested stockholder. Such provisions also may have
the effect of preventing changes in the Board. It is further possible that such
provisions could make it more difficult to accomplish transactions which
stockholders may otherwise deem to be in their best interests.

CERTAIN PROVISIONS OF CERTIFICATE OF INCORPORATION AND BYLAWS AFFECTING CHANGE
IN CONTROL

Certain provisions of the Certificate of Incorporation and Bylaws may delay
or make more difficult unsolicited acquisitions or changes of control of the
Company. It is believed that such provisions will enable the Company to develop
its business in a manner that will foster its long-term growth without
disruption caused by the threat of a takeover not deemed by its Board of
Directors to be in the best interests of the Company and its stockholders. Such
provisions could have the effect of discouraging third parties from making
proposals involving an unsolicited acquisition or change of control of the
Company, although such proposals, if made, might be considered desirable by a
majority of the Company's stockholders. Such provisions may also have the effect
of making it more difficult for third parties to cause the replacement of the
current Board. These provisions include (i) the availability of capital stock
for issuance from time to time at the discretion of the Board of Directors (see
"Authorized but Unissued Capital Stock"), (ii) prohibitions against stockholders
calling a special meeting of stockholders, (iii) requirements for advance notice
for raising business or making nominations at stockholders' meetings, (iv) the
ability of the Board of Directors to increase the size of the board and to
appoint directors to newly created directorships and (v) higher than majority
requirements to make certain amendments to the Bylaws and Certificate of
Incorporation.

Special Meetings

The Certificate of Incorporation and Bylaws also provide that special
meetings of the stockholders can be called only by the Chairman of the Board of
Directors, the Chief Executive Officer of the Company or by a vote of the
majority of the Board of Directors. Furthermore, the Bylaws of the Company
provide that only such business as is specified in the notice of any such
special meeting of stockholders may come before such meeting.

44
<PAGE> 46

Advance Notice for Raising Business or Making Nominations at Meetings

The Bylaws of the Company establish an advance notice procedure for
stockholder proposals to be brought before an annual meeting of stockholders and
for nominations by stockholders of candidates for election as directors at an
annual or special meeting at which directors are to be elected. Only such
business may be conducted at an annual meeting of stockholders as has been
brought before the meeting by, or at the direction of, the Chairman of the Board
of Directors, or by a stockholder of the Company who is entitled to vote at the
meeting who has given to the Secretary of the Company timely written notice, in
proper form, of the stockholder's intention to bring that business before the
meeting. The chairman of such meeting has the authority to make such
determinations. Only persons who are nominated by, or at the direction of, the
Chairman of the Board of Directors, or who are nominated by a stockholder who
has given timely written notice, in proper form, to the Secretary prior to a
meeting at which directors are to be elected will be eligible for election as
directors of the Company.

To be timely, a stockholder's notice of business to be brought before an
annual meeting and nominations of candidates for election as directors at any
annual meeting shall be delivered to the Secretary of the Company at the
principal executive offices of the Company not less than 70 days nor more than
90 days prior to the first anniversary of the preceding year's annual meeting;
provided, however, that in the event that the date of the annual meeting is
advanced by more than 20 days, or delayed by more than 70 days, from such
anniversary date, notice by the stockholder to be timely must be so delivered
not earlier than the ninetieth day prior to such annual meeting and not later
than the close of business on the later of the seventieth day prior to such
annual meeting or the tenth day following the day on which public announcement
of the date of such meeting is first made.

To be timely, a stockholder's notice of nominations of persons for election
to the Board of Directors may be made at such a special meeting of stockholders
if the stockholder's notice shall be delivered to the Secretary of the Company
at the principal executive offices of the Company not earlier than the ninetieth
day prior to such special meeting and not later than the close of business on
the later of the seventieth day prior to such special meeting or the tenth day
following the day on which public announcement is first made of the date of the
special meeting and of the nominees proposed by the Board of Directors to be
elected at such meeting.

The notice of any nomination for election as a director must set forth the
name and address of, and the class and number of shares of the Company held by,
the stockholder who intends to make the nomination and the beneficial owner, if
any, on whose behalf the nomination is being made; the name and address of the
person or persons to be nominated; a representation that the stockholder is a
holder of record of stock of the Company entitled to vote at such meeting and
intends to appear in person or by proxy at the meeting to nominate the person or
persons specified in the notice; a description of all arrangements or
understandings between the stockholder and each nominee and any other person or
persons (naming such person or persons) pursuant to which the nomination or
nominations are to be made by the stockholder; such other information regarding
each nominee proposed by such stockholder as would have been required to be
included in a proxy statement filed pursuant to the proxy rules of the SEC had
each nominee been nominated, or intended to be nominated, by the Board of
Directors; and the consent of each nominee to serve as a director if so elected.

Number of Directors; Filling of Vacancies

The Certificate of Incorporation and Bylaws provide that newly created
directorships resulting from any increase in the authorized number of directors
(or any vacancy) may be filled by a vote of a majority of directors then in
office. Accordingly, the Board may be able to prevent any stockholder from
obtaining majority representation on the Board of Directors by increasing the
size of the board and filling the newly created directorships with its own
nominees.

Amendments to the Bylaws

The Certificate of Incorporation provides that the affirmative vote of the
holders of at least 80.0% in voting power of all the shares of the Company
entitled to vote generally in the election of directors, voting together as a
single class, shall be required in order for the stockholders to alter, amend or
repeal any provision of the Bylaws which is to the same effect as provisions
contained in the Certificate of Incorporation relating to (i) the

45
<PAGE> 47

amendment of the Bylaws, (ii) the filling of director vacancies and (iii)
calling and taking actions at meetings of stockholders.

Amendments to the Certificate of Incorporation

Certificate of Incorporation requires the affirmative vote of the holders
of at least 80.0% in voting power of all the shares of the Company entitled to
vote generally in the election of directors, voting together as a single class,
to alter, amend or repeal provisions of the Certificate of Incorporation
relating to (i) the amendment of the Certificate of Incorporation and/or the
Bylaws, (ii) the filling of director vacancies and (iii) calling and taking
actions at meetings of stockholders.

INDEMNIFICATION AND LIMITATION OF LIABILITY FOR DIRECTORS AND OFFICERS

The Company's Bylaws provide that the Company may indemnify directors and
officers to the fullest extent permitted by the laws of the State of Delaware.
The Company has entered into indemnification agreements with its directors
creating certain indemnification obligations on the Company's part in favor of
the directors and, as permitted by applicable law, these indemnification
agreements clarify and expand the circumstances under which a director will be
indemnified. The Certificate of Incorporation also provides that a director of
the Company shall not be liable to the corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director, except to the
extent such exemption from liability or limitation thereof is not permitted
under the General Corporation Law of the State of Delaware as the same exists or
may hereafter be amended.

The indemnification rights conferred by the Certificate of Incorporation of
the Company are not exclusive of any other right to which a person seeking
indemnification may otherwise be entitled. The Company will also provide
liability insurance for the directors and officers for certain losses arising
from claims or charges made against them while acting in their capacities as
directors or officers.

The effect of such indemnification arrangements may be to exempt or limit
the liability of such directors to the Company or its stockholders for monetary
damages for breach of fiduciary duty to the Company, except to the extent such
exemption or limitation is not permitted under applicable law.

TRANSFER AGENT

The transfer agent and registrar of the Company's Common Stock is State
Street Bank and Trust Company.

SHARES ELIGIBLE FOR FUTURE SALE

Upon the consummation of the Offering, the Company will have 6,899,936
shares of Common Stock outstanding. Of such shares the 2,300,000 shares offered
hereby will be freely tradeable by persons other than affiliates of the Company,
without restriction under the Securities Act of 1933, as amended (the
"Securities Act"). As defined in Rule 144, an "affiliate" of an issuer is a
person that directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, such issuer.

In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated), including an "affiliate" as that term is defined
above, who has paid for shares is entitled, beginning one year from the later of
the date of acquisition of the shares from the Company or from an affiliate of
the Company, to sell within any three-month period up to that number of shares
that does not exceed the greater of 1.0% of the then outstanding shares or the
average weekly trading volume of the then outstanding shares during the four
calendar weeks preceding each such sale. A person (or persons whose shares are
aggregated) who is not deemed an affiliate of the Company and who has paid for
his shares is entitled, beginning two years from the later of the date of the
acquisition from the Company or from an affiliate of the Company, to sell such
shares under Rule 144(k) without regard to the volume limitations described
above. Affiliates continue to be subject to such volume limitations after the
two year holding period.

The Company, its officers and directors and certain of its other current
stockholders, who collectively hold 4,599,936 shares of Common Stock, have
agreed that they will not dispose of any shares of Common Stock, or

46
<PAGE> 48

any securities convertible or exchangeable for shares of Common Stock, for a
period of 180 days after the date of the Underwriting Agreement without the
written consent of Oppenheimer & Co., Inc., on behalf of the Representatives.
See "Underwriting." Upon expiration of such 180 day period, an aggregate of
228,288 shares will become eligible for sale without restriction pursuant to
Rule 144(k) under the Securities Act.

Following the effectives of the Registration Statement filed in connection
with the Offering, the Company intends to file a registration statement on Form
S-8 under the Securities Act to register 850,000 shares of Common Stock issuable
upon the exercise of stock options granted under the Option Plans. Shares of
Common Stock issued upon the exercise of stock options after the effective date
of such registration statement generally will be available for sale in the open
market. Immediately following the Offering, however, no options to purchase
Common Stock will be exercisable under the Option Plans.

47
<PAGE> 49

UNDERWRITING

Subject to the terms and conditions set forth in the Underwriting Agreement
(the "Underwriting Agreement") among the Company, the Selling Stockholder and
Oppenheimer & Co., Inc., and A.G. Edwards & Sons, Inc., as representatives (the
"Representatives") of the underwriters of the Offering (the "Underwriters"), the
Company and the Selling Stockholder have agreed to sell to the Underwriters, and
the Underwriters have severally agreed to purchase from the Company and the
Selling Stockholder, the number of shares of Common Stock set forth opposite
their names below:

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS SHARES
------------ ---------
<S> <C>
Oppenheimer & Co., Inc......................................
A.G. Edwards & Sons, Inc....................................

---------
Total............................................. 2,300,000
=========
</TABLE>

The Underwriters propose to offer the Common Stock directly to the public
at the public offering price set forth on the cover page of this Prospectus, and
at such price less a concession not in excess of $ per share of Common
Stock to certain securities dealers, of which a concession not in excess of
$ per share of Common Stock may be reallowed to certain other
securities dealers. After the Offering, the offering price and other selling
terms may be changed by the Underwriters.

In order to facilitate the Offering, the Underwriters may engage in
transactions that stabilize, maintain or otherwise affect the price of the
Common Stock. Specifically, the Underwriters may over-allot in connection with
the Offering, creating a short position in the Common Stock for their own
account. In addition, to cover over-allotments or to stabilize the price of the
Common Stock, the Underwriters may bid for and purchase, shares of Common Stock
in the open market. Finally, the underwriting syndicate may reclaim selling
concessions allowed to an underwriter or a dealer for distributing the Common
Stock in the Offering, if the syndicate repurchases previously distributed
Common Stock in transactions to cover syndicate short provisions, in
stabilization transactions or otherwise. Any of these activities may stabilize
or maintain the market price of the Common Stock above independent market
levels. The Underwriters are not required to engage in these activities, and may
end any of these activities at any time.

The Underwriting Agreement provides that the obligations of the several
Underwriters thereunder are subject to approval of certain legal matters by
counsel and to various other conditions. The nature of the Underwriters'
obligations is such that they are committed to purchase and pay for all of the
above shares of Common Stock if any are purchased.

The Company has granted an option to the Underwriters execercisable within
45 days after the date of this Prospectus, to purchase from the Company up to an
aggregate of 345,000 additional shares of Common Stock, to cover
over-allotments, if any, at the initial public offering price less the
underwriting discount set forth on the cover pages of this Prospectus. If the
Underwriters exercise their over-allotment option to purchase any of the
additional 345,000 shares of Common Stock, each of the Underwriters has
severally agreed, subject to certain conditions, to purchase approximately the
same percentage as the number of shares of Common Stock to be purchased by each
of them bears to the 2,300,000 shares of Common Stock offered hereby. The
Company will be

48
<PAGE> 50

obligated, pursuant to the over-allotment option, to sell Common Stock to the
Underwriters to the extent such over-allotment option is exercised.

The Company and each of its officers and directors and certain stockholders
have agreed that without the consent of Oppenheimer & Co., Inc., on behalf of
the Representatives, they will not, for a period of 180 days after the date of
the Underwriting Agreement (i) offer, pledge, sell, distribute, contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant to purchase, or otherwise transfer
or dispose of, directly or indirectly, any shares of Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock or
(ii) enter into any swap or similar agreement that transfers, in whole or in
part, the economic risk of ownership of the Common Stock, subject to certain
limited exceptions, including the sale by the Company and the Selling
Stockholder of shares of Common Stock in the Offering. The Company also may
grant options, restricted stock, stock appreciation rights or other units of
stock-based incentive compensation under the JLM LTIP.

The Company, the Selling Stockholder and the Underwriters have agreed to
indemnify each other against certain liabilities, including liabilities under
the Securities Act.

The Representatives do not intend to confirm sales of the Common Stock to
accounts over which they exercise discretionary authority.

Prior to the Offering, there has been no public market for the Common
Stock. There can be no assurance that any active trading market will develop for
the Common Stock or as to the price at which the Common Stock may trade in the
public market from time to time subsequent to the offering made hereby. The
initial price to the public for shares of Common Stock offered hereby will be
negotiated between the Company and the Representatives. Among the factors to be
considered in determining the initial price to the public are (i) the history of
and prospects for the industry in which the Company competes, (ii) the ability
of the Company's management, (iii) the past and present operations of the
Company, (iv) the historical results of operations of the Company, (v) the
prospects for future earnings and business potential of the Company, (vi) the
general condition of the securities markets at the time of the Offering, (vii)
the recent market prices of securities of generally comparable companies, (viii)
the market capitalizations and stages of development of other companies which
the Company and Representatives believe to be comparable to the Company and (ix)
other factors deemed relevant.

LEGAL MATTERS

The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Trenam, Kemker, Scharf, Barkin, Frye, O'Neill & Mullis,
Professional Association, Tampa, Florida, and for the Underwriters by Rogers &
Wells, New York, New York.

EXPERTS

The Consolidated Financial Statements of JLM and the Statement of Revenues
and Direct Costs of the Blue Island, Illinois, location of BTL Specialty Resins
Corp. included in this Prospectus and the Registration Statement have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
reports appearing herein, and are included in reliance upon the reports of such
firm given upon their authority as experts in accounting and auditing.

ADDITIONAL INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (together with all
amendments, exhibits and schedules, the "Registration Statement") under the
Securities Act with respect to the shares of Common Stock offered hereby. This
Prospectus does not contain all of the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the Commission. For further information with respect to the
Company, reference is hereby made to the Registration Statement. Statements
contained in this Prospectus as to the contents of any contract or other
document are not necessarily complete, and in each such instance reference is
made to the copy of such contract or document filed as an exhibit to the
Registration Statement, each such statement being qualified in all respects by
such reference. As a result of the Offering, the Company will become

49
<PAGE> 51

subject to the informational requirements of the Exchange Act, and in accordance
therewith will file reports, proxy statements and other information with the
Commission. The Registration Statement, as well as all periodic reports and
other information to be filed by the Company pursuant to the Exchange Act, may
be inspected without charge and copied upon payment of fees prescribed by the
Commission at the public reference facilities maintained by the Commission in
Room 1024, 450 Fifth Street NW, Washington, D.C. 20549, and at the Commission's
regional offices located at Seven World Trade Center, 7th Floor, New York, New
York 10048 and Citicorp Center, 500 Madison Street, Suite 1400, Chicago,
Illinois 60661. The Commission maintains a worldwide web site at
(http:/www.sec.gov) that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission.

The Company intends to furnish its stockholders with annual reports
containing consolidated audited financial statements which have been certified
by its independent public accountant, and quarterly reports containing unaudited
summary consolidated financial information for each of the first three quarters
of each fiscal year.

50
<PAGE> 52

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED FINANCIAL STATEMENTS OF JLM INDUSTRIES, INC. AND SUBSIDIARIES

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Auditors' Report................................ F-2
Consolidated Balance Sheets -- December 31, 1995 and 1996
and (Unaudited) March 31, 1997............................ F-3
Consolidated Statements of Income -- Years Ended December
31, 1994, 1995 and 1996 and (Unaudited) Three Months Ended
March 31, 1996 and 1997................................... F-4
Consolidated Statements of Changes in Stockholders'
Equity -- Years Ended December 31, 1994, 1995 and 1996 and
(Unaudited) Three Months Ended March 31, 1997............. F-5
Consolidated Statements of Cash Flows -- Years Ended
December 31, 1994, 1995 and 1996 and (Unaudited) Three
Months Ended March 31, 1996 and 1997...................... F-6
Notes to Consolidated Financial Statements.................. F-7

CONSOLIDATED SUPPLEMENTAL SCHEDULE
Independent Auditors' Report................................ F-23
Supplemental Schedule....................................... F-24
</TABLE>

STATEMENT OF REVENUES AND DIRECT COSTS OF THE BLUE ISLAND, ILLINOIS LOCATION OF
BTL SPECIALTY RESINS CORP.

<TABLE>
<S> <C>
Independent Auditors' Report................................ F-25
Statement of Revenues and Direct Costs for the Period From
April 1, 1995 through June 7, 1995........................ F-26
Notes to Statement of Revenues and Direct Costs............. F-27
</TABLE>

F-1
<PAGE> 53

INDEPENDENT AUDITORS' REPORT

The Stockholders and Board of Directors
JLM Industries, Inc. and Subsidiaries
Tampa, Florida

We have audited the accompanying consolidated balance sheets of JLM
Industries, Inc. and subsidiaries (the "Company") as of December 31, 1995 and
1996, and the related consolidated statements of income, changes in
stockholders' equity and of cash flows for each of the three years in the period
ended December 31, 1996. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in
all material respects, the consolidated financial position of JLM Industries,
Inc. and subsidiaries as of December 31, 1995 and 1996 and the consolidated
results of their operations and their consolidated cash flows for each of the
three years in the period ended December 31, 1996 in conformity with generally
accepted accounting principles.

DELOITTE & TOUCHE LLP

Tampa, Florida
February 19, 1997
(July 3, 1997 as to Note 18)

F-2
<PAGE> 54

JLM INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1995 AND 1996 AND (UNAUDITED) MARCH 31, 1997

<TABLE>
<CAPTION>
PRO FORMA
MARCH 31, MARCH 31,
1995 1996 1997 1997
----------- ----------- ------------ -----------
(UNAUDITED)
(UNAUDITED) (NOTE 19)
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents................ $ 4,710,483 $ 4,792,473 $ 5,829,482 $ 5,679,482
Accounts receivable:
Trade................................. 29,514,825 25,721,911 44,078,475
Other................................. 3,234,256 2,769,232 3,533,148 3,283,148
Inventories.............................. 14,193,219 13,283,576 14,615,456
Prepaid expenses and other current
assets................................ 1,925,022 3,699,913 3,754,210
Assets held for sale..................... 2,626,594 1,924,394 1,866,746
----------- ----------- ------------
Total current assets............. 56,204,399 52,191,499 73,677,517
Other investments.......................... 1,876,118 1,881,066 1,935,535
Note receivable from Olefins Terminal
Corporation.............................. 2,752,356 2,320,313 2,406,797
Property and equipment -- net.............. 24,711,397 29,368,360 29,206,372
Other assets -- net........................ 953,681 1,530,565 1,519,139
----------- ----------- ------------
Total assets..................... $86,497,951 $87,291,803 $108,745,360
=========== =========== ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses.... $50,929,882 $39,590,106 $ 51,692,849
Current portion of long-term debt........ 3,044,064 3,962,385 4,696,652 4,729,985
Loans payable............................ 2,132,079 8,366,520 17,578,930
Income taxes payable..................... 352,461 33,322 513,605
Deferred revenue......................... 20,400 300,475 20,000
----------- ----------- ------------
Total current liabilities........ 56,478,886 52,252,808 74,502,036
Long-term debt, less current portion....... 17,018,214 17,808,872 15,420,991 16,737,658
Deferred income taxes...................... 1,195,131 2,538,980 2,826,487
Loan payable to stockholder................ 1,009,960 905,148 905,148
Minority interest.......................... 55,699 137,802 146,470
Other liabilities.......................... 220,688 203,761 208,901
----------- ----------- ------------
Total liabilities................ 75,978,578 73,847,371 94,010,033
----------- ----------- ------------
Commitments and Contingencies (Note 12)
Stockholders' Equity:
Preferred stock -- authorized 5,000,000
shares, issued and outstanding 0
shares................................ -- -- --
Common stock -- $.01 par value,
authorized 30,000,000 shares, issued
and outstanding 5,011,200 shares...... 50,112 50,112 50,112
Additional paid-in capital............... 489,888 489,888 489,888
Retained earnings........................ 10,002,182 13,467,898 14,869,776 13,269,776
Foreign currency translation
adjustment............................ (22,809) (41,266) (152,249)
----------- ----------- ------------
10,519,373 13,966,632 15,257,527
Less treasury stock at cost -- 267,264
shares................................ -- (522,200) (522,200)
----------- ----------- ------------
Total stockholders' equity....... 10,519,373 13,444,432 14,735,327
----------- ----------- ------------
Total liabilities and
stockholders' equity........... $86,497,951 $87,291,803 $108,745,360
=========== =========== ============
</TABLE>

See notes to consolidated financial statements.

F-3
<PAGE> 55

JLM INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
AND (UNAUDITED) THREE MONTHS ENDED MARCH 31, 1996 AND 1997

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------------
1994 1995 1996 1996 1997
------------ ------------ ------------ ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues.............................. $218,569,604 $289,370,945 $236,521,183 $57,861,298 $80,517,783
Cost of sales......................... 206,906,758 265,460,931 208,281,667 51,171,163 73,671,162
------------ ------------ ------------ ----------- -----------
Gross profit........................ 11,662,846 23,910,014 28,239,516 6,690,135 6,846,621
Selling, general and administrative
expenses............................ 9,280,280 15,175,815 17,237,736 4,015,203 3,917,669
------------ ------------ ------------ ----------- -----------
Operating income.................... 2,382,566 8,734,199 11,001,780 2,674,932 2,928,952
Interest expense -- net............... (369,899) (1,757,326) (2,814,667) (641,486) (627,910)
Other income -- net................... 453,025 152,320 196,896 64,082 40,769
Foreign currency exchange (loss)
gain -- net......................... (319,303) (1,074,974) (527,652) (799,015) 62,908
------------ ------------ ------------ ----------- -----------
Income before minority interest and
income taxes...................... 2,146,389 6,054,219 7,856,357 1,298,513 2,404,719
Minority interest in (income) loss of
subsidiaries........................ (63,821) 4,670 (82,103) (7,362) (8,668)
------------ ------------ ------------ ----------- -----------
Income from continuing operations
before income taxes, discontinued
operations and extraordinary
item.............................. 2,082,568 6,058,889 7,774,254 1,291,151 2,396,051
------------ ------------ ------------ ----------- -----------
Income tax provision:
Current............................. 924,218 2,093,004 2,073,586 598,745 548,289
Deferred............................ 48,982 336,793 1,343,849 370,705 287,507
------------ ------------ ------------ ----------- -----------
Total income tax provision.......... 973,200 2,429,797 3,417,435 969,450 835,796
------------ ------------ ------------ ----------- -----------
Income from continuing operations
before discontinued operations and
extraordinary item................ 1,109,368 3,629,092 4,356,819 321,701 1,560,255
Discontinued operations:
Loss from operations of discontinued
operations (net of income tax
benefit of $214,115, $217,155,
$279,312, $54,847 and $56,452,
respectively)..................... (229,060) (325,728) (419,215) (82,270) (84,679)
Loss on disposal of discontinued
operations (net of income tax
benefit of $81,049 and $3,620,
respectively)..................... -- (121,574) (9,050) -- --
------------ ------------ ------------ ----------- -----------
Income before extraordinary item.... 880,308 3,181,790 3,928,554 239,431 1,475,576
Extraordinary gain on share of
partnership forgiveness of debt (net
of income tax expense of
$103,620)........................... 169,064 -- -- -- --
------------ ------------ ------------ ----------- -----------
Net income.......................... $ 1,049,372 $ 3,181,790 $ 3,928,554 $ 239,431 $ 1,475,576
============ ============ ============ =========== ===========
Income per share:
Income from continuing operations
before discontinued operations and
extraordinary item.................. $ 0.22 $ 0.72 $ 0.89 $ 0.06 $ 0.33
Discontinued operations............... (0.05) (0.09) (0.09) (0.02) (0.02)
Extraordinary item.................... 0.03 -- -- -- --
------------ ------------ ------------ ----------- -----------
Net income per share.................. $ 0.20 $ 0.63 $ 0.80 $ 0.04 $ 0.31
============ ============ ============ =========== ===========
Weighted average number of shares
outstanding......................... 5,011,200 5,011,200 4,877,568 5,011,200 4,743,936
</TABLE>

See notes to consolidated financial statements.

F-4
<PAGE> 56

JLM INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
AND (UNAUDITED) THREE MONTHS ENDED MARCH 31, 1997

<TABLE>
<CAPTION>
FOREIGN
ADDITIONAL CURRENCY
PREFERRED COMMON PAID-IN RETAINED TRANSLATION TREASURY STOCKHOLDERS'
STOCK STOCK CAPITAL EARNINGS ADJUSTMENT STOCK EQUITY
--------- ------- ---------- ----------- ----------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1,
1994............... $ -- $50,112 $489,888 $ 5,971,664 $ (49,320) $ -- $ 6,462,344
Stockholder
distributions...... -- -- -- (53,564) -- -- (53,564)
Net income........... -- -- -- 1,049,372 -- -- 1,049,372
Currency translation
adjustment......... -- -- -- -- (47,166) -- (47,166)
----- ------- -------- ----------- --------- --------- -----------
Balance at December
31, 1994........... -- 50,112 489,888 6,967,472 (96,486) -- 7,410,986
Stockholder
distributions...... -- -- -- (147,080) -- -- (147,080)
Net income........... -- -- -- 3,181,790 -- -- 3,181,790
Currency translation
adjustment......... -- -- -- -- 73,677 -- 73,677
----- ------- -------- ----------- --------- --------- -----------
Balance at December
31, 1995........... -- 50,112 489,888 10,002,182 (22,809) -- 10,519,373
Stockholder
distributions...... -- -- -- (462,838) -- -- (462,838)
Net income........... -- -- -- 3,928,554 -- -- 3,928,554
Purchase of treasury
stock.............. -- -- -- -- -- (522,200) (522,200)
Currency translation
adjustment......... -- -- -- -- (18,457) -- (18,457)
----- ------- -------- ----------- --------- --------- -----------
Balance at December
31, 1996........... -- 50,112 489,888 13,467,898 (41,266) (522,200) 13,444,432
Stockholder
distributions
(unaudited)........ -- -- -- (73,698) -- -- (73,698)
Net income
(unaudited)........ -- -- -- 1,475,576 -- -- 1,475,576
Currency translation
adjustment
(unaudited)........ -- -- -- -- (110,983) -- (110,983)
----- ------- -------- ----------- --------- --------- -----------
Balance at March 31,
1997 (unaudited)... $ -- $50,112 $489,888 $14,869,776 $(152,249) $(522,200) $14,735,327
===== ======= ======== =========== ========= ========= ===========
</TABLE>

See notes to consolidated financial statements.

F-5
<PAGE> 57

JLM INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
AND (UNAUDITED) THREE MONTHS ENDED MARCH 31, 1996 AND 1997

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
---------------------------
1994 1995 1996 1996 1997
----------- ----------- ------------ ------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.............................................. $ 1,049,372 $ 3,181,790 $ 3,928,554 $ 239,430 $ 1,475,576
Adjustments to reconcile net income to net cash provided
by (used in) operating activities:
Deferred income taxes................................. 48,982 336,793 1,343,849 370,705 287,507
Minority interest in income (loss) of subsidiaries.... 63,821 (172,950) 82,103 7,362 8,668
Loss on disposal of assets............................ 155,625 177,942 379,067 -- --
Loss on disposal of discontinued operations -- net.... -- 121,574 9,050 -- --
Extraordinary gain on share of partnership forgiveness
of debt -- net...................................... (169,064) -- -- -- --
Depreciation and amortization......................... 572,226 1,522,282 2,524,187 531,993 678,042
Loss from partnerships................................ 48,000 41,697 48,000 12,000 12,000
(Income) loss from investment in Olefins Terminal
Corporation -- net.................................. (205,155) (82,500) 55,169 47,941 6,924
Noncash management fee and interest income from
Olefins Terminal Corporation........................ (338,768) (297,706) (334,578) (67,324) (86,484)
Allowance for doubtful accounts....................... -- 44,537 383,662 -- --
Changes in assets and liabilities:
(Increase) decrease in accounts receivable.......... (9,649,574) (3,720,019) 4,081,252 414,325 (19,120,480)
(Increase) decrease in inventories.................. (15,267) (6,703,960) 510,593 6,290,069 (1,331,880)
Decrease (increase) in prepaid expenses and other
current assets.................................... 2,138 (397,739) (1,774,891) (979,902) (54,297)
(Increase) decrease in income tax receivable........ (499,954) 396,334 -- -- --
(Increase) decrease in assets held for sale......... -- (2,476,594) 1,101,250 (360,973) --
Increase in other assets............................ (275,686) (33,351) (906,048) -- (77,443)
Increase (decrease) in accounts payable and accrued
expenses.......................................... 15,374,780 10,642,880 (11,345,206) (11,001,784) 12,102,743
Increase (decrease) in income taxes payable......... 52,738 78,740 (322,759) 162,855 480,283
Increase (decrease) in deferred revenue............. -- 20,400 280,075 786,600 (280,475)
(Decrease) increase in other liabilities............ (150,000) 65,627 (16,927) (18,121) 5,148
----------- ----------- ------------ ------------ ------------
Net cash provided by (used in) operating
activities....................................... 6,064,214 2,745,777 26,402 (3,564,824) (5,894,168)
----------- ----------- ------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of assets held for sale.............. 1,034,000 -- 786,535 -- 1,090
Proceeds from sale of Polychem Ltd., Inc................ -- 882,337 -- -- --
Capital expenditures.................................... (1,220,974) (2,319,890) (7,346,658) (1,444,976) (370,633)
Capitalized acquisition costs........................... (127,700) -- -- -- --
Purchase of net assets, net of cash acquired............ (900,000) (3,223,084) -- -- --
Other investments....................................... (3,481) -- (70,672) (35,310) (73,393)
----------- ----------- ------------ ------------ ------------
Net cash used in investing activities............. (1,218,155) (4,660,637) (6,630,795) (1,480,286) (442,936)
----------- ----------- ------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (repayments) proceeds of loans payable.............. (1,952,917) 797,140 6,234,441 4,854,812 9,212,410
Proceeds from long-term debt............................ 3,188,962 7,699,613 4,279,312 2,616,308 50,333
Repayments of long-term debt............................ (1,640,676) (9,223,825) (3,241,263) (2,813,836) (1,703,949)
Proceeds from shareholder loan.......................... 605,000 402,380 -- -- --
Distributions to shareholders........................... (53,564) (147,080) (462,838) (140,337) (73,698)
(Repayments) borrowings of shareholder loan............. (61,769) 2,580 (104,812) (105,945) --
----------- ----------- ------------ ------------ ------------
Net cash provided by (used in) financing activities... 85,036 (469,192) 6,704,840 4,411,002 7,485,096
----------- ----------- ------------ ------------ ------------
Effect of foreign exchange rates on cash................. (47,166) 73,677 (18,457) (826) (110,983)
----------- ----------- ------------ ------------ ------------
Net increase (decrease) in cash and cash
equivalents......................................... 4,883,929 (2,310,375) 81,990 (634,934) 1,037,009
Cash and cash equivalents, beginning of period........... 2,136,929 7,020,858 4,710,483 4,710,483 4,792,473
----------- ----------- ------------ ------------ ------------
Cash and cash equivalents, end of period................. $ 7,020,858 $ 4,710,483 $ 4,792,473 $ 4,075,549 $ 5,829,482
=========== =========== ============ ============ ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest.............................................. $ 592,987 $ 2,000,005 $ 2,928,671 $ 554,035 $ 698,251
=========== =========== ============ ============ ============
Income taxes.......................................... $ 1,129,356 $ 1,131,857 $ 2,113,975 $ 252,217 $ 65,826
=========== =========== ============ ============ ============
Noncash investing activities:
Capital lease obligations............................. $ 149,331 $ 121,135 $ 106,391 $ -- $ 50,335
=========== =========== ============ ============ ============
Noncash financing activities:
Treasury stock purchased by satisfaction of accounts
receivable.......................................... $ -- $ -- $ 522,200 $ -- $ --
=========== =========== ============ ============ ============
</TABLE>

See notes to consolidated financial statements.

F-6
<PAGE> 58

JLM INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996 AND THE
(UNAUDITED) THREE MONTHS ENDED MARCH 31, 1996 AND 1997

1. DESCRIPTION OF BUSINESS

JLM Industries, Inc. and subsidiaries ("JLM" or the "Company") is a leading
marketer and distributor of certain commodity chemicals, principally acetone and
phenol. JLM is headquartered in Tampa, Florida.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation -- The consolidated financial statements
include the accounts of JLM and its wholly-owned subsidiaries. JLM's principal
operating subsidiaries are JLM Marketing, Inc., JLM Chemicals, Inc., JLM
Terminals, Inc., JLM International, Inc., Olefins Marketing, Inc., JLM
Industries (Europe) B.V., JLM Chemicals Canada, Inc., JLM Industries de
Venezuela, C.A., Aurora Chemicals, Inc. ("Aurora") and Phoenix Tank Car
Corporation ("Phoenix"). All material intercompany balances and transactions
have been eliminated in consolidation. Included in the 1994 consolidation is the
80% owned subsidiary, Olefins Marketing Inc. and the 95% owned subsidiary,
Polychem Ltd., Inc. ("Polychem"). In 1995, a former employee assigned his 20%
minority interest in Olefins Marketing Inc. to JLM in conjunction with his
severance agreement. Pursuant to the severance agreement, the former employee
received severance compensation and indemnification against future liabilities
arising out of the ownership of such shares. The resulting decrease in minority
interest of $177,620 was included in other income. Also, in 1995 Polychem was
sold (see Note 16). Included in the 1995, 1996 and 1997 consolidation is the 55%
owned subsidiary, JLM Europe (B.V.).

Unaudited Interim Information -- In the opinion of management, all
adjustments necessary for a fair presentation of the unaudited interim
consolidated financial statements as of March 31, 1997 and for the three months
ended March 31, 1996 and 1997 have been included. Such adjustments consist only
of normal recurring items. Interim results are not necessarily indicative of
results for a full year.

Consolidated Statements of Cash Flows -- Cash equivalents consist of highly
liquid investments with original maturities from purchase date of three months
or less.

Inventories -- Inventories are valued at the lower of cost or market. The
costs of JLM Marketing, Inc.'s inventories are determined on the last-in,
first-out (LIFO) method. As of December 31, 1996 and March 31, 1997, JLM
Marketing Inc.'s inventory was approximately 22% and 33%, respectively, of total
inventory. The costs of remaining inventories are determined on the first-in,
first out (FIFO) method. In the year ended December 31, 1996, there was a
decrease of LIFO inventory quantities and an increase in the price index,
resulting in a decrease in the LIFO reserve. In the three months ended March 31,
1997, there was an increase of LIFO inventory quantities with no change in the
price index, resulting in no change in the LIFO reserve. If LIFO inventories
were valued at current costs, operating income would have been $1,006,000,
$623,000, $(13,000), $0 and $0 higher (lower) than those reported for the years
ended December 31, 1994, 1995 and 1996, and the three months ended March 31,
1996 and 1997, respectively. The excess of replacement cost over the value of
inventories based upon the LIFO method was $1,629,000, and $1,616,000 as of
December 31, 1995 and 1996. There was no change in the excess of replacement
cost over the value of inventories based upon the LIFO method from December 31,
1996 to March 31, 1997.

JLM enters into contracts whereby parties to the contracts agree to
exchange various quantities of inventory over a specified period of time. JLM
records these exchanges of inventory at the lower of cost or market. As of
December 31, 1995 and 1996 and March 31, 1997, JLM owed approximately
$1,360,000, $1,378,000 and $755,700, respectively, under these contracts which
are included in inventory.

In 1996, JLM entered into a fixed price financial hedging contract in order
to minimize its exposure in the three months ended March 31, 1997 to the
fluctuations in the price of propylene, one of the two key raw materials used by
JLM. The purpose of the financial hedging contract was to secure an acceptable
purchase price for JLM's propylene requirements in the three months ended March
31, 1997. The contract was for 13 million pounds of

F-7
<PAGE> 59

JLM INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

propylene at $.1225 per pound. In accordance with Statement of Financial
Accounting Standards ("SFAS") No. 80, Accounting for Futures Contracts, gains
and losses for such contracts are recognized as an adjustment to cost of sales
at the time the finished goods are sold by JLM. During the three months ended
March 31, 1997, JLM purchased and sold substantially all of the 13 million
pounds of propylene covered under the hedging contract. As a result, in the
three months ended March 31, 1997, JLM recognized a gain of $492,970, which
reduced cost of sales for this period. JLM can be exposed to losses in
connection with such contracts, generally the amount by which the fixed hedged
price on the contract is above the market price for such chemicals at the time
of purchase.

Prepaid Expenses and Other Current Assets -- Prepaid expenses and other
current assets include marketable securities and stock issuance costs.
Marketable securities are stated at cost, adjusted for unrealized gains or
losses, in accordance with SFAS No. 115, Accounting for Certain Investments in
Debt and Equity Securities. Stock issuance costs relate to JLM's proposed
initial public offering. Upon successful completion of the offering, such costs
will be netted against the proceeds. In the event that the offering is not
successful, JLM will expense these costs.

Assets Held for Sale -- Assets held for sale are stated at cost which
approximates market value.

Other Investments -- Other investments include JLM's investments in
partnerships and the investment in Olefins Terminal Corporation ("OTC"). JLM
accounts for certain of its investments in partnerships on an equity basis, and
accordingly, records its respective share of profits and losses which are
allocated in accordance with the partnership agreements. Except for OTC, JLM has
no obligation to make any contributions beyond its initial investments. See
further discussion of OTC in Note 5.

Property and Equipment -- Property and equipment are stated at cost.
Depreciation and amortization are computed using the straight-line method over
the shorter of the lease term or the estimated useful lives.

A summary of the lives used for computing depreciation is as follows:

<TABLE>
<S> <C>
Building.................................................... 31.5 years
Vehicles and airplanes...................................... 2 to 10 years
Equipment................................................... 5 to 10 years
Furniture and fixtures...................................... 3 to 5 years
Leasehold improvements...................................... Life of lease
</TABLE>

Other Assets -- As of December 31, 1995 and 1996 and March 31, 1997, other
assets consist primarily of the cash surrender values of life insurance policies
held on key employees and deferred acquisition costs. In addition to the above,
as of December 31, 1996 and March 31, 1997 other assets included license fees,
certain development costs and advances on consulting and non-competition
agreements (see Note 12). These costs are amortized on a straight-line basis
from 2 to 10 years. Accumulated amortization on other assets as of December 31,
1995 and 1996 and March 31, 1997 was $208,434, $578,029 and $666,898,
respectively.

Deferred Revenue -- JLM accounts for amounts received from customers in
advance of shipments of inventory as deferred revenue.

Income Taxes -- JLM accounts for income taxes under the asset and liability
method as required by SFAS No. 109, Accounting for Income Taxes. Under this
method, deferred income taxes are recognized for the tax consequences of
"temporary differences" by applying enacted statutory tax rates applicable to
future years to differences between the financial statement carrying amounts and
the tax basis of existing assets and liabilities. The effect on deferred taxes
of a tax rate change is recognized in income in the period that the rate change
is enacted.

Aurora and Phoenix have elected to be treated as S corporations for federal
income tax purposes, with profits and losses generally reportable by the
stockholders in their individual income tax returns. Any tax liability related
to either Aurora or Phoenix prior to their acquisition by JLM will be the
responsibility of their shareholders.

F-8
<PAGE> 60

JLM INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Accordingly, JLM has recorded no tax liability for such periods. On a pro forma
basis the tax liability for Aurora and Phoenix would be immaterial.

Translation of Foreign Currency Financial Statements -- Assets and
liabilities of foreign subsidiaries are translated at period-end exchange rates.
Results of operations are translated at weighted average rates for the period.
The effects of exchange rate changes in translating foreign financial statements
are presented as a separate component of stockholders' equity, except for the
Venezuelan subsidiary which operates in a hyperinflationary economy for which
the translation gains and losses are included in net income currently.

Foreign Exchange Contracts -- JLM enters into foreign exchange contracts as
a hedge against foreign accounts payable and receivable. Market value gains and
losses are recognized, and the resulting credit or debit offsets foreign
exchange gains or losses on these payables and receivables. At December 31, 1996
and March 31, 1997, JLM had no open foreign exchange contracts

Stock-Based Compensation -- In October 1995, the Financial Accounting
Standards Board issued SFAS No. 123, Accounting for Stock-Based Compensation
("SFAS No. 123"), which is effective for fiscal years beginning after December
15, 1995. Under SFAS No. 123, JLM may elect to recognize stock-based
compensation expense based on the fair value of the awards or continue to
account for stock-based compensation under Accounting Principles Board Opinion
No. 25 Accounting for Stock Issued to Employees and disclose in the financial
statements the effects of SFAS No. 123 as if the recognition provisions were
adopted. JLM does not currently have a stock-based compensation plan.

Stockholders' Equity -- Effective May 22, 1997, the Company amended its
Certificate of Incorporation and increased the number of shares of common stock
authorized to 30,000,000 and changed the par value from no par to $.01 per
share. Additionally, this amendment provided for 5,000,000 authorized shares of
a new class of preferred stock. All share and per share amounts in the
accompanying consolidated financial statements have been retroactively adjusted
for the amendment.

Income per Share -- The income per share is based on the weighted average
number of common shares outstanding during each period adjusted for actual
shares issued during the period.

Revenue Recognition -- The Company recognizes revenue from product sales
upon shipment and passage of title. The Company estimates and records provisions
for quantity rebates and sales allowances if necessary in the period the sale is
reported.

Use of Estimates -- The preparation of the consolidated financial
statements, in conformity with generally accepted accounting principles,
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the consolidated financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimated.

Fair Value of Financial Instruments -- The estimated fair value of amounts
reported in the consolidated financial statements have been determined by using
available market information and appropriate valuation methodologies. The
carrying value of all current assets and current liabilities approximates the
fair value because of their short-term nature. The fair value of long-term debt
approximates its carrying value.

Concentration of Credit Risk -- Financial instruments which potentially
subject JLM to a concentration of credit risk principally consist of trade
accounts receivable. Credit risk with respect to trade accounts receivable is
generally diversified due to the large number of entities comprising JLM's
customer base and their dispersion

F-9
<PAGE> 61

JLM INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

across many different geographies. JLM performs ongoing credit evaluations of
its customers' financial condition and requires collateral, such as letters of
credit, or business insurance in certain circumstances.

3. PROPERTY AND EQUIPMENT

Property and equipment consist of the following:

<TABLE>
<CAPTION>
MARCH 31,
1995 1996 1997
----------- ----------- -----------
<S> <C> <C> <C>
Land and building............................... $ 6,090,504 $ 6,168,690 $ 6,168,690
Vehicles........................................ 1,040,360 378,894 361,893
Airplane........................................ -- 2,090,071 2,090,071
Equipment....................................... 17,896,185 22,493,073 22,781,904
Leased equipment -- capital lease............... 1,121,135 1,188,122 1,188,122
Furniture and fixtures.......................... 849,545 850,708 859,492
Leasehold improvements.......................... 172,701 318,066 450,186
----------- ----------- -----------
27,170,430 33,487,624 33,900,358
Less accumulated depreciation and
amortization.................................. (2,459,033) (4,119,264) (4,693,986)
----------- ----------- -----------
$24,711,397 $29,368,360 $29,206,372
=========== =========== ===========
</TABLE>

Depreciation and amortization expense for property and equipment was
$452,075, $1,335,500, $2,241,584, $499,741 and $574,722 for the years ended
December 31, 1994, 1995 and 1996 and the three months ended March 31, 1996 and
1997, respectively. The leased equipment consists of several capital leases,
which expire through June 1999, with a $189,318 option to purchase at the end of
the lease period. Future minimum capital lease payments for the years 1997
through 2001 are $266,563, $281,534, $331,767, $3,448, and $1,253, respectively.
Interest payments on such capital leases for the years 1997 through 2000 are
$72,232, $47,020, $13,670 and $440, respectively.

4. INVESTMENTS IN JOINT VENTURES AND PARTNERSHIPS

Investments in partnerships at December 31, 1995 and 1996 and March 31,
1997 consist principally of the following:

Phenol Plant Partnership -- JLM holds a 2% interest in the Mt. Vernon
Phenol Plant Partnership via its wholly owned subsidiary JLM (Ind), Inc., an
Indiana Corporation. The plant converts cumene into phenol which is marketed
under contractual agreements to GE Plastics. JLM has a long-term exclusive
agreement through 2002, and thereafter unless the agreement is terminated upon
prior notice, to purchase all acetone not used internally by GE Plastics
produced at the Mt. Vernon Phenol Plant. Based on its percentage of ownership,
JLM accounts for this investment using the cost method. As of December 31, 1995
and 1996 and March 31, 1997, the amount of this investment was approximately
$492,000. No contributions or distributions were made in 1995, 1996 or 1997.

Real Estate Partnerships -- JLM holds a 99% interest in Len-Kel Realty
Limited Partnership ("Len-Kel"). During 1987 and 1988, Len-Kel acquired 28 units
in a development project converting historical buildings into residential use.
The units are currently operated as rental property. JLM is a limited partner in
Len-Kel and cannot exert control over the partnership. Accordingly, the
investment is carried on the equity method. As of December 31, 1995 and 1996 and
March 31, 1997, the amount of this investment was approximately $957,000,
$909,000 and $897,000, respectively.

JLM holds other investments through limited partnerships. The amount of
these partnerships totaled approximately $133,000, $47,000 and $47,000 at
December 31, 1995 and 1996 and March 31, 1997, respectively.

F-10
<PAGE> 62

JLM INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

During the years ended December 31, 1994, 1995 and 1996 and the three
months ended March 31, 1996 and 1997, JLM recorded income (losses) from
partnership investments of $224,684, ($41,697), $(48,000), $(12,000) and
$(12,000), respectively. The 1994 recorded income of $224,684 is comprised of a
loss of $48,000 from partnership operating activities and an extraordinary gain
of $272,684 from partnership forgiveness of debt. Income tax expense of $103,620
has been allocated to the extraordinary gain, for an extraordinary gain net of
applicable taxes of $169,064. Losses do not require cash contributions by JLM.
As a limited partner, JLM has no obligation to make any contributions beyond its
initial investment.

5. OLEFINS TERMINAL CORPORATION

During 1991, JLM formed a 100% owned subsidiary, OTC, to design and
construct a polymer grade propylene export facility in Bayport, Texas. On August
15, 1991, OTC issued common stock and common stock warrants to other investors
which reduced JLM's ownership to 49% (32% on a fully diluted basis).
Construction was completed in July 1992. JLM accounts for its investment in OTC
on the equity basis. During the years ended December 31, 1994, 1995 and 1996 and
the three months ended March 31, 1996 and 1997, income (loss) from the
investment in OTC of $205,155, $82,500, $(55,169), $(47,941) and $(15,641),
respectively, was recorded. As of December 31, 1995 and 1996 and March 31, 1997,
the amount of this investment was approximately $297,000, $280,000 and $295,000,
respectively.

JLM provides OTC with financial and management services for a fee of 2.5%
on certain sales, as defined. JLM recorded management fees of $188,768,
$147,706, $139,321, $29,824 and $0 for the years ended December 31, 1994, 1995
and 1996 and the three months ended March 31, 1996 and 1997, respectively, under
this agreement. No payment of management fees had been made to JLM as of March
31, 1997 as these amounts were subordinated to OTC's senior indebtedness. As of
December 31, 1996 and March 31, 1997, JLM has recorded approximately $729,000 in
management fees due from OTC in accounts receivable-other.

As of December 31, 1995 and 1996 and March 31, 1997, JLM has a non-current
note receivable, including accrued interest, from OTC in the amount of
$2,752,356, $2,320,313 and $2,406,797, respectively. The note bears interest at
the rate of 10% per annum.

JLM is under contract through August 1997 to ship 5,000 metric tons per
month through OTC's terminal. JLM pays $113,200 each month for these terminaling
privileges. If JLM ships less than 5,000 metric tons in a month, the difference
can be carried over to subsequent months. These carryover rights, however,
expire at the end of each subsequent contract year. JLM recorded no prepaid
terminaling fees as of December 31, 1996 as there was no guarantee that such
amounts could be utilized by JLM in 1997.

See Note 18 regarding the OTC refinancing of their long-term debt.

The following summarizes the assets, liabilities and stockholders' equity
of OTC:

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, MARCH 31,
1995 1996 1997
------------ ------------ -----------
<S> <C> <C> <C>
ASSETS:
Current....................................... $ 2,204,142 $ 2,154,737 $ 3,131,227
Noncurrent.................................... 14,697,600 12,095,787 11,355,334
----------- ----------- -----------
$16,901,742 $14,250,524 $14,486,561
=========== =========== ===========
LIABILITIES:
Current liabilities........................... $ 5,397,487 $ 4,292,927 $ 4,184,299
Noncurrent liabilities........................ 10,611,211 9,230,060 9,553,953
Stockholders' equity.......................... 893,044 727,537 748,309
----------- ----------- -----------
$16,901,742 $14,250,524 $14,486,561
=========== =========== ===========
</TABLE>

F-11
<PAGE> 63

JLM INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

OTC had net income (loss) of $621,682, $250,035, $(165,507), $(145,276) and
$20,772 for the years ended December 31, 1994, 1995 and 1996 and the three
months ended March 31, 1996 and 1997, respectively.

6. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, MARCH 31,
1995 1996 1997
------------ ------------ -----------
<S> <C> <C> <C>
Accounts payable................................ $48,116,089 $35,886,152 $45,843,678
Accrued expenses................................ 2,813,793 3,703,954 5,849,171
----------- ----------- -----------
$50,929,882 $39,590,106 $51,692,849
=========== =========== ===========
</TABLE>

7. LOANS PAYABLE

Loans payable consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, MARCH 31,
1995 1996 1997
------------ ------------ -----------
<S> <C> <C> <C>
Secured revolving loan agreements expiring in June 1997
and April 2000. The loan agreement expiring in June
1997 has been extended to August 31, 1997. Interest is
payable monthly at prime and prime plus 1.75% (prime
was 8.25% and 8.5% as of December 31, 1996 and March
31, 1997, respectively)................................ $ -- $5,915,336 $ 8,410,854
Secured loans payable associated with Venezuelan
operations due on demand. Interest is payable monthly
at 37.2% and between 21% -- 23% as of December 31, 1996
and March 31, 1997, respectively....................... 29,354 1,013,655 1,087,507
Secured loans payable due on demand. Interest is payable
monthly at rates between 8.3% -- 10.0% as of December
31, 1996 and March 31, 1997............................ 2,102,725 1,437,529 8,080,569
---------- ---------- -----------
Total loans payable............................ $2,132,079 $8,366,520 $17,578,930
========== ========== ===========
</TABLE>

The loans payable are collateralized by virtually all of JLM's inventory
and accounts receivable. As of December 31, 1996 and March 31, 1997, JLM had a
total of approximately $52,800,000 of credit facilities available with various
financial institutions of which approximately $38,213,917 and $20,968,524,
respectively, was unused. Additionally, as of December 31, 1996 and March 31,
1997, JLM had guaranteed vendor letters of credit in the amount of $6,219,563
and $14,252,546, respectively.

JLM's loans payable also contain certain financial covenants which must be
met with respect to, among other things, tangible net worth, cash flow coverage,
earnings and capital expenditures. JLM was not in compliance the tangible net
worth and the cash flow coverage covenants as of December 31, 1996, and
accordingly, received waivers with respect to such covenants from its financial
institutions. There can be no assurance that JLM will not require additional
waivers in the future or, if required, that the financial institutions will
grant them. Additionally, certain provisions of the loans payable to which JLM
is subject restrict JLM's ability to pay dividends.

F-12
<PAGE> 64

JLM INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

8. LONG-TERM DEBT

Long-term debt consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, MARCH 31,
1995 1996 1997
------------ ------------ -----------
<S> <C> <C> <C>
Secured term loan payable due in equal quarterly
installments through June 2002. Interest is
payable quarterly at LIBOR plus 3.5% (LIBOR
was 5.375% and 5.688% as of December 31, 1996
and March 31, 1997, respectively)............. $14,864,177 $12,507,619 $11,293,334
Secured term loan payable due in June 2002.
Interest is payable monthly at 8.875% and
9.063% as of December 31, 1996 and March 31,
1997, respectively............................ -- 2,300,000 2,200,000
Mortgage payable due in equal monthly
installments through June 2004. Interest is
payable monthly at 9.59% as of December 31,
1996 and March 31, 1997....................... 1,800,587 1,703,694 1,679,471
Secured loans payable due in 2006. Interest is
payable at rates between 8%-9.68% as of
December 31, 1996 and March 31, 1997.......... 113,108 1,838,215 1,808,929
Secured loan payable due in variable monthly
installments through June 2000. Interest is
payable monthly at 10.9% as of December 31,
1996 and March 31, 1997....................... 1,129,167 929,167 866,667
Secured loan payable due in 1998, payable in a
$74,000 installment in 1997 and the balance
due in 1998. Interest is payable monthly at
the prime rate plus 1% (prime was 8.25% and
8.50% as of December 31, 1996 and March 31,
1997, respectively)........................... 1,052,400 978,400 904,400
Secured installment loan payable due in
September 1999, payable in quarterly
installments of $50,000. Interest is payable
quarterly at the prime rate plus 2% (prime was
8.25% and 8.50% as of December 31, 1996 and
March 31, 1997, respectively)................. -- 564,339 464,339
Secured loans payable due in equal monthly
installments through 1999. Interest is payable
monthly at rates between 10.13%-13.47% as of
December 31, 1996 and March 31, 1997.......... 93,821 65,258 99,894
Capital lease obligations due in equal monthly
installments through April 2001. Interest is
payable monthly at rates between 9.93%-16.99%
as of December 31, 1996 and March 31, 1997.... $ 1,009,018 $ 884,565 $ 800,610
----------- ----------- -----------
Total................................. 20,062,278 21,771,257 20,117,643
Less current portion.................. (3,044,064) (3,962,385) (4,696,652)
----------- ----------- -----------
Long-term portion..................... $17,018,214 $17,808,872 $15,420,991
=========== =========== ===========

</TABLE>

F-13
<PAGE> 65

JLM INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Long-term debt becoming due during subsequent fiscal years ending on
December 31 are as follows:

<TABLE>
<S> <C>
1997........................................................ $ 3,962,385
1998........................................................ 4,724,810
1999........................................................ 3,802,765
2000........................................................ 3,147,303
2001........................................................ 3,320,577
Thereafter.................................................. 2,813,417
-----------
Total............................................. 21,771,257
Less current portion.............................. (3,962,385)
-----------
Long-term portion................................. $17,808,872
===========
</TABLE>

The long-term debt is secured by substantially all of JLM's property and
equipment.

9. LOAN PAYABLE TO STOCKHOLDER AND RELATED PARTY TRANSACTIONS

JLM has loans payable to its majority stockholder in the amount of
$1,009,960, $905,148 and $905,148 at December 31, 1995 and 1996 and March 31,
1997, respectively. The loan payable as of December 31, 1996 and March 31, 1997
bears interest at the prime rate, which was 8.25%, and matures on January 1,
1999. In 1995 and 1996, JLM purchased $479,400 and $318,600 of chemical products
from a joint venture partnership owned 50.0% by Kemlink, L.L.C., a Delaware
limited Liability company of which the majority stockholder is a 97.0% owner.
All purchases in 1995 and 1996 were at prices comparable to those paid to
unrelated parties. In addition, during 1995 and 1996, JLM sold $1,588,900 and
$1,260,000, respectively, of chemical products to Kemlink J.V. JLM did not
purchase from or sell any chemicals to Kemlink J.V. in 1994. Effective December
31, 1996, the Company ceased doing business with Kemlink J.V., which was
terminated by its partners, and Kemlink, L.L.C.

10. INCOME TAXES

JLM's current and deferred income tax provision consists of the following:

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
---------------------------------- -------------------
1994 1995 1996 1996 1997
-------- ---------- ---------- -------- --------
<S> <C> <C> <C> <C> <C>
Current:
Federal........................ $366,645 $1,333,030 $1,350,848 $330,438 $336,630
State and local................ 48,826 212,427 182,528 45,215 59,305
Foreign........................ 398,252 249,343 257,278 168,245 95,902
Deferred......................... 48,982 336,793 1,343,849 370,705 287,507
-------- ---------- ---------- -------- --------
$862,705 $2,131,593 $3,134,503 $914,603 $779,344
======== ========== ========== ======== ========
</TABLE>

The income tax provision reflected above includes the income tax
expense/benefit associated with discontinued operations and extraordinary gain.

F-14
<PAGE> 66

JLM INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The significant components of the deferred tax assets and liabilities are
as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------- MARCH 31,
1995 1996 1997
----------- ----------- -----------
<S> <C> <C> <C>
Deferred tax assets:
Foreign net operating loss................. $ 77,000 $ 415,000 $ 430,000
Minimum tax credit carryforward............ -- 283,400 283,400
----------- ----------- -----------
77,000 698,400 713,400
Valuation allowance........................ (77,000) (415,000) (430,000)
----------- ----------- -----------
Total deferred tax assets.......... -- 283,400 283,400
----------- ----------- -----------
Deferred tax liabilities:
Property................................... (289,451) (1,953,133) (2,252,040)
Investment in partnership.................. (866,571) (817,974) (806,574)
Other...................................... (39,109) (51,273) (51,273)
----------- ----------- -----------
Total deferred tax liabilities..... (1,195,131) (2,822,380) (3,109,887)
----------- ----------- -----------
Net deferred tax liability......... $(1,195,131) $(2,538,980) $(2,826,487)
=========== =========== ===========
</TABLE>

The net change in the total valuation allowance for the year ended December
31, 1996 and the three months ended March 31, 1997 was an increase of $338,000
and $15,000, respectively. The valuation allowance represents the deferred tax
assets booked for foreign net operating losses generated from Venezuelan
operations.

At December 31, 1996 and March 31, 1997, there are foreign net operating
losses of approximately $1,220,000 and $1,270,000, respectively, available to
offset future foreign taxable income. These net operating losses expire in
various years ending in 2000.

JLM's effective income tax rate differs from the statutory federal income
tax rate of 34% as follows:

<TABLE>
<CAPTION>
THREE MONTHS
YEARS ENDED ENDED
DECEMBER 31, MARCH 31,
----------------------- --------------
1994 1995 1996 1996 1997
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Statutory federal income tax rate.......... 34.00% 34.00% 34.00% 34.00% 34.00%
State and local income taxes............... 2.55 4.00 2.58 4.92 2.74
Foreign income taxes, net of federal income
tax benefit.............................. 6.55 2.12 3.80 17.53 2.42
Valuation allowance -- foreign net
operating loss........................... -- -- 4.79 38.10 .67
Foreign Sales Corporation benefit.......... -- -- (2.05) (1.69) (4.45)
Other...................................... 2.02 0.00 1.25 6.61 .62
----- ----- ----- ----- -----
Effective income tax rate.................. 45.12% 40.12% 44.37% 99.47% 36.00%
===== ===== ===== ===== =====
</TABLE>

Undistributed earnings (accumulated deficit) of non-U.S. subsidiaries
included in consolidated retained earnings amounted to $542,794, $(284,069) and
$(256,467) as of December 31, 1995 and 1996 and March 31, 1997, respectively.
JLM intends to continue to indefinitely reinvest these earnings, which reflect
full provision for non-U.S. income taxes, to expand its international
operations. Accordingly, no provision has been made for U.S. income taxes that
might be payable upon repatriation of such earnings. In the event any earnings
of non-U.S. subsidiaries are repatriated, JLM will provide for U.S. income taxes
upon repatriation of such earnings which will be offset by applicable foreign
tax credits, subject to certain limitations.

F-15
<PAGE> 67

JLM INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

11. TREASURY STOCK

Chemical Trading, S.L. ("Trading"), JLM's Spanish distributor, was indebted
to JLM pursuant to an arrangement in which JLM pays the distributor's operating
expenses. JLM treats the difference between such payments made by JLM and the
amount of commissions and other amounts due to the distributor in respect of his
activities on behalf of JLM as a loan by JLM to the distributor. Such
indebtedness was carried on an open account basis and in July 1996, $522,200 was
repaid without interest through the sale to JLM at fair market value of 48
shares (267,264 after giving effect to the stock split in July 1997) of common
stock owned by Trading's owner. See Note 18 regarding the stock split and
retirement of treasury stock. Included in accounts receivable-other as of
December 31, 1995 and 1996 and March 31, 1997 are amounts owed to JLM by Trading
in the amount of $568,633, $322,350 and $420,944, respectively.

12. COMMITMENTS AND CONTINGENCIES

JLM is obligated under operating leases with remaining noncancelable terms
of a year or more for office equipment and automobiles. The approximate minimum
annual rentals under these leases at December 31, 1996 are as follows:

<TABLE>
<S> <C>
1997........................................................ $ 829,306
1998........................................................ 592,128
1999........................................................ 371,174
2000........................................................ 186,583
2001........................................................ 33,370
----------
Total minimum lease payments...................... $2,012,561
==========
</TABLE>

Total rental expenses for all operating leases approximated $1,533,000,
$1,605,300, $1,875,000, $469,000 and $286,000 for the years ended December 31,
1994, 1995 and 1996 and the three months ended March 31, 1996 and 1997,
respectively.

JLM is also obligated under a license agreement at December 31, 1996 to
make future minimum payments as follows:

<TABLE>
<S> <C>
1997........................................................ $115,750
1998........................................................ 115,750
1999........................................................ 115,650
--------
Total............................................. $347,150
========
</TABLE>

The Internal Revenue Service (the "IRS") has concluded a federal income tax
examination of JLM's 1988, 1989 and 1990 tax years and has proposed adjustments
for such years. JLM has filed a protest of the proposed adjustments and is
awaiting a determination by the IRS with respect to the JLM protest. JLM
believes that the outcome of the examination will not have a material adverse
effect on the financial condition or results of operations of JLM.

The IRS has also commenced a federal income tax examination for JLM's 1992,
1993 an 1994 tax years. The examination is in its final stages, and the IRS has
not asserted any income tax deficiencies or definitively indicated all the
issues that will be involved in the examination. The issues that have been
raised by the IRS thus far do not indicate that any impact on the taxable years
at issue would be material. However, there can be no assurance that additional
issues impacting future taxable years will not be raised and resolved adversely
to JLM during the course of the examination or subsequent proceedings.

JLM is subject to federal, state, local and foreign environmental laws,
rules, regulations and ordinances concerning emissions to the air, discharges to
surface and subsurface waters, and the generation, handling, storage,
transportation, treatment, disposal and import and export of hazardous
materials. JLM has engaged

F-16
<PAGE> 68

JLM INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

environmental counsel for three of their facilities: the JLM Chemicals, Inc.
Blue Island, Illinois facility, the JLM Terminals, Inc. facility and the
Polychem facility. Regarding the JLM Chemicals, Inc. facility, JLM believes that
the low levels of various organic compounds detected in soil and groundwater at
the facility are the result of historical use of the facility prior to its
acquisition by JLM (see Note 15) and/or migration from neighboring facilities.
JLM also believes that the likelihood of either state or federal environmental
regulatory agencies seeking remediation in the near term is low, based on the
location of the facility, the character of the area (each of which are factors
in assessing risk) and the fact that the site is pending removal from the
federal list of contaminated sites. Regarding the JLM Terminals, Inc. facility,
JLM believes that ultimate liability for remediation of soil and groundwater
contamination rests with the previous owner of the facility and/or a neighboring
facility. The previous owner is currently implementing a state approved Remedial
Action Plan ("RAP"). The Company is not subject to any requirements under the
RAP. Regarding the Polychem facility, levels of organic compounds slightly in
excess of regulatory thresholds were detected in the ground water. JLM has been
addressing the problem and recent analytical results show that the levels of
contaminants have decreased to acceptable levels. Accordingly, JLM has requested
that state authorities permit closure of the remediation of the Polychem
facility. JLM does not believe that a material amount of funds will be required
to complete remediation at any site. Accordingly, the Company has not accrued
any amounts related to the remediation of any sites.

On December 12, 1996, JLM entered into consulting and non-competition
agreements with two independent third parties. The terms of the consulting
agreements are from January 3, 1997 through December 31, 2003 and JLM is
committed to pay $130,000 per year, payable semi-annually beginning January 1,
1997 through December 31, 2002 and $200,000 on January 1, 2003. The terms of the
non-competition agreements will be from January 1, 1997 through December 31,
2006 and JLM is committed to pay $100,000 per year, payable semi-annually from
July 1, 1997 through December 31, 2002 and $270,000 on January 1, 2003. As of
December 31, 1996 and March 31, 1997, JLM has advanced $470,000 to the third
parties and, in conjunction with entering into the consulting and
non-competition agreements, these amounts shall be satisfied by setting them off
against the amounts owed by the third parties to JLM. As of December 31, 1996
and March 31, 1997, the $240,000 advance has been recorded in other assets-net
and the remaining $230,000 advance is recorded in prepaid expenses and other
current assets in the accompanying consolidated balance sheet. On October 24,
1996, the third parties signed promissory notes aggregating $470,000 and bearing
no interest for the monies that had been advanced.

13. PROFIT-SHARING PLAN

JLM has a defined contribution profit-sharing plan covering substantially
all of its employees. Prior to July 1995, JLM was contributing an amount equal
to 50% of the contribution of eligible employees, limited to the lesser of 3% of
the employees' compensation or $1,000. Effective July 1995, JLM changed its
contribution amount from the above to 100% of the contribution of eligible
employees, limited to a maximum amount of 6% of the employees' compensation.
JLM's contribution rate is determined annually at the beginning of each plan
year. The costs for this plan were approximately $15,000, $130,000, $278,000,
$64,000 and $65,000 for the years ended December 31, 1994, 1995 and 1996 and the
three months ended March 31, 1996 and 1997, respectively.

Included in selling, general and administrative expenses are discretionary
profit-sharing bonuses paid to employees based on performance or formulas. The
bonuses of JLM were approximately $447,000, $326,000, $581,000, $150,000 and
$100,000 for the years ended December 31, 1994, 1995 and 1996, and the three
months ended March 31, 1996 and 1997, respectively.

14. POLYCHEM LTD., INC.

During 1994, JLM formed and held 95% ownership of a new subsidiary, JLM
Acquisition, Inc. On August 8, 1994, JLM Acquisition, Inc. purchased
substantially all the business assets of Polychem, a chemical dyes distributor
in Dalton, Georgia, for $900,000 in cash and a promissory note for $1,240,000
payable in semi-

F-17
<PAGE> 69

JLM INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

annual installments over five years. The acquisition was accounted for as a
purchase transaction and, accordingly, the purchase price was allocated to the
assets on the basis of estimated fair market value on the date of purchase. The
excess of purchase price over the fair value of the tangible assets acquired was
$1,515,000. See Note 16 for discussions of the discontinued operations of
Polychem.

15. JLM CHEMICALS, INC.

During 1995, JLM formed a new wholly-owned subsidiary, JLM Chemicals, Inc.
On June 8, 1995, JLM Chemicals, Inc. purchased certain of the business assets
and assumed certain liabilities of BTL Specialty Resins, Corp., a phenol and
acetone producer located in Blue Island, Illinois. The acquisition has been
accounted for as a purchase transaction and, accordingly, the purchase price was
allocated to the assets and liabilities on the basis of estimated fair market
value on the date of purchase. The fair value of the assets and liabilities, at
the date of acquisition, recorded in conjunction with the transaction are
presented below:

<TABLE>
<S> <C>
Inventories................................................. $ 2,983,555
Prepaid expenses and other current assets................... 598,505
Property and equipment...................................... 18,583,845
Other assets................................................ 325,000
Accounts payable and accrued expenses....................... (1,146,686)
Debt........................................................ (18,121,135)
------------
Net assets acquired, excluding cash............... 3,223,084
Cash........................................................ 1,776,916
------------
Net assets acquired............................... $ 5,000,000
============
</TABLE>

16. DISCONTINUED OPERATIONS

During 1995 and 1996, JLM's Board of Directors adopted formal plans to sell
the non-core business segments, consisting of Polychem, MAC Enterprises, Inc.
("Enterprises") and JLM Stables, Inc. ("Stables") (collectively the "Segments"),
as part of JLM's strategic focus on marketing and manufacturing of commodity and
specialty chemicals. The Segments have been accounted for as discontinued
operations in the accompanying consolidated financial statements, which requires
the plan of disposal to be carried out within one year.

On October 26, 1995, JLM completed the sale of substantially all the
operating assets of Polychem for cash of $882,237 and the assumption of related
liabilities. The purchaser has an irrevocable option for a period of three years
to buy the Polychem real property for $1; however, Polychem has retained title
to this real property. In conjunction with the sale of Polychem, JLM guaranteed
the payment of the note payable that was assumed by the purchaser of Polychem.

In December 1996, JLM entered into a plan to sell the assets of both
Enterprises and Stables. Based on management's review of the assumptions used in
determining the estimated gain or loss from the disposals of Enterprises and
Stables, JLM recorded a provision of $9,050, net of income taxes, for the loss
on disposal during 1996. The Company does not allocate any corporate overhead to
either Enterprises or Stables.

F-18
<PAGE> 70

JLM INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The operating results of the discontinued operations, which includes
interest expense associated with Enterprises and Stables, are summarized as
follows:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, MARCH 31,
----------------------------------- ---------------------
1994 1995 1996 1996 1997
---------- ---------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Sales.......................... $1,927,003 $4,004,431 $ 244,909 $ 81,773 $ 65,853
Loss from discontinued
operations before income
taxes........................ (443,175) (745,506) (711,197) (137,117) (141,131)
Income tax benefit............. 214,115 298,204 282,932 54,847 56,452
Net loss....................... (229,060) (447,302) (428,265) (82,270) (84,679)
</TABLE>

The net liabilities of discontinued operations are summarized as follows:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, MARCH 31,
------------------------ ----------
1995 1996 1997
---------- ---------- ----------
<S> <C> <C> <C>
Current assets................................. $3,542,884 $2,227,636 $2,257,197
Property and equipment, net.................... 330,062 4,735 2,706
Current liabilities............................ 3,705,882 2,712,711 3,733,189
Net liabilities of discontinued operations..... 936,333 1,384,741 1,473,286
</TABLE>

Current assets of discontinued operations as of December 31, 1995 and 1996
and March 31, 1997 includes assets held for sale of $2,246,594, $1,817,394 and
$1,759,746, respectively.

17. SEGMENT REPORTING

JLM's business consists of a marketing and a manufacturing segment. JLM's
manufacturing segment includes the operations of JLM Chemicals, Inc. and the
sale of acetone manufactured at the Mount Vernon Phenol Plant. JLM's marketing
segment includes its distribution, storage and terminaling operations and all
other sourcing operations. Marketing segment revenues include an assumed selling
commission determined in accordance with industry standards for the sale of
products manufactured at JLM Chemicals, Inc. The marketing segment also includes
an assumed allocation of revenues, costs of goods sold and expenses associated
with the sale of products sourced from the Mt. Vernon Phenol Plant, which
allocation is determined on a basis consistent with the commission for sale of
products manufactured at JLM Chemicals, Inc.

F-19
<PAGE> 71

JLM INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The following schedule presents information about JLM's continuing
operations in these segments and geographic locations for:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, THREE MONTHS ENDED MARCH 31,
------------------------------------------ -----------------------------
1994 1995 1996 1996 1997
------------ ------------ ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>
INDUSTRY SEGMENT
Revenues:
Marketing.......... $193,835,542 $229,504,506 $176,274,489 $ 39,983,334 $ 64,186,446
Manufacturing...... 24,734,062 59,866,439 60,246,694 17,877,964 16,331,337
------------ ------------ ------------ ------------ ------------
$218,569,604 $289,370,945 $236,521,183 $ 57,861,298 $ 80,517,783
============ ============ ============ ============ ============
Operating Income:
Marketing.......... $ 4,045,205 $ 5,186,059 $ 5,011,196 $ 958,652 $ 1,367,147
Manufacturing...... 620,667 6,164,010 7,586,128 2,185,771 2,137,056
Corporate.......... (2,283,306) (2,615,870) (1,595,544) (469,491) (575,251)
------------ ------------ ------------ ------------ ------------
$ 2,382,566 $ 8,734,199 $ 11,001,780 $ 2,674,932 $ 2,928,952
============ ============ ============ ============ ============
Capital Expenditures:
Marketing.......... $ 1,220,974 $ 1,390,899 $ 592,422 $ 369,906 $ 211,986
Manufacturing...... -- 928,991 4,398,480 1,075,070 197,306
Corporate.......... -- -- 2,355,756 -- --
------------ ------------ ------------ ------------ ------------
$ 1,220,974 $ 2,319,890 $ 7,346,658 $ 1,444,976 $ 409,292
============ ============ ============ ============ ============
Depreciation and
Amortization:
Marketing.......... $ 518,244 $ 839,890 $ 794,031 $ 177,625 $ 183,062
Manufacturing...... -- 667,745 1,652,809 352,294 421,933
Corporate.......... 53,982 14,647 77,347 2,074 73,047
------------ ------------ ------------ ------------ ------------
$ 572,226 $ 1,522,282 $ 2,524,187 $ 531,993 $ 678,042
============ ============ ============ ============ ============
Identifiable Assets:
Marketing.......... $ 46,233,226 $ 49,865,521 $ 43,303,972 $ 64,752,440
Manufacturing...... 2,773,350 28,092,298 31,871,092 30,982,300
Corporate.......... 6,024,597 8,540,132 12,116,739 13,010,620
------------ ------------ ------------ ------------
$ 55,031,173 $ 86,497,951 $ 87,291,803 $108,745,360
============ ============ ============ ============
</TABLE>

F-20
<PAGE> 72

JLM INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, THREE MONTHS ENDED MARCH 31,
------------------------------------------ -----------------------------
1994 1995 1996 1996 1997
------------ ------------ ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>
GEOGRAPHIC
LOCATION
Revenues:
United States...... $206,962,650 $244,864,754 $191,382,570 $ 44,403,519 $ 66,296,031
Venezuela.......... 4,440,499 14,491,443 10,068,395 2,499,996 1,917,923
Holland............ -- 21,248,933 29,201,763 9,163,401 11,219,960
Other nations...... 7,166,455 8,765,815 5,868,455 1,794,382 1,083,869
------------ ------------ ------------ ------------ ------------
$218,569,604 $289,370,945 $236,521,183 $ 57,861,298 $ 80,517,783
============ ============ ============ ============ ============
Operating Income
(Loss):
United States...... $ 3,452,127 $ 9,324,264 $ 12,204,002 $ 3,114,977 $ 3,390,214
Venezuela.......... 922,201 1,290,877 (414,554) (189,797) (69,001)
Holland............ -- 117,666 571,046 70,378 83,682
Other nations...... 291,544 617,261 236,830 148,865 99,308
Corporate.......... (2,283,306) (2,615,869) (1,595,544) (469,491) (575,251)
------------ ------------ ------------ ------------ ------------
$ 2,382,566 $ 8,734,199 $ 11,001,780 $ 2,674,932 $ 2,928,952
============ ============ ============ ============ ============
Identifiable Assets:
United States...... $ 52,758,912 $ 74,896,376 $ 73,683,268 $ 68,792,586 $ 89,391,327
Venezuela.......... 1,069,341 4,233,208 6,112,667 6,176,157 5,570,842
Holland............ -- 5,374,039 6,169,386 4,905,991 12,582,697
Other nations...... 1,202,920 1,994,328 1,326,482 1,580,439 1,200,494
------------ ------------ ------------ ------------ ------------
$ 55,031,173 $ 86,497,951 $ 87,291,803 $ 81,455,173 $108,745,360
============ ============ ============ ============ ============
</TABLE>

18. SUBSEQUENT EVENTS

In April 1997, JLM entered into an agreement to purchase 25% of the common
stock of S. K. Chemicals Asia Pte. Ltd. ("S.K. Chemicals"), an international
petrochemical distributor, for $500,000 cash. As of December 31, 1996 and March
31, 1997, JLM has made a refundable deposit of $50,000 to S. K. Chemicals and
has recorded this deposit in other investments in the accompanying consolidated
balance sheet. In addition, in April 1997, JLM entered into an agreement to
purchase for $500,000 a 12.7% interest in S.K. Chemical Trading Pte ("S.K.
Trading"), a joint venture that intends to construct a petrochemical plant in
Vietnam. The agreements for S.K. Chemicals and S.K. Trading, collectively,
require up to an additional $500,000 over the following four years given certain
earnings, as defined.

On May 1, 1997, JLM entered into a three-year cancelable exclusive
marketing agreement with one of its suppliers. JLM has agreed to purchase 100%
of the supplier's excess styrene after the supplier has serviced its internal
needs, the needs of its affiliate businesses and those of its existing customer
base. If JLM purchases less than the agreed upon amounts, JLM shall pay a
percentage of the difference between the price contracted for and any lesser
price at which the supplier sells the unpurchased product.

On May 7, 1997, OTC refinanced their existing long-term debt and replaced
it with an unsecured term loan (the "Term Loan"). The proceeds from the Term
Loan will, among other items, be used to repay all of OTC's existing long-term
debt, to purchase all outstanding stock warrants, and to pay for management fees
outstanding to JLM. After the purchase of the stock warrants is complete, OTC
will be owned 50% by JLM and will continue to be accounted for on the equity
basis. In conjunction with the refinancing, JLM's terminaling contract was
canceled and a new, one year terminaling arrangement, which is effective January
1, 1997, was entered into. The

F-21
<PAGE> 73

JLM INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

new terminaling contract, which has no minimum throughput requirements, requires
JLM to pay for throughput at $16 per metric ton during the one year term and it
cancels the carryover rights from the old terminaling contract. Also in
conjunction with the refinancing, JLM's non-current note receivable, including
accrued interest, was converted to an investment in OTC and JLM's account
payable to OTC was forgiven and accounted for as a reduction in JLM's investment
in OTC. The amount of the account payable to OTC as of December 31, 1996 and
March 31, 1997 was approximately $2,000,000 and $2,500,000, respectively. In
addition, JLM has pledged its ownership interest in OTC to the other 50% owner
as security for certain contingent payment obligations required to be made
equally by JLM and the other 50% owner of OTC, if OTC has inadequate operating
funds.

On May 9, 1997, the Company completed the sale of the majority of the
assets of Enterprises for $1,075,000 cash. The sale resulted in an immaterial
loss and the proceeds of the sale were used to repay the entire outstanding loan
balance of Enterprises of approximately $905,000.

On May 22, 1997, the Company entered into agreements to purchase the 45%
minority interest of its European subsidiary, JLM (Europe) B.V. The Company will
purchase such minority interest based upon the net book value of the subsidiary
as of April 30, 1997. The purchase price of the minority interest is $98,000
cash.

In June 1997, JLM closed the purchase of all of the outstanding stock of
Aurora and Phoenix for $1,750,000 from the stockholders of these two companies.
The purchase price represented the fair market value of Aurora and Phoenix.
Aurora markets certain solvent chemicals, primarily phenol, benzene and acetone
and is owned 80% by the majority stockholder of JLM and 20% by an unrelated
third party. Phoenix leases railcars for use in the transportation of bulk
liquid chemicals and is owned 100% by the majority stockholder of JLM. The
transaction described above has been accounted for as a combination of entities
under common control using historical amounts and all consolidated financial
statements presented herein have been restated to give retroactive effect to the
"as if pooling" transaction referred to above for the applicable periods
presented. As such, $150,000 of accounts receivable -- trade of Aurora and
Phoenix are included in the consolidated balance sheet as of March 31, 1997. The
excess of the purchase price paid to the majority stockholder of JLM and the net
book value of the assets and liabilities of Aurora and Phoenix is approximately
$1,600,000 and will be accounted for as a deemed distribution by JLM. During the
years ended 1994, 1995 and 1996, and the three months ended March 31, 1996 and
1997, Aurora and Phoenix distributed $53,564, $147,080, $462,838, $140,337 and
$73,698 respectively, of its retained earnings to its stockholders.

On July 3, 1997, JLM approved the retirement of the shares of common stock
held in treasury by the Company and a stock split resulting in an exchange of 1
share for 5,568 shares of common stock issued and outstanding. All share and per
share amounts have been retroactively adjusted for this split.

19. UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET INFORMATION

The unaudited pro forma consolidated balance sheet information as of March
31, 1997 reflects the purchase of both Aurora and Phoenix, as described in Note
18, as if the transactions had occurred on March 31, 1997. The excess of the
purchase price over the net book values of both Aurora and Phoenix of $1,600,000
is treated as a deemed distribution to the former stockholders of Aurora and
Phoenix and therefore a reduction in retained earnings in the unaudited pro
forma consolidated balance sheet information. The unaudited pro forma
consolidated balance sheet information also includes the payment of $150,000 to
the minority stockholder of Aurora, a reduction of "accounts
receivable -- other" of $250,000 to reflect the set off of advances made to the
majority stockholder of JLM and the issuance of notes payables to the former
stockholders of Aurora and Phoenix of $1,350,000. The unaudited pro forma
consolidated balance sheet information reflects only those balances that are
impacted by the pro forma presentation of the transactions described above.

F-22
<PAGE> 74

INDEPENDENT AUDITORS' REPORT

The Stockholders and Board of Directors
JLM Industries, Inc. and Subsidiaries
Tampa, Florida

We have audited the consolidated balance sheets of JLM Industries, Inc. and
subsidiaries (the "Company") as of December 31, 1995 and 1996 and the related
consolidated statements of income, changes in stockholders' equity and of cash
flows for each of the three years in the period ended December 31, 1996 and have
issued our report thereon dated February 19, 1997 (July 3, 1997 as to Note 18)
(included in this Form S-1). Our audits also included the accompanying
consolidated financial statement schedule. This consolidated financial statement
schedule is the responsibility of the Company's management. Our responsibility
is to express an opinion based on our audits. In our opinion, such consolidated
financial statement schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly, in all
material respects the information set forth herein.

DELOITTE & TOUCHE LLP

Tampa, Florida
February 19, 1997
(July 3, 1997 as to Note 18)

F-23
<PAGE> 75

JLM INDUSTRIES, INC. AND SUBSIDIARIES

SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
AND (UNAUDITED) THREE MONTHS ENDED MARCH 31, 1996 AND 1997

<TABLE>
<CAPTION>
BALANCE AT
BEGINNING CHARGED TO BALANCE AT
DESCRIPTION OF YEAR EXPENSES DEDUCTIONS END OF YEAR
----------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Year Ended December 31, 1994:
Accumulated amortization(2)................. $ 65,452 $ 82,245 $ -- $147,697
Allowance for doubtful accounts............. 25,661 -- -- --
Year Ended December 31, 1995:
Accumulated amortization(2)................. 147,697 104,925 (44,188)(1) 208,434
Allowance for doubtful accounts............. 25,661 44,637 -- 70,198
Year Ended December 31, 1996:
Accumulated amortization(2)................. 208,434 389,595 -- 578,029
Allowance for doubtful accounts............. 70,198 383,662 -- 453,660
(Unaudited) Three Months Ended March 31, 1996:
Accumulated amortization(2)................. 208,434 32,252 -- 240,686
Allowance for doubtful accounts............. 70,198 -- -- 70,198
(Unaudited) Three Months Ended March 31, 1997:
Accumulated amortization(2)................. 578,029 86,869 -- 566,898
Allowance for doubtful accounts............. 453,860 -- -- 453,860
</TABLE>

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

(1) Represents the disposal of the goodwill for Polychem Ltd., Inc. in October
1995.
(2) Represents accumulated amortization of goodwill, deferred acquisition costs,
license fees, certain development costs and advances on non-competition
agreements.

F-24
<PAGE> 76

INDEPENDENT AUDITORS' REPORT

The Stockholders and
Board of Directors
JLM Industries, Inc. and Subsidiaries
Tampa, FL

We have audited the accompanying statement of revenues and direct costs of
the Blue Island, Illinois, location of BTL Specialty Resins Corp. ("Blue
Island"), for the period from April 1, 1995 through June 7, 1995. The statement
of revenues and direct costs is the responsibility of Blue Island's management.
Our responsibility is to express an opinion on the statement of revenues and
direct costs based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the statement of revenues and direct costs is
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the statement of revenues and
direct costs. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
statement of revenues and direct costs presentation. We believe that our audit
provides a reasonable basis for our opinion.

In our opinion, the statement of revenues and direct costs presents fairly,
in all material respects, the results of revenues and direct costs of Blue
Island for the period from April 1, 1995 through June 7, 1995 in conformity with
generally accepted accounting principles.

As more fully described in Note 2 to the statement of revenues and direct
costs, Blue Island has been operated as a location of BTL Specialty Resins Corp.
As a result, certain expense allocations have not been made in the accompanying
statement of revenues and direct costs.

DELOITTE & TOUCHE LLP

Tampa, Florida

January 29, 1997

F-25
<PAGE> 77

BLUE ISLAND, ILLINOIS
LOCATION OF BTL SPECIALTY RESINS CORP.

STATEMENT OF REVENUES AND DIRECT COSTS
FOR THE PERIOD FROM APRIL 1, 1995 THROUGH JUNE 7, 1995
(IN THOUSANDS)

<TABLE>
<S> <C>
Net sales................................................... $8,522
Cost of goods sold.......................................... 6,227
------
Gross profit.............................................. 2,295
Direct selling, general and administrative expenses......... 208
------
Excess of revenues over direct costs...................... $2,087
======
</TABLE>

See notes to statement of revenues and direct costs.

F-26
<PAGE> 78

BLUE ISLAND, ILLINOIS
LOCATION OF BTL SPECIALTY RESINS CORP.

NOTES TO STATEMENT OF REVENUES AND DIRECT COSTS
FOR THE PERIOD FROM APRIL 1, 1995 THROUGH JUNE 7, 1995
(IN THOUSANDS)

1. DESCRIPTION OF BUSINESS

On June 8, 1995, JLM Chemicals, Inc., a wholly-owned subsidiary of JLM
Industries, Inc., acquired substantially all of the business assets of the Blue
Island, Illinois location of BTL Specialty Resins Corp. ("Blue Island") for
$19,175. Blue Island is a manufacturer of phenol and acetone.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation -- The accompanying statement of revenues and direct
costs reflects the operations of Blue Island, operating as a location of BTL
Specialty Resins, Corp., and may not necessarily be indicative of the financial
results had Blue Island been operating as a separate entity. Allocations for
certain expenses such as interest, corporate overhead and income taxes have not
been made as Blue Island could not determine a reasonable methodology for
allocation and Blue Island believes that any allocation may not be indicative of
the actual costs incurred by Blue Island.

Plant and Equipment -- Provision is made for depreciation primarily on the
straight-line method based on estimates of useful lives ranging form 12 to 20
years. Leasehold improvements and capital leases are amortized over the life of
the respective lease. Depreciation and amortization expense was approximately
$386 for the period from April 1, 1995 through June 7, 1995.

Inventories -- Inventories are valued at the lower of cost (first-in,
first-out) or market.

Use of Estimates -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of revenues and
direct costs during the reporting period. Actual operating results could differ
from those estimated.

Revenue Recognition -- Blue Island recognizes revenue when products are
shipped.

3. COMMITMENTS AND CONTINGENCIES

Blue Island leases certain machinery, equipment and facilities under
non-cancelable lease agreements which expire at various dates through 2000.
These leases generally contain renewal options and require Blue Island to pay
taxes, insurance, maintenance and other expenses in addition to the minimum base
rentals.

The following is a schedule by year of future minimum lease payments
required under operating leases that have non-cancelable terms in excess of one
year as of June 7, 1995:

Rental expense under operating leases was approximately $45 for the period
from April 1, 1995 through June 7, 1995.

F-27
<PAGE> 79

[PHOTO OF OLEFINS MARKETING JOINT VENTURE, BAYPORT, TEXAS]

[PHOTO RAIL CAR STORAGE AND TRANSPORTATION]
<PAGE> 80

======================================================

NO DEALER, SALESMAN OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE COMMON STOCK IN ANY
JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR AFFAIRS OF THE
COMPANY SINCE THE DATE HEREOF.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 7
Use of Proceeds....................... 12
Dividend Policy....................... 12
Capitalization........................ 13
Dilution.............................. 14
Selected Consolidated Financial
Data................................ 15
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 17
Business.............................. 27
Management............................ 37
Certain Transactions.................. 40
Principal and Selling Stockholders.... 42
Description of Capital Stock.......... 42
Shares Eligible for Future Sale....... 46
Underwriting.......................... 48
Legal Matters......................... 49
Experts............................... 49
Additional Information................ 49
Index to Consolidated Financial
Statements.......................... F-1
</TABLE>

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

UNTIL , 1997 (25 DAYS AFTER THE COMMENCEMENT OF THE OFFERING),
ALL DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
======================================================

======================================================

2,300,000 SHARES

[JLM LOGO]

JLM INDUSTRIES, INC.

COMMON STOCK
-------------------------

PROSPECTUS
-------------------------
OPPENHEIMER & CO., INC.

A.G. EDWARDS & SONS, INC.
, 1997

======================================================
<PAGE> 81

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

Set forth below is an estimate (except for the registration and NASD filing
fees) of the fees and expenses payable by the registrant in connection with the
issuance and distribution of the common stock.

<TABLE>
<S> <C>
Securities and Exchange Commission registration fee......... $ 11,222
NASD filing fee............................................. 4,203
Nasdaq listing fees......................................... 34,750
Printing and engraving expenses............................. 150,000*
Accounting fees and expenses................................ 150,000*
Legal fees and expenses..................................... 200,000*
Blue Sky fees and expenses.................................. 5,000*
Transfer Agent's fees and expenses.......................... 2,500*
Miscellaneous............................................... 42,325
--------
Total............................................. $600,000*
========
</TABLE>

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

* Estimated

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 145(a) of the General Corporation Law of the State of Delaware (the
"DGCL") provides that a Delaware corporation may indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation or enterprise,
against expenses, judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding if
he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no cause to believe his conduct was unlawful.

DGCL Section 145(b) provides that a Delaware corporation may indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person acted in any of the capacities set forth above, against expenses actually
and reasonably incurred by him in connection with the defense or settlement of
such action or suit if he acted under similar standards, except that no
indemnification may be made in respect of any claim, issue or matter as to which
such person shall have been adjudged to be liable to the corporation unless and
only to the extent that the court in which such action or suit was brought shall
determine that despite the adjudication of liability, such person is fairly and
reasonably entitled to be indemnified for such expenses which the court shall
deem proper.

DGCL Section 145 further provides that to the extent a director or officer
of a corporation has been successful in the defense of any action, suit or
proceeding referred to in subsections (a) and (b) or in the defense of any
claim, issue, or matter therein, he shall be indemnified against expenses
actually and reasonably incurred by him in connection therewith; that
indemnification provided for by Section 145 shall not be deemed exclusive of any
other rights to which the indemnified party may be entitled; and that the
corporation may purchase and maintain insurance on behalf of a director or
officer of the corporation against any liability asserted against him or
incurred by him in any such capacity or arising out of his status as such
whether or not the corporation would have the power to indemnify him against
such liabilities under such Section 145.

DGCL Section 102(b)(7) provides that a corporation in its original
certificate of incorporation or an amendment thereto validly approved by
stockholders may eliminate or limit personal liability of members of its

II-1
<PAGE> 82

board of directors or governing body for breach of a director's fiduciary duty.
However, no such provision may eliminate or limit the liability of a director
for breaching his duty of loyalty, failing to act in good faith, engaging in
intentional misconduct or knowingly violating a law, paying a dividend or
approving a stock repurchase which was illegal, or obtaining an improper
personal benefit. A provision of this type has no effect on the availability of
equitable remedies, such as injunction or rescission, for breach of fiduciary
duty. The Company's Certificate of Incorporation (as to be in effect after
completion of the Offering to which this Registration Statement relates)
contains such a provision.

The Company's Bylaws (as to be in effect after completion of the Offering
to which this Registration Statement relates) further provides that the Company
may indemnify its officers and directors and, to the extent authorized by the
Board of Directors, employees and agents of the Company, to the fullest extent
permitted by and in the manner permissible under the laws of the State of
Delaware.

In addition, prior to the completion of the Offering, the Company intends
to enter into agreements (the "Indemnification Agreements") with each of the
directors and certain officers of the Company pursuant to which the Company will
agree to indemnify each such person against claims, liabilities, damages,
expenses, losses, costs, penalties or amounts paid in settlement (collectively,
"Losses") incurred by such person and arising out of his capacity or service as
a director, officer, employee and/or agent of the Company to the maximum extent
permitted by applicable law. In addition, each such person shall be entitled to
an advance of expenses to the maximum extent authorized or permitted by law to
meet the obligations indemnified against. The Indemnification Agreements also
obligate the Company to purchase and maintain insurance for the benefit and on
behalf of each of its directors insuring such director in or arising out of his
capacity as a director, officer, employee and/or agent of the Company. The
Company has purchased such insurance, which provides coverage with respect to
liabilities that may arise under the statutory provisions referred to above and
other liabilities as well, including certain liabilities that could arise under
the Securities Act of 1933 and against which such persons might not be
indemnified by the Company.

The underwriters also will agree to indemnify the directors and officers of
the Company against certain liabilities as set forth in Section 7(c) of the
Underwriting Agreement (see Exhibit 1).

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

Not Applicable.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) Exhibits

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S> <C>
1 -- Form of Underwriting Agreement
3.1 -- Articles of Incorporation, as amended
3.2 -- Form of Amended and Restated Articles of Incorporation
3.3 -- Bylaws
3.4 -- Form of Amended and Restated Bylaws
4 -- Form of Common Stock Certificate
5 -- Opinion of Trenam, Kemker, Scharf, Barkin, Frye, O'Neill &
Mullis, as to the legality of the Common Stock Being
Registered
</TABLE>

10.1 -- Authorized Distributor Agreement between GE Petrochemicals,
Inc. and JLM Marketing, Inc. for Styrene
10.2+ -- Memorandum of Agreement between Sasol Chemical Industries
(PTY) Ltd. and JLM Marketing, Inc. for N-Propanol

II-2
<PAGE> 83

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C> <C>
10.3+ -- Memorandum of Agreement between Sasol Chemical Industries
(PTY) Ltd. and JLM Marketing, Inc. for Acetone
10.4+ -- Memorandum of Agreement between Sasol Chemical Industries
(PTY) Ltd. and JLM Marketing, Inc. for Methyl Ethyl Ketone
10.5+ -- Acetone Sales Agreement between Mt. Vernon Phenol Plant
Partnership, JLM Marketing, Inc. and JLM Industries, Inc.
10.6 -- Asset Purchase Agreement by and among BTL Specialty Resins
Corp. and JLM Chemicals, Inc. providing for the acquisition
of the Blue Island (Illinois) Phenol Plant, as amended
10.7 -- Propane/Propylene Agreement between Clark Oil & Refining
Corporation and BTL Specialty Resins Corp.
10.8 -- Q-Max Process License Agreement between BTL Specialty Resins
Corp. and UOP
10.9 -- Credit Agreement among JLM Chemicals, Inc., The CIT
Group/Equipment Financing, Inc. and The CIT Group/Business
Credit, Inc., as amended
10.10 -- Security Agreement by JLM Chemicals, Inc. in favor of the
Lenders and The CIT Group/Equipment Financing, Inc.
10.11 -- Pledge Agreement by JLM Industries, Inc. in favor of the
Lenders and The CIT Group/Equipment Financing, Inc.
10.12 -- Mortgage, Assignment of Leases and Rents and Security
Agreement from JLM Chemicals, Inc. to The CIT
Group/Equipment Financing, Inc., as corrected and modified
10.13 -- Partnership Agreement of Mt. Vernon Phenol Plant Partnership
10.14 -- Intercreditor Agreement between JLM Marketing, Inc., JLM
Industries, Inc., JLM Terminals, Inc., JLM International,
Olefins Marketing, Inc., State Street Bank and Trust
Company, Caisse Nationale De Credit Agricole and Standard
Chartered Bank New York Branch
10.15 -- Master Promissory Note by JLM International, Inc. and
Olefins Marketing, Inc. in favor of Caisse Nationale De
Credit Agricole
10.16 -- Guaranty Agreement by JLM Industries, Inc. to Caisse
Nationale De Credit Agricole, New York Branch
10.17 -- Security Agreement between Olefins Marketing, Inc. and
Caisse Nationale De Credit Agricole, New York Branch
10.18 -- Security Agreement between JLM International, Inc. and
Caisse Nationale De Credit Agricole, New York Branch
10.19* -- Amended and Restated Credit Agreement among JLM Industries,
Inc., JLM Marketing, Inc., JLM Terminals, Inc., JLM
International Inc., Olefins Marketing, Inc., John L.
MacDonald and State Street Bank and Trust Company, as
amended
10.20 -- Facility Letter between Standard Chartered Bank and Olefins
Marketing
10.21 -- Security Agreement by Olefins Marketing to Standard
Chartered Bank
10.22 -- Security Agreement by JLM International, Inc. to Standard
Chartered Bank
10.23 -- Continuing Guaranty by JLM International, Inc. and Olefins
Marketing Corp. in favor of Standard Chartered Bank
10.24 -- Facility letter between Generale Bank and JLM Industries
10.25 -- Corporate Guarantee by JLM Industries, Inc. to Generale Bank
10.26 -- Agreement by and among Union Carbide Corporation, D-S
Splitter, Inc., JLM Industries, Inc. and Olefins Terminal
Corporation
10.27 -- Pledge and Security Agreement by JLM Industries, Inc. to
Ultramar Diamond Shamrock Corporation
</TABLE>

II-3
<PAGE> 84

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C> <C>
10.28 -- Management, Operating and Stockholders Agreement of Olefins
Terminal Corporation between D-S Splitter, Inc., Ultramar
Diamond Shamrock Corporation, JLM Industries, Inc., Olefins
Marketing, Inc. and Olefins Terminal Corporation
10.29 -- Stockholders Agreement dated effective as of May 1, 1997 by
and between D-S Splitter, JLM Industries, Inc., and Olefins
Terminal Corporation
10.30 -- Investment Agreement by and between JLM Industries, Inc. and
Tan Siew Kiat
10.31 -- Agreement for Sale and Purchase of Common Stock between John
L. Macdonald and Gene Harmeyer, as owners of the capital
stock of Aurora Chemical, Inc., and JLM Marketing, Inc.
10.32 -- Agreement for Sale and Purchase of Common Stock between John
L. Macdonald, owner of the capital stock of Phoenix Tank Car
Corp., and JLM Marketing, Inc.
10.33 -- Form of Indemnification Agreement for Officers and Directors
10.34 -- Form of 1997 Employee Stock Purchase Plan
10.35 -- Form of Long Term Incentive Plan
10.36 -- Form of Nonemployee Directors' Stock Option Plan
10.37 -- Assignment and Assumption Agreement between Ashland
Chemical, Inc. and JLM Terminals, Inc.
10.38 -- Asset Purchase Agreement between Union Oil Company of
California and Ashland Chemical, Inc.
21* -- Subsidiaries of the Registrant
23.1 -- Consent of Trenam, Kemker, Scharf, Barkin, Frye, O'Neill, &
Mullis (contained in Exhibit 5)
23.2* -- Consent of Deloitte & Touche LLP to the consolidated
financial statements of JLM Industries, Inc. and
subsidiaries
23.3* -- Consent of Deloitte & Touche LLP to the Statement of
Revenues and Direct Costs of the Blue Island, Illinois,
location of BTL Specialty Resins Corp.
23.4 -- Consent of J. Robert Mehall
23.5 -- Consent of Jerry L. Weinstein
23.6 -- Consent of Roger C. Kahn
27.1 -- Financial Data Schedule for the year ended December 31, 1996
27.2 -- Financial Data Schedule for the three months ended March 31,
1997
</TABLE>

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

* Filed herewith, all other exhibits previously filed
+ Confidential treatment has been requested with respect to portions of this
Exhibit.

ITEM 17. UNDERTAKINGS.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described in Item 14), or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.

II-4
<PAGE> 85

The undersigned registrant hereby undertakes to provide to the underwriter
at the closing specified in the underwriting agreements certificates in such
denominations and registered in such names as required by the underwriter to
permit prompt deliver to each purchaser.

The undersigned registrant hereby undertakes that:

i. For purposes of determining any liability under the Securities act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4), or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.

ii. For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

II-5
<PAGE> 86

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this amendment to the registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Tampa,
State of Florida, on the 21st day of July, 1997.

JLM INDUSTRIES, INC.

By: /s/ JOHN L. MACDONALD
------------------------------------
John L. Macdonald,
President and Chief Executive
Officer

Pursuant to the requirements of the Securities Act of 1933, this amendment
to the registration statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ JOHN L. MACDONALD President, Chief Executive Officer July 21, 1997
- --------------------------------------------------- and Director (Principal Executive
John L. Macdonald Officer)

/s/ FRANK A. MUSTO Chief Financial Officer, Vice July 21, 1997
- --------------------------------------------------- President and Director (Principal
Frank A. Musto Financial Officer and Principal
Accounting Officer)

/s/ THADDEUS J. LELEK Vice President and Director Vice July 21, 1997
- --------------------------------------------------- President and Director
Thaddeus J. Lelek

/s/ WILFRED J. KIMBALL Vice President and Director July 21, 1997
- ---------------------------------------------------
Wilfred J. Kimball
</TABLE>

II-6

<PAGE> 1

EXHIBIT 10.19

AMENDED AND RESTATED CREDIT AGREEMENT

dated as of June 15, 1994

among

JLM INDUSTRIES, INC.

JLM MARKETING, INC.

JLM TERMINALS, INC.

JLM INTERNATIONAL, INC.

OLEFINS MARKETING, INC.

JOHN L. MACDONALD

and

STATE STREET BANK AND TRUST COMPANY

<PAGE> 2

Table of Contents

ARTICLE 1. DEFINITIONS; ACCOUNTING TERMS ................................. 2
Section 1.01 Definitions ......................................... 2
Section 1.02 Accounting Terms .................................... 10

ARTICLE 2. THE LOANS ..................................................... 11
Section 2.01 The Loans ........................................... 11
Section 2.02 The Notes ........................................... 11
Section 2.03 Purposes ............................................ 12
Section 2.04 Borrowing Procedures ................................ 12
Section 2.05 Prepayments ......................................... 12
Section 2.06 Changes of Commitments .............................. 12
Section 2.07 Certain Notices ..................................... 12
Section 2.08 Minimum Amounts ..................................... 13
Section 2.09 Interest ............................................ 13
Section 2.10 Fees ................................................ 13
Section 2.11 Payments Generally .................................. 14

ARTICLE 3. THE LETTERS OF CREDIT ......................................... 14
Section 3.01 Letters of Credit ................................... 14
Section 3.02 Purposes ............................................ 14
Section 3.03 Procedures for Issuance of Letters of Letters
of Credit ........................................... 14
Section 3.04 Payments ............................................ 15
Section 3.05 Further Assurances .................................. 15
Section 3.06 Obligations Absolute ................................ 15
Section 3.07 Cash Collateral Account ............................. 16
Section 3.08 Letter of Credit Fees ............................... 16

ARTICLE 4. CONDITIONS OF PRECEDENT ....................................... 17
Section 4.01 Documentary Conditions Precedent .................... 17
Section 4.02 Additional Conditions Precedent ..................... 18
Section 4.03 Deemed Representations .............................. 19

ARTICLE 5. REPRESENTATIONS AND WARRANTIES ................................ 19
Section 5.01 Incorporation, Good Standing and Due
Qualification ....................................... 19
Section 5.02 Corporate Power and Authority; No
Conflicts ........................................... 19
Section 5.03 Legally Enforceable Agreements ...................... 20
Section 5.04 Litigation .......................................... 20
Section 5.05 Financial Statements ................................ 20
Section 5.06 Ownership and Liens ................................. 20
Section 5.07 Taxes ............................................... 21
Section 5.08 ERISA ............................................... 21
Section 5.09 Subsidiaries and Ownership of Stock ................. 21
Section 5.10 Credit Arrangements ................................. 21
Section 5.11 Operation of Business ............................... 22
Section 5.12 Hazardous Materials ................................. 22
Section 5.13 No Default on Outstanding Judgements or
Orders .............................................. 22
Section 5.14 No Defaults on Other Agreements ..................... 22

<PAGE> 3

Section 5.15 Labor Disputes and Acts of God ...................... 22
Section 5.16 Governmental Regulation ............................. 23
Section 5.17 No Forfeiture ....................................... 23
Section 5.18 Solvency ............................................ 23
Section 5.19 Security Documents .................................. 24

ARTICLE 6. AFFIRMATIVE COVENANTS ......................................... 24
Section 6.01 Maintenance of Existance ............................ 24
Section 6.02 Conduct of Business ................................. 24
Section 6.03 Maintenance of Properties ........................... 24
Section 6.04 Maintenance of Records .............................. 24
Section 6.05 Maintenance of Insurance ............................ 24
Section 6.06 Compliance with Laws ................................ 24
Section 6.07 Right of Inspection ................................. 25
Section 6.08 Reporting Requirements .............................. 25
Section 6.09 Additional Subsidiary Guarantors .................... 28

ARTICLE 7. NEGATIVE COVENANTS ............................................ 28
Section 7.01 Debt ................................................ 28
Section 7.02 Guaranties, Etc ..................................... 29
Section 7.03 Liens ............................................... 29
Section 7.04 Leases .............................................. 30
Section 7.05 Investments ......................................... 31
Section 7.06 Dividends ........................................... 31
Section 7.07 Sale of Property .................................... 32
Section 7.08 Stock of Subsidiaries, Etc .......................... 32
Section 7.09 Transaction with Affiliates ......................... 32
Section 7.10 Mergers, Etc ........................................ 32
Section 7.11 Acquisitions ........................................ 33
Section 7.12 No Activities Leading to Forfeiture ................. 33
Section 7.13 Restrictions ........................................ 33

ARTICLE 8. FINANCIAL COVENANTS ........................................... 33
Section 8.01 Net Income .......................................... 33
Section 8.02 Minimum Tangible Net Worth .......................... 34
Section 8.03 Leverage Ratio ...................................... 34
Section 8.04 Cash Flow Ratio ..................................... 34

ARTICLE 9. EVENTS OF DEFAULT ............................................. 34
Section 9.01 Events of Default ................................... 34
Section 9.02 Remedies ............................................ 36

ARTICLE 10. GUARANTY OF JLM DOMESTIC ENTITIES ............................ 37
Section 10.01 Guarantied Obligations ............................. 37
Section 10.02 Performance under this Agreement ................... 37
Section 10.03 Waivers ............................................ 37
Section 10.04 Releases ........................................... 39
Section 10.05 Marshaling ......................................... 40
Section 10.06 Liability .......................................... 40
Section 10.07 Primary Obligation ................................. 40
Section 10.08 Election to Perform Obligations .................... 40
Section 10.09 No Election ........................................ 41
Section 10.10 Severability ....................................... 41
Section 10.11 Other Enforcement Rights ........................... 41

<PAGE> 4

Section 10.12 Delay or Omission; No Waiver ....................... 41
Section 10.13 Restoration of Rights and Remedies ................. 42
Section 10.14 Cumulative Remedies ................................ 42
Section 10.15 Survival ........................................... 42

ARTICLE 11. GUARANTY OF MACDONALD ........................................ 42
Section 11.01 Guarantied Obligations ............................. 42
Section 11.02 Performance Under This Agreement ................... 43
Section 11.03 LIMITED GUARANTY ................................... 43
Section 11.04 Waivers ............................................ 43
Section 11.05 Releases ........................................... 44
Section 11.06 Marshaling ......................................... 45
Section 11.07 Liability .......................................... 45
Section 11.08 Primary Obligation ................................. 46
Section 11.09 Election to Perform Obligations .................... 46
Section 11.10 No Election ........................................ 46
Section 11.11 Severability ....................................... 46
Section 11.12 Other Enforcement Rights ........................... 46
Section 11.13 Delay or Omission; No Waiver ....................... 47
Section 11.14 Restoration of Rights and Remedies ................. 47
Section 11.15 Cumulative Remedies ................................ 47
Section 11.16 Survival ........................................... 47

ARTICLE 12. MISCELLANEOUS ................................................ 48
Section 12.01 Amendments and Waivers ............................. 48
Section 12.02 Usury .............................................. 48
Section 12.03 Expenses ........................................... 48
Section 12.04 Survival ........................................... 48
Section 12.05 Assignment; Participations ......................... 48
Section 12.06 Notices ............................................ 49
Section 12.07 Setoff ............................................. 50
Section 12.08 JURISDICTION; IMMUNITIES ........................... 50
Section 12.09 Table of Contents; Headings ........................ 51
Section 12.10 Severability ....................................... 51
Section 12.11 Counterparts ....................................... 51
Section 12.12 Integration ........................................ 51
Section 12.13 GOVERNING LAW ...................................... 51
Section 12.14 Confidentiality .................................... 51
Section 12.15 Treatment of Certain Information ................... 52

<PAGE> 5

EXHIBITS

Exhibit A1 Revolving Credit Note
Exhibit A2 Florida Term Note
Exhibit A3 North Carolina Term Note
Exhibit B1 Borrowing Base Certificate
Exhibit B2 Compliance Certificate
Exhibit C1 Opinion of Counsel to the Obligors
Exhibit C2 Opinion of Canadian Counsel
Exhibit D Amended and Restated Security Agreement
Exhibit E Canadian Guarantee
Exhibit F Canadian Security Agreement

SCHEDULES

Schedule I Subsidiaries
Schedule II Credit Arrangements
Schedule III Liens

<PAGE> 6

AMENDED AND RESTATED CREDIT AGREEMENT dated as of June 15, 1994 among
JLM INDUSTRIES, Inc., a corporation organized under the laws of Delaware ("JLM
Industries"), JLM MARKETING, INC., a corporation organized under the laws of
Delaware ("JLM Marketing"), JLM TERMINALS, INC., a corporation organized under
the laws of North Carolina ("JLM Terminals"), JLM INTERNATIONAL, INC., a
corporation organized under the laws of Delaware ("JLM International") and
OLEFINS MARKETING, INC., a corporation organized under the laws of Delaware
("Olefins Marketing" and collectively, together with JLM Industries, JLM
Marketing, JLM Terminals and JLM International, the "JLM Domestic Entities");
JOHN L. MACDONALD, an individual residing at 921 Anchorage Rd., Tampa, Fl 33602
("MacDonald); and STATE STREET BANK AND TRUST COMPANY, a Massachusetts bank and
trust company (the "Bank").

WHEREAS, JLM Marketing and the Bank have entered into that certain
Revolving Line of Credit Agreement dated as of July 13, 1992 pursuant to which
the Bank has extended credit to JLM Marketing evidenced by that certain
Promissory Note issued by JLM Marketing and guarantied by JLM Industries, JLM
International and Olefins Marketing;

WHEREAS, JLM Industries and the Bank have entered into that certain
Construction Loan Agreement dated as of December 2, 1992 pursuant to which the
Bank has extended credit to JLM Industries and JLM Marketing evidenced by that
certain Promissory Note issued by JLM Industries and JLM Marketing and
guarantied by JLM Marketing, JLM International, and Olefins Marketing;

WHEREAS, the Bank has agreed to extend additional credit to JLM
Terminals to be secured by a bulk liquid chemical storage terminal in Cape
Fear, North Carolina;

WHEREAS, the JLM Domestic Entities, MacDonald and the Bank have agreed
to enter this Agreement to provide for, among other things, (a) the issuance of
the Revolving Credit Note by JLM Marketing to be guarantied by the other JLM
Domestic Entities, (b) the issuance of the Florida Term Note by JLM Industries
to be guarantied by the other JLM Domestic Entities and (c) the issuance of the
North Carolina Term Note by JLM Terminals to be guarantied by the other JLM
Domestic Entities and MacDonald;

WHEREAS, the JLM Domestic Entities are and will be operated on an
integrated basis in connection with their respective financial resources; the
JLM Domestic Entities are and will be operated as separate entities but will
constitute part of one business enterprise and are and will be operated on an
integrated basis in connection with their respective business activities and
their respective financial resources; each of the JLM Domestic Entities will
receive direct economic and financial benefits from the Debt incurred under
this Agreement and the incurrence of such Debt is in the best interests of such
JLM Domestic Entity; each of the JLM Domestic Entities acknowledges that the
Bank would not provide the financing hereunder but for the joint and several
obligations of

<PAGE> 7

such JLM Domestic Entity hereunder with respect hereto; each of the JLM
Domestic Entities will receive direct economic and financial benefits from the
Debt incurred under this Agreement by such JLM Domestic Entity and the
incurrence of such Debt is in the best interests of such JLM Domestic Entity.

NOW THEREFORE, the parties hereto agree as follows:

ARTICLE 1. DEFINITIONS; ACCOUNTING TERMS.

Section 1.01. Definitions. As used in this Agreement the following
terms have the following meanings (terms defined in the singular to have a
correlative meaning when used in the plural and vice versa):

"Acquisition" means any transaction pursuant to which any JLM entity (a)
acquires equity securities (or warrants, options or other rights to acquire such
securities) of any Person, (b) causes or permits any Person be merged into
any JLM Entity, in any case pursuant to a merger, purchase of assets or any
reorganization providing for the delivery or issuance to the holders of such
Person's then outstanding securities, in exchange for such securities, of cash
or securities of any JLM Entity, or a combination thereof, or (c) purchases all
or substantially all of the business or assets of any Person.

"Affiliate" means any Person (other than an Obligor): (a) which directly
or indirectly controls, or is controlled by, or is under common control with,
any JLM Entity; (b) which directly or indirectly beneficially owns or holds 10%
or more of any class of voting stock of any JLM Entity; (c) 10% or more of the
voting stock of which is directly or indirectly beneficially owned or held by
any JLM Entity; or (d) which is a partnership in which any JLM Entity is a
general partner. The term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract, or otherwise.

"Agreement" means this Amended and Restated Credit Agreement, as amended
or supplemented from time to time. References to Articles, Sections, Exhibits,
Schedules and the like refer to the Articles, Sections, Exhibits, Schedules and
the like of this Agreement unless otherwise indicated.

"Banking Day" means any day on which commercial banks are not authorized
or required to close in Boston, Massachusetts.

<PAGE> 8

monthly and certified as accurate and complete by the chief financial officer
of JLM Marketing.

"Borrowing Base Certificate" means each certificate delivered by JLM
Marketing substantially in the form of Exhibit B1.

"Canadian Guarantee" means the guaranty in the form of Exhibit E to be
delivered by JLM Canada under the terms of this agreement, as amended or
supplemented from time to time.

"Canadian Security Agreement" means the security agreement in the form of
Exhibit F to be delivered by JLM Canada under the terms of this Agreement, as
amended or supplemented from time to time.

"Capital Expenditures" means, with respect to any Person, with respect
to any fiscal period, the aggregate amount of expenditures made by such Person
to acquire or construct fixed assets, plant and equipment (including renewals,
improvements, replacements and incurrence of obligations under Capital Leases
but excluding repairs) for such period.

"Capital Lease" means any lease which has been or should be capitalized
on the books of the lessee in accordance with GAAP.

"Cash Flow" means, with respect to any Person, with respect of any fiscal
period, the result of (a) net income for such Person for such period plus (b)
the aggregate amount of depreciation, amortization and other non-cash charges
to the extent such amount was deducted in the computation of net income for
such period minus (c) the aggregate amount of Capital Expenditures of such
Person for such period to the extent such amount is not financed with Debt
incurred by such Person.

"Cash Flow Ratio" means, with respect to any Person, at any date of
determination thereof, the ratio of (a) Cash Flow of such Person for the most
recently ended four fiscal quarters to (b) current maturities at such date of
Debt payable more than one year from the date of its incurrence.

"Closing Date" means the date this Agreement has been executed by the JLM
Domestic entities, Macdonald and the Bank.

"Code" means the Internal Revenue code of 1986, as amended from time to
time.

"Collateral" means all of each Obligor's right, title and interest in and
to Property in which such Obligor has granted a Lien to the Bank under any
Facility Document.

"Compliance Certificate" means the compliance certificate in the form of
Exhibit B2 to be delivered by the JLM Domestic Entities under the terms of this
Agreement.

<PAGE> 9

"Consolidated Cash Flow" means, with respect to any fiscal period, Cash
Flow of the JLM Entities for such fiscal period, as determined on a
consolidated basis in accordance with GAAP.

"Consolidated Cash Flow Ratio" means, with respect to any Person, at any
date of determination thereof, the ratio of (a) Consolidated Cash Flow of such
Person for the most recently ended four fiscal quarters to (b) current
maturities at such date of Debt payable more than one year from the date of its
incurrence.

"Consolidated Liabilities" means with respect to any fiscal period, net
income of the JLM Entities for such fiscal period, as determined on a
consolidated basis in accordance with GAAP.

"Consolidated Net Income" means, with respect to any fiscal period, net
income of the JLM Entities for such fiscal period, as determined on a
consolidated basis in accordance with GAAP.

"Consolidated Tangible Assets" means, at any date of determination
thereof, all assets of the JLM Entities except assets of the JLM Entities which
would be classified as intangibles under GAAP including, without limitation,
patents, copyrights, trademarks, trade names, franchises, goodwill and other
similar intangible assets, as determined on a consolidated basis in accordance
with GAAP.

"Consolidated Tangible Net worth" means, at any date of determination
thereof, the difference between (a Consolidated Tangible Assets and (b)
Consolidated Liabilities.

"Customer" shall have the meaning assigned to such term in the Security
Agreement.

"Debt" means, with respect to any Person: (a) indebtedness of such Person
for borrowed money; (b) indebtedness for the deferred purchase price of
Property or services (except trade payables in the ordinary course of
business); (c) Unfunded Benefit Liabilities of such Person (if such Person is
not a JLM Entity, determined in a manner analogous to that of determining
Unfunded Benefit Liabilities of a JLM Entity); (d) the face amount of any
outstanding letters of credit issued for the account of such Person; (e)
obligations arising under acceptance facilities; (f) Guaranties of such Person;
(g) obligations secured by any Lien on Property of such Person; and (h)
obligations of such Person as lessee under Capital Leases.

"Default" means any event which with the giving of notice or lapse of
time, or both, would become an Event of Default.

"Default Rate" means, with respect to the principal of any Loan and, to
the extent permitted by law, any other amount payable by any Obligor under this
Agreement or any other Facility Document, or any Note that is not paid when due
(whether at stated maturity, by acceleration or otherwise), a rate per annum
during the period

<PAGE> 10

from and including the due date, to, but excluding the date on which such
amount is paid in full equal to two percent (2%) above the Prime Rate as in
effect from time to time.

"Dollars" and the sign "$" mean lawful money of the United States of
America.

"Eligible Inventory" means such Inventory of such part of such Inventory
of JLM Marketing and JLM Canada as shall be designated by the Bank from time to
time as being acceptable to it in its sole discretion in all respects; provided
that no Inventory shall constitute "Eligible Inventory" unless such Inventory
is owned solely by JLM Marketing and JLM Canada and no other Person has and
right, title, interest, claim or Lien thereon, or thereto, other than in favor
of the Bank securing the obligations hereunder and the Lien granted by such JLM
Marketing and JLM Canada in favor of the Bank constitutes a first priority
security interest in such Inventory.

"Eligible Receivables" means such Receivables of the JLM Marketing and
JLM Canada (but in the case of Receivables of JLM Canada as to which the Bank
so requires only to the extent that such receivables are fully insured and are
assigned to JLM Marketing) as shall be designated by the Bank from time to time
as being acceptable to it in its sole discretion in all respects; provided that
no Receivable shall constitute an "Eligible Receivable" unless (a) such
Receivable is bona fide, valid and constitutes an enforceable order or
contract, written or oral, for goods sold, and the same were sold in accordance
with such order or contract, (b) such Receivable is owned solely by an Obligor
and no other Person has any right, title, interest, claim or Lien thereon, or
thereto, other than in favor of the Bank securing the obligations hereunder and
the Lien granted by such Obligor in favor of the Bank constitutes a first
priority security interest in such Receivable, (c) such Receivable is not
outstanding for more than 90 days from the earlier of the date of shipment of
goods to the Customer or the invoice date, (d) such Receivable is not subject
to any claim of reduction, counterclaim, setoff, recoupment, or other defense
in law or equity, or any claim for credits , contractual allowances, discounts,
or other credit adjustments by the Customer, (e) the Bank in the exercise of
its sole discretion has not deemed such Receivable ineligible because of
uncertainty as the creditworthiness of the Customer in relation to the amount of
credit extended and (f) such Receivable is not the obligation of a JLM entity
or an Affiliate of a JLM Entity.

"Environmental Indemnity Agreements" means the Environmental Indemnity
Agreement, dated as of June 15, 1994 between the Bank and JLM Terminals and the
Environmental Indemnity Agreement, dated December 2, 1992, among the Bank, JLM
Marketing and JLM Industries.

"Environmental Laws" means any and all federal, state, local and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, licenses, agreements or other

<PAGE> 11

governmental restrictions relating to the environment or to emissions,
discharges, releases or threatened releases of pollutants, contaminates,
chemicals, or industrial, toxic or hazardous substances or wastes into the
environment including, without limitation, ambient air, surface water, ground
water, or land, or otherwise relating to the manufacture, processing
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminates, chemicals, or industrial, toxic or hazardous
substances or wastes.

"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, including any rules and regulations promulgated
thereunder.

"ERISA Affiliate" means any corporation or trade or business which is a
member of any group of organizations (i) described in Section 414(b) or (c) of
the Code of which any ELM Entity is a member, or (ii) solely for purposes of
potential liability under Section 302 (c)(11) of ERISA and Section 412(c)(11)
of the Code and the lien created under Section 302(f) of ERISA and Section
412(n) if the Code, described in Section 414(m) or (o) of the Code of which any
JLM Entity is a member.

"Event of Default" has the meaning given such term in Section 9.01.

"Facility Documents" means this Agreement, the Notes, the Letters of
Credit, the Canadian Guarantee, the Security Documents and the Environmental
Indemnity Agreements as each may be amended from time to time.

"First Florida Mortgage Modification" means the Mortgage Modification
Agreement and Notice of Future Advance, executed June 4, 1994, by and between
JLM Marketing, JLM Industries and the Bank, as amended or supplemented from
time to time.

"Fiscal Year Net worth Increases Amounts" means (a) $600,000 for each of
the fiscal years of the JLM Entities ending on December 31, 1994 and December
31, 1995 and (b) $750,000 for each of fiscal years ending thereafter.

"Florida Term Note" means the promissory note of JLM Industries and JLM
Marketing in the form of Exhibit A2 hereto evidencing the Florida Term Loan
made by the Bank hereunder and all promissory notes delivered in substitution
or exchange therefor, as amended or supplemented from time to time.

"Florida Mortgage" means the Mortgage from JLM Marketing and JLM
Industries in favor of the Bank, dated December 2, 1992, as recorded in
Official Records Book 6812, page 1027, of the public records of Hillsborough
County, Florida as modified by the First Florida Mortgage Modification.

<PAGE> 12

"Forfeiture Proceeding" means any action, proceeding or investigation
affecting any JLM Entity or any of its Affiliates before any court,
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, or the receipt of notice by any such party that any of
them is a suspect in or a target of any governmental inquiry or investigation,
which may result in an indictment of any of them or the seizure or forfeiture
of any of their Property.

"GAAP" means generally accepted accounting principles in the United
States of America as is effect from time to time, applied on a basis consistent
with those used in the preparation of the financial statements referred to in
Section 5.05 (except for changes concurred in by the JLM Entities' independent
public accountants).

"Governmental Authority" means any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.

"Guaranty" means, with respect to any Person, guaranties, endorsements
(other that for collection in the ordinary course of business) and other
contingent obligations of such Person with respect to the obligations of any
other Person (including, but not limited to, an agreement to purchase any
obligation, stock, assets, goods or services or to supply or advance any funds,
assets, goods or services, or an agreement to maintain or cause such Person to
maintain a minimum working capital or net worth or otherwise to assure the
creditors of any such other Person against loss).

"Hazardous Materials" means any and all pollutants, contaminants, toxic or
hazardous wastes or any other substances, the removal of which is required or
the generation, manufacture, refining, production, processing, treatment,
storage, handling, transportation, transfer, use, disposal, release, discharge,
spillage, seepage, or filtration of which is restricted, prohibited or
penalized by any applicable law.

"Inventory" shall have the meaning assigned to such term in the Security
Agreement.

"JLM Canada" means JLM Chemicals Canada Ltd., a corporation organized
under the laws of the Province of Ontario, Canada.

"JLM Entity" means JLM Industries or any Subsidiary of JLM Industries
whose accounts are or are required to be consolidated or included with the
accounts of JLM Industries in accordance with GAAP.

"Lending Office" means the lending office of the Bank (or of an affiliate
of the Bank) on its signature page hereof or such other office of the Bank (or
of an affiliate of the Bank) as the

<PAGE> 13
Bank may from time to time specify to the JLM Domestic Entities as the office by
which its Loans are to be made and maintained.

"Letter of Credit Availability" means, at any date of determination
thereof, the amount by which (a) the result of (i) the aggregate amount of the
Revolving Credit Commitment as of such date minus (ii) the unpaid aggregate
principal amount of the Revolving Credit Loans then outstanding exceeds (b) the
aggregate amount of the Letter of Credit Obligations at such date; provided that
in no event shall the Letter of Credit Obligations exceed $3,500,000 for Letters
of Credit whose expiry date is more than 90 days from such date of
determination.

"Letter of Credit Obligations" means, at any date of determination
thereof, all liabilities of JLM Marketing with respect to Letters of Credit,
whether or not any liability is contingent, including, without limitation, the
sum of (a) the aggregate amount available to be drawn under the Letters of
Credit then outstanding plus (b) the aggregate amount of all unpaid
Reimbursement Obligations.

"Leverage Ratio" means, at any date of determination thereof, the ratio
of (a) Consolidated Liabilities to (b) Consolidated Tangible Net Worth.

"Lien" means any lien (statutory or otherwise), security interest,
mortgage, deed of trust, priority, pledge, charge, conditional sale, title
retention agreement, financing lease or other encumbrance or similar right of
others, or any agreement to give any of the foregoing.

"Loan" means any loan made by the Bank pursuant to Section 2.01.

"Material Adverse Effect" means any material adverse effect on (a) the
business, profits, properties or condition of the JLM Entities, taken as a
whole, (b) the ability of any Obligator to perform their respective obligations
under each of the Facility Documents to which it is a party, (c) the binding
nature, validity or enforceability of any of the Facility Documents and (d) the
validity, perfection, priority or enforceability of the Liens in favor of the
Bank securing the obligations hereunder, which, in each case, arises from, or
reasonably could be expected to arise from, any action or omission of action on
the part of any JLM Entity or the occurrence of any event or the existence of
any fact or condition in respect of any JLM Entity or any of their respective
properties.

"Multiemployer Plan" means a Plan defined as such in Section 3(37) of
ERISA to which contributions have been made by any JLM Entity or any ERISA
Affiliate and which is covered by Title IV of ERISA.

<PAGE> 14
"North Carolina Deed of Trust" means the Deed of Trust and Security
Agreement, dated June 1994, from JLM Terminals to _____________________, as
trustee, for the benefit of the Bank.

"North Carolina Term Note" means the promissory note of JLM Terminals in
the form of Exhibit A3 hereto evidencing the North Carolina Term Loans made by
the Bank hereunder and all promissory notes delivered in substitution or
exchange therefor, as amended or supplemented from time to time.

"Notes" means the Revolving Credit Note, the Florida Term Note and the
North Carolina Term Note.

"Obligors" Means, collectively, the JLM Domestic Entities, JLM Canada and
MacDonald.

"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.

"Person" means an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture,
Governmental Authority or other entity of whatever nature.

"Plan" means any employee benefit or other plan established or
maintained, or to which contributions have been made, by any JLM Entity or any
ERISA Affiliate and which is covered by Title IV of ERISA, other than a
Multiemployer Plan.

"Prime Rate" means that rate of interest from time to time announced by
the Bank at its Principal Office as its prime commercial lending rate.

"Principal Office" means the principal office of the Bank, presently
located at 225 Franklin Street, Boston, MA 02110.

"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, and whether tangible or intangible.

"Purchase Money Lien" means a Lien on any Property acquired by any JLM
Entity or placed on any Property in order to finance the acquisition or
construction of such Property or the construction of improvements located on
such Property, or the assumption of any Lien on Property existing at the time of
the acquisition of such Property or of the Person holding such Property or a
Lien incurred in connection with any conditional sale or other title retention
agreement or a Capital Lease.

"Receivables" shall have the meaning assigned to such term in the
Security Agreement.

<PAGE> 15
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as the same may be amended or supplemented from time to
time.

"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System as the same may be amended or supplemented from time to
time.

"Reimbursement Obligation" means the obligation of JLM Marketing to
reimburse State Street in accordance with the terms of this Agreement for the
payment made by State Street under any Letter of Credit.

"Revolving Credit Commitment" means the obligation of the Bank to make
the Revolving Credit Loans under this Agreement in the aggregate principal
amount of $9,000,000, as such amount may be reduced or otherwise modified from
time to time.

"Revolving Credit Note" means the promissory note of JLM Marketing in the
form of Exhibit A1 hereto evidencing the Revolving Credit Loans made by the Bank
hereunder and all promissory notes delivered in substitution or exchange
therefor, as amended or supplemented from time to time.

"Revolving Credit Termination Date" means May 25, 1997.

"Security Agreement" means the security agreement in the form of
Exhibit D to be delivered by each of the JLM Domestic Entities under the terms
of this Agreement, as amended or supplemented from time to time.

"Security Documents" means the Security Agreement, the Canadian Security
Agreement, the Florida Mortgage, the North Carolina Deed of Trust and each other
security document that may from time to time be delivered to the Bank in
connection therewith.

"Subsidiary" means, with respect to any Person, any corporation or other
entity of which at least a majority of the securities or other ownership
interest having ordinary voting power (absolutely or contingently) for the
election of directors or other persons performing similar functions are at the
time owned directly or indirectly by such Person.

"Term Loans" means the Florida Term Loan and the North Carolina Term
Loan.

"UCP" means the Uniform Customs and Practice for Documentary Credits
(1993 Revision), International Chamber of Commerce Publication No. 500, as the
same may be amended from time to time.

"Unfunded Benefit Liabilities" means, with respect to any Plan, the
amount (if any) by which the present value of all benefit liabilities (within
the meaning of Section 4001(a)(16) of ERISA) under the Plan exceeds the fair
market value of all Plan assets

<PAGE> 16
allocable to such benefit liabilities, as determined on the most recent
valuation date of the plan and in accordance with the provisions of ERISA for
calculating the potential liability of any JLM Entity or any ERISA Affiliate
under Title IV of ERISA.

Section 1.02. Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP, and all financial
data required to be delivered hereunder shall be prepared in accordance with
GAAP.

ARTICLE 2. THE LOANS.

Section 2.01. The Loans. (a) Subject to the terms and conditions of
this Agreement, the Bank agrees to make revolving credit loans (the "Revolving
Credit Loans") to JLM Marketing from time to time from and including the date
hereof to and including the Revolving Credit Termination Date, up to but not
exceeding in the aggregate principal amount at any one time outstanding, the
amount of the lesser of (i) the difference between the Revolving Credit
Commitment and the Letter of Credit Obligations and (ii) the difference between
the Borrowing Base and the Letter of Credit Obligations. The revolving Credit
Loans shall be due and payable on the Revolving Credit Termination Date.

(b) Subject to the terms and conditions of this Agreement, the Bank
agrees to modify and extend an existing term loan (the "Florida Term Loan") to
JLM Industries on the Closing Date in the aggregate original principal amount of
$2,000,000. The Florida Term Loan will be repaid in 120 consecutive monthly
installments each in an amount necessary to fully amortize the original
principal amount, together with accrued interest thereon, on an accrual basis
over a period of 240 consecutive months. The first such installment shall be
due on June 1, 1994 with subsequent installments due on the 1st day of each
month thereafter to and including May 1, 2004. The last such installment shall
be in an amount necessary to repay in full the unpaid principal amount of the
Florida Term Loan.

(c) Subject to the terms and conditions of this Agreement, the Bank
agrees to make a term loan (the "North Carolina Term Loan") the JLM Terminals on
the Closing Date in the aggregate original principal amount of $1,250,000. The
North Carolina Term Loan will be repaid in 72 consecutive monthly installments
each in amount necessary to fully amortize the original principal amount,
together with accrued interest thereon, on an accrual basis as follows: (i)
$50,000 of the original principal amount during the first year of the North
Carolina Term Loan, (ii) $150,000 of the original principal amount during the
second year of the North Carolina Term Loan, (iii) $250,000 of the original
principal amount during each of the next three years of the North Carolina Term
Loan and (iv) $300,000 during the sixth and final year of the North Carolina
Term Loan. The first such installment shall be due on June 1, 1994 with
subsequent installments due on the 1st day of each month thereafter to an
including May 1, 2000. The last such

<PAGE> 17
installment shall be in an amount necessary to repay in full the unpaid
principal amount of the North Carolina Term Loan.

Section 2.02. The Notes. The Revolving Credit Loans shall be evidenced
by a single promissory note in favor of the Bank in the form of Exhibit A1,
dated the Closing Date, duly completed and executed by JLM Marketing. The
Florida Term Loans shall be evidenced by a single promissory note in favor of
the Bank in the form of Exhibit A2, dated the Closing Date, duly completed and
executed by JLM Industries and JLM Marketing. The North Carolina Term Loan
shall be evidenced by a single promissory note in favor of the Bank in the form
of Exhibit A3, dated the Closing Date, duly completed and executed by JLM
Terminals.

Section 2.03. Purposes. The JLM Industries, JLM Marketing and JLM
Terminals shall use the proceeds of the Loans for general corporate purposes.
Such proceeds shall not be used for the purpose, whether immediate, incidental
or ultimate, of buying or carrying "margin stock" within the meaning of
Regulation U.

Section 2.04. Borrowing Procedures. JLM Marketing when it intends to
effect a borrowing shall give the Bank notice of each borrowing to be made
hereunder as provided in Section 2.08. Not later than 1:00 p.m. Boston,
Massachusetts time on the date of such borrowing, the Bank, shall through its
Lending Office and subject to the conditions of this Agreement, make the amount
of the Revolving Credit Loan to be made on such day available to JLM Marketing,
in immediately available funds, by the Bank crediting an account of JLM
Marketing designated by JLM Marketing and maintained with the Bank at the
Lending Office.

Section 2.05. Prepayments. JLM Marketing shall have the right to make
prepayments of principal on the Revolving Credit Note at any time or from time
to time; provided that JLM Marketing shall give the Bank notice of each such
prepayment as provided in Section 2.08. In the case of the Term Loans, all
prepayments shall be applied to the principal installments of the Term Loans in
the inverse order of their maturities and shall be subject to the prepayment
premiums set forth in the Florida Term Note and the North Carolina Term Note,
respectively.

Section 2.06. Changes of Commitments. JLM Marketing shall have the
right to reduce or terminate the amount of the unused Revolving Credit
Commitment at any time or from time to time, provided that: (a) JLM Marketing
shall give notice of each such reduction or termination to the Bank as provided
in Section 2.08; and (b) each partial reduction shall be in an aggregate amount
at least equal to $1,000,000. The Revolving Credit Commitment once reduced or
terminated may not be reinstated.

Section 2.07. Certain Notices. Notices by JLM Marketing to the Bank of
each borrowing pursuant to Section 2.04 and each prepayment pursuant to Section
2.05, and each reduction or termination of the Revolving Credit Commitment
pursuant to Section

<PAGE> 18

2.06 shall be irrevocable and shall be effective only if received by the Bank
not later than 1;00 p.m. Boston, Massachusetts time, and (a) in the case of
borrowings and prepayments of Loans, given the same Banking Day; and (b) in the
case of reductions or terminations of the Revolving Credit Commitment, given
three Banking Days prior thereto. Each such notice shall specify the Loans to
the borrowed or prepaid and the date of the borrowing or prepayment (which shall
be a Banking Day). Each such notice of reduction or termination shall specify
the amount of the Revolving Credit Commitment to be reduced or terminated.

Section 2.08. Minimum Amounts. Except for borrowings which exhaust the
full remaining amount of the Revolving Credit Commitment, each borrowing of
Revolving Credit Loans and prepayment of Loans shall be in an amount not less
than $100 in the aggregate for the Bank unless such minimum amount is waived by
the Bank.

Section 2.09 Interest. (a) Interest shall accrue on the outstanding
and unpaid payment amount of each Loan for the period from and including the
date of such Loan to but excluding the date such Loan is due at the following
rates per annum: (i) for the Revolving Credit Loan, at a variable rate per
annum equal to the Prime Rate, (ii) for the Florida Term Loan, at a fixed rate
per annum equal to __% and (iii) for the North Carolina Term Loan, at a variable
rate per annum equal to the Prime Rate plus 1.50% with an option to allow the
Borrower to convert the North Carolina Terms Loan interest rate to a fixed rate
within 180 days of the date of this Agreement. If the principal amount of any
Loan and any other amount payable by JLM Marketing hereunder or under the Notes
shall not be paid when due (at stated maturity, by acceleration or otherwise),
interest shall accrue on such amount to the fullest extent permitted by law from
and including such due date to but excluding the date such amount is paid in
full at the Default Rate.

(b) The interest rate on each Loan shall change when the variable rate
changes and interest on each such Loan shall be calculated on the basis of a
year of 360 days for the actual number of days elapsed.

(c) Accrued interest shall be due and payable in arrears upon any full
payment of principal and on the first day of each month commencing the first
such date after such Loan.

Section 2.10. Fees. (a) JLM Marketing shall pay to the Bank a facility
fee for the Revolving Credit Loans at a rate per annum equal to .75% on the
aggregate amount of the Revolving Credit Commitment per year payable quarterly
in advance. JLM Industries shall pay to the Bank a facility fee for the Florida
Term Loan equal to .75% of the aggregate principal amount of the Florida Term
Loan payable on the Closing Date. JLM Terminals shall pay to the Bank a
facility fee for the North Carolina Term Loan equal to 1% on the aggregate
principal amount of the North Carolina Term Loan payable on the Closing Date.

<PAGE> 19
(b) JLM Marketing shall pay to the Bank a commitment fee at a rate per
annum equal to .25% on the daily average of the difference among (i) the
aggregate amount of the Revolving Credit Commitment minus (ii) the unpaid
aggregate principal amount of the Revolving Credit Loans then outstanding minus
(iii) the Letter of Credit Obligations minus (iv) the aggregate principal amount
of banker's acceptance than outstanding, for the period from and including the
Closing Date to the earlier of the date the Revolving Credit Commitment is
terminated or the Revolving Credit Termination Date, calculated on the basis of
a year of 360 days for the actual number of days elapsed. The accrued
commitment fee shall be due and payable in arrears upon any reduction or
termination of the Revolving Credit Commitment and on the first day of each
June, September, December and March.

Section 2.11. Payments Generally. All payments under this Agreement or
the Notes shall be made in Dollars in immediately available funds not later
than 1:00 p.m. Boston, Massachusetts time on the relevant dates specified above
(each such payment made after such time on such due date to be deemed to have
been made on the next succeeding Banking Date) at the Lending Office. The Bank
may (but shall not be obligated to) debit the amount of any such payment which
is not made by such time to any ordinary deposit account of JLM Industries, JLM
Marketing, JLM Terminals or JLM Canada with the Bank. JLM Industries, JLM
Marketing, JLM Terminals or JLM Canada Entities shall, at the time of making
each payment under this Agreement or the Notes, specify to the Bank the
principal or other amount payable by JLM Industries, JLM Marketing, JLM
Terminals or JLM Canada under this Agreement or the Notes to which such payment
is to be applied (and in the event that it fails to so specify, or if a Default
or Event of Default has occurred and is continuing, the Bank may apply such
payment as it may elect in its sole discretion). If the due date of any
payment under this Agreement or the Notes would otherwise fall on a day which
is not a Banking Day, such date shall be extended to the next succeeding
Banking Day and interest shall be payable for any principal so extended for
the period of such extension.

ARTICLE 3. THE LETTERS OF CREDIT.

Section 3.01. Letters of Credit. (a) Subject to the terms and
conditions of this Agreement, the Bank agrees to issue on any Banking Day prior
to the Revolving Credit Termination Date for the account of JLM Marketing
documentary and standby letters of credit in such form as may from time to time
be approved by the Bank acting reasonably (together with the applications
therefor, the "Letters of Credit"); provided that on the date of the issuance of
any Letter of Credit, and after giving effect to such issuance, the Letter of
Credit Obligations shall not exceed the Letter of Credit Availability.

(b) Each Letter of Credit shall (i) have an expiry date no later than
the Revolving Credit Termination Date, (ii) be denominated in Dollars, (iii) be
in a minimum face amount of

<PAGE> 20

$10,000 and (iv) provide for the payment of sight drafts when presented for
honor thereunder in accordance with the terms thereof and when accompanied by
the documents described or when such documents are presented, as the case may
be.

Section 3.01. Purposes. JLM Marketing shall use the Letters of Credit
for the purpose of securing obligations incurred in the ordinary course of its
business.

Section 3.03. Procedures for Issuance of Letters of Credit. JLM
Marketing may from time to time request that the Bank issue a Letter of Credit
by delivering to the Bank at its address for notices specified herein an
application therefor in such form as may from time to time be approved by the
Bank acting reasonably, completed to the satisfaction of the Bank, and such
other certificates, documents and other papers and information as the Bank may
reasonably request. Upon receipt of any application, the Bank will process such
application and the certificates, documents and other papers and information
delivered to it in connection therewith in accordance with its customary
procedures and shall promptly issue the Letter of Credit in such customized form
as may reasonably be requested by JLM Marketing (but in no event shall the Bank
issue any Letter of Credit later than five Banking Days after receipt of the
application therefor and all such other certificates, documents and other papers
and information relating thereto) by issuing the original of such Letter of
Credit to the beneficiary thereof or as otherwise may be agreed by the Bank and
JLM Marketing. The Bank shall furnish a coy of such Letter of Credit to JLM
Marketing promptly following the issuance thereof.

Section 3.04. Payments. In order to induce the Bank to issue the
Letters of Credit, JLM Marketing hereby agrees to reimburse the Bank, unless
such Reimbursement Obligation has been accelerated pursuant to Section 9.02, on
each date that JLM Marketing has been notified by the Bank that any draft
presented under any Letter of Credit is paid by the Bank, for (i) the amount of
the draft paid by the Bank and (ii) the amount of any taxes, reasonably fees,
reasonable charges or other reasonable costs or expenses whatsoever incurred by
the Bank in connection with any payment made by the Bank under, or with respect
to, such Letter of Credit. Each such payment shall be made to the Bank at its
office specified in Section 12.06, in lawful money of the United States and in
immediately available funds on the day that payment is made by the Bank.
Interest on any and all amounts remaining unpaid by JLM Marketing under this
Section 3.04 at any time from the date such amounts become payable (whether at
stated maturity, by acceleration or otherwise) until payment in full shall be
payable to the Bank on demand at a fluctuating rate per annum equal to Default
Rate.

Section 3.05. Further Assurances. JLM Marketing hereby agrees to do and
perform any and all acts and to execute any and all further instruments from
time to time reasonably requested by the Bank more fully to effect the purposes
of this Agreement and the issuance of the Letters of Credit opened hereunder.

<PAGE> 21

Section 3.06. Obligations Absolute. Provided that the Bank has
fulfilled its obligations under the UCP, the payment obligations of JLM
Marketing under Section 3.05 shall be unconditional and irrevocable and shall
be paid strictly in accordance with the terms of this Agreement under all
circumstances, including, without limitation, the following circumstances:

(a) the existence of any claim, set-off, defense or other right which
JLM Marketing may have at any time against any beneficiary, or any transferee,
of any Letter of Credit (or any Persons for whom any such beneficiary or any
such transferee may be acting), the Bank, or any other Person, whether in
connection with this Agreement, any other Facility Document, the transactions
contemplated herein, or any unrelated transaction;

(b) any statement or any other document presented under any Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any respect
or any statement therein being untrue or inaccurate in any respect unless the
Bank's actions with respect thereto constituted gross negligence or willful
misconduct;

(c) payment by the Bank under any Letter of Credit against
presentation of a draft or certificate which does not comply with the terms of
such Letter of Credit, except payment resulting solely from the gross negligence
or willful misconduct of the Bank; or

(d) any other circumstances or happening whatsoever, whether or not
similar to any of the foregoing, except circumstances or happenings resulting
solely from the gross negligence or willful misconduct of the Bank.

Section 3.07. Cash Collateral Account. If the Revolving Credit
Commitment is terminated and all amounts owing under this Agreement, the Notes
and the Letters of Credit become due and payable pursuant to Section 9, JLM
Marketing shall deposit with the Bank, on the date such obligations become due
and payable, an amount in cash equal to the Letter of Credit Obligations as of
such date and the other amounts owning hereunder. Such amounts shall be
deposited in a cash collateral account to be established by the Bank and shall
constitute collateral security for the Letter of Credit Obligations and other
amounts owing hereunder. All amounts in such cash collateral account shall be
maintained pursuant to the cash collateral account agreement which shall grant
to the Bank exclusive dominion and control (including exclusive rights of
withdrawal) over all such amounts and shall be otherwise satisfactory in form
and substance to the Bank.

Section 3.08. Letter of Credit Fees. (a) JLM Marketing agrees to pay
in advance the Bank a non-refundable letter of credit fee with respect to each
Letter of Credit, payable in the same currency as that in which such Letter of
Credit is denominated, computed at the rate per annum equal to one percent of
the

<PAGE> 22

aggregate undrawn amount under such Letter of Credit on the date on which such
fee is calculated.

(b) JLM Marketing agrees to pay the Bank, for its own account, its
normal and customary administration, amendment, transfer, payment and
negotiation fees charged in connection with its issuance and administration of
letters of credit.

ARTICLE 4. CONDITIONS PRECEDENT.

Section 4.01. Documentary Conditions Precedent. The obligations of the
Bank to make any Loan and to issue any Letter of Credit are subject to the
condition precedent that the Bank shall have received on or before the date of
such Loans or date of the issuance of such Letters of Credit each of the
following, in form and substance satisfactory to the Bank and its counsel:

(a) counterparts of this Agreement executed by each of the JLM
Domestic Entities, MacDonald and the Bank;

(b) the Revolving Credit Note duly executed by JLM Marketing, the
North Carolina Term Note duly executed by JLM Terminals and the Florida Term
Note duly executed by JLM Industries and JLM Marketing;

(c) the North Carolina Deed of Trust duly executed by JLM Terminals,
the First Florida Mortgage Modification duly executed by JLM Industries and the
Florida Mortgage shall be in full force and effect;

(d) the Security Agreement duly executed by each of the JLM Domestic
Entities together with (i) executed copies of the financing statements (UCC-1)
to be duly filed under the Uniform Commercial Code of all jurisdictions
necessary or, in the opinion of the Bank, desirable to perfect the security
interests created by the Security Agreement; (ii) executed copies of the
amendment statements (UCC-3) to be duly filed under the Uniform Commercial Code
of all jurisdictions necessary or, in the opinion of the Bank, desirable to
perfect the security interests created by the Security Agreement and (iii)
copies of searches identifying all of the financing statements on file with
respect to each of the JLM Domestic Entities in all jurisdictions referred
to under (i);

(e) the Canadian Guarantee duly executed by JLM Canada;

(f) the Canadian Security Agreement duly executed by JLM Canada
together with (i) executed copies of the financing statements to be duly filed
under the Personal Property Securities Act and the Uniform Commercial Code of
all jurisdictions necessary or, in the opinion of the Bank, desirable to perfect
the security interests created by the Canadian Security Agreement and (ii)
copies of searches identifying all of the financing statements on

<PAGE> 23

file with respect to JLM Canada in all jurisdictions referred to under (i);

(g) the Participation Agreement duly executed by the Bank and Barnette
Bank of Tampa, N.A.;

(h) commitments to issue (i) a policy of mortgagee title insurance in
favor of the Bank with respect to the Property subject to the Lien of the North
Carolina Deed of Trust and (ii) endorsements to the policy of mortgagee title
insurance in favor of the Bank with respect to the Property subject to the Lien
of the Florida Mortgage;

(i) "Phase II" environmental assessments with respect to the Property
subject to the Lien of the North Carolina Deed of Trust;

(j) certificates or other evidence of casualty insurance policies
covering all of the Property subject to the Lien of the Security Documents with
appropriate loss payable endorsements indicating assignment of proceeds
thereunder to the Bank and certificates or other evidence of liability insurance
with appropriate endorsements indicating the coverage of the Bank as an
additional insured;

(k) certificates of the Secretary or Assistant Secretary of each of
the Obligors, dated the Closing Date, (i) attesting to all corporate action
taken by such Obligor, including resolutions of its Board of Directors
authorizing the execution, delivery and performance of each of the Facility
Documents to which it is a party and each other document to be delivered
pursuant to this Agreement, (ii) certifying the names and true signatures of the
officers of such Obligor authorized to sign the Facility Documents to which it
is a party and the other documents to be delivered by such Person under this
Agreement and (iii) verifying that the charter and by-laws of such Obligor
attached thereto are true, correct and complete as of the date thereof;

(l) a certificate of a duly authorized officer of each of the
Obligors, dated the Closing Date, stating that the representations and
warranties in Article 5 are true and correct in all material respects on such
date as though made on and as of such date and that no event has occurred and is
continuing which constitutes a Default or Event of Default;

(m) good standing certificates and certified copies of all charter
documents with respect to each Obligor certified by the appropriate officer of
its jurisdiction of incorporation, and evidence that each of the Obligors is
qualified as a foreign corporation in every other jurisdiction in which it does
business; and

(n) favorable opinions of John T. White, Esq., inside counsel to the
Obligors, and Brans, Lehun, Baldwin & Champagne,

<PAGE> 24
special Canadian counsel, each dated the Closing Date, in substantially the
forms of Exhibit C1 and Exhibit C2 and as to such other matters as the Bank may
reasonably request.

Section 4.02. Additional Conditions Precedent. The obligations of the
Bank to make any Loans pursuant to a borrowing which increases the amount
outstanding hereunder (including the initial borrowing) or to issue any Letter
of Credit shall be subject to the further conditions precedent that on the date
of such Loans, the following statements shall be true: (i) the representations
and warranties contained in Article 5, in Article 3 of the Security Agreement,
and in any other Facility Document, are true and correct on and as of the date
of such Loans or the issuance of such Letters of Credit as though made on and as
of such date; and (ii) no Default or Event of Default has occurred and is
continuing, or would result from such Loans or the issuance of such Letter of
Credit.

Section 4.03. Deemed Representations. Each Notice of borrowing
hereunder or request for the issuance of a Letter of Credit and acceptance by
JLM Marketing of the proceeds of such borrowing or of the issuance of such
Letter of Credit shall constitute a representation and warranty that the
statements contained in Section 4.02 are true and correct both on the date of
such notice or request and, unless JLM Marketing otherwise notifies the Bank
prior to such borrowing or such issuances, as of the date of such borrowing or
such issuance.

ARTICLE 5. REPRESENTATIONS AND WARRANTIES.

Each of the JLM Domestic Entities hereby represents and warrants that:

Section 5.01. Incorporation, Good Standing and Due Qualification. Each
of the JLM Entities is duly incorporated, validly existing and in good standing
under the laws of the jurisdiction of its incorporation, has the corporate power
and authority to own its assets and to transact the business in which it is now
engaged or proposed to be engaged, and is duly qualified as a foreign
corporation and in good standing under the laws of each other jurisdiction in
which such qualification is required.

Section 5.02. Corporate Power and Authority; No Conflicts. The
execution, delivery and performance by each of the Obligors of the Facility
Documents to which it is a party have been duly authorized by all necessary
corporate action and do not and will not: (a) require any consent or approval of
its stockholders; (b) contravene its charter or by-laws; (c) violate any
provision of, or require any filing (other than as required under the Security
Documents), registration, consent or approval under, any law, rule, regulation
(including, without limitation, Regulation U), order, writ, judgment,
injunction, decree, determination or award presently in effect having
applicability to any JLM Entity; (d) result in a breach of or constitute a
default or require any

<PAGE> 25
consent under any indenture or loan or credit agreement or any other agreement,
lease or instrument to which any JLM Entity is a party or by which it or its
properties may be bound or affected; (e) result in, or require, the creation or
imposition of any Lien (other than as created under the Security Documents),
upon or with respect to any Property now owned or hereafter acquired by any JLM
Entity; or (f) cause any JLM Entity to be in default under any such law, rule,
regulation, order, writ, judgment, injunction, decree, determination or award
or any such indenture, agreement, lease or instrument.

Section 5.03. Legally Enforceable Agreements. Each Facility Document
to which any Obligor is a party is, or when delivered under this Agreement will
be, a legal, valid and binding obligation of such Obligor enforceable against
such Obligor in accordance with its terms, except to the extent that such
enforcement may be limited by applicable bankruptcy, insolvency and other
similar laws affecting creditors' rights generally.

Section 5.04. Litigation. Except as set forth on Schedule I, there are
no actions, suits or proceedings pending or, to the knowledge of any JLM
Domestic Entity, threatened, against or affecting any JLM Entity before any
court, governmental agency or arbitrator

Section 5.05. Financial Statements. The consolidated and consolidating
balance sheets of the JLM Entities as at December 31, 1993, 1992 and 1991, and
the related consolidated and consolidating income statements and statements of
cash flows and changes in stockholders' equity of the JLM Entities for the
fiscal years then ended, and the accompanying footnotes, together with the
opinion on the consolidated statements of Deloitte & Touche, independent
certified public accountants, and the interim consolidated and consolidating
balance sheets of the JLM Entities as at March 31, 1994, and the related
consolidated and consolidating income statements and statements of cash flows
and changes in stockholders' equity of the JLM Entities for the three month
period then ended, are complete and correct and fairly present the financial
condition of the JLM Entities at such dates and the results of the operations
of the JLM Entities for the periods covered by such statements, all in
accordance with GAAP consistently applied. There are no liabilities of any JLM
Entity, fixed or contingent, which are material but are not reflected in the
financial statements or in the notes thereto and which would be required to be
recorded in such financial statements or notes in accordance with GAAP, other
than liabilities arising in the ordinary course of business since March 31,
1994. No information, exhibit or report furnished by any JLM Entity to the Bank
in connection with the negotiation of this Agreement contained any material
misstatements of fact or omitted to state a material fact or any fact necessary
to make the statements contained therein not materially misleading. Since March
31, 1994, there has been no change which could have a Material Adverse Effect.

20
<PAGE> 26
Section 5.06. Ownership and Liens. Each of the JLM Entities has title
to, or valid leasehold interests in, all of its Property including the Property
reflected in the financial statements referred to in Section 6.05 (other than
any Property disposed of in the ordinary course of business), and none of the
Property owned by any JLM Entity and none of its leasehold interests is subject
to any Lien, except as disclosed in such financial statements or as may be
permitted hereunder and except for the Liens created by the Security Documents.

Section 5.07. Taxes. Each of the JLM Entities has filed all tax
returns (federal, state and local) required to be filed and has paid all taxes,
assessments and governmental charges and levies thereon to be due, including
interest and penalties. The federal income tax liability of the JLM Entities
has been audited by the Internal Revenue Service and has been finally
determined and satisfied for all taxable years up to and including the taxable
year ended December 31, 1988.

Section 5.08. ERISA. To the best knowledge of each JLM Domestic
Entity, each Plan and Multiemployer Plan, is in compliance in all material
respects with, and has been administered in all material respects in compliance
with, the applicable provisions of ERISA, the Code and any other applicable
Federal or state law, and no event or condition is occurring or exists
concerning which any JLM Domestic Entity would be under an obligation to
furnish a report to the Bank in accordance with Section 6.08(h) hereof. As of
the most recent valuation date for each Plan, each Plan was "fully funded",
which for purposes of this Section 5.08 shall mean that the fair market value
of the assets of the Plan is not less than the present value of the accrued
benefits of all participants in the Plan, computed on a Plan termination basis.
To the best knowledge of each JLM Domestic Entity, no Plan has ceased being
fully funded as of the date these representations are made with respect to any
Loan under this Agreement. For purposes of this Section 5.08, "material" shall
be determined in relation to the financial position of the JLM Entities as
specified in Section 6.08(g)(viii).

Section 5.09. Subsidiaries and Ownership of Stock. Schedule I sets
forth the name of each Subsidiary of JLM Industries, the jurisdiction of its
incorporation and the Persons owning the outstanding capital stock of such
Subsidiary. Except as set for in Schedule I, all of the outstanding capital
stock of each Subsidiary of JLM Industries are validly issued, fully paid and
nonassessable, and all such shares are owned by JLM Industries or another
Subsidiary of JLM Industries free and clear of all Liens. Except as set forth
in Schedule I, neither JLM Industries nor any of its Subsidiaries owns or holds
the right to acquire any shares of stock or any other security or interest in
any other Person.

Section 5.10. Credit Arrangements. Schedule II is a complete and
correct list of all credit agreements, indentures, purchase agreements,
guaranties, Capital Leases and other investments,

21
<PAGE> 27
agreements and arrangements presently in effect (the "Credit Arrangements")
providing for or relating to extensions of credit (including agreements and
arrangements for the issuance of letters of credit or for acceptance financing)
in respect of which any JLM Entity is in any manner directly or contingently
obligated; and the maximum principal or face amounts of the credit in question,
outstanding and which can be outstanding, are correctly stated, and all Liens
of any nature given or agreed to be given as security therefor are correctly
described or indicated in such Schedule.

Section 5.11. Operation of Business. Each of the JLM Entities
possesses all licenses, permits, franchises, patents, copyrights, trademarks
and trade names, or rights thereto, which are material to conduct its business
substantially as now conducted and as presently proposed to be conducted and no
JLM Entity is in violation of any valid rights of others with respect to any of
the foregoing.

Section 5.12. Hazardous Materials. To the knowledge of the Borrower,
each of the JLM Entities is in compliance with all Environmental Laws in effect
in each jurisdiction where it is presently doing business. No JLM Entity is
subject to any liability under any Environmental Law.

In addition except as set forth on Schedule I, no JLM Entity has
received any (i) notice from any Governmental Authority by which any of its
present or previously-owned or leased real Property has been designated,
listed, or identified in any manner by any Governmental Authority charged with
administering or enforcing any Environmental Law as a Hazardous Material
disposal or removal site, "Super Fund" clean-up site, or candidate for removal
or closure pursuant to any Environmental Law, (ii) notice of any Lien arising
under or in connection with any Environmental Law that has attached to any
revenues of, or to, any of its owned or leased real Property, or (iii) summons,
citation, notice, directive, letter, or other written or oral communication
from any Governmental Authority concerning any intentional or unintentional
action or omission by such JLM Entity in connection with its ownership or
leasing of any real Property resulting in the releasing, spilling, leaking,
pumping, pouring, emitting, emptying, dumping, or otherwise disposing of any
Hazardous Material into the environment resulting in any violation of any
Environmental Law.

Section 5.13. No Default on Outstanding Judgments or Orders. Each of
the JLM Entities has satisfied all judgments and no JLM Entity is in default
with respect to any final judgment, writ, injunction, decree, rule or
regulation of any court, arbitrator or federal, state, municipal or other
governmental authority, commission, board, bureau, agency or instrumentality,
domestic or foreign.

Section 5.14. No Defaults on Other Agreements. No JLM Entity is a
party to any indenture, loan or credit agreement or any lease or other
agreement or instrument or subject to any charter or

22
<PAGE> 28
corporate restriction which could have a Material Adverse Effect. No JLM Entity
is in default in any respect in the performance, observance or fulfillment of
any of the obligations, covenants or conditions contained in any agreement or
instrument material to its business to which it is a party.

Section 5.15. Labor Disputes and Acts of God. Neither any material
part of the business nor the properties of any JLM Entity are affected by any
fire, explosion, accident, strike, lockout or other labor dispute, drought,
storm, hail, earthquake, embargo, act of God or of the public enemy or other
casualty (whether or not covered by insurance), which could have a Material
Adverse Effect.

Section 5.16. Governmental Regulation. No JLM Entity is subject to
regulation under the Public Utility Holding Company Act of 1935, the Investment
Company Act of 1940, the Interstate Commerce Act, the Federal Power Act or any
statute or regulation limiting its ability to incur indebtedness for money
borrowed as contemplated hereby.

Section 5.17. No Forfeiture. Neither any JLM Entity nor any of its
Affiliates is engaged in or proposes to be engaged in the conduct of any
business or activity which could result in a Forfeiture Proceeding and no
Forfeiture Proceeding against any of them is pending or threatened.

Section 5.18. Solvency.

(a) The present fair saleable value of the assets of JLM
Industries, JLM Marketing, JLM Terminals and JLM Canada after giving effect to
all the transactions contemplated by the Facility Documents and the funding of
the Revolving Credit Commitment and the issuance of all Letters of Credit
hereunder exceeds the amount that will be required to be paid on or in respect
of the existing debts and other Liabilities (including contingent liabilities)
of such JLM Domestic Entity as they mature.

(b) The property of each JLM Domestic Entity does not
constitute unreasonably small capital for such JLM Domestic Entity to carry out
its business as now conducted and as proposed to be conducted including the
capital needs of such JLM Domestic Entity.

(c) No JLM Domestic Entity intends to, nor does any JLM
Domestic Entity believe that it will, incur debts beyond its ability to pay
such debts as they mature (taking into account the timing and amounts of cash
to be received by such JLM Domestic Entity, and of amounts to be payable on or
in respect of debt of such JLM Domestic Entity). The cash available to such JLM
Domestic Entity after taking into account all other anticipated uses of the
cash of such JLM Domestic Entity, is anticipated to be sufficient to pay all
such amounts on or in respect of debt of such JLM Domestic Entity when such
amounts are required to be paid.

23
<PAGE> 29

(d) No JLM Domestic Entity believes that final judgments against it
in actions for money damages will be rendered at a time when, or in an amount
such that, such JLM Domestic Entity will be unable to satisfy any such judgments
promptly in accordance with their terms (taking into account the maximum
reasonable amount of such judgments might be rendered). The cash available to
each JLM Domestic Entity after taking into account all other anticipated uses
of the cash of such JLM Domestic Entity (including the payments on or in
respect of debt referred to in paragraph (c) of the Section 5.18), is
anticipated to be sufficient to pay all such judgments promptly in
accordance with their terms.

Section 5.19. Security Documents. The Security Documents are effective
to create in favor of the Bank a legal, valid and enforceable Lien on and
security interest in all right, title and interest of each Obligor in the
Collateral securing the obligations of the Obligors under this Agreement, the
Notes, the Letters of Credit and the other Facility Documents. The Bank has a
fully perfected and continuing first priority Lien on and security interest in
such Collateral described in the Security Documents, free from all Liens other
than Liens permitted under Section 7.03.

ARTICLE 6. AFFIRMATIVE COVENANTS.

So long as any Note shall remain unpaid, any Letter of Credit Obligation
shall remain outstanding or the Bank shall have any revolving Credit Commitment
under this Agreement, JLM Industries shall:

Section 6.01. Maintenance of Existence. Preserve and maintain, and
cause each of its Subsidiaries to preserve and maintain, its corporate
existence and good standing in the jurisdiction of its incorporation, and
qualify and remain qualified as a foreign corporation in each jurisdiction in
which such qualification is required.

Section 6.02. Conduct of Business. Continue, and cause each of its
Subsidiaries to continue, to engage in a business of the same general type as
conducted by it on the date of this Agreement.

Section 6.03. Maintenance of Properties. Maintain, keep and preserve,
and cause each of its subsidiaries to maintain, keep and preserve, all of its
Property necessary or useful in the proper conduct of its business in good
working order and condition, ordinary wear and tear excepted.

Section 6.04. Maintenance of Records. Keep, and cause each of its
subsidiaries to keep, adequate records and books of account, in which complete
entries will be made in accordance with GAAP, reflecting all financial
transactions of the JLM Entities.

<PAGE> 30

Section 6.05. Maintenance of Insurance. Maintain, and cause each of its
Subsidiaries to maintain, insurance with financially sound and reputable
insurance companies or associations in such amounts and covering such risks as
are usually carried by companies engaged in the same or a similar business and
similarly situated, which insurance may provide for reasonable deductibility
from coverage thereof.

Section 6.06. Compliance with Laws. Comply, and cause each of its
Subsidiaries to comply, in all respects with all applicable laws, rules,
regulations and orders, such compliance to include, without limitation, paying
before the same become delinquent all taxes, assessments and governmental
charges imposed upon it or upon its Property unless contested in good faith by
appropriate proceedings and for which appropriate reserves have been
established in accordance with GAAP.

Section 6.07. Right of Inspection. At any reasonable time and from time
to time, permit the Bank or any agent or representative thereof, to examine and
make copies and abstracts from the records and books of account of, and visit
the Property of, any JLM Entity, and to discuss the affairs, finances and
accounts of such JLM Entity with any or their respective officers and directors
and independent accountants.

Section 6.08. Reporting Requirements. Furnish directly to the Bank:

(a) as soon as available and in any event within 90 days after the
end of each fiscal year of the JLM entities, the consolidated and consolidating
balance sheets of the JLM Entities, as of the end of such fiscal year and the
consolidated and consolidating income statements and statements of cash flows
and changes in stockholders' equity of the JLM Entities for such fiscal year,
all in reasonable detail and stating in comparative form the respective
consolidated and consolidating figures for the corresponding date and period in
the prior fiscal year and all prepared in accordance with GAAP and as to the
consolidated and consolidating statements accompanied by an opinion thereon
acceptable to the Bank by Deloitte & Touche or other independent accountants of
national standing selected by the JLM Entities;

(b) as soon as available and in any event within 45 days after the
end of each month of each fiscal year of the JLM Entities, consolidated and
consolidating balance sheets of the JLM Entities as of the end of such month
and consolidated and consolidating income statements and statements of cash
flows and changes in stockholders' equity of the JLM Entities for the period
commencing at the end of the previous fiscal year and ending with the end of
such month, all in reasonable detail and stating in comparative form the
respective consolidated and consolidating figures for the corresponding date
and period in the previous fiscal year and all prepared in accordance with
GAAP and certified

<PAGE> 31

by the chief financial officer of the JLM Entities (subject to year-end
adjustments);

(c) simultaneously with the delivery of the financial statements
referred to above, a Compliance Certificate of the chief financial officer of
the JLM Industries (i) certifying that to the best of his knowledge no Default
or Event of Default has occurred and is continuing or, if a Default or Event of
Default has occurred and is continuing, a statement as to the nature thereof
and the action which is proposed to be taken with respect thereto, and (ii) at
the end of each fiscal quarter with computations demonstrating compliance with
the covenants contained in article 8;

(d) simultaneously with the delivery of the annual financial
statements referred to in Section 6.08(a), a certificate of the independent
public accountants who audited such statements to the effect that, in making
the examination necessary for the audits of such statements, they have obtained
no knowledge of any condition or event which constitutes a Default or Event of
Default, or if such accountants shall have obtained knowledge of any such
condition or event, specifying in such certificate each such condition or event
of which they have knowledge and the nature and status thereof;

(e) as soon as available and in any event within 30 days after the end
of each of fiscal month of the JLM Entities, a schedule showing the amounts and
aging of all Receivables of the JLM Entities as of the end of such month
together with a reconciliation of all Receivables and together with a schedule
showing the quantity, the amounts and the value of Inventory of the JLM
Entities existing as of the end of such month;

(f) promptly after the commencement thereof, notice of all actions,
suits, and proceedings before any court or governmental department, commission,
board, bureau, agency, or instrumentality, domestic or foreign, affecting any
JLM Entity;

(g) as soon as possible and in any event within 10 days after becoming
aware of or having reason to become aware of the occurrence of each Default or
Event of Default a written notice setting forth the details of such Default or
Event of Default and the action which is proposed to be taken by the JLM
Entities with respect thereto;

(h) as soon as possible and in any event within ten days after any JLM
Entity knows or has reason to know that any of the events or conditions
specified below with respect to any Plan or Multiemployer Plan have occurred or
exist, a statement signed by a senior financial officer of such JLM Entity
setting forth details respecting such event or condition and the action, if
any, which such JLM Entity or an ERISA Affiliate proposes to take with respect
thereto (and a copy of any report or notice required to be filed with or given
to PBGC by such by such JLM Entity or an ERISA Affiliate with respect to such
event or condition):

<PAGE> 32
(i) any reportable event, as defined in Section 4043(b) of
ERISA, with respect to a Plan, as to which PBGC has not by regulation waived the
requirement of Section 4043(a) of ERISA that it be notified within 30 days of
the occurrence of such event (provided that a failure to meet the minimum
funding standard of Section 412 of the Code or Section 302 of ERISA including,
without limitation, the failure to make on or before its due date a required
installment under Section 412(m) of the Code or Section 302(e) of ERISA, shall
be a reportable event regardless of the issuance of any waivers in accordance
with Section 412(d) of the Code) and any request for a waiver under Section
412(d) of the Code for any Plan;

(ii) the distribution under Section 4041 of ERISA of a notice
of intent to terminate any Plan or any action taken by such JLM Entity or an
ERISA Affiliate to terminate any Plan;

(iii) the institution by PBGC of proceedings under Section 4042
of ERISA for the termination of, or the appointment of a trustee to administer,
any Plan, or the receipt by such JLM Entity or any ERISA Affiliate of a notice
from a Multiemployer Plan that such action has been taken by PBGC with respect
to such Multiemployer Plan;

(iv) the complete or partial withdrawal from a Multiemployer
Plan by such JLM Entity or any ERISA Affiliate that results in liability under
Section 4201 or 4204 of ERISA (including the obligation to satisfy secondary
liability as a result of a purchaser default) or the receipt of such JLM Entity
or any ERISA Affiliate of notice from a Multiemployer Plan that it is in
reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA or that
it intends to terminate or has terminated under section 4041A of ERISA;

(v) the institution of a proceeding by a fiduciary or any
Multiemployer Plan against such JLM Entity or any ERISA Affiliate to enforce
Section 515 of ERISA, which proceeding is not dismissed within 30 days;

(vi) the adoption of an amendment to any Plan that pursuant to
Section 401(a)(29) of the Code or Section 307 of ERISA would result in the loss
of tax-exempt status of the trust of which such Plan is a part if such JLM
Entity or an ERISA Affiliate fails to timely provide security to the Plan in
accordance with the provisions of said Sections;

(vii) any event or circumstance exists which may reasonably be
expected to constitute grounds for such JLM Entity or any ERISA Affiliate to
incur liability under Title IV of ERISA or under Sections 412(c)(11) or 412(n)
of the Code with respect to any Plan; and

(viii) the Unfunded Benefit Liabilities of one or more Plans
increase after the date of this Agreement in an amount

<PAGE> 33

which is material in relation to the financial condition of the JLM Entities;
provided, however, that such increase shall not be deemed to be material so long
as it does not exceed during any consecutive 3 year period $100,000;

(i) promptly after the request of the Bank, copies of each annual
report filed pursuant to Section 104 of ERISA with respect to each Plan
(including, to the extent required by Section 104 of ERISA, the related
financial and actuarial statements and opinions and other supporting statements,
certifications, schedules and information referred to in Section 103) and each
annual report filed with respect to each Plan under Section 4065 of ERISA;
provided, however, that in the case of a Multiemployer Plan, such annual reports
shall be furnished only if they are available to such JLM Entity or an ERISA
Affiliate;

(j) promptly after the sending or filing thereof, copies of all proxy
statements, financial statements and reports which any JLM Entity sends to its
stockholders, and copies of all regular, periodic and special reports, and all
registration statements which such JLM Entity files with the Securities and
Exchange Commission or any Governmental Authority which may be substituted
therefor, or with any national securities exchange;

(k) promptly after becoming aware of the existence of any violation
or alleged violation in any material respect of any Environmental Law by any JLM
Entity, prompt written notice of and a description of the nature of such
violation or alleged violation, what action such JLM Entity is taking or
proposes to take with respect thereto and, when-known, any action taken, or
proposed to be taken, by any Governmental Authority with respect thereto;

(1) promptly after the commencement thereof or promptly after any JLM
Entity knows of the commencement or threat thereof, notice of any Forfeiture
Proceeding; and

(m) such other information respecting the condition or operations,
financial or otherwise, of any JLM Entity as the Bank may from time to time
reasonably request.

Section 6.03 Additional Subsidiary Guarantors. Cause each of its
Subsidiaries acquired or formed after the date hereof with funds advanced by the
Bank under this Agreement to become an obligor hereunder pursuant to an
assumption agreement in form and substance satisfactory to the Bank, and shall
deliver such proof of corporate action, incumbency of officers, opinions of
counsel and other documents as is consistent with those delivered by the JLM
Domestic Entities pursuant to Article 4 hereof upon the Closing Date or as the
Bank shall have reasonably requested.

ARTICLE 7. NEGATIVE COVENANTS.

So long as any Note shall remain unpaid, any Letter of Credit Obligation
shall remain outstanding or the Bank shall have any

28
<PAGE> 34

Revolving Credit commitment under this Agreement, JLM Industries shall not:

Section 7 01. Debt. Create, incur, assume or suffer to exist, or permit any
of its Subsidiaries to create, incur, assume or suffer to exist, any Debt,
except:

(a) Debt of the JLM Domestic Entities under this Agreement, the Notes,
the Letters of Credit and the other Facility Documents;

(b) Debt described in Schedule II;

(c) Debt of any Obligor to any other Obligor so long as (i)if such
debt is secured, such Debt is evidenced by a promissory note and such note
together with such security is pledged as collateral for the Loans, the Letter
of Credit Obligations and the other obligations under the Facility Documents and
(ii) if such Debt is evidenced by a promissory note or other Instrument, such
note or other instrument is pledged to the Bank as collateral for the Loans, the
Letter of Credit Obligations and the other obligations under the Facility
Documents;

(d) accounts payable to trade creditors for goods or services and
current operating liabilities (other than for borrowed money), in each case
incurred in the ordinry course of business and paid within prescribed time
limits that are in the ordinary course of business, unless contested in good
faith and by appropriate proceedings; or

(e) Debt of any JLM Entity secured by Purchase Money Liens permitted
by Section 7.03(j) provided that the aggregate principal amount of all such Debt
for all JLM Entities does not exceed at any time $100,000.

Section 7.02. Guaranties. Etc. Create, incur, assume or suffer to exist, or
permit any of its Subsidiaries to create, incur, assume or suffer to exist, any
Guaranty, except Guaranties by endorsement of negotiable instruments for deposit
or collection or similar transactions in the ordinary course of business.

Section 7.03. Liens. Create, incur, assume or suffer to exist, or permit
any of its Subsidiaries to create, incur, assume or suffer to exist, any Lien,
upon or with respect to any of its Property, now owned or hereafter acquired,
except:

(a) Liens in favor of the Bank securing the Loans and the Letter of
Credit obligations hereunder;

(b) Liens for taxes or assessments or other government charges or
levies if not yet due and payable or if due and payable if they are being
contested in good faith by appropriate proceedings and for which appropriate
reserves are maintained in accordance with GAAP;

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<PAGE> 35
(c) Liens imposed by law, such as mechanic's materialmen's,
landlord's, warehousemen's and carrier's Liens, and other similar Liens,
securing obligations incurred in the ordinary course of business which are not
past due for more than 60 days, or which are being contested in good faith by
appropriate proceedings and for which appropriate reserves have been
established in accordance with GAAP;

(d) Liens under workmen's compensation, unemployment
insurance, social security or other similar legislation (other than ERISA);

(e) Liens, deposits or pledges to secure the performance of
bids, tenders, contracts (other than contracts for the payment of money),
leases (permitted under the terms of this Agreement), public or statutory
obligations, surety, stay, appeal, indemnity, performance or other similar
bonds, or other similar obligations arising in the ordinary course of business;

(f) judgment and other similar Liens arising in connection
with court proceedings which do not exceed $100,000 in the aggregate or where
the execution or other enforcement of such Lien is effectively stayed and the
claims secured thereby are being actively contested in good faith and by
appropriate proceedings;

(g) easements, rights-of-way, restrictions and other similar
encumbrances which, in the aggregate, do not materially interfere with the
occupation, use and enjoyment by any JLM Entity of the Property or assets
encumbered thereby in the normal course of its business or materially impair
the value of the Property subject thereto;

(h) Liens securing obligations of any Obligor to any other
Obligor;

(i) Liens described on Schedule III;

(j) Purchase Money Liens; provided that:

(i) any Property subject to any of the foregoing is
acquired by any JLM Entity in the ordinary course of its business and the Lien
on any such Property is created contemporaneously with such acquisition;

(ii) the obligation secured by any Lien so created,
assumed or existing shall not exceed 100% of the lesser of cost or fair market
value as of the time of acquisition of the Property covered thereby to such JLM
Entity acquiring the same;

(iii) each such Lien shall attach only to the Property
so acquired and fixed improvements thereon; and

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<PAGE> 36
(iv) the obligations secured by such Lien are permitted
by the provisions of Section 7.01(h) and the related expenditure is permitted
under Section 8.03.

Section 7.04. Leases. Create, incur, assume or suffer to exist, or
permit any of its Subsidiaries to create, incur, assume or suffer to exist, any
obligation as lessee for the rental or hire of any real or personal Property,
except:

(a) leases existing on the date of this Agreement and any
extensions or renewals thereof;

(b) operating leases (other than Capital Leases) which do
not in the aggregate require the JLM Entities on a consolidated basis to make
payments (excluding taxes, insurance, maintenance and similar expense which any
Consolidated Entity is required to pay under the terms of any lease) in any
fiscal year of the JLM Entities in excess of $1,000,000;

(d) Capital Leases permitted by Section 7.01 and Section
7.03.

Section 7.05. Investments. Make, or permit any of its Subsidiaries to
make, any loan or advance to any Person or purchase or otherwise acquire, any
capital stock, assets, obligations or other securities of, make any capital
contribution to, or otherwise invest in, or acquire any interest in, any
Person, except:

(a) direct obligations of the United States of America or
any agency thereof with maturities of one year or less from the date of
acquisition;

(b) commercial paper of a domestic issuer rated at least
"A-1" by Standard & Poor's Corporation or "P-1" by Moody's Investors Service,
Inc.;

(c) time deposits or certificates of deposit with maturities
of one year or less from the date of acquisition issued by any commercial bank
operating within the United States of America having capital and surplus in
excess of $50,000,000;

(d) money market or mutual funds whose sole investments are
comprised of investments permitted under the foregoing clauses (a) through (c);

(e) for stock, obligations or securities received in
settlement of debts (created in the ordinary course of business) owing to any
JLM Entity;

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<PAGE> 37
(f) Property to be used or useful in the ordinary course of
business of the JLM Entities; or

(g) Subsidiaries, provided that the aggregate investment in
all Subsidiaries during the term of this Agreement shall not exceed $750,000
and further provided that JLM Industries and\or its Subsidiaries shall at all
times own, directly and indirectly, 100% of the securities or other ownership
interests having ordinary voting power (absolutely and contingently) for the
election of directors or other persons performing similar functions with
respect to such Subsidiary.

Section 7.06. Dividends. Declare or pay, or permit any of its
Subsidiaries to declare or pay, any dividends, purchase, redeem, retire or
otherwise acquire for value, or permit any such Subsidiary to purchase, redeem,
retire or otherwise acquire for value, any of its capital stock now or
hereafter outstanding, or make, or permit any such Subsidiary to make, any
distribution of assets to its stockholders as such whether in cash, assets or
in obligations of the JLM Entities, or allocate or otherwise set apart, or
permit any such Subsidiary to allocate or otherwise set apart, any sum for the
payment of any dividend or distribution on, or for the purchase, redemption or
retirement of any shares of its capital stock, or make, or permit any such
Subsidiary to make, any other distribution by reduction of capital or otherwise
in respect of any shares of its capital stock, except that:

(a) JLM Industries may declare and deliver dividends and make
distributions payable solely in its common stock;

(b) JLM Industries may purchase or otherwise acquire shares
of its capital stock by exchange for or out of the proceeds received from a
substantially concurrent issue of new shares of its capital stock; and

SECTION 7.07. Sale of Property. Sell, lease, assign, transfer or
otherwise dispose of, or permit any of its Subsidiaries to sell, lease, assign,
transfer or otherwise dispose of, any of its now owned or hereafter acquired
Property (including, without limitation, shares of stock and indebtedness,
receivables and leasehold interests); except:

(a) for Inventory disposed of in the ordinary course of
business;

(b) the sale or other disposition of Property no longer used
or useful in the conduct of its business; or

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<PAGE> 38
Section 7.08. Stock of Subsidiaries. Etc. Sell or otherwise dispose
of any shares of capital stock of any of its Subsidiaries, or permit any such
Subsidiary to issue any additional shares of its capital stock, except
directors, qualifying shares.

Section 7.09. Transactions with Affiliates. Enter, or permit any
Subsidiary enter, into any transaction, including, without limitation, the
purchase, sale or exchange of Property or the rendering of any service, with
any Affiliate, including, without limitation, the purchase, sale or exchange of
Property or the rendering of any service, with any Affiliate, except in the
ordinary course of and pursuant to the reasonable requirements of the JLM
Industries's or such Subsidiary's business and upon fair and reasonable terms
no less favorable to JLM Industries's or such Subsidiary than would obtain in a
comparable arm's length transaction with a Person not an Affiliate.

Section 7.10. Mergers, Etc. Merge or consolidate with, or sell,
assign, lease or otherwise dispose of (whether in one transaction or in a
series of transactions) all or substantially all of its assets (whether now
owned or hereafter acquired) to, any Person, or acquire all or substantially
all of the assets or the business of any Person (or enter into any agreement to
do any of the foregoing), or permit any of its Subsidiaries to do so, except
that any obligor may merge into or consolidate with or transfer assets to any
other Obligor.

Section 7.11. Acquisitions. Make, or permit any of its Subsidiaries,
to make any Acquisition without the prior written approval of the Bank.

Section 7.12. No Activities Leading to Forfeiture. Engage in or
propose to be engaged in, or permit any of its Subsidiaries to engage in or
propose to be engaged in, the conduct of any business or activity which could
result in a Forfeiture Proceeding.

Section 7.13. Restrictions. Enter into, or suffer to exist, or
permit any of its Subsidiaries to enter into, or suffer to exist, any agreement
with any Person other than the Bank that (a) prohibits, requires the consent of
such Person for or limits the ability of (i) any JLM Entity to pay dividends or
make other distributions or pay Debt owed to any other JLM Entity, make loans
or advances to any other JLM Entity or transfer any of its Property which
constitutes Collateral to any other JLM Entity, (ii) any JLM Entity to create,
incur, assume or suffer to exist any Lien upon any of its Property or revenues
which constitutes Collateral, whether now owned or hereafter acquired, or (iii)
any Obligor to enter into any modification or supplement of the Facility
Documents; or (b) contains financial covenants which, taken as a whole, are
more restrictive on the JLM Entities than the financial covenants contained in
Article 8.

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ARTICLE 8. FINANCIAL COVENANTS.

So long as any Note shall remain unpaid, any Letter of Credit
Obligation shall remain outstanding or the Bank shall have any Revolving Credit
Commitment under this Agreement:

Section 8.01. Net Income. (a) JLM Industries shall maintain (i) as
determined as of the end of each fiscal quarter of the JLM Entities,
Consolidated Net Income of not less than $300,000 for the two most recently
ended fiscal quarters and (ii) as determined as of the end of each fiscal year
of the JLM Entities, (A) Consolidated Net Income of not less than $600,000 for
the fiscal years ending on December 31, 1994 and December 31, 1995 and (B)
Consolidated Net Income of not less than $750,000 for each fiscal year ending
thereafter.

(b) JLM Marketing shall maintain (i) as determined as of the end of
each fiscal quarter of the JLM Entities, net income of not less than $150,000
for the two most recently ended fiscal quarters and (ii) as determined as of
the end of each fiscal year of the JLM Entities, (A) net income of not less
than $300,000 for the fiscal years ending on December 31, 1994 and December 31,
1995 and (B) net income of not less than $450,000 for each fiscal year ending
thereafter.

Section 8.02. Minimum Tangible Net Worth. JLM Industries shall
maintain, as determined as of the end of each fiscal year of the JLM Entities,
Consolidated Tangible Net Worth of not less than (a) $6,000,000 on the Closing
Date, (b) $6,600,000 at December 31, 1994, (c) $7,200,000 at December 31, 1995
and (d) at each December 31 thereafter, $750,000 more than at December 31 of
the previous year.

SECTION 8.03. Leverage Ratio. JLM Industries shall maintain, as
determined as of the end of each fiscal quarter of the JLM Entities, a Leverage
Ratio of not greater than 6.00 to 1.00.

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<PAGE> 40

Section 8.04. Cash Flow Ratio. (a) JLM Terminals shall maintain, as
determined as of the end of each fiscal year of the JLM Entities, a
Consolidated Cash Flow Ratio of not less than (i) 1.50 to 1.00 for the fiscal
year ending on December 31, 1994 and (ii) 1.25 to 1.00 for each fiscal year
ending thereafter.

(b) JLM Industries shall maintain, as determined as of the end of
each fiscal year of the JLM Entities, a Cash Flow Ratio of not less than 1.50
to 1.00 for each fiscal year ending on or after the Closing Date.

ARTICLE 9. EVENTS OF DEFAULT.

Section 9.01. Events of Default. Any of the following events shall
be an "Event of Default":

(a) any Obligor shall: (i) fail to pay the principal of any Note when
due; (ii) fail to pay any Reimbursement Obligation when due; or (iii) fail to
pay interest on any Note or any fee or other amount due hereunder or under any
other Facility Document when due;

(b) any representation or warranty made or deemed made by any JLM
Entity in this Agreement or in any other Facility Document or which is
contained in any certificate, document, opinion, financial or other statement
furnished at any time under or in connection with any Facility Document shall
prove to have been incorrect in any material respect on or as of the date made
or deemed made;

(c) any JLM Domestic Entity shall: (i) fail to perform or observe any
term, covenant or agreement contained in Section 2.03 or Articles 7 or 8; or
(ii) fail to perform or observe any term, covenant or agreement on its part to
be performed or observed (other than the obligations specifically referred to
elsewhere in this Section 9.01) in any Facility Document and such failure shall
continue for 30 consecutive days;

(d) any JLM Entity shall: (i) fail to pay any other indebtedness when
due, including but not limited to material indebtedness for borrowed money
(excluding the payment obligations described in (a) above), or any interest or
premium thereon, when due (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise); or (ii) fail to perform or observe any
term, covenant or condition on its part to be performed or observed under any
agreement or instrument relating to any such indebtedness, when required to be
performed or observed, if the effect of such failure to perform or observe is
to accelerate, or to permit the acceleration of, after the giving of notice or
passage of time, or both, the maturity of such indebtedness, whether or not
such failure to perform or observe shall be waived by the holder of such
indebtedness; or any such indebtedness shall be declared to be due and payable,
or required to be prepaid (other

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<PAGE> 41
than by a regularly scheduled required prepayment), prior to the stated
maturity thereof;

(e) any JLM Entity: (i) shall generally not, or be unable to, or shall
admit in writing its inability to, pay its debts as such debts become due; or
(ii) shall make an assignment for the benefit of creditors, petition or apply
to any tribunal for the appointment of a custodian, receiver or trustee for it
or a substantial part of its assets; or (iii) shall commence any proceeding
under any bankruptcy, reorganization, arrangement, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction, whether now or
hereafter in effect; or (iv) shall have had any such petition or application
filed or any such proceeding shall have been commenced, against it, in which an
adjudication or appointment is made or order for relief is entered, or which
petition, application or proceeding remains undismissed for a period of 30 days
or more; or shall be the subject of any proceeding under which its assets may
be subject to seizure, forfeiture or divestiture (other than a proceeding in
respect of a Lien permitted under Section 7.03(b)); or (v) by any act or
omission shall indicate its consent to, approval of or acquiescence in any such
petition, application or proceeding or order for relief or the appointment of a
custodian, receiver or trustee for all or any substantial part of its Property;
or (vi) shall suffer any such custodianship, receivership or trusteeship to
continue undischarged for a period of 30 days or more;

(f) one or more final judgments, decrees or orders for the payment of
money in excess of $100,000 in the aggregate shall be rendered against any JLM
Entity and such judgments, decrees or orders shall continue unsatisfied and in
effect for a period of 30 consecutive days without being vacated, discharged,
satisfied or stayed or bonded pending appeal;

(g) any event or condition shall occur or exist with respect to any
Plan or Multiemployer Plan concerning which any JLM Entity is under an
obligation to furnish a report to the Bank in accordance with Section 6.08(h)
hereof and as a result of such event or condition, together with all other such
events or conditions, such JLM Entity has incurred or in the opinion of the
Banks is reasonably likely to incur a liability to a Plan, a Multiemployer
Plan, the PBGC, or a Section 4042 Trustee (or any combination of the foregoing)
which is material in relation to the financial position of the JLM Entities;
provided, however, that any such amount shall not be deemed to be material so
long as all such amounts do not exceed $100,000 in the aggregate during the
term of this Agreement;

(h) The Unfunded Benefit Liabilities of one or more Plans have
increased after the date of this Agreement in an amount which is material (as
specified in Section 6.08(g) hereof);

(i) (i) any Person or two or more Persons acting in concert shall have
acquired beneficial ownership (within the

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<PAGE> 42
meaning of Rules 13d-3 of the Securities and Exchange Commission under the
Securities Exchange Act of 1934) of 25% or more of the outstanding shares of
voting stock of JLM Industries; and (ii) during any period of 12 consecutive
months, commencing before or after the date of this Agreement, individuals who
at the beginning of such 12-month period were directors of the JLM Industries
cease for any reason to constitute a majority of the board of directors of JLM
Industries;

(j) any Forfeiture Proceeding shall have been commenced or any JLM
Entity shall have given the Bank written notice of the commencement of any
Forfeiture Proceeding as provided in Section 6.08(h); or

(k) any of the Security Documents shall at any time after its
execution and delivery and for any reason cease: (i) to create a valid and
perfected first priority security interest in and to the Collateral; or (ii) to
be in full force and effect or shall be declared null and void, or the validity
or enforceability thereof shall be contested by any Obligor or any Obligor
shall deny it has any further liability or obligation under the Security
Documents or any Obligor shall fail to perform any of its obligations
thereunder.

Section 9.02. Remedies. If any Event of Default shall occur and be
continuing, the Bank may, by written notice to the JLM Domestic Entities, (a)
declare the Revolving Credit Commitment to be terminated, whereupon the same
shall forthwith terminate and so shall the obligations of the Bank to issue any
Letter of Credit, (b) declare the outstanding principal of the Notes, all
interest thereon and all other amounts payable under this Agreement, the Notes
and the other Facility Documents to be forthwith due and payable, whereupon the
Notes, all such interest and all such amounts shall become and be forthwith due
and payable, without presentment, demand, protest or further notice of any
kind, all of which are hereby expressly waived by the JLM Domestic Entities
and/or (c) direct JLM Marketing to pay to the Bank an amount, to be held as
cash security in the cash collateral account held by the Bank under Section
3.07, equal to the Letter of Credit Obligations then outstanding; provided
that, in the case of an Event of Default referred to in Section 9.01(e) or
Section 9.01(i)(i) above, the Revolving Credit Commitment shall be immediately
terminated, and the Notes, the Letter of Credit Obligations, all interest
thereon and all other amounts payable under this Agreement shall be immediately
due and payable without notice, presentment, demand, protest or other
formalities of any kind, all of which are hereby expressly waived by the JLM
Domestic Entities.

ARTICLE 10. GUARANTY OF JLM DOMESTIC ENTITIES.

Section 10.01. Guarantied Obligations. Each of the JLM Domestic
Entities, jointly and severally, in consideration of the execution and delivery
of this Agreement by the Bank, hereby irrevocably and unconditionally
guarantees to the Bank, as and for

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<PAGE> 43
such JLM Domestic Entity's own debt, until final payment has been made:

(a) the due and punctual payment of the principal of, and interest on,
the Notes and the Letter of Credit Obligations at any time outstanding and the
due and punctual payment of all other amounts payable, and all other
indebtedness owing, by each of the Obligors under each of the Facility
Documents to which it is a party (all such obligations so guarantied are herein
collectively referred to as the "Guarantied Obligations"), in each case when
and as the same shall become due and payable, whether at maturity, pursuant to
mandatory or optional prepayment, by acceleration or otherwise, all in
accordance with the terms and provisions hereof and thereof, it being the
intent of the JLM Domestic Entities that the guaranty set forth in this Section
10.01 (the "Unconditional Guaranty") shall be a guaranty of payment and not a
guaranty of collection; and

(b) the punctual and faithful performance, keeping, observance, and
fulfillment by each of the Obligors of all duties, agreements, covenants and
obligations of such Obligor contained in each of the Facility Documents to
which it is a party.

Section 10.02. Performance Under This Agreement. In the event any
Obligor fails to make, on or before the due date thereof, any payment of the
principal of, or interest on, the Notes, the Letter of Credit Obligations or of
any other amounts payable, or any other indebtedness owing, under any of the
Facility Documents or if any Obliger shall fail to perform, keep, observe, or
fulfill any other obligation referred to in clause (a) or clause (b) of Section
10.01 hereof in the manner provided in the Notes, the Letters of Credit or in
any of the other Facility Documents, the JLM Domestic Entities shall cause
forthwith to be paid the moneys, or to be performed, kept, observed, or
fulfilled each of such obligations, in respect of which such failure has
occurred.

Section 10.03. Waivers. To the fullest extent permitted by law, each
of the JLM Domestic Entities does hereby waive:

(a) notice of acceptance of the Unconditional Guaranty;

(b) notice of any borrowings under this Agreement, or the creation,
existence or acquisition of any of the Guarantied Obligations, subject to such
JLM Domestic Entity's right to make inquiry of the Bank to ascertain the amount
of the Guarantied Obligations at any reasonable time;

(c) notice of the amount of the Guarantied Obligations, subject to
such JLM Domestic Entity's right to make inquiry of the Bank to ascertain the
amount of the Guarantied Obligations at any reasonable time;

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<PAGE> 44

(d) notice of adverse change in the financial condition of any other
Obligor or any other fact that might increase such JLM Domestic Entity's risk
hereunder;

(e) notice of presentment for payment, demand, protest, and notice
thereof as to the Notes, the Letters of Credit or any other instrument;

(f) notice of any Default or Event of Default;

(g) all other notices and demands to which such JLM Domestic Entity
might otherwise be entitled (except if such notice or demand is specifically
otherwise required to be given to such JLM Domestic Entity hereunder or under
the other Facility Documents);

(h) the right by statute or otherwise to require the Bank to institute
suit against any other Obligor or to exhaust the rights and remedies of the
Bank against any other Obligor, such JLM Domestic Entity being bound to the
payment of each and al' Guarantied Obligations, whether now existing or
hereafter accruing, as fully as if such Guarantied Obligations were directly
owing to the Bank by such JLM Domestic Entity;

(i) any defense arising by reason of any disability or other defense
(other than the defense that the Guarantied Obligations shall have been fully
and finally performed and indefeasibly paid) of any other Obligor or by reason
of the cessation from any cause whatsoever of the liability of any other
Obligor in respect thereof;

(j) any stay (except in connection with a pending appeal), valuation,
appraisal, redemption or extension law now or at any time hereafter in force
which, but for this waiver, might be applicable to any sale of Property of such
JLM Domestic Entity made under any judgment, order or decree based on this
Agreement, and such JLM Domestic Entity covenants that it will not at any time
insist upon or plead, or in any manner claim or take the benefit or advantage
of such law; and

(k) any claim of any nature arising out of any right of indemnity,
contribution, reimbursement or any similar right, or any claim of subrogation
arising, in respect of any payment made under the Unconditional Guaranty or in
connection with the Unconditional Guaranty, against any other Obligor or the
estate of such other Obligor (including, without limitation, Liens on the
Property of such other Obligor or the estate of such other Obligor), in each
case if, but only if, and for so long as, such other Obligor is the subject of
any proceeding brought under the Federal Bankruptcy Code or under the
applicable bankruptcy laws of any appropriate jurisdiction, whether now or
hereafter in effect, and further agrees that such JLM Domestic Entity will not
file any claims against such other Obligor or the estate of such other Obligor
in the course of any such proceeding in respect of the rights referred

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<PAGE> 45

to in this clause (k) and further agrees that the Bank may specifically enforce
the provisions of this clause (k)

Until all of the Guarantied Obligations shall have been paid in full, none of
the JLM Domestic Entities shall have any right of subrogation, reimbursement,
or indemnity whatsoever in respect thereof and no right of recourse to or with
respect to any assets or Property of any other Obligor. Nothing shall discharge
or satisfy the obligations of the JLM Domestic Entities hereunder except the
full and final performance and indefeasible payment of the Guarantied
Obligations by the JLM Domestic Entities, upon which the Bank agrees to
transfer and assign its interest in the Notes to the JLM Domestic Entities
without recourse, representation or warranty of any kind (other than that the
Bank owns such Notes and that such Notes are free of Liens created by such
holder). All of the Guarantied Obligations shall in the manner and subject to
the limitations provided herein for the acceleration of, the Notes and the
Letter of Credit Obligations, forthwith become due and payable without notice.

Section 10.04. Releases. Each of the JLM Domestic Entities consents
and agrees that, without notice to or by such JLM Domestic Entity and without
affecting or impairing the obligations of such JLM Domestic Entity hereunder,
the Bank, in the manner provided herein, by action or inaction, may:

(a) compromise or settle, extend the period of duration or the time
for the payment, or discharge the performance of, or may refuse to, or
otherwise not, enforce, or may, by action or inaction, release all or any one
or more parties to, any one or more of the Notes, the Letters of Credit or the
other Facility Documents;

(b) grant other indulgences to any other Obligor in respect thereof;

(c) amend or modify in any manner and at any time (or from time to
time) any one or more of the Notes, the Letters of Credit and the other
Facility Documents in accordance with Section 12.01 or otherwise;

(d) release or substitute any one or more of the endorsers or
guarantors of the Guaranteed Obligations whether parties hereto or not; and

(e) exchange, enforce, waive, or release, by action or inaction, any
security for the Guarantied Obligations (including, without limitation, any of
the collateral therefor) or any other guaranty of any of the Notes or the Letter
of Credit Obligations.

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Section 10.05. Marshaling. Each of the JLM Domestic Entities consents
and agrees that:

(a) the Bank shall be under no obligation to marshal any assets in
favor of such JLM Domestic Entity or against or in payment of any or all of the
Guarantied Obligations; and

(b) to the extent any other Obligor makes a payment or payments to the
Bank, which payment or payments or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside, or required,
for any of the foregoing reasons or for any other reason, to be repaid or paid
over to a custodian, trustee, receiver, or any other party under any bankruptcy
law, common law, or equitable cause, then to the extent of such payment or
repayment, the obligation or part thereof intended to be satisfied thereby
shall be revived and continued in full force and effect as if said payment or
payments had not been made and such JLM Domestic Entity shall be primarily
liable for such obligation.

Section 10.06. Liability. Each of the JLM Domestic Entities agrees
that the liability of such JLM Domestic Entity in respect of this Article 10
shall not be contingent upon the exercise or enforcement by the Bank of
whatever remedies the Bank may have against any other Obligor or the
enforcement of any Lien or realization upon any security the Bank may at any
time possess.

Section 10.07. Primary Obligation. The Unconditional Guaranty set
forth in this Article 10 is a primary and original obligation of each of the
JLM Domestic Entities and an absolute, unconditional, continuing and
irrevocable guaranty of payment and performance and shall remain in full force
and effect until the full and final payment of the Guarantied Obligations
without respect to future changes in conditions, including change of law or any
invalidity or irregularity with respect to the issuance or assumption of any
obligations (including, without limitation, the Notes and the Letter of Credit
Obligations) of or by any other Obligor, or with respect to the execution and
delivery of any agreement (including, without limitation, the Notes and the
other Facility Documents) of any other Obligor.

Section 10.08 Election to Perform Obligations. Any election by any of
the JLM Domestic Entities to pay or otherwise perform any of the obligations of
any other Obligor under the Notes or under any of the other Facility Documents,
whether pursuant to this Article 10 or otherwise, shall not release such other
Obligor from such obligations or any of its other obligations under the Notes
or under any of the other Facility Documents.

Section 10.09. No Election. The Bank shall have the right to seek
recourse against any one or more of the JLM Domestic Entities to the fullest
extent provided for herein for such JLM Domestic Entity's obligations under
this Agreement (including, without limitation, this Article 10) in respect of
the Notes. No election

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<PAGE> 47

to proceed in one form of action or proceeding, or against any party, or on any
obligation, shall constitute a waiver of the Bank's right to proceed in any
other form of action or proceeding or against other parties unless such holder
has expressly waived such right in writing. Specifically, but without limiting
the generality of the foregoing, no action or proceeding by the Bank against
any other Obligor under any document or instrument evidencing obligations of
such other Obligor to the Bank shall serve to diminish the liability of any of
the JLM Domestic Entities under this Agreement (including, without limitation,
this Article 10) except to the extent that the Bank finally and unconditionally
shall have realized payment by such action or proceeding, notwithstanding the
effect of any such action or proceeding upon any JLM Domestic Entity's right of
subrogation against any other Obligor.

Section 10.10. Severability. Subject to Article 9 hereof and applicable
law, each of the rights and remedies granted under this Article 10 to the Bank
may be exercised by the Bank without notice by the Bank to, or the consent of
or any other action by, the Bank.

Section 10.11. Other Enforcement Rights. The Bank may proceed, as
provided in Article 10 hereof, to protect and enforce the Unconditional
Guaranty by suit or suits or proceedings in equity, at law or in bankruptcy,
and whether for the specific performance of any covenant or agreement contained
herein (including, without limitation, in this Article 10) or in execution or
aid of any power herein granted; or for the recovery of judgment for the
obligations hereby guarantied or for the enforcement of any other proper, legal
or equitable remedy available under applicable law. The Bank shall have, to the
fullest extent permitted by law and this Agreement, a right of set-off against,
any and all credits and any and all other Property of any JLM Domestic Entity,
now or at any time whatsoever with, or in the possession of, such holder, or
anyone acting for such holder, as security for any and all obligations of the
JLM Domestic Entities hereunder and such Lien shall be deemed permitted for all
purposes under Article 7 hereof.

Section 10.12. Delay or Omission: No Waiver. No course of dealing on
the part of the Bank and no delay or failure on the part of any such Person to
exercise any right hereunder (including, without limitation, this Article 10)
shall impair such right or operate as a waiver of such right or otherwise
prejudice such Person's rights, powers and remedies hereunder. Every right and
remedy given by the Unconditional Guaranty or by law to the Bank may be
exercised from time to time as often as may be deemed expedient by such Person.

Section 10.13. Restoration of Rights and Remedies. If the Bank shall
have instituted any proceeding to enforce any right or remedy under the
Unconditional Guaranty, under any Note held by the Bank, or under any Security
Document, and such proceeding shall have been discontinued or abandoned for any
reason, or shall have been determined adversely to the Bank, then and in every
such case

42
<PAGE> 48

the Bank and each JLM Domestic Entity shall, except as may be limited or
affected by any determination in such proceeding, be restored severally and
respectively to its respective former positions hereunder and thereunder, and
thereafter, subject as aforesaid, the rights and remedies of the Bank shall
continue as though no such proceeding had been instituted.

Section 10.14. Cumulative Remedies. No remedy under this Agreement
(including, without limitation, this Article 10), the Notes or any of the other
Facility Documents is intended to be exclusive of any other remedy, but each
and every remedy shall be cumulative and in addition to any and every other
remedy given hereunder this Agreement (including, without limitation, this
Article 10), under the Notes, the Letters of Credit or under any of the other
Facility Documents.

Section 10.15. Survival. So long as the Guarantied Obligations shall
not have been fully and finally performed and indefeasibly paid, the
obligations of the JLM Domestic Entities under this Article 10 shall survive
the transfer and payment of any Note or Letter of Credit Obligation and the
payment in full of all the Notes and the Letter of Credit Obligations and the
expiration and termination of the Revolving Credit Commitment.

ARTICLE 11. GUARANTY OF MACDONALD.

Section 11.01. Guarantied obligations. MacDonald, in consideration of
the execution and delivery of this Agreement by the Bank, hereby irrevocably
and unconditionally guarantees to the Bank, as and for his own debt, until
final payment has been made:

(a) the due and punctual payment of the principal of, and interest on,
the North Carolina Term Note at any time outstanding and the due and punctual
payment of all other amounts payable, and all other indebtedness owing, by JLM
Terminals with respect to the North Carolina Term Loan (all such obligations so
guarantied are herein collectively referred to as the ''MacDonald Guarantied
Obligations"), in each case when and as the same shall become due and payable,
whether at maturity, pursuant to mandatory or optional prepayment, by
acceleration or otherwise, all in accordance with the terms and provisions
hereof and thereof, it being the intent of MacDonald that the guaranty set
forth in this Section 11.01 (the "Limited Guaranty") shall be a guaranty of
payment and not a guaranty of collection; and

(b) the punctual and faithful performance, keeping, observance, and
fulfillment by JLM Terminals of all duties, agreements, covenants and
obligations of JLM Terminals with respect to the North Carolina Term Loan.

Section 11.02. Performance Under This Agreement. In the event any
Obligor fails to make, on or before the due date thereof, any payment of the
principal of, or interest on, the North Carolina Term Note or of any other
amounts payable, or any other

43
<PAGE> 49

indebtedness owing, with respect to the North Carolina Term Loan or if any
Obligor shall fail to perform, keep, observe, or fulfill any other obligation
referred to in clause (a) or clause (b) of Section 11.01 hereof in the manner
provided in the North Carolina Term Note or in any other Facility Document
evidencing or securing the North Carolina Term Loan, MacDonald shall cause
forthwith to be paid the moneys, or to be performed, kept, observed, or
fulfilled each of such obligations, in respect of which such failure has
occurred.

SECTION 11.03. LIMITED GUARANTY. NOTWITHSTANDING ANYTHING TO THE
CONTRARY CONTAINED HEREIN, MACDONALD'S OBLIGATIONS UNDER THIS AGREEMENT ARE
LIMITED TO $250,000.

Section 11.04. Waivers. To the fullest extent permitted by law,
MacDonald does hereby waive:

(a) notice of acceptance of the Limited Guaranty;

(b) notice of any borrowings under this Agreement, or the creation,
existence or acquisition of any of the MacDonald Guarantied Obligations,
subject to MacDonald's right to make inquiry of the Bank to ascertain the
amount of the MacDonald Guarantied Obligations at any reasonable time;

(c) notice of the amount of the MacDonald Guarantied Obligations,
subject to MacDonald's right to make inquiry of the Bank to ascertain the
amount of the MacDonald Guarantied Obligations at any reasonable time;

(d) notice of adverse change in the financial condition of any Obligor
or any other fact that might increase MacDonald's risk hereunder;

(e) notice of presentment for payment, demand, protest, and notice
thereof as to the North Carolina Term Note;

(f) notice of any Default or Event of Default;

(g) all other notices and demands to which MacDonald might otherwise
be entitled (except if such notice or demand is specifically otherwise required
to be given to MacDonald hereunder or under the other Facility Documents);

(h) the right by statute or otherwise to require the Bank to institute
suit against any Obligor or to exhaust the rights and remedies of the Bank
against any Obligor, MacDonald being bound to the payment of each and all
MacDonald Guarantied Obligations, whether now existing or hereafter accruing,
as fully as if such MacDonald Guarantied Obligations were directly owing to the
Bank by MacDonald;

(i) any defense arising by reason of any disability or other defense
(other than the defense that the MacDonald Guarantied Obligations shall have
been fully and finally performed and

44
<PAGE> 50

indefeasibly paid) of any Obligor or by reason of the cessation from any cause
whatsoever of the liability of any Obligor in respect thereof;

(j) any stay (except in connection with a pending appeal), valuation,
appraisal, redemption or extension law now or at any time hereafter in force
which, but for this waiver, might be applicable to any sale of Property of
MacDonald made under any judgment, order or decree based on this Agreement, and
MacDonald covenants that he will not at any time insist upon or plead, or in
any manner claim or take the benefit or advantage of such law; and

(k) any claim of any nature arising out of any right of indemnity,
contribution, reimbursement or any similar right, or any claim of subrogation
arising, in respect of any payment made under the Limited Guaranty or in
connection with the Limited Guaranty, against any Obligor or the estate of such
Obligor (including, without limitation, Liens on the Property of such Obligor
or the estate of such Obligor), in each case if, but only if, and for so long
as, such Obligor is the subject of any proceeding brought under the Federal
Bankruptcy Code or under the applicable bankruptcy laws of any appropriate
jurisdiction, whether now or hereafter in effect, and further agrees that
MacDonald will not file any claims against such Obligor or the estate of such
Obligor in the course of any such proceeding in respect of the rights referred
to in this clause (k), and further agrees that the Bank may specifically
enforce the provisions of this clause (k).

Until all of the MacDonald Guarantied Obligations shall have been paid in full,
MacDonald shall not have any right of subrogation, reimbursement, or indemnity
whatsoever in respect thereof and no right of recourse to or with respect to
any assets or Property of any Obligor. Nothing shall discharge or satisfy the
obligations of MacDonald hereunder except the full and final performance and
indefeasible payment of the MacDonald Guarantied Obligations by MacDonald or
any Obligor, upon which the Bank agrees to transfer and assign its interest in
the North Carolina Term Note to MacDonald without recourse, representation or
warranty of any kind (other than that the Bank owns such Note and that such
Note is free of Liens created by such holder). All of the MacDonald Guarantied
Obligations shall in the manner and subject to the limitations provided herein
for the acceleration of, the North Carolina Term Note, forthwith become due and
payable without notice.

Section 11.05. Releases. MacDonald consents and agrees that, without
notice to or by MacDonald and without affecting or impairing the obligations of
MacDonald hereunder, the Bank, in the manner provided herein, by action or
inaction, may:

45
<PAGE> 51

more of the North Carolina Term Note or the other Facility Documents evidencing
or securing the North Carolina Term Loan;

(b) grant other indulgences to any other Obligor in respect thereof;

(c) amend or modify in any manner and at any time (or from time to
time) any one or more of North Carolina Term Note or the other Facility
Documents evidencing or securing the North Carolina Term Loan in accordance
with Section 12.01 or otherwise;

(d) release or substitute any one or more of the endorsers or
guarantors of the Guaranteed Obligations whether parties hereto or not; and

(e) exchange, enforce, waive, or release, by action or inaction, any
security for the MacDonald Guarantied obligations (including, without
limitation, any of the collateral therefor) or any other guaranty of the North
Carolina Term Note.

Section 11.06. Marshaling. MacDonald consents and agrees that:

(a) the Bank shall be under no obligation to marshal any assets in
favor of MacDonald or against or in payment of any or all of the MacDonald
Guarantied Obligations; and

(b) to the extent any Obligor makes a payment or payments to the Bank,
which payment or payments or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside, or required, for any of
the foregoing reasons or for any other reason, to be repaid or paid over to a
custodian, trustee, receiver, or any other party under any bankruptcy law,
common law, or equitable cause, then to the extent of such payment or
repayment, the obligation or part thereof intended to be satisfied thereby
shall be revived and continued in full force and effect as if said payment or
payments had not been made and MacDonald shall be primarily liable for such
obligation.

Section 11.07. Liability. MacDonald agrees that the liability of
MacDonald in respect of this Article 11 shall not be contingent upon the
exercise or enforcement by the Bank of whatever remedies the Bank may have
against any other Obligor or the enforcement of any Lien or realization upon
any security the Bank may at any time possess.

Section 11.08. Primary obligation. The Limited Guaranty set forth in
this Article 11 is a primary and original obligation of each of the JLM
Domestic Entities and an absolute, unconditional, continuing and irrevocable
guaranty of payment and performance and shall remain in full force and effect
until the full and final payment of the MacDonald Guarantied Obligations
without respect to future changes in conditions, including change of law or any
invalidity or irregularity with respect to the issuance or

46
<PAGE> 52

assumption of any obligations (including, without limitation, the North
Carolina Term Note) of or by any Obligor, or with respect to the execution and
delivery of any agreement (including, without limitation, the North Carolina
Term Note and the other Facility Documents evidencing or securing the North
Carolina Term Loan) of any Obligor.

Section 11.09. Election to Perform obligations. Any election by
MacDonald to pay or otherwise perform any of the obligations of any Obligor
under the North Carolina Term Note or under any of the other Facility Documents
evidencing or securing the North Carolina Term Loan, whether pursuant to this
Article II or otherwise, shall not release such Obligor from such obligations
or any of its other obligations under the North Carolina Term Note or under any
of the other Facility Documents evidencing or securing the North Carolina Term
Loan.

Section 11.10. No Election. The Bank shall have the right to seek
recourse against any MacDonald to the fullest extent provided for herein for
MacDonald's obligations under this Agreement (including, without limitation,
this Article 11) in respect of the North Carolina Term Note. No election to
proceed in one form of action or proceeding, or against any party, or on any
obligation, shall constitute a waiver of the Bank's right to proceed in any
other form of action or proceeding or against other parties unless such holder
has expressly waived such right in writing. Specifically, but without limiting
the generality of the foregoing, no action or proceeding by the Bank against
any Obligor under any document or instrument evidencing obligations of such
Obligor to the Bank shall serve to diminish the liability of MacDonald under
this Agreement (including, without limitation, this Article 11) except to the
extent that the Bank finally and unconditionally shall have realized payment by
such action or proceeding, notwithstanding the effect of any such action or
proceeding upon MacDonald's right of subrogation against any Obligor.

Section 11.11. Severability. Subject to Article 9 hereof and
applicable law, each of the rights and remedies granted under this Article 11
to the Bank may be exercised by the Bank without notice by the Bank to, or the
consent of or any other action by, the Bank.

Section 11.12. Other Enforcement Rights. The Bank may proceed, as
provided in Article 11 hereof, to protect and enforce the Limited Guaranty by
suit or suits or proceedings in equity, at law or in bankruptcy, and whether
for the specific performance of any covenant or agreement contained herein
(including, without limitation, in this Article 11) or in execution or aid of
any power herein granted; or for the recovery of judgment for the obligations
hereby guarantied or for the enforcement of any other proper, legal or
equitable remedy available under applicable law. The Bank shall have, to the
fullest extent permitted by law and this Agreement, a right of set-off against,
any and all credits and any and all other Property of MacDonald, now or at any
time whatsoever with, or in

47
<PAGE> 53

the possession of, such holder, or anyone acting for such holder, as security
for any and all obligations of MacDonald hereunder.

Section 11.13. Delay or Omission No Waiver. No course of dealing on
the part of the Bank and no delay or failure on the part of any such Person to
exercise any right hereunder (including, without limitation, this Article II)
shall impair such right or operate as a waiver of such right or otherwise
prejudice such Person's rights, powers and remedies hereunder. Every right and
remedy given by the Limited Guaranty or by law to the Bank may be exercised
from time to time as often as may be deemed expedient by such Person.

Section 11.14. Restoration of Rights and Remedies. If the Bank shall
have instituted any proceeding to enforce any right or remedy under the Limited
Guaranty, under the North Carolina Term Note, or under any Security Document
securing the North Carolina Term Loan, and such proceeding shall have been
discontinued or abandoned for any reason, or shall have been determined
adversely to the Bank, then and in every such case the Bank and MacDonald
shall, except as may be limited or affected by any determination in such
proceeding, be restored severally and respectively to its respective former
positions hereunder and thereunder, and thereafter, subject as aforesaid, the
rights and remedies of the Bank shall continue as though no such proceeding had
been instituted.

Section 11.15. Cumulative Remedies. No remedy under this Agreement
(including, without limitation, this Article 11), the North Carolina Term Note
or any of the other Facility Documents evidencing or securing the North
Carolina Term Note is intended to be exclusive of any other remedy, but each
and every remedy shall be cumulative and in addition to any and every other
remedy given hereunder this Agreement (including, without limitation, this
Article 11), under the North Carol na Term Note or under any of the other
Facility Documents evidencing or securing the North Carolina Term Note.

Section 11.16. Survival. So long as the MacDonald Guarantied
Obligations shall not have been fully and finally performed and indefeasibly
paid, the obligations of MacDonald under this Article 11 shall survive the
transfer and payment of the North Carolina Term Note and the expiration and
termination of the Revolving Credit Commitment.

ARTICLE 12. MISCELLANEOUS.

Section 12.01. Amendments and Waivers. Except as otherwise expressly
provided in this Agreement, any provision of this Agreement may be amended or
modified only by an instrument in writing signed by the JLM Domestic Entities
and the Bank and any provision of this Agreement may be waived by the JLM
Domestic Entities and the Bank. No failure on the part of the Bank to

48
<PAGE> 54
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof or preclude any other or further exercise thereof or the exercise
of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.

Section 12.02. Usury. Anything herein to the contrary notwithstanding,
the obligations of the JLM Domestic Entities under this Agreement and the Notes
shall be subject to the limitation that payments of interest shall not be
required to the extent that receipt thereof would be contrary to provisions of
law applicable to the Bank limiting rates of interest which may be charged or
collected by the Bank.

Section 12.03. Expenses. The JLM Domestic Entities shall reimburse the
Bank on demand for all reasonable costs, expenses, and charges (including,
without limitation, reasonable fees and charges of external legal counsel for
the Bank) incurred by the Bank in connection with the preparation, performance,
or enforcement of this Agreement, the Notes and the other Facility Documents.
Each of the JLM Domestic Entities agrees to indemnify the Bank and its
directors, officers, employees and agents from, and hold each of them harmless
against, any and all losses, liabilities, claims, damages or expenses incurred
by any of them arising out of or by reason of any investigation or litigation or
other proceedings (including any threatened investigation or litigation or other
proceedings) arising under or relating to the Facility Documents or to any
actual or proposed use by any JLM Entity of the proceeds of the Loans, including
without limitation, the reasonable fees and disbursements of counsel incurred in
connection with any such investigation or litigation or other proceedings (but
excluding any such losses, liabilities, claims, damages or expenses incurred by
reason of the gross negligence or wilful misconduct of the Person to be
indemnified).

Section 12.04. Survival. The obligations of the JLM Domestic
Entities under Section 12.03 shall survive the repayment of the Loans and the
Letters of Credit and the termination of the Revolving Credit Commitment.

SECTION 12.05. Assignment Participations.

(a) This Agreement shall be binding upon, and shall inure to
the benefit of, the JLM Domestic Entities, MacDonald, the Bank and their
respective successors and assigns, except that the JLM Domestic Entities and
MacDonald may not assign or transfer THEIR RIGHTS OR OBLIGATIONS hereunder. The
Bank may, with the prior written consent of the JLM Domestic Entities or
MacDonald, assign, or sell participation in, all or any part of any Loan or its
rights and obligations under the Letters of Credit to another bank or other
entity, in which event (i) in the case of an assignment, upon notice thereof by
the Bank to the JLM Domestic Entities, the assignee shall have, to the extent of
such assignment (unless otherwise provided therein), the same rights, benefits
and

<PAGE> 55

obligations as it would have if it were a Bank hereunder) and (ii) in the case
of a participation, the participant shall have no rights under the Facility
Documents and all amounts payable by the JLM Domestic Entities under Articles 2
and 3 shall be determined as if the Bank had not sold such participation. The
agreement executed by the Bank in favor of the participant shall not give the
participant the right to require the Bank to take or omit to take any action
hereunder except action directly relating to (i) the extension of a payment date
with respect to any portion of the principal of or interest on any amount
outstanding hereunder allocated to such participant, (ii) the reduction of the
principal amount outstanding hereunder or (iii) the reduction of the rate of
interest payable on such amount or any amount of fees payable hereunder to a
rate or amount, as the case may be, below that which the participant is entitled
to receive under its agreement with the Bank. The Bank may furnish any
information concerning any JLM Entity or MacDonald in the possession of the Bank
from time to time to assignees and participants (including prospective assignees
and participants); provided that the Bank shall require any such prospective
assignee or such participant (prospective or otherwise) to agree in writing to
maintain the confidentiality of such information.

(b) In addition to the assignments and participations
permitted under paragraph (a) above, the Bank may assign and pledge all or any
portion of its Loans, its Notes and its rights and obligations under the Letters
of Credit to (i) any affiliate of the Bank or (ii) any Federal Reserve Bank but
only as collateral security pursuant to Regulation A of the Board of Governors
of the Federal Reserve System and any Operating Circular issued by such Federal
Reserve Bank. No such assignment or the exercise of any rights thereunder shall
release the assigning Bank from its obligations hereunder or the relationship
among the JLM Domestic Entities, MacDonald and the Bank.

Section 12.06. Notices. Unless the party to be notified otherwise
notifies the other party in writing as provided in this Section, and except as
otherwise provided in this Agreement, notices shall be given to the Bank, to the
JLM Domestic Entities and to MacDonald by ordinary mail or telecopier addressed
to such party at its address on the signature page of this Agreement. Notices
shall be effective: (a) if given by mail, 72 hours after DEPOSIT IN THE MAILS
with first class postage prepaid, addressed as aforesaid; and (b) if given by
telecopier, when the telecopy is transmitted to the telecopier number as
aforesaid; provided that notices to the Bank shall be effective upon receipt.

Section 12.07. Setoff. Each of the JLM Domestic Entities and MacDonald
agrees that, in addition to (and without limitation of) any right of setoff,
banker's lien or counterclaim the Bank may otherwise have, the Bank shall be
entitled, at its option, to offset balances (general or special, time or demand,
provisional or final) held by it for the account of any JLM Domestic Entity or
MacDonald at any of the Bank's offices, in Dollars or in any other

<PAGE> 56

currency, against any amount payable by the JLM Domestic Entities or MacDonald
to the Bank under this Agreement, the Notes or the Letters of Credit which is
not paid when due (regardless of whether such balances are then due to such JLM
Domestic Entity or the MacDonald), in which case it shall promptly notify the
JLM Domestic Entities and MacDonald thereof; provided that the Bank's failure to
give such notice shall not affect the validity thereof. Payments by the JLM
Domestic Entities and MacDonald hereunder shall be made without setoff or
counterclaim.

SECTION 12.08. JURISDICTION IMMUNITIES. {a) EACH OF THE JLM DOMESTIC
ENTITIES AND MACDONALD HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY
MASSACHUSETTS STATE OR UNITED STATES FEDERAL COURT SITTING IN SUFFOLK COUNTY
OVER ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT. THE
NOTES. THE LETTERS OF CREDIT OR THE OTHER FACILITY DOCUMENTS AND EACH OF THE JLM
DOMESTIC ENTITIES AND MACDONALD HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN
RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH
MASSACHUSETTS STATE OR FEDERAL COURT. EACH OF THE JLM DOMESTIC ENTITIES AND
MACDONALD IRREVOCABLY consents TO THE SERVICE OF ANY AND ALL PROCESS IN ANY SUCH
ACTION OR PROCEEDING BY THE MAILING OF COPIES OF SUCH PROCESS TO SUCH JLM
DOMESTIC ENTITY OR MACDONALD AT ITS ADDRESS SPECIFIED IN SECTION 12.06. EACH OF
THE JLM DOMESTIC ENTITIES AND MACDONALD AGREES THAT A FINAL JUDGMENT IN ANY SUCH
ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY Be ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.
EACH OF THE JLM DOMESTIC ENTITIES AND MACDONALD FURTHER WAIVES ANY OBJECTION TO
VENUE IN SUCH STATE AND ANY OBJECTION TO AN ACTION OR PROCEEDING IN SUCH STATE
ON THE BASIS OF FORUM NON COVENIENS. EACH OF THE JLM DOMESTIC ENTITIES AND
MACDONALD FURTHER AGREES THAT ANY ACTION OR PROCEEDING BROUGHT AGAINST THE BANK
SHALL BE BROUGHT ONLY IN MASSACHUSETTS STATE OR UNITED STATES FEDERAL COURT
SITTING IN SUFFOLK COUNTY. EACH OF THE JLM DOMESTIC ENTITIES AND MACDONALD
WAIVES ANY RIGHT IT MAY HAVE TO JURY TRIAL.

(b) Nothing in this Section 12.08 shall affect the right of
the Bank to serve legal process in any other manner permitted by law or affect
the right of the Bank to bring any action or PROCEEDING AGAINST ANY JLM Domestic
Entity, MacDonald or any of their respective properties in the courts of any
other jurisdictions.

(c) To the extent that any JLM Domestic Entity or MacDonald
has or hereafter may acquire any immunity from jurisdiction of any court or from
any legal process (whether from service or notice, attachment prior to judgment,
attachment in aid of execution, execution or otherwise) with respect to itself
or its property, such JLM Domestic Entity and MacDonald hereby irrevocably
waives such immunity in respect of its obligations under this Agreement, the
Note, the Letters of Credit and the other Facility Documents.

<PAGE> 57

Section 12.09. Table of Contents: Headings. Any table of contents and
the headings and captions hereunder are for convenience only and shall not
affect the interpretation or construction of this Agreement.

Section 12.10. Severability. The provisions of this Agreement are
intended to be severable. If for any reason any provision of this Agreement
shall be held invalid or unenforceable in whole or in part in any jurisdiction,
such provision shall, as to such jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without in any manner affecting the validity
or enforceability thereof in any other jurisdiction or the remaining provisions
hereof in any jurisdiction.

Section 12.11. Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument, and any party hereto may execute this Agreement by signing any
such counterpart.

Section 12.12. Integration. The Facility Documents set forth the entire
agreement among the parties hereto relating to the transactions contemplated
thereby and supersede any prior oral or written statements or agreements with
respect to such transactions.

SECTION 12.13. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
INTERPRETED AND CONSTRUED IN ACCORDANCE WITH. THE LAW OF THE COMMONWEALTH OF
MASSACHUSETTS.

Section 12.14. Confidentiality. The Bank agrees (on behalf of itself
and each of its affiliates, directors, officers, employees and representatives)
to use reasonable precautions to keep confidential, in accordance with safe and
sound banking practices, any non-public information supplied to it by the JLM
Domestic Entities or MacDonald pursuant to this Agreement which is identified by
the JLM Domestic Entities or MacDonald as being confidential at the time the
same is delivered to the Bank, provided that nothing herein shall limit the
disclosure of any such information (i) to the extent required by statute, rule,
regulation or judicial process, (ii) to counsel for the Bank, (iii) to bank
examiners, auditors or accountants, (iv) in connection with any litigation to
which the Bank is a party or (v) to any assignee or PARTICIPANT (or prospective
assignee or participant) so long as such assignee or participant (or prospective
assignee or participant) agrees to use reasonable precautions to keep such
INFORMATION CONFIDENTIAL; and provided finally that in no event shall the Bank
be obligated or required to return any materials furnished by the JLM Domestic
Entities or MacDonald.

Section 12.15. Treatment of Certain Information. Each JLM Domestic
Entity and MacDonald (a) acknowledges that services may be offered or provided
to it (in connection with this Agreement or otherwise) by the Bank or by one or
more of its subsidiaries or affiliates and (b) acknowledges that information
delivered to the

<PAGE> 58

Bank by each JLM Domestic Entity and MacDonald may be provided to each such
subsidiary and affiliate.

[BALANCE OF PAGE LEFT INTENTIONALLY BLANK]

<PAGE> 59

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.

JLM INDUSTRIES, INC.

BY /s/ Frank A. Musto
---------------------
Name: Frank A. Musto
Title:VP & CFO

JLM MARKETING, INC.

BY /s/ Frank A. Musto
---------------------
Name: Frank A. Musto
Title:VP & CFO

JLM TERMINALS, INC.

BY /s/ Frank A. Musto
---------------------
Name: Frank A. Musto
Title:VP & CFO

JLM INTERNATIONAL, INC.

BY /s/ Frank A. Musto
---------------------
Name: Frank A. Musto
Title:VP & CFO

OLEFINS MARKETING, INC.

BY /s/ Frank A. Musto
---------------------
Name: Frank A. Musto
Title:VP & CFO

/s/ John L. MacDonald
-------------------------
John L. MacDonald

Address for Notices:

8675 Hidden Parkway
Tampa, FL 33637
Telecopier No.: (813) 632-3301
Attn: Chief Executive Office

54
<PAGE> 60

BANK:
STATE STREET BANK & TRUST
COMPANY

By /s/ William F. Zola
----------------------
Name: William F. Zola
Title:Assistant Vice President

Address for Notices:

225 Franklin Street
Boston, MA 02110
Telecopier No.: (617) 654-4176
Attention: William F. Zola

[SIGNATURE PAGE TO CREDIT AGREEMENT]

<PAGE> 61
AMENDED AND RESTATED PROMISSORY NOTE

$11,000,000.00 July 19, 1995

FOR VALUE RECEIVED, JLM MARKETING, INC., a Delaware corporation (the
"Maker"), HEREBY PROMISES to pay to the order of STATE STREET BANK AND TRUST
COMPANY (hereinafter called the "Bank"), on the Revolving Credit Termination
Date (as such term is defined in that certain Amended and Restated Credit
Agreement, dated as of July 19, 1995 (the "Credit Agreement"), and all other
capitalized terms which are used herein and not otherwise defined herein shall
have the meanings ascribed to them in the Credit Agreement), the principal sum
of the lesser of (i) Eleven Million Dollars ($11,000,000) or (ii) the
outstanding amount of Revolving Credit Loans; together with interest (computed
on the basis of the actual number of days elapsed over a year of three hundred
sixty (360) days) on the unpaid principal amount thereof outstanding hereunder
from time to time from the date hereof, at a fluctuating interest rate per
annum (the "Interest Rate") equal to the rate of interest announced by the Bank,
in Boston, from time to time as the Bank's prime rate (the "Prime Rate")
payable monthly in arrears, on the 1st day of each calendar month during the
term hereof beginning August 1, 1995 and on the final day when said principal
amounts are paid in full. Each change in the Interest Rate hereunder due to a
<PAGE> 62
change in the Prime Rate shall take effect on the date of change in the Prime
Rate. Any amounts advanced by the Bank with regard to a payment upon a
banker's acceptance, documentary letter of credit or standby letter of credit
shall be payable as a cash advance pursuant to this Note, and subject to the
payment of interest, as of the date such amounts are advanced by the Bank.

Both principal and interest are payable in lawful money of the United
States of America to the Bank at 225 Franklin Street, Boston, Massachusetts
02110 or such other address as the Bank may designate to the Maker; provided,
however, the Bank may charge from time to time such amounts against any account
of the Maker with the Bank.

Anything herein contained to the contrary notwithstanding, the maximum
rate of interest payable in respect of the unpaid principal amount hereof shall
not exceed the maximum rate allowable under such provisions of law, as in
effect from time to time, as is applicable to the indebtedness evidenced hereby
and to the payee or holder thereof.

This Note is the Revolving Credit Note referred to in, and entitled to
the benefits of, the Credit Agreement and is secured by an Amended and Restated
Security Agreement, dated as of June 15, 1994 (the "Security Agreement"), as
more fully described in the Credit Agreement. The prompt payment of this Note
is guaranteed, all as more fully described in the Credit Agreement. The Bank
or any subsequent holder of this Note shall have all of the rights arising
under this Note, the Credit Agreement and the
<PAGE> 63
Security Agreement hereinbefore referred to. The Credit Agreement and the
Security Agreement grant to the Bank certain security interests in property of
the Maker and the Guarantors, and the Bank or any subsequent holder of this
Note shall, in addition to all other rights, be entitled to all the rights of a
secured party under the Massachusetts Uniform Commercial Code.

Upon the occurrence of any Event of Default specified in said Credit
Agreement or Security Agreement, the principal of this Note, premium if any,
principal amount of outstanding banker's acceptance, documentary letters of
credit and standby letters of credit, fees with respect to such amounts and the
interest and penalties accrued thereon may be declared forthwith due and
payable as provided in said Credit Agreement.

Notwithstanding anything to the contrary herein, principal and interest
hereunder shall be payable in the manner set forth in the Credit Agreement and
the Security Agreement.

If any required payment of principal, premium, if any, fees or
interest, or any part thereof, be not paid when due the same shall bear
interest at the rate per annum equal to the Prime Rate plus two (2) percentage
points until paid (computed on the basis of the actual number of days elapsed
over a year of three hundred sixty (360) days). In addition, the Bank may
collect, and the Maker agrees to pay, a late charge equal to five percent (5%)
of any principal, fee or interest payment due under this Note if such payment
is not made within ten (10) days of the due date
<PAGE> 64
thereof to defray the extra expense of handling the delinquent payment.

The maker hereby waives presentment for payment, demand, notice of
dishonor and protest and all other demands or notices in connection with the
delivery, performance, default or enforcement of this Note.

The Bank shall have a lien upon the right to set off against all
deposits and property of the Maker now or hereafter in the Bank's possession or
in transit to it.

[BALANCE OF PAGE LEFT BLANK INTENTIONALLY]
<PAGE> 65
This Note shall be governed by and construed and enforced in
accordance with the laws of the Commonwealth of Massachusetts.

JLM MARKETING, INC.

By: /s/ John T. White
----------------------------
Name: John T. White
Title: Vice President
<PAGE> 66
AMENDMENT NO. 1

Dated as of December 30, 1995

This AMENDMENT among JLM INDUSTRIES, INC., a Delaware corporation ("JLM
Industries"), JLM MARKETING, INC., a Delaware corporation ("JLM Marketing"),
JLM TERMINALS, INC., a North Carolina corporation ("JLM Terminals") JLM
INTERNATIONAL, INC., a Delaware corporation ("JLM International"), and OLEFINS
MARKETING, INC., a Delaware corporation ("Olefins Marketing" and together with
JLM Industries, JLM Marketing, JLM Terminals and JLM International,
collectively, the "JLM domestic Entities"); JOHN L. MACDONALD, an individual
residing at 921 Ankorage Rd., Tampa, FL 33602 ("MacDonald"); and STATE STREET
BANK AND TRUST COMPANY, a Massachusetts bank and trust company (the "Bank").

PRELIMINARY STATEMENT.

A. The JLM Domestic Entities, MacDonald and the Bank have entered
into an Amended and Restated Credit Agreement dated as of June 15, 1994 (the
"Credit Agreement"; the capitalized terms defined therein being used herein as
therein defined unless otherwise defined herein).

B. The JLM Domestic Entities, MacDonald and the Bank have agreed to
amend the Credit Agreement and the Revolving Credit Note as hereinafter set
forth.

SECTION 1. Amendments to Credit Agreement. The Credit Agreement is,
effective as of the date hereof and subject to the satisfaction of the
conditions precedent set forth in Section 4 hereof, hereby amended as follows;

(a) The definition of the term "Revolving Credit Commitment"
contained in Section 1.01 of the Credit Agreement is amended and restated in
full to read as follows:

"Commitment" means the obligation of the Bank to make the
Revolving Credit Loans under this Agreement in the
aggregate principal amount of $11,000,000, as such amount
may be reduced or otherwise modified from time to time.

(b) Article 8 is amended and restated in its entirety to read
as follows:

<PAGE> 67

ARTICLE 8. FINANCIAL COVENANTS.

Section 8.01. Net Income, (a) JLM Industries shall maintain
(i) as determined as of the end of each of each fiscal quarter of the
JLM Entities, Consolidated Net Income of not less than $1,000,000 for
the two most recently ended fiscal quarters and (ii) as determined as
of the end of each fiscal year of the JLM Entities, Consolidated Net
Income of not less than $2,000,000 for such fiscal year.

(b) JLM Marketing shall maintain (i) as
determined as of the end of each fiscal quarter of the JLM Entities,
net income of not less than $250,000 for the two most recently ended
fiscal quarters and (ii) as determined as of the end of each fiscal
year of the JLM Entities, net income of not less than $500,000 for
such fiscal year.

Section 8.02. Minimum Tangible Net Worth. JLM Industries
shall maintain, as determined as of the end of each fiscal year of the
JLM Entities, Consolidated Tangible Net Worth of not less than (a)
$11,000,000 at December 31, 1995, and (b) for each fiscal year
thereafter, an amount equal to the minimum required (not actual)
amount for the immediately preceding fiscal year plus $2,000,000

Section 8.03. Leverage Ratio. JLM Industries shall
maintain, as determined as of the end of each fiscal quarter of the JLM
Entities, a Leverage Ratio of not greater than (a) 11.0 to 1.0 for the
fiscal quarter ending December 31, 1995, (b) 9.5 to 1.0 for each
fiscal quarter ending during fiscal year 1996, (c) 7.0 to 1.0 for each
fiscal quarter ending during fiscal year 1997, (d) 5.5 to 1.0 for each
fiscal quarter ending during fiscal year 1998, (e) 4.0 to 1.0 for each
fiscal quarter ending during fiscal year 1999, (f) 3.0 to 1.0 for each
fiscal quarter ending during fiscal year 2000, and (g) 2.0 to 1.0 for
each fiscal quarter ending thereafter.

Section 8.04. Cash Flow Ratio. (a) JLM Terminals shall
maintain, as determined as of the end of each fiscal year of the JLM
Entities, a Consolidated Cash Flow Ratio of not less than 1.25 to 1.00.

(b) JLM Industries shall maintain, as determined
as of the end of each fiscal year of the JLM Entities, a Cash Flow
Ratio of not less than 1.30 to 1.00.

(c) Article 11 of the Credit Agreement is hereby
deleted in its entirety and the words "INTENTIONALLY OMITTED"
substituted therefore. MacDonald is hereby released from all liability
in respect of his guaranty contained in said Article 11

<PAGE> 68
-3-

and shall no longer be an "Obligor" under the Credit Agreement. From and after
the date of effectiveness of this Amendment, any reference in the Credit
Agreement or the other Facility Documents to MacDonald in his capacity as a
guarantor under the Credit Agreement, or to Article 11 of the Credit Agreement
or any of the Sections contained within Article 11, shall be of no further force
and effect.

(d) The form of Revolving Credit Note attached to the Credit Agreement
as Exhibit A1 is hereby replaced with the form of Revolving Credit Note attached
hereto as Exhibit A1.

(e) The form of Borrowing Base Certificate attached to the Credit
Agreement as Exhibit B1 is hereby replaced with the form of Borrowing Base
Certificate attached hereto as Exhibit B1.

SECTION 2. Amendments to Revolving Credit Note. Effective as of the date
hereof and subject to the satisfaction of the conditions precedent set forth in
Section 4 hereof, the Revolving Credit Note shall be amended and restated in its
entirety by an amended and restated promissory note in the form of Exhibit A1
hereto.

SECTION 3. Waiver. Effective as of the date hereof and subject to the
satisfaction of the conditions precedent set forth in Section 4 hereof, the Bank
hereby waives any Default or Event of Default due to the failure to comply with
the covenants contained in Article 8 of the Credit Agreement for the fiscal
quarters ending prior to December 31, 1995.

SECTION 4. Conditions of Effectiveness. This Amendment shall become
effective when, and only when, the Bank shall have received counterparts of this
Amendment executed by the JLM Domestic Entities, MacDonald and the Bank, and
Sections 1, 2 and 3 hereof shall become effective when, and only when, the Bank
shall have additionally received all of the following documents, each document
(unless otherwise indicated) being dated the date of receipt thereof by the Bank
(which date shall be the same for all such documents), in form and substance
satisfactory to the Bank:

(a) The Amended and Restated Promissory Note in the form of Exhibit
A1 hereto.

(b) Certified copies of (i) the resolutions of the Board of Directors of
each JLM Domestic Entity approving this Amendment and the matters contemplated
hereby and (ii) all documents evidencing other necessary corporate action and
governmental approvals, if any, with respect to this Amendment and the matters
contemplated hereby.

<PAGE> 69

-4-

(c) A certificate of the Secretary or an Assistant Secretary of each JLM
Domestic Entity certifying the names and true signatures of the officers of such
JLM Domestic Entity authorized to sign this Amendment and the other documents to
be delivered hereunder.

(d) A consent in the form appended hereto as Annex I (the "Consent"),
executed by JLM Canada.

(e) Certified copies of (i) the resolutions of the Board of Directors of
JLM approving the Consent and the matters contemplated hereby and thereby and
(ii) all documents evidencing other necessary corporate action and governmental
approvals, if any, with respect to the Consent and the matters contemplated
hereby.

(f) A certificate of the Secretary or an Assistant Secretary of JLM
Canada certifying the names and true signatures of the officers of JLM Canada
authorized to sign the Consent.

(g) A favorable opinion of John Tower White, counsel for the JLM
Domestic Entities and MacDonald, to the effect that this Amendment has been duly
authorized, executed and delivered by the JLM Domestic Entities and MacDonald,
and that the amended and restated Revolving Credit Note has been duly
authorized, executed and delivered by JLM Marketing, Inc., and such instruments
constitute the legal, valid and binding obligations of such parties, enforceable
against such parties in accordance with their respective terms, and confirming
the opinion of such counsel furnished on June 15, 1994 pursuant to Section 4.01
(n) of the Credit Agreement, with references therein to the Credit Agreement to
mean the Credit Agreement as amended by this Amendment.

(h) A favorable opinion of Brans, Lehun, Baldwin & Champagne, counsel
for JLM Canada, to the effect that the Consent has been duly authorized,
executed and delivered by JLM Canada and constitutes the legal, valid and
binding obligation of JLM Canada, enforceable against JLM Canada in accordance
with its terms, and confirming the opinion of such counsel furnished on June 15,
1994 pursuant to Section 4.01(n) of the Credit Agreement, with references
therein to the Credit Agreement to mean the Credit Agreement as amended by this
Amendment.

(i) A certificate signed by a duly authorized officer of each JLM
Domestic Entity stating that:

(i) The representations and warranties contained in Section 5 hereof are
correct on and as of the date of such certificate as though made on and
as of such date, and

<PAGE> 70

-5-

(ii) No event has occurred and is continuing which constitutes a Default
or Event of Default.

SECTION 5. Representations and Warranties of the JLM Domestic Entities
and MacDonald. Each of each JLM Domestic Entity and MacDonald represent and
warrant as follows:

(a) Such JLM Domestic Entity is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction indicated at
the beginning of this Amendment.

(b) The execution, delivery and performance by such JLM Domestic
Entity and MacDonald of this Amendment, the amended and restated Revolving
Credit Note and the Facility Documents, as amended hereby, to which it is or is
to be a party are within such JLM Domestic Entity's corporate powers, have been
duly authorized by all necessary corporate action and do not contravene (i) such
JLM Domestic Entity's charter or by-laws, (ii) any law or any contractual
restriction binding on or affecting such JLM Domestic Entity or MacDonald, as
the case may be, or result in, or require, the creation or imposition of any
mortgage, deed of trust, pledge, lien, security interest or other charge,
encumbrance or preferential arrangement of any nature upon or with respect to
any of the properties now owned or hereafter acquired by such JLM Domestic
Entity or MacDonald, as the case may be.

(c) No authorization, approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body is required for the
due execution, delivery and performance by such JLM Domestic Entity or
MacDonald, as the case may be, of this Amendment, the amended and restated
Revolving Credit Note or any of the Facility Documents, as amended hereby, to
which it is or is to be a party.

(d) This Amendment, the amended and restated Revolving Credit Note
and each of the other Facility Documents, as amended hereby, to which such JLM
Domestic Entity or MacDonald, as the case may be, is a party constitute legal,
valid and binding obligations of such JLM Domestic Entity or MacDonald, as the
case may be, enforceable against such JLM Domestic Entity or MacDonald, as the
case may be, in accordance with their respective terms.

(e) The Security Agreement constitutes valid and perfected first
priority Liens in and to the Collateral covered thereby enforceable against all
third parties in all jurisdictions and secure the payment of all obligations of
the JLM Domestic Entities under the Facility Documents, as amended hereby,
including all obligations of JLM Marketing, Inc. under the amended and restated
Revolving Credit Note; and the execution, delivery and performance of this
Amendment do not adversely affect the aforesaid Liens of such Security
Agreement.

<PAGE> 71

-6-

(f) The consolidated and consolidated balance sheets of the JLM Entities
as at December 31, 1994, and the related consolidated and consolidated income
statements and statements of cash flows and changes in stockholders' equity of
the JLM Entities for the fiscal years then ended, copies of which have been
furnished to the Bank, fairly present the financial condition of the JLM
Entities as at such date and the results of the operations of the JLM Entities
for the periods covered by such statements, and since December 31, 1994, there
has been no material adverse change in such condition or operations.

(f) There is no pending or threatened action or proceeding affecting
such JLM Domestic Entity before any court, governmental agency or arbitrator,
which may materially adversely affect the financial condition or operations of
such JLM Domestic Entity or which purport to affect the legality, validity or
enforceability of this Amendment, the amended and restated Revolving Credit Note
or any of the other Facility Documents, as amended hereby.

SECTION 6. Reference to and Effect on the Facility Documents.

(a) Upon the effectiveness of Sections 1, 2 and 3 hereof, on and after
the date hereof each reference in the Credit Agreement to "this Agreement,"
"hereunder," "hereof," "herein" or words of like import, and each reference in
the other Facility Documents to the Credit Agreement, shall mean and be a
reference to the Credit Agreement as amended hereby, and each reference in the
other Facility Documents to the Revolving Credit Note shall mean and be a
reference to the Revolving Credit Note as amended by the delivery of the amended
and restated promissory note in the form of Exhibit Al.

(b) Except as specifically amended above and by the delivery of the
amended and restated promissory note in the form of Exhibit A1, the Credit
Agreement and the Revolving Credit Note, and all other Facility Documents, shall
remain in full force and effect and are hereby ratified and confirmed. Without
limiting the generality of the foregoing, the Security Agreement and all of the
described therein, does and shall continue to secure the payment of all "Secured
Obligations" described therein, as amended hereby.

(c) The execution, delivery and effectiveness of this Amendment shall
not, except as expressly provided herein, operate as a waiver of any right,
power or remedy of the Bank under any of the Facility Documents, nor constitute
a waiver of any provision of any of the Facility Documents.

SECTION 7. Costs. Expenses and Taxes. The JLM Domestic Entities jointly and
severally agree to pay on demand all costs and expenses of the Bank in

<PAGE> 72

-7-

connection with the preparation, execution and delivery of this Amendment, the
Revolving Credit Note and the other instruments and documents to be delivered
hereunder, including, without limitation, the reasonable fees and out-of-pocket
expenses of counsel for the Bank with respect thereto and with respect to
advising the Bank as to its rights and responsibilities hereunder and
thereunder. The JLM Domestic Entities further jointly and severally agree to pay
on demand all costs and expenses, if any (including, without limitation,
reasonable counsel fees and expenses), in connection with the enforcement
(whether through negotiations, legal proceedings or otherwise) of this
Amendment, the Revolving Credit Note and the other instruments and documents to
be delivered hereunder, including, without limitation, reasonable counsel fees
and expenses in connection with the enforcement of rights under this Section 7.
In addition, the JLM Domestic Entities shall pay any and all stamp and other
taxes payable or determined to be payable in connection with the execution and
delivery of this Amendment, the Revolving Credit Note and the other instruments
and documents to be delivered hereunder, and agree to save the Bank harmless
from and against any and all liabilities with respect to or resulting from any
delay in paying or omission to pay such taxes.

SECTION 8. Execution in Counterparts. This Amendment may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which taken together shall constitute but one and the
same instrument.

SECTION 9. Governing Law. This AMENDMENT SHALL be governed by, and
construed in accordance with, the laws of the State of Massachusetts.

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

JLM INDUSTRIES, INC.

By: /s/Frank A. Musto
--------------------
Name: Frank A.Musto
Title: VP & CFO

JLM MARKETING, INC.

By: /s/ Frank A. Musto
--------------------
Name: Frank A. Musto
Title: VP & CFO

<PAGE> 73

-8-

JLM TERMINALS, INC.

By: /s/ Frank A. Musto
--------------------
Name: Frank A. Musto
Title: VP & CFO

JLM INTERNATIONAL, INC.

By: /s/ Frank A. Musto
--------------------
Name: Frank A. Musto
Title: VP & CFO

OLEFINS MARKETING, INC.

By: /s/ Frank A. Musto
-----------------------
Name: Frank A. Musto
Title: VP & CFO

/s/John L. MacDonald
----------------------
John L. MacDonald

STATE STREET BANK AND TRUST
COMPANY

By: /s/ William F. Zola
----------------------
William F. Zola
Vice President
<PAGE> 74
[LOGO STATE STREET BANK] Steven W. Harvey
Vice President

Corporate Banking
225 Franklin Street
Boston, MA 02110-2804

Telephone: (617) 664-3021
Facsimile: (617) 664-4178
[email protected]

June 18, 1997

Mr. Frank A. Musto
Vice President and Treasurer
JLM Industries, Inc.
8675 Hidden River Parkway
Tampa, FL 33637

Dear Frank:

The Amended and Restated Credit Agreement ("Credit Agreement") dated June 15,
1994, as amended from time to time, by and among JLM Industries, Inc., JLM
Marketing, Inc. JLM Terminals, Inc., JLM International, Olefins Marketing,
Inc., John L. Macdonald and State Street Bank and Trust Company ("Bank") has a
Revolving Credit Termination Date (as defined in the Credit Agreement) of May
15, 1997. We are temporarily extending the facility and will forbear from
enforcing the maturity date of the Revolving Credit until July 31, 1997.
Interest payments will continue to be payable as though the Revolving Credit
has not matured.

All of the terms and conditions of the Credit Agreement and Security documents
governing and/or securing the Loan, remain in full force and effect and are
applicable to this letter except to the extent hereby modified. This
forbearance is not a waiver or novation on behalf of the Bank.

If you have any questions, please contact me at (617) 664-3021.

Sincerely,

State Street Bank and Trust Company

/s/ Steven W. Harvey 6/19/97
- ------------------------- -------
By: Steven W. Harvey Date

ACKNOWLEDGED AND AGREED:

Barnett Bank, N.A.

/s/ Lynn Billingsley, SVP 6/24/97
- ------------------------- -------
By: Lynn Billingsley Date
<PAGE> 75
Exhibit 10.19

AMENDMENT NO. 2
---------------

Dated as of May 15, 1997

This AMENDMENT among JLM INDUSTRIES, INC., a Delaware corporation ("JLM
Industries"), JLM MARKETING, INC., a Delaware corporation ("JLM Marketing"),
JLM TERMINALS, INC., a North Carolina corporation ("JLM Terminals"), JLM
INTERNATIONAL, INC., a Delaware corporation ("JLM International"), and OLEFINS
MARKETING, INC., a Delaware corporation ("Olefins Marketing" and together with
JLM Industries, JLM Marketing, JLM Terminals and JLM International,
collectively, the "JLM Domestic Entities"); and STATE STREET BANK AND TRUST
COMPANY, a Massachusetts bank and trust company (the "Bank").

PRELIMINARY STATEMENT.

A. The JLM Domestic Entities, John L. MacDonald, an individual
("MacDonald"), and the Bank have entered into an Amended and Restated Credit
Agreement dated as of June 15, 1994, as amended by Amendment No. 1, dated as of
December 30, 1995 (the "Credit Agreement"; the capitalized terms defined
therein being used herein as therein defined unless otherwise defined herein).

B. MacDonald was released as an "Obligor" under the Credit Agreement
pursuant to Amendment No. 1.

C. The JLM Domestic Entities and the Bank have agreed to amend the
Credit Agreement and the Revolving Credit Note as hereinafter set forth.

SECTION 1. AMENDMENTS TO CREDIT AGREEMENT. The Credit Agreement is,
effective as of the date hereof and subject to the satisfaction of the
conditions precedent set forth in Section 4 hereof, hereby amended as follows:

(a) The definition of the term "Borrowing Base" contained in
Section 1.01 of the Credit Agreement is amended and restated in full to read as
follows:

"Borrowing Base" means at any date of determination thereof, the sum of
(a) eighty-five percent (85%) of Eligible Receivables plus (b) the
lesser of (i) fifty percent (50%) of Eligible Inventory and (ii)
$5,000,000; the Borrowing Base shall be determined by the Bank based
upon a Borrowing Base Certificate submitted by JLM Marketing to the Bank
not less frequently than monthly and certified as accurate and complete
by the chief financial officer of JLM Marketing.
<PAGE> 76
(b) The definition of the term "Revolving Credit Commitment"
contained in Section 1.01 of the Credit Agreement is amended and restated in
full to read as follows:

"Revolving Credit Commitment" means the obligation of
the Bank to make the Revolving Credit Loans under this
Agreement in the aggregate principal amount of $13,000,000,
as such amount may be reduced or otherwise modified from time
to time.

(c) The definition of the term "Revolving Credit Termination
Date" contained in Section 1.01 of the Credit Agreement is amended and restated
in full to read as follows:

"Revolving Credit Termination Date" means August 31,
1997.

(d) The form of Revolving Credit Note attached to the Credit
Agreement as Exhibit A1 is hereby replaced with the form of Revolving Credit
Note attached hereto as Exhibit A1.

(e) The form of Borrowing Base Certificate attached to the
Credit Agreement as Exhibit B1 is hereby replaced with the form of Borrowing
Base Certificate attached hereto as Exhibit B1.

(f) Section 2.01 of the Credit Agreement is amended by adding
to the end thereof a new subsection (d), to read as follows:

(d) The Bank agrees, on the terms and conditions
hereinafter set forth, to make advances (the "OVERDRAFT
ADVANCES") to JLM Marketing from time to time on any
Banking Day during the period from July 3, 1997 until the
Revolving Credit Termination Date in an aggregate amount
not to exceed at any time outstanding $1,000,000 (the
"OVERDRAFT COMMITMENT"). Within the limits of the
Overdraft Commitment, JLM Marketing may borrow,
prepay and reborrow under this Section 2.01(d). The
Overdraft Advances shall be evidenced by a separate
promissory note in the amount of the Overdraft
Commitment (the "Overdraft Note"). The Overdraft Note
shall constitute one of the "Notes" and one of the "Facility
Documents" as such terms are defined in this Agreement

-2-

<PAGE> 77
and the Overdraft Advances and all amounts due in connection therewith
shall constitute obligations under this Agreement and "Secured
Obligations" under the Security Agreement; provided, however, that the
Overdraft Advances and amounts due in connection therewith shall be
second in priority to the other "Secured Obligations" under the Security
Agreement. The Overdraft Advances shall be treated as Revolving Credit
Loans under this Agreement and shall be subject to all of the terms of
this Agreement governing Revolving Credit Loans (for example, interest
rate provisions, prepayment provisions, conditions of borrowing, etc.),
except as follows: (i) the Overdraft Commitment is in addition to the
Revolving Credit Commitment and the Overdraft Advances shall not be
subject to the limitations imposed by the Borrowing Base, and (ii) the
Overdraft Advances shall only be available to the extent that a
Revolving Credit Loan is not then available to JLM Marketing.

SECTION 2. AMENDMENTS TO REVOLVING CREDIT NOTE. Effective as of the
date hereof and subject to the satisfaction of the conditions precedent set
forth in Section 4 hereof, the Revolving Credit Note shall be amended and
restated in its entirety by an amended and restated promissory note in the form
of Exhibit A1 hereto.

SECTION 3. WAIVER. Effective as of the date hereof and subject to the
satisfaction of the conditions precedent set forth in Section 4 hereof, the Bank
hereby waives any Default or Event of Default (i) resulting from the violation
of Section 9.01(i) of the Credit Agreement in connection with the initial
public offering of the stock of JLM Industries, Inc., or any trading of such
public stock thereafter, or (ii) resulting from the violation of Section 7.11
of the Credit Agreement in connection with JLM Industries, Inc.'s April 1997
agreement to purchase 25% of the common stock of S.K. Chemicals Asia Pte. Ltd.
or its April 1997 agreement to purchase a 12.7% interest in S.K. Chemical
Trading Pte.

SECTION 4. CONDITIONS OF EFFECTIVENESS. This Amendment shall become
effective when, and only when, the Bank shall have received counterparts of this
Amendment executed by the JLM Domestic Entities and the Bank, and Sections 1, 2
and 3 hereof shall become effective when, and only when, the Bank shall have
additionally received all of the following documents, each document (unless
otherwise indicated) being dated the date of receipt thereof by the Bank (which
date shall be the same for all such documents), in form and substance
satisfactory to the Bank:

-3-
<PAGE> 78
(a) The Amended and Restated Promissory Note in the form of
Exhibit A1 hereto.

(b) A consent in the form appended hereto as Annex 1 (the
"Consent"), executed by JLM Canada.

SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE JLM DOMESTIC
ENTITIES AND MACDONALD. Each JLM Domestic Entity represents and warrants as
follows:

(a) Such JLM Domestic Entity is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction
indicated at the beginning of this Amendment.

(b) The execution, delivery and performance by such JLM Domestic
Entity of this Amendment, the amended and restated Revolving Credit Note, the
Overdraft Note and the Facility Documents, as amended hereby, to which it is or
is to be a party are within such JLM Domestic Entity's corporate powers, have
been duly authorized by all necessary corporate action and do not contravene (i)
such JLM Domestic Entity's charter or by-laws, (ii) any law or any contractual
restriction binding on or affecting such JLM Domestic Entity or result in, or
require, the creation or imposition of any mortgage, deed of trust, pledge,
lien, security interest or other charge, encumbrance or preferential arrangement
of any nature upon or with respect to any of the properties now owned or
hereafter acquired by such JLM Domestic Entity.

(c) No authorization, approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body is
required for the due execution, delivery and performance by such JLM Domestic
Entity of this Amendment, the amended and restated Revolving Credit Note, the
Overdraft Note or any of the Facility Documents, as amended hereby, to which it
is or is to be a party.

(d) This Amendment, the amended and restated Revolving Credit
Note, the Overdraft Note and each of the other Facility Documents, as amended
hereby, to which such JLM Domestic Entity is a party constitute legal, valid
and binding obligations of such JLM Domestic Entity enforceable against such
JLM Domestic Entity in accordance with their respective terms.

-4-

<PAGE> 79
JLM Marketing, Inc. under the amended and restated Revolving Credit Note and
the Overdraft Note; and the execution, delivery and performance of this
Amendment do not adversely affect the aforesaid Liens of such Security
Agreement.

(f) The consolidated and consolidating balance sheets of the
JLM Entities as at December 31, 1996, and the related consolidated and
consolidating income statements and statements of cash flows and changes in
stockholders' equity of the JLM Entities for the fiscal years then ended,
copies of which have been furnished to the Bank, fairly present the financial
condition of the JLM Entities as at such date and the results of the operations
of the JLM Entities for the periods covered by such statements, and since
December 31, 1996, there has been no material adverse change in such condition
or operations.

(g) There is no pending or threatened action or proceeding
affecting such JLM Domestic Entity before any court, governmental agency or
arbitrator, which may materially adversely affect the financial condition or
operations of such JLM Domestic Entity or which purport to affect the legality,
validity or enforceability of this Amendment, the amended and restated
Revolving Credit Note, the Overdraft Note or any of the other Facility
Documents, as amended hereby.

SECTION 6. REFERENCE TO AND EFFECT ON THE FACILITY DOCUMENTS.

(a) Upon the effectiveness of Sections 1, 2 and 3 hereof, on
and after the date hereof each reference in the Credit Agreement to "this
Agreement," "hereunder," "hereof," "herein" or words of like import, and each
reference in the other Facility Documents to the Credit Agreement, shall mean
and be a reference to the Credit Agreement as amended hereby, and each
reference in the other Facility Documents to the Revolving Credit Note shall
mean and be a reference to the Revolving Credit Note as amended by the delivery
of the amended and restated promissory note in the form of Exhibit A1.

(b) Except as specifically amended above and by the delivery
of the amended and restated promissory note in the form of Exhibit A1 and the
Overdraft Note, the Credit Agreement and the Revolving Credit Note, and all
other Facility Documents, shall remain in full force and effect and are hereby
ratified and confirmed. Without limiting the generality of the foregoing, the
Security Agreement and all of the "Collateral" described therein, does and shall
continue to secure the payment of all "Secured Obligations" described therein,
as amended hereby.

(c) The execution, delivery and effectiveness of this
Amendment shall not, except as expressly provided herein, operate as a waiver
of any right, power or remedy of the Bank under any of the Facility Documents,
nor constitute a waiver of any provision of any of the Facility Documents.

-5-
<PAGE> 80
SECTION 7. COSTS, EXPENSES AND TAXES. The JLM Domestic Entities
jointly and severally agree to pay on demand all costs and expenses of the Bank
in connection with the preparation, execution and delivery of this Amendment,
the Revolving Credit Note, the Overdraft Note and the other instruments and
documents to be delivered hereunder, including, without limitation, the
reasonable fees and out-of-pocket expenses of counsel for the Bank with respect
thereto and with respect to advising the Bank as to its rights and
responsibilities hereunder and thereunder. The JLM Domestic Entities further
jointly and severally agree to pay on demand all costs and expenses, if any
(including, without limitation, reasonable counsel fees and expenses), in
connection with the enforcement (whether through negotiations, legal
proceedings or otherwise) of this Amendment, the Revolving Credit Note, the
Overdraft Note and the other instruments and documents to be delivered
hereunder, including, without limitation, reasonable counsel fees and expenses
in connection with the enforcement of rights under this Section 7. In addition,
the JLM Domestic Entities shall pay any and all stamp and other taxes payable
or determined to be payable in connection with the execution and delivery of
this Amendment, the Revolving Credit Note, the Overdraft Note and the other
instruments and documents to be delivered hereunder, and agree to save the Bank
harmless from and against any and all liabilities with respect to or resulting
from any delay in paying or omission to pay such taxes.

SECTION 8. EXECUTION IN COUNTERPARTS. This Amendment may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to
be an original and all of which taken together shall constitute but one and the
same instrument.

SECTION 9. GOVERNING LAW. This Amendment shall be governed by, and
construed in accordance with, the laws of the State of Massachusetts.

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

JLM INDUSTRIES, INC.

By: /s/ Frank A. Musto
-----------------------------
Name: Frank A. Musto
Title: VP & CFO

-6-

<PAGE> 81
JLM MARKETING, INC.

By: /s/ Frank A. Musto
-------------------------------
Name: Frank A. Musto
Title: VP & CFO

JLM TERMINALS, INC.

By: /s/ Frank A. Musto
-------------------------------
Name: Frank A. Musto
Title: VP & CFO

JLM INTERNATIONAL, INC.

By: /s/ Frank A. Musto
-------------------------------
Name: Frank A. Musto
Title: VP & CFO

OLEFINS MARKETING, INC.

By: /s/ Frank A. Musto
-------------------------------
Name: Frank A. Musto
Title: VP & CFO

STATE STREET BANK AND TRUST
COMPANY

By: /s/ John A. Stankard
-------------------------------
John A. Stankard
Banking Officer

-7-
<PAGE> 82
ANNEX 1
-------

CONSENT
-------

Dated as of May 15, 1997

The undersigned, as Guarantor under the Canadian Guarantee dated as of
June 15, 1994 (the "Guaranty") in favor of the Bank, hereby consents to
Amendment No. 2 of even date herewith and attached hereto executed by JLM
Industries, Inc., JLM Marketing, Inc., JLM Terminals, Inc., JLM International,
Inc. and Olefins Marketing, Inc., and the Bank.

The undersigned hereby confirms and agrees that (i) the Guaranty is,
and shall continue to be, in full force and effect and is hereby ratified and
confirmed in all respects except that, upon the effectiveness of, and on and
after the date of, the said Amendment, each reference in the Guaranty to the
Facility Documents or any thereof, "thereunder," "thereof" or words of like
import shall mean and be a reference to the Facility Documents or such Facility
Document as amended by the said Amendment, (ii) the Guaranty does, and shall
continue to, guaranty the payment of all of the Obligations (as such term is
defined in the Guaranty), as such Obligations have been amended by said
Amendment, including by the addition of the Overdraft Advances and (iii) the
General Security Agreement dated as of June 15, 1994 by and between the
undersigned and the bank does, and shall continue to, secure the payment of all
of the Obligations (as such term is defined in the General Security Agreement),
as such Obligations have been amended by said Amendment, including by the
addition of the Overdraft Advances.

JLM CHEMICALS CANADA INC.

By: /s/ Frank A. Musto
--------------------------------
Name: Frank A. Musto
Title: VP & CFO

<PAGE> 83
Exhibit A-1
-----------

AMENDED AND RESTATED PROMISSORY NOTE
------------------------------------

$13,000,000 May 15, 1997

FOR VALUE RECEIVED, JLM MARKETING, INC., a Delaware corporation (the
"Maker"), HEREBY PROMISES to pay to the order of STATE STREET BANK AND TRUST
COMPANY (hereinafter called the "Bank"), on the Revolving Credit Termination
Date (as such term is defined in that certain Amended and Restated Credit
Agreement, dated as of June 15, 1994 (the "Credit Agreement"), and all other
capitalized terms which are used herein and not otherwise defined herein shall
have the meanings ascribed to them in the Credit Agreement), the principal sum
of the lesser of (i) Thirteen Million Dollars ($13,000,000) or (ii) the
outstanding amount of Revolving Credit Loans; together with interest (computed
on the basis of the actual number of days elapsed over a year of three hundred
sixty (360) days) on the unpaid principal amount thereof outstanding hereunder
from time to time from the date hereof, at a fluctuating interest rate per annum
(the "Interest Rate") equal to the rate of interest announced by the Bank, in
Boston, from time to time as the Bank's prime rate (the "Prime Rate") payable
monthly in arrears, on the 1st day of each calendar month during the term hereof
beginning June 1, 1997 and on the final day when said principal amounts are paid
in full. Each change in the Interest Rate hereunder due to a change in the Prime
Rate shall take effect on the date of change in the Prime Rate. Any amounts
advanced by the Bank with regard to a payment upon a banker's acceptance,
documentary letter of credit or standby letter of credit shall be payable as a
cash advance pursuant to this Note, and subject to the payment of interest, as
of the date such amounts are advanced by the Bank.

Both principal and interest are payable in lawful money of the United
States of America to the Bank at 225 Franklin Street, Boston, Massachusetts
02110 or such other

<PAGE> 84
address as the Bank may designate to the Maker; provided, however, the Bank may
charge from time to time such amounts against any account of the Maker with the
Bank.

Anything herein contained to the contrary notwithstanding, the maximum
rate of interest payable in respect of the unpaid principal amount hereof shall
not exceed the maximum rate allowable under such provisions of law, as in effect
from time to time, as is applicable to the indebtedness evidenced hereby and to
the payee or holder thereof.

This Note is the Revolving Credit Note referred to in, and entitled to
the benefits of, the Credit Agreement and is secured by an Amended and Restated
Security Agreement, dated as of June 15, 1994 (the "Security Agreement"), as
more fully described in the Credit Agreement. The prompt payment of this Note is
guaranteed, all as more fully described in the Credit Agreement. The Bank or any
subsequent holder of this Note shall have all of the rights arising under this
Note, the Credit Agreement and the Security Agreement hereinbefore referred to.
The Credit Agreement and the Security Agreement grant to the Bank certain
security interests in property of the Maker and the Guarantors, and the Bank or
any subsequent holder of this Note shall, in addition to all other rights, be
entitled to all the rights of a secured party under the Massachusetts Uniform
Commercial Code.

Notwithstanding anything to the contrary herein, principal and
interest hereunder shall be payable in the manner set forth in the Credit
Agreement and the Security Agreement.

2
<PAGE> 85
If any required payment of principal, premium, if any, fees or
interest, or any part thereof, be not paid when due the same shall bear interest
at the rate per annum equal to the Prime Rate plus two (2) percentage points
until paid (computed on the basis of the actual number of days elapsed over a
year of three hundred sixty (360) days). In addition, the Bank may collect, and
the Maker agrees to pay, a late charge equal to five percent (5%) of any
principal, fee or interest payment due under this Note if such payment is not
made within ten (10) days of the due date thereof to defray the
extra expense of handling the delinquent payment.

The Maker hereby waives presentment for payment, demand, notice of
dishonor and protest and all other demands or notices in connection with the
delivery, performance, default or enforcement of this Note.

The Bank shall have a lien upon the right to set off against all
deposits and property of the Maker now or hereafter in the Bank's possession or
in transit to it.

This Note amends and restates in its entirety a certain Amended and
Restated Promissory Note, dated December 30, 1995, from the Maker to the Bank,
in the original principal amount of Eleven Million Dollars ($11,000,000) (the
"Existing Note"). Upon the execution and delivery of this Note, this Note shall
replace the Existing Note and shall immediately evidence all outstanding
indebtedness under the Existing Note. The Maker and the Bank hereby agree that
the indebtedness embodied in and evidenced by this Note is the same indebtedness
embodied in and evidenced by the Existing Note, as increased as provided herein,
and that such indebtedness is a continuing obligation of the Maker to the Bank,
and has been and continues to be fully enforceable, absolute and in existence.

3
<PAGE> 86
This Note shall be governed by and construed and enforced in accordance
with the laws of the Commonwealth of Massachusetts.

JLM MARKETING, INC.

By: /s/ Frank A. Musto
---------------------------
Name: Frank A. Musto
Title: VP & CFO

<PAGE> 1

EXHIBIT 21

Subsidiaries of the Registrant

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Name State/Country of Incorporation
- ---- ------------------------------
- --------------------------------------------------------------------------------
<S> <C>
JLM Chemicals, Inc. Delaware
- --------------------------------------------------------------------------------
JLM International, Inc. Delaware
- --------------------------------------------------------------------------------
JLM Marketing, Inc. Delaware
- --------------------------------------------------------------------------------
JLM Terminals, Inc. North Carolina
- --------------------------------------------------------------------------------
JLM Chemicals Canada, Inc. Province of Ontario, Canada
- --------------------------------------------------------------------------------
JLM (IND) Inc. Indiana
- --------------------------------------------------------------------------------
JLM Industries de Venezuela, C.A. Venezuela
- --------------------------------------------------------------------------------
JLM Industries (Europe) B.V. Netherlands
- --------------------------------------------------------------------------------
Olefins Marketing, Inc. Delaware
- --------------------------------------------------------------------------------
Olefins Terminal Corporation Delaware
- --------------------------------------------------------------------------------
SK Chemicals Asia Pte. Ltd. Singapore
- --------------------------------------------------------------------------------
SK Chemical Trading Pte. Ltd. Singapore
- --------------------------------------------------------------------------------
Aurora Chemical, Inc. Texas
- --------------------------------------------------------------------------------
Phoenix Tank Car Corp. Connecticut
- --------------------------------------------------------------------------------
</TABLE>

All subsidiaries conduct business under their legal names.

<PAGE> 1
EXHIBIT 23.2

INDEPENDENT AUDITORS' CONSENT

We consent to the use in this Amendment No. 2 to Registration Statement No.
333-27843 of JLM Industries, Inc. and subsidiaries on Form S-1 of our reports
relating to the consolidated financial statements of JLM Industries, Inc. and
subsidiaries dated February 19, 1997 (except for Note 18 as to which the date
is July 3, 1997), appearing in the Prospectus, which is part of this
Registration Statement.

We also consent to the reference to us under the headings "Selected Financial
Data" and "Experts" in such Prospectus.

DELOITTE & TOUCHE LLP
Tampa, Florida

July 21, 1997

<PAGE> 1
EXHIBIT 23.3

INDEPENDENT AUDITORS' CONSENT

We consent to the use in this Amendment No. 2 to Registration Statement No.
333-27843 of JLM Industries, Inc. and subsidiaries on Form S-1 of our report
relating to the statement of revenues and direct costs of the Blue Island,
Illinois, location of BTL Specialty Resins Corp. for the period from April 1,
1995 through June 7, 1995 dated January 29, 1997 appearing in the Prospectus,
which is part of this Registration Statement.

DELOITTE & TOUCHE LLP
Tampa, Florida

July 21, 1997