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JLM Industries Inc – ‘DEFM14A’ on 2/11/04

On:  Wednesday, 2/11/04, at 6:39pm ET   ·   As of:  2/12/04   ·   Effective:  2/12/04   ·   Accession #:  1193125-4-20044   ·   File #:  0-22687

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 2/12/04  JLM Industries Inc                DEFM14A     2/12/04    1:1.2M                                   RR Donnelley/FA

Document/Exhibit                   Description                      Pages   Size 

 1: DEFM14A     Definitive Proxy Statement                          HTML   1.14M 

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SCHEDULE 14A

(RULE 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

Filed by the Registrant    x

Filed by a Party other than the Registrant    ¨

Check the appropriate box:

JLM Industries, Inc.

(Name of Registrant as Specified in Its Charter)

Payment of Filing Fee (Check the appropriate box):

¨    No fee required.

¨    Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

x    Fee paid previously with preliminary materials:

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JLM INDUSTRIES, INC.

8675 Hidden River Parkway

Tampa, FL 33637

PROPOSED MERGER—YOUR VOTE IS VERY IMPORTANT

To JLM Industries, Inc. Stockholders:

You are cordially invited to attend a special meeting of stockholders, including any adjournment or postponement of the special meeting, of JLM Industries, Inc. to be held on March 16, 2004 at 11:00 a.m., Eastern Standard time, at the Hilton Garden Inn—Tampa North, 600 Tampa Oaks Blvd., Temple Terrace, FL 33637.

At the meeting, you will be asked to consider and vote upon a proposal to approve and adopt the merger agreement entered into by and among JLM Industries, Inc. (“JLM”), JLMI Holding Corp. (“JLMI Holding Corp.”), JLMI Holdings, LLC (“JLMI Holdings”) and JLMI Acquisition Corp. (“JLMI Acquisition”) and the related merger. JLMI Holdings, JLMI Holding Corp. and JLMI Acquisition are affiliates of John L. Macdonald (the current President, Chief Executive Officer and Chairman of the board of the directors of JLM) and Phoenix JLM Holdings, LLC (“Phoenix”), a Delaware limited liability company controlled by Philip S. Sassower (who was a director of JLM from June 2001 until May 29, 2003, when he resigned from the board of directors) and owned by Mr. Sassower and certain other individuals and entities included as “Reporting Persons” in the Schedule 13D with respect to common stock of JLM filed under the Securities Exchange Act of 1934 by Messrs. Sassower, Macdonald and such other persons (collectively, the “buyer group”) on July 3, 2003 and as amended by the Schedule 13D filed by the buyer group on February 10, 2004. The merger agreement provides for the merger of JLMI Acquisition with and into JLM, with JLM continuing as the surviving corporation. A copy of the merger agreement is attached to the enclosed proxy statement as Annex A.

If the merger is completed, each share of common stock of JLM (“Common Stock”) issued and outstanding at the closing of the merger will be canceled and converted into the right to receive $1.40 in cash, except for shares held by JLM, JLMI Holdings or JLMI Acquisition, shares contributed to JLMI Holdings by the buyer group as described below and shares held by dissenting stockholders, if any, who have perfected their dissenters’ rights under Delaware law. Immediately prior to the merger, Mr. Macdonald and Phoenix and/or certain of their respective affiliates will contribute an aggregate of 4 million shares of Common Stock to JLMI Holdings in exchange for equity interests in JLMI Holdings. However, approximately 508,485 shares of Common Stock held by Mr. Macdonald are anticipated to be retained by him and not contributed to JLMI Holdings, and will therefore be exchanged by him in the merger for $1.40 per share. As a result of the merger, JLM will be wholly-owned by JLMI Holding Corp., which will, in turn, be wholly-owned by JLMI Holdings, which will be owned by Mr. Macdonald and Phoenix.

In order to evaluate the advisability of the merger, the board of directors of JLM formed a special committee of the board of directors, consisting of three independent directors. The special committee unanimously recommended to the board of directors of JLM that the merger agreement and the merger be approved. In its evaluation of the merger, the special committee considered among other things, the opinion of BB&T Capital Markets, its independent financial advisor, which states that, as of the date of such opinion, the cash merger consideration of $1.40 per share to be received in the merger by the stockholders of JLM (other than the members of the buyer group) with respect to their shares is fair from a financial point of view to such stockholders. BB&T Capital Markets’ opinion is subject to the assumptions, limitations and qualifications set forth in its written opinion, which is attached as Annex B to the enclosed proxy statement.

The special committee has unanimously determined that the merger agreement and the merger are advisable and fair to, and in the best interests of, JLM and its stockholders who are not members of, or affiliated with, the buyer group and recommended the merger agreement and the merger to the full board of directors of JLM. Based on the recommendation of the special committee, the board of directors has determined that the merger agreement and the merger are fair to, and in the best interests of, JLM and its stockholders, and recommended that the stockholders approve and adopt the merger agreement and the merger.

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The attached proxy statement provides you with detailed information about the merger agreement and the proposed merger. We urge you to read the entire document carefully.

Under applicable Delaware law, approval and adoption of the proposed merger requires the affirmative vote of the holders of a majority of the shares of Common Stock outstanding on the record date. As of January 31, 2004, the buyer group held approximately 4,508,485 shares of Common Stock, representing approximately 46% of the issued and outstanding shares of Common Stock of JLM, all of which will be voted in favor of the merger at the special meeting of stockholders. However, in addition to the vote required by applicable law, the merger agreement also requires the affirmative vote of a majority of those stockholders of JLM who are not members of, or affiliated with, the buyer group and who appear in person or by proxy and vote on the proposal at the special meeting.

Regardless of the number of shares you own, your vote is very important. Whether or not you plan to attend the meeting, please complete, sign, date and mail the enclosed proxy card.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THIS TRANSACTION, OR PASSED UPON THE MERITS OR FAIRNESS OF THIS TRANSACTION, OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE ATTACHED PROXY STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

The date of this proxy statement is February 12, 2004.

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JLM INDUSTRIES, INC.

8675 Hidden River Parkway

Tampa, FL 33637

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

TO BE HELD ON MARCH 16, 2004

To JLM Industries, Inc. Stockholders:

We will hold a special meeting of stockholders of JLM Industries, Inc. on March 16, 2004, at 11:00 a.m., Tampa time, at Hilton Garden Inn-Tampa North, 600 Tampa Oaks Blvd., Temple Terrace, FL 33637. The purpose of the meeting is:

1.        To consider and vote upon a proposal to approve and adopt a merger agreement that was entered into to effect a merger of JLMI Acquisition Corp. with and into JLM Industries, Inc. Under applicable Delaware law, the approval and adoption of the merger agreement by the stockholders requires the affirmative vote of the holders of a majority of the shares of Common Stock outstanding on the record date. In addition to the vote required by Delaware law, however, the merger agreement also requires the affirmative vote of a majority of those stockholders of JLM who are not members of, or affiliated with the buyer group, and who appear in person or by proxy and vote at the special meeting.

2.        To transact such other business as may properly come before the meeting or any adjournments or postponements of the meeting.

We describe the merger agreement and the merger in the accompanying proxy statement, which you should read in its entirety before voting. A copy of the merger agreement is attached as Annex A to the proxy statement. The record date to determine who is entitled to vote at the meeting is February 12, 2004. Only holders of JLM Industries, Inc. common stock at the close of business on the record date are entitled to notice of, and to vote at, the meeting.

Your vote is very important. You should complete, sign, date and return the enclosed proxy card as soon as possible to make sure your shares are represented at the meeting. If you attend the meeting and wish to vote in person, you may revoke your proxy and vote in person. If you have instructed a broker to vote your shares, you must follow directions received from the broker to change or revoke your proxy.

February 12, 2004.

Tampa, Florida

WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, PLEASE COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING SELF-ADDRESSED POSTAGE PRE-PAID ENVELOPE AS SOON AS POSSIBLE.

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SUMMARY TERM SHEET

The following summary briefly describes the material terms of the proposed merger. This summary does not contain all the information that may be important for you to consider when evaluating the merger. We encourage you to read this proxy statement and the documents we have incorporated herein by reference before voting. We have included section references to direct you to a more complete description of the topics described in this summary.

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QUESTIONS AND ANSWERS ABOUT THE MERGER

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JLM INDUSTRIES, INC.

Attn: Ford Pearson, General Counsel

8675 Hidden River Parkway

Tampa, FL 33637

Telephone: 813-632-3300

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SUMMARY

This summary highlights some of the information from this proxy statement and may not contain all of the information that is important to you. To understand the merger fully and for a more complete description of the legal terms of the merger, you should carefully read this entire document, including the annexes and other documents to which we have referred you. See the discussion under the heading “Additional Information—Where You Can Find More Information” on page 71 for more details.

The Companies (See page 71)

JLM Industries, Inc.

8675 Hidden River Parkway

Tampa, Florida 33637

Telephone: 813-632-3300

JLM is a Delaware corporation that is a leading global marketer and distributor of performance chemicals, olefins, and specialty plastics. JLM is one of the largest chemical distributors in North America and a manufacturer and merchant marketer of phenol and acetone. JLM maintains long-term supplier relationships with many global chemical companies, and manufactures phenol and acetone at its phenol plant in Blue Island, IL.

JLMI Holdings, LLC

c/o Phoenix Enterprises LLC

135 East 57th Street, 12th Floor

New York, NY 10022

Telephone: 212-759-1909

JLMI Holdings, LLC is a limited liability company formed under the laws of the state of Delaware and is controlled by Mr. Macdonald and Phoenix. It was established solely for the purpose of acquiring and holding directly, or indirectly, 100% of the equity of JLM. At the closing of the merger, all of the outstanding equity interests of JLMI Holdings will be owned by Mr. Macdonald and Phoenix.

JLMI Holding Corp.

c/o Phoenix Enterprises LLC

135 East 57th Street, 12th Floor

New York, NY 10022

Telephone: 212-759-1909

JLMI Holding Corp. is a corporation formed under the laws of the state of Delaware and is controlled by JLMI Holdings. It was established solely for the purpose of acquiring shares of JLM in connection with the merger. JLMI Holding Corp. will be wholly-owned by JLMI Holdings.

JLMI Acquisition Corp.

c/o Phoenix Enterprises LLC

135 East 57th Street, 12th Floor

New York, NY 10022

Telephone: 212-759-1909

JLMI Acquisition Corp. is a corporation formed under the laws of the state of Delaware and is a wholly-owned subsidiary of JLMI Holdings. It was established solely for the purpose of merging with and into JLM.

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Effects of the Merger (See page 14)

If the merger agreement and the merger are approved by the stockholders of JLM and the other conditions to the closing of the merger are either satisfied or waived, JLMI Acquisition will be merged with and into JLM, with JLM being the surviving corporation.

If the merger is completed, each share of Common Stock issued and outstanding at the closing of the merger will be canceled and converted into the right to receive $1.40 in cash, except for shares held by dissenting stockholders who have perfected their dissenters’ rights under Delaware law. Immediately prior to the merger, each member of the buyer group will exchange some of their shares of Common Stock for equity interests of JLMI Holdings. Each option granted by JLM to acquire Common Stock that is outstanding immediately prior to the closing of the merger will be canceled in exchange for a single lump sum cash payment (less any applicable income or employment tax withholding) equal to the product of (1) the number of shares of Common Stock underlying the option and (2) the excess, if any, of $1.40 over the option exercise price. After the merger, all of JLM’s capital stock will be held by JLMI Holding Corp. (which will, in turn, be wholly-owned by JLMI Holdings).

Upon the closing of the merger, Common Stock will no longer be quoted on the NASDAQ Stock Market and the registration of Common Stock under the Exchange Act will be terminated.

What You Will Receive in the Merger (See pages 14 and 48)

If you are not a dissenting stockholder, you will receive $1.40 in cash for each share of Common Stock that you own at the closing of the merger.

Payment for Stock Certificates (See page 49)

As soon as reasonably practicable after the merger, the paying agent for the merger will mail (and make available for collection by hand) to each record holder of Common Stock a letter of transmittal to be used for surrendering Common Stock certificates for $1.40 per share in cash. You should not send in your Common Stock certificates until you receive the letter of transmittal.

The Special Meeting (See page 64)

The special meeting of JLM’s stockholders will take place on March 16, 2004, Tampa time. At the meeting you will be asked to approve and adopt the merger agreement and the merger.

Vote Required (See page 64)

Delaware corporate law requires that JLM’s stockholders approve and adopt the merger agreement and the merger before JLM may complete the merger. Each stockholder of record on the record date is entitled to one vote on each matter submitted to a vote at the meeting for each share of Common Stock held. A majority of the shares of Common Stock outstanding on the record date represented in person or by proxy at the meeting constitutes a quorum for consideration of such matters at the meeting. Although Delaware law requires the affirmative vote of at least a majority of the shares of Common Stock outstanding on the record date to approve and adopt the merger agreement and the merger, the merger agreement imposes an additional requirement that the merger must also be approved by the affirmative vote of a majority of those stockholders of JLM who are not members of, or affiliated with, the buyer group and who vote on the proposal by proxy or in person at the special meeting.

Post-Merger Ownership and Control (See page 16)

Immediately after the merger, JLMI Holdings will hold, directly or indirectly through JLMI Holding Corp., all of the outstanding capital stock of JLM.

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ORGANIZATIONAL STRUCTURE

The following diagram describes the present structure of the buyer group immediately prior to the merger.

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Interests of Certain Persons in the Merger (See page 37)

In considering the recommendation of the special committee and the board of directors of JLM with respect to the merger, you should be aware that certain directors, officers and affiliates of JLM (including members of the buyer group) have interests in the merger that are different than yours in several respects. These interests include the following:

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Legal Documents (See page A-1)

Whenever we refer to the merger agreement in this proxy statement we are referring to the merger agreement attached as Annex A to this proxy statement. You should read the merger agreement because it, and not this proxy statement, is the legal document that governs the merger.

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Recommendation of the Special Committee and the Board of Directors; Reasons for the Merger (See page 21)

A special committee of independent directors of JLM carefully reviewed and considered the terms and conditions of the merger agreement and the merger, unanimously determined that the merger agreement and the merger are advisable and fair to, and in the best interests of, JLM and the stockholders of JLM (other than the buyer group) and recommended the merger agreement and the merger to the full membership of the board of directors of JLM. Based on the recommendation of the special committee, the board of directors of JLM has determined that the merger agreement and the merger are fair to, and in the best interests of, JLM and the JLM stockholders, and recommend that you vote to approve and adopt the merger agreement and the merger.

Opinion of the Special Committee’s Financial Advisor (See page 23)

On October 22, 2003, the special committee received a written opinion from BB&T Capital Markets, its independent financial advisor, which states that, as of the date of such opinion, the cash merger consideration of $1.40 per share to be received in the merger by the stockholders of JLM (other than the buyer group) is fair from a financial point of view to such stockholders. The full text of the written opinion of BB&T Capital Markets is attached to this proxy statement as Annex B. We encourage you to carefully read this opinion in its entirety for a description of the procedures followed, assumptions made, matters considered and limitations on the review undertaken. The opinion of BB&T Capital Markets is directed only to the matters described in the opinion and does not constitute a recommendation to any stockholder as to how you should vote on any matter at the special meeting.

Conditions to the Merger (See page 57)

The obligations of JLM, JLMI Holdings, JLMI Holding Corp. and JLMI Acquisition to complete the merger are subject to the following mutual closing conditions:

JLM’s obligation to complete the merger is also subject to the following additional conditions:

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JLMI Holdings’, JLMI Holding Corp.’s and JLMI Acquisition’s obligations to complete the merger are also subject to the following additional conditions:

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Termination of the Merger Agreement (See page 60)

The merger agreement provides that JLMI Holdings, JLMI Holding Corp., JLMI Acquisition and JLM may mutually agree to terminate the merger agreement at any time. In addition, JLMI Holdings, JLMI Holding Corp., JLMI Acquisition or JLM may terminate the merger agreement at any time if:

In addition, JLMI Holdings, JLMI Holding Corp. and JLMI Acquisition may also terminate the merger agreement if:

In addition, JLM may also terminate the merger agreement:

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No Solicitation of Competing Proposals (See page 53)

The merger agreement provides that, until the effective time of the merger or the termination of the merger agreement, JLM will not, and JLM will direct its officers, directors, affiliates, advisors, representatives or other agents not to:

However, the merger agreement does not prohibit JLM from participating or engaging in discussions or negotiations with, or disclosing non-public information or data relating to JLM (or affording access to JLM’s properties, books or records) to any person that has made an Acquisition Proposal (or to any person in contemplation of an Acquisition Proposal) in the event that:

For more information regarding the provisions of the merger agreement limiting the solicitation of competing proposals, see the information under the heading “Merger Agreement—No Solicitation of Competing Proposals” on page 53 below.

Modification or Amendment of the Merger Agreement (See page 63)

JLM, JLMI Holdings, JLMI Holding Corp. and JLMI Acquisition may, by acting through their respective boards of directors or board of managers as the case may be, amend, modify or waive any provision of the merger agreement prior to the closing of the merger. However, no such amendment, modification or waiver by JLM will be effective unless it is authorized by the special committee and, after the approval of the merger agreement and the merger by JLM’s stockholders, there shall not be made any amendment that (i) affects the nature of the merger consideration per share or the manner or timing of the payment thereof; (ii) affects the nature or amount of any fee or expense required to be paid as described under the heading “Fees and Expenses” above or (iii) by law requires the further approval by such stockholders, in each case, without such further approval of the stockholders of JLM.

Fees and Expenses (See pages 62)

Pursuant to the merger agreement, JLM has agreed to reimburse JLMI Holdings for documented out-of-pocket fees and expenses, including fees and expenses of outside financial advisors, legal counsel and

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accountants, not to exceed $250,000 in the aggregate, reasonably incurred by JLMI Holdings and its affiliates in connection with the transactions contemplated by the merger agreement if the merger agreement is terminated under certain circumstances. JLM has also agreed to pay to JLMI Holdings a breakup fee of $385,000 and to reimburse JLMI Holdings for any third party financing fee and all expenses (regardless of the foregoing limitation on reimbursement of expenses) if the merger agreement is terminated under certain other circumstances. On the other hand, JLMI Holdings has agreed to reimburse JLM for all expenses, not to exceed $250,000 in the aggregate, reasonably incurred by JLM and its affiliates in connection with the transactions contemplated by the merger agreement if Mr. Macdonald voluntarily terminates his employment with JLM prior to the closing date of the merger such that the closing condition relating to Macdonald’s continued employment with JLM cannot be satisfied and the merger is not consummated or if the merger agreement is terminated by JLM under certain limited circumstances. For more information regarding the circumstances under which the parties have agreed to reimburse expenses or pay a breakup fee, see the information under the headings “The Merger Agreement—Termination of the Merger Agreement” and “The Merger Agreement—Fees and Expenses” on pages 60 and 62 below.

Except as described above or otherwise provided in the merger agreement, all costs and expenses incurred in connection with the merger agreement and the transactions contemplated thereby will be paid by the party incurring such expenses.

Material Federal Income Tax Consequences (See page 42)

The receipt of cash in the merger will be a taxable transaction for U.S. federal income tax purposes under the Internal Revenue Code of 1986, as amended and may also be a taxable transaction under applicable state, local, foreign and other tax laws. For more information regarding the material federal income tax consequences to the transaction as contemplated by the merger agreement, see the information under the heading “Special Factors—Material Federal Income Tax Consequences” on page 42 of this proxy statement.

Tax matters are very complicated. The tax consequences of the merger to you will depend upon your own situation. You should consult your tax advisors for a full understanding of the U.S. federal, state and local tax consequences of the merger to you.

Anticipated Accounting Treatment (See page 43)

The merger is intended to be accounted for as a purchase in conformity with Statement of Financial Accounting Standards No. 141, “Business Combinations.”

Financing of the Merger (See pages 40 and 53)

Phoenix will provide senior subordinated debt financing to JLM (or to JLMI Holding Corp., which will hold all of the shares of JLM immediately following the consummation of the merger) in an amount sufficient to (a) finance the payment of the cash consideration to be paid in the merger and transaction expenses (up to $10 million in the aggregate), and (b) provide JLM with an additional $5 million in working capital (such financing referred to collectively in this proxy statement as the “Proposed Financing”). The Proposed Financing will be reduced by (i) any net proceeds received by JLM from any asset sales consummated prior to the closing of the merger transaction described in this proxy statement, and (ii) any increase in the principal amount of senior debt of JLM from that existing on May 29, 2003 (other than increases in indebtedness under JLM’s revolving credit facility with Congress Financial Corporation to the extent such increases are fully collateralized in accordance with the existing agreements governing that facility). The Proposed Financing will also be reduced or increased, as the case may be, by any cumulative positive or negative operating cash flow of JLM from and after June 30, 2003 and prior to consummation of the merger. Phoenix will fund the Proposed Financing by using cash contributions from Phoenix’s members.

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The Proposed Financing will:

If the Proposed Financing is provided by Phoenix, the Proposed Terms shall not include any equity components, equity conversion or profit participation features. If a third party finances the merger, such third party may receive profit participation rights (but not equity components or equity conversion rights). The members of Phoenix may personally guarantee, and provide collateral to support, any third party financing in full or partial substitution for providing the Proposed Financing.

Mr. Sassower has agreed to use, and to cause Phoenix and Phoenix Enterprises LLC to use, commercial best efforts to secure the Proposed Financing from one or more third party lenders on terms and conditions at least as favorable to JLMI Holdings, JLMI Holding Corp. and JLM as the Proposed Terms (which terms, if approved by Mr. Macdonald and Phoenix, may include profit participation but not equity or equity conversion features). To the extent that Mr. Sassower and/or Phoenix is successful in arranging such financing (or in arranging a refinancing by one or more third party lenders of any financing initially provided by Phoenix or its affiliates on terms and conditions at least as favorable to JLMI Holdings, JLMI Holding Corp. and JLM as the Proposed Terms (which terms, if approved by Mr. Macdonald and Phoenix, may include profit participation but not equity or equity conversion features), Mr. Sassower and/or Phoenix will be entitled to receive a financing fee, payable in cash, of 2% of the principal amount of such financing (or refinancing, as the case may be) committed and funded by third-party lenders, plus reimbursement of all actual documented out-of-pocket expenses. For purposes of the foregoing, no affiliate or member of Phoenix or Phoenix Enterprises LLC, or any member of any member of Phoenix will constitute a third party lender. Please read the discussion under the heading “Special Factors—Financing of the Merger” beginning on page 40.

Rights of Dissenting Stockholders (See page 44)

JLM is a corporation organized under Delaware law. Under Delaware law, if you do not vote in favor of the merger agreement and the merger and instead follow the appropriate procedures for demanding appraisal rights as described under the heading “Special Factors—Rights of Dissenting Stockholders” on page 42 and in Annex C, you will receive a cash payment for the “fair value” of your shares of Common Stock, as determined by the Delaware Court of Chancery. The price determined by the Delaware Court of Chancery may be less than, equal to or more than the $1.40 in cash you would have received for each of your shares in the merger if you had not exercised your appraisal rights. Generally, in order to exercise appraisal rights, among other things:

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Merely voting against the merger agreement and the merger will not perfect your appraisal rights under Delaware law. Annex C to this proxy statement contains the Delaware statute relating to your appraisal rights. If you want to exercise your appraisal rights, please read and carefully follow the procedures described under the heading “Special Factors—Rights of Dissenting Stockholders” on page 43 and in Annex C. Failure to take all of the steps required under Delaware law may result in the loss of your appraisal rights. We encourage you to read the statute carefully and to consult with legal counsel if you desire to exercise your dissenters’ rights.

Selected Historical and Pro Forma Consolidated Financial Data

Set forth below is a summary of selected historical consolidated financial data with respect to JLM excerpted or derived from the information contained in JLM’s annual report on Form 10-K for the fiscal year ended December 31, 2002 filed with the SEC and JLM’s Form 10-Q for the fiscal quarter ended September 30, 2003 filed with the SEC, both of which are incorporated herein by reference. More comprehensive financial information is included in such report and other documents filed by JLM with the SEC. The following summary is qualified by reference to such report and other documents and all of the financial information, including any related notes, contained therein. Such report and other documents may be inspected and copies may be obtained from the offices of the SEC. See the discussion under the heading “Additional Information—Where You Can Find More Information” on page 71 for further details about this additional information.

Also set forth below is a summary of selected pro forma consolidated financial data with respect to JLM derived by the application of pro forma adjustments to JLM’s historical financial statements. The unaudited pro forma financial data presented below give effect to the transactions described in this proxy statement under the heading “Unaudited Pro Forma Financial Information” on page 73. The pro forma data is not necessarily indicative of JLM’s results of operations or financial position had these transactions taken place on the dates indicated and is not intended to project JLM’s results of operations or financial position for any future period or date. See the discussion under the heading “Unaudited Pro Forma Financial Information” on page 74 for additional pro forma information.

No separate financial information for JLMI Holdings, JLMI Holding Corp., or JLMI Acquisition is provided in this proxy statement because each is a special purpose entity formed in connection with the proposed merger and has had no independent operations.

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SELECTED CONSOLIDATED FINANCIAL INFORMATION

(in thousands, except per share data)

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SPECIAL FACTORS

Effects of the Merger

If the merger is approved by the JLM stockholders and the other conditions to the closing of the merger are either satisfied or waived, JLMI Acquisition will be merged with and into JLM, with JLM being the surviving corporation. After the merger, JLMI Holding Corp., (which will be wholly-owned by JLMI Holdings) will own all of the capital stock of JLM. JLMI Holdings will be owned by Mr. Macdonald and Phoenix. Phoenix is controlled by Mr. Sassower and owned by Mr. Sassower and certain other individuals and entities included as “Reporting Persons” in the Schedule 13D (collectively, the “buyer group”) with respect to Common Stock filed under the Securities Exchange Act of 1934 by Messrs. Sassower, Macdonald and the other such persons on July 3, 2003 and as amended by the Schedule 13D filed by the buyer group on February 10, 2004.

When the merger is completed, each share of Common Stock issued and outstanding immediately prior to the effective time of the merger (other than (1) the shares of Common Stock owned by JLM or any direct or indirect wholly-owned subsidiary of JLM, (2) the shares of Common Stock owned by JLMI Holdings, JLMI Holding Corp. or JLMI Acquisition (including as a result of the contribution by the members of the buyer group of Common Stock to JLMI Holdings in exchange for equity interests in JLMI Holdings, and (3) the shares of Common Stock held by any dissenting stockholders) will be canceled and converted into the right to receive $1.40 in cash. Each option granted by JLM to acquire Common Stock that is outstanding immediately prior to the closing of the merger will be canceled in exchange for a single lump sum cash payment (less any applicable income or employment tax withholding) equal to the product of (1) the number of shares of Common Stock subject to the option and (2) the excess, if any, of $1.40 over the option exercise price.

Immediately prior to the merger, each of Mr. Macdonald, on one hand, and Phoenix, on the other hand, will contribute 2 million shares of Common Stock for equity interests in JLMI Holdings. The shares contributed by Phoenix will first be contributed to Phoenix by Mr. Sassower and the other investors in Phoenix. Approximately 508,485 shares of Common Stock held by Mr. Macdonald are anticipated to be retained by him and not contributed to JLMI Holdings, and will therefore be exchanged by him in the merger for $1.40 per share.

As a result of the merger JLM will be a privately held company and there will be no public market for JLM’s Common Stock. Upon the completion of the merger, Common Stock will no longer be listed on the NASDAQ Stock Market and price quotations for sales of shares in the public market will no longer be available. In addition, the registration of Common Stock under the Exchange Act will be terminated.

The primary benefits of the merger to JLM are that, because Common Stock will be privately held, JLM will enjoy certain efficiencies, such as a reduction of the time devoted by its management and certain other employees to compliance with certain SEC reporting requirements, and its directors, officers and beneficial owners of more than 10% of the shares of Common Stock will be relieved of the reporting requirements and restrictions on insider trading under Section 16 of the Exchange Act. In addition, JLM will be relieved of NASDAQ Stock Market listing and reporting requirements.

A potential detriment of the merger to JLM is that JLM and its subsidiaries will be incurring approximately $15 million in long-term debt on a consolidated basis in connection with the closing of the merger, including approximately $5 million of indebtedness that will be used as working capital by JLM. As a result, JLM and its subsidiaries will be subject to restrictive covenants under the terms of such indebtedness, some of which may be more restrictive than the covenants contained in JLM’s existing indebtedness. In addition, such new indebtedness may:

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The primary benefits of the merger to the unaffiliated stockholders of JLM who, as a result thereof, will not have a continuing interest in JLMI Holdings include the following:

The primary detriments of the merger to the unaffiliated stockholders of JLM who, as a result thereof, will not have a continuing interest in JLMI Holdings include the following:

The primary benefit of the merger to the members of the buyer group is that Mr. Macdonald and Phoenix will own all of the outstanding equity of JLMI Holdings (which in turn will indirectly own all of the capital stock of JLM) after the merger and therefore will indirectly receive all of the benefit, if any, of any increase in the future earnings, growth or value of JLM, including any increase in value attributable to any cyclical recovery in the business in which JLM operates.

The primary detriments of the merger to the members of the buyer group include the following:

The $1.40 per share cash consideration to be received by the stockholders of JLM (other than the buyer group) in the merger is the result of arm’s length negotiations between Mr. Macdonald, Mr. Sassower, Phoenix and their respective advisors, on the one hand, and the special committee and its advisors, on the other hand.

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Post-Merger Ownership and Control

Immediately after the merger, JLMI Holding Corp. will hold all of the outstanding capital stock of JLM. JLMI Holding Corp. will be wholly-owned by JLMI Holdings, which will be owned 50% by Mr. Macdonald and 50% by Phoenix. Phoenix will, in turn, continue to be controlled by Mr. Sassower and owned by Mr. Sassower and certain other individuals and entities included as “Reporting Persons” in the Schedule 13D (as the same may be amended from time to time) with respect to Common Stock filed under the Securities Exchange Act of 1934, as amended, by Messrs. Sassower, Macdonald and such other persons on July 3, 2003 and as amended by the Schedule 13D filed by the buyer group on February 10, 2004. Following the merger, JLMI Holdings will be required to vote its shares of JLM for the election of a board of directors of JLM of which 50% will be required to be designees of Macdonald and 50% will be required to be designees of Phoenix. The following individuals and entities in addition to Mr. Sassower have contributed their shares of Common Stock and/or committed to provide cash contributions to, and are non-voting members of Phoenix and, as a result, may be deemed to be part of the buyer group: Phoenix Venture Fund LLC; Phoenix Enterprises, LLC; Phoenix Enterprises Family Fund, LLC; Edward Sassower; Wendy Sassower; Edward Sassower as custodian for William and James Sassower; Mark Sassower; Jill Sassower; Mark Sassower as Custodian for Rachel, Lauren and David Sassower; Robert Sassower; Caroline O. Sack; Jonathan Sack; Jonathan Sack as Custodian for Elizabeth and Charlotte Sack; Goren Brothers Limited Partnership; Gobco Partners, LP., JAM Capital Assoc. LLC; Daryl Lee Scot LLC; Michael G. Jesselson 4/8/71 Trust; Steven Mitchell Sack; Robert and Stacey Zuckerman; and Gil Fields.

Background of the Merger

Mr. Macdonald is the founder of JLM and has been its President and Chief Executive Officer, as well as the Chairman of its board of directors, since JLM’s founding in April 1986.

In connection with a June 2001 private placement of shares of JLM’s Common Stock and warrants to purchase Common Stock to a group of investors led by Phoenix Enterprises, LLC (“Phoenix Enterprises”), Mr. Philip S. Sassower, the Chief Executive Officer of Phoenix Enterprises, and a principal stockholder of JLM, was appointed as a member of the board of directors of JLM.

Commencing in July 2002, Mr. Sassower and Mr. Macdonald discussed from time to time in general terms the disadvantages faced by JLM as a smaller-sized publicly-traded company. In particular, they noted:

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During the second half of 2002, Mr. Sassower also explored on a preliminary basis with several asset-based lenders the prospects of their providing additional working capital for JLM, whether as a continuing public company or possibly in the context of a management buyout of assets.

In October 2002, at a regular meeting of the board of directors of JLM, Mr. Sassower discussed the disadvantages of JLM being a public company, and raised the concept of a “going-private” transaction. No formal action was taken by the board of directors of JLM, or by Messrs. Macdonald or Sassower at this time.

Mr. Macdonald’s and Mr. Sassower’s discussions with each other regarding a possible transaction involving JLM continued in early 2003.

On March 26, 2003, at a regular meeting of the board of directors of JLM, Mr. Macdonald advised the board that he was giving preliminary consideration to a possible “going-private” transaction involving JLM. Mr. Sassower did not participate in this portion of the board meeting.

Over a period of the next four weeks, Mr. Macdonald and Mr. Sassower continued their discussions and Mr. Sassower concluded that the disadvantages described above significantly outweighed the advantages of JLM continuing as a publicly traded company. Consequently, on May 29, 2003, Mr. Sassower announced (and he and JLM publicly reported) his resignation from the board of directors of JLM, in order to consider pursuing a strategic transaction with JLM. Over the next three weeks, Mr. Macdonald and Mr. Sassower gave further consideration to the structure, timing and pricing of a transaction.

On June 24, 2003, Mr. Macdonald and Mr. Sassower submitted their proposal to the board of directors of JLM. At a regularly scheduled meeting of the board of directors of JLM held on that date, the members discussed the offer made by the buyer group to acquire JLM and determined that the proposal was feasible. Because the members of the buyer group are affiliates of JLM due to their ownership and management positions with JLM, the board of directors of JLM concluded that the proposal should be fully analyzed and considered by a special committee of independent directors. Messrs. Tunstall, Naimoli, and Weinstein were appointed to serve on the special committee and the special committee was granted the express authority to evaluate the merits of the proposal, to employ outside professionals to advise and assist them in their evaluation, to pursue the proposal if it is determined to be advisable, and to take all action necessary to ensure that any such transaction is fair to all of the stockholders of JLM. Mr. Tunstall was selected to serve as chairman of the special committee. The special committee was also empowered to take all such other actions as it determined necessary to evaluate the fairness of the merger proposal. However, the special committee was not specifically requested or authorized to consider any alternative transactions. Given (a) the absence of any prior expressions of interest from third parties in acquiring JLM or its assets, (b) JLM’s poor operating performance in recent years, which made it an unattractive acquisition prospect, and (c) that the June 24 proposal from Messrs Sassower and Macdonald specifically indicated that both were unwilling to consider any alternative transaction in which they would dispose of their shares to a third party, which given their aggregate share ownership would have made another transaction difficult to consummate, the board of directors of JLM did not consider as realistic the possibility that a third party would solicit JLM to engage in an alternative transaction to that proposed by the buyer group and as a result, did not expressly authorize or request the special committee to consider alternative transactions. However, the special committee was not expressly barred from considering alternative transactions. The buyer group did not restrict in any way the ability of the special committee or board of directors to actively solicit, entertain or respond to unsolicited offers until the merger agreement was executed on October 30, 2003, more than four months after the buyer group’s proposal was publicly announced.

Over the next few days, the special committee interviewed several law firms to represent it and determined to engage the law firm of Carlton Fields, P.A., Tampa, Florida. On July 17, 2003, the special committee held a meeting at which it formally engaged counsel to discuss several substantive aspects of, and to establish the procedures for evaluating, the proposed merger. Counsel was present at this meeting and advised the members of

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the special committee of their duties and responsibilities in the consideration of business combinations generally and, more specifically, the purpose and role of a special committee of independent directors in reviewing and analyzing transactions proposed by insiders and affiliates of a corporation. Following this discussion, the special committee, with the advice of counsel, determined that it would be in the best interests of JLM and its stockholders for it to engage the services of an investment banker or other financial advisor to assist them in analyzing the fairness to the stockholders of JLM other than the buyer group, from a financial point of view, of the consideration being offered by the buyer group. Mr. Tunstall was authorized and directed by the special committee to solicit bids from reputable firms for such purpose.

On July 31, 2003, the special committee met in the offices of its counsel to review the preliminary proposals received by Mr. Tunstall from eight different investment banking firms. Mr. Tunstall had held discussions with, received proposed terms of engagement from, and interviewed each of these firms. Mr. Tunstall provided the special committee with the written materials received from these firms and provided a report of his discussions. In their review of these firms, the special committee considered each firm’s experience in fairness valuations, the quality and credibility of the firm, the level and quality of preliminary review work undertaken, their ability to meet the requested timetable for completing their analysis of the merger proposal, economic value to be received for the service to be provided, the firm’s specific experience with companies in similarly situated circumstances and with the evaluation of highly leveraged transactions. Based on the foregoing, the special committee selected two firms that it believed were best suited to advise it in the transaction and authorized Mr. Tunstall to contact them to submit their final, formal bids for the engagement. After the conclusion of the follow-up discussions and negotiations of the potential terms of engagement, at a meeting held on August 6, 2003, the special committee retained the services of BB&T Capital Markets, a division of Scott & Stringfellow, Inc. BB&T was selected based on their experience, thoroughness, and understanding of JLM’s business.

Between August 7, 2003 and August 28, 2003, BB&T undertook a detailed due diligence review of JLM, its financial information and projections, operations and physical assets. BB&T also reviewed the form of the proposed merger agreement, conducted on site examinations and conducted numerous interviews with senior management.

On September 4, 2003, the special committee held a meeting to discuss the current status of the transaction and to review BB&T’s initial findings and conclusions with respect to the merger consideration being offered by the buyer group. At this meeting, BB&T made a presentation to the special committee which included a summary of the background of the transaction and a detailed analysis reviewing the adequacy of the consideration to be paid to the stockholders of JLM other than the buyer group in the proposed merger. BB&T reviewed JLM’s historical financial results and projections for the next two years and provided a comparison with other public companies that market, manufacture, and distribute specialty chemicals similar to those marketed and produced by JLM. BB&T noted the general negative industry trends and JLM’s deteriorating financial and liquidity position. In its presentation, BB&T provided an analysis of:

BB&T also provided a discounted cash flow analysis of JLM. Following its presentation, BB&T provided its preliminary oral opinion that the consideration proposed to be paid in the merger is fair, from a financial point of view, to the stockholders of JLM other than the buyer group. As a result, the special committee concluded that it was in the best interests of JLM and its unaffiliated stockholders to pursue the proposed transaction.

From September 4, 2003 through September 15, 2003, the parties and their respective counsel negotiated the terms and conditions of a merger agreement. In particular, the special committee focused its review on those aspects of the agreement that related to the payment of termination fees in the proposed amount of $750,000, the exclusivity provisions, the payment of expenses by each party under various circumstances, the indemnity and

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insurance provisions, certain representations and warranties requested from JLM, and the status of the buyer group’s financing arrangements. JLM’s outside corporate counsel was responsible for the general review of the merger agreement and the special committee and its counsel coordinated their review and negotiations with such counsel.

On September 16, 2003, the special committee held a meeting by telephone conference to discuss outstanding issues. The special committee’s counsel summarized the negotiations that had taken place prior to the meeting and identified those issues which had not yet been resolved. The outstanding issues related generally to the payment of termination fees and expenses, the exclusivity provisions, and the scope of various representations and warranties. In particular, the special committee discussed, among other things, the scope of the limitations placed on the board of directors of JLM in responding to, and considering, any unsolicited third party inquiries about a potential acquisition transaction as well as the amount of termination fees and expenses to be paid or reimbursed in connection with this transaction. Although the special committee did not object to the payment of the buyer group’s expenses if the merger agreement was not closed due to breaches of the merger agreement by JLM, the special committee believed that it was necessary for there to be a reasonable cap on such expenses and that certain expenses not be covered absent a subsequently consummated third party acquisition of JLM. After discussing these issues with counsel, the special committee concluded that it was necessary to resolve these issues and other issues before it could recommend approval of the merger.

Following this meeting, each of the special committee’s concerns and issues with respect to the proposed merger were conveyed to JLM’s corporate counsel who, in turn, conveyed the outstanding issues and areas of concern of both JLM and the special committee to the buyer group. Each party and their respective counsel, including the special committee and its counsel, engaged in another round of negotiations in an effort to resolve these issues and concerns.

On September 19, 2003, the special committee held a meeting at the JLM corporate headquarters to review the status of the negotiations and the proposed revisions to the merger agreement. At this meeting, the special committee again reviewed the proposed merger agreement with its legal counsel in detail, discussed the remaining issues relating to the termination fees, expenses and certain JLM representations and warranties. In order to assist the special committee in its review of the reasonableness of the proposed termination fee, BB&T provided the special committee with an analysis of the termination fees provided for in comparable transactions. After reviewing the merger agreement, the special committee requested, and received, from BB&T their re-affirmation of the fairness, from a financial point of view, of the merger consideration to be paid to the unaffiliated stockholders of JLM other than the buyer group. Although the buyer group had agreed to limit the payment of termination fees to those situations where JLM consummated a competing third party acquisition and also had agreed to lower the amount of the termination fee payable in such an event from the originally proposed $750,000 to $385,000, based in part on the advice of counsel and the presentation made by BB&T the special committee continued to believe that the amount of the termination fee requested was excessive relative to the size of the transaction. Further, the special committee also continued to take the position that the payment of expenses should be limited in the absence of any subsequently consummated third party transaction. Acceptable financial parameters for resolving these issues were discussed and approved by the special committee. Based on the foregoing, the special committee unanimously approved the proposed merger, subject to satisfactorily resolving the outstanding issues within the specified parameters.

The buyer group was advised of the special committee’s actions and its positions with respect to the outstanding issues. Further discussions and negotiations between the parties led to an agreement to reduce the amount of the termination fees ($385,000) to an amount deemed acceptable by the special committee. In addition, the buyer group agreed that JLM would only be required to reimburse them for a capped amount of basic expenses ($250,000) incurred by it if the transaction should not close due to a breach of the merger agreement by JLM. A reciprocal provision was granted to JLM if the transaction should not close due to a breach by the buyer group. However, if the transaction does not close and JLM should subsequently consummate another third party acquisition transaction, the buyer group would be permitted to recover all of their expenses actually incurred in connection therewith.

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Although the special committee’s concerns had been largely resolved through such negotiations, as a result of its ongoing due diligence examination of JLM, the buyer group subsequently proposed certain revisions to the merger agreement relating to, among other things, the imposition of certain financial requirements to be satisfied by JLM as a condition to closing.

Specifically, the buyer group requested that the following conditions be satisfied by JLM as a condition to closing, and such conditions were subsequently incorporated into the terms of the merger agreement:

Additionally, the buyer group requested that the following conditions be satisfied with respect to the existing employment agreement between JLM and John L. Macdonald as a condition to closing, and such conditions were subsequently incorporated into the terms of the merger agreement:

On October 30, 2003, the special committee held a telephone meeting to review the proposed definitive draft of the merger agreement. Counsel reviewed all the changes made since the September 19, 2003 meeting, describing the negotiations that had taken place, and the manner in which the outstanding issues had been resolved. Mr. Tunstall advised the special committee of his negotiations and his satisfaction with the resolution of all such issues. BB&T confirmed its opinion that the merger consideration was fair, from a financial point of view, to the stockholders of JLM other than the buyer group. Members of the special committee asked questions regarding recent developments and directed questions to BB&T with respect to the financial terms of the merger, including questions about the relationship of the book value per share and the merger consideration being offered. BB&T responded to all inquiries to the satisfaction of the special committee. Following this discussion, the special committee unanimously approved the merger agreement and recommended its approval by the entire membership of the board of directors of JLM.

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On October 30, 2003, at a meeting of the board of directors of JLM, with all members attending either in person or telephonically, the board of directors of JLM unanimously approved the merger agreement after careful consideration of the recommendation given by the special committee and after careful consideration of the report given by BB&T as to the fairness of the transaction.

Following the meeting of the board of directors of JLM, JLM and the buyer group executed the merger agreement and related documents in the evening on October 30, 2003 and publicly announced the transaction the next day.

Recommendation of the Special Committee and the Board of Directors; Reasons for the Merger

The board of directors of JLM and the special committee have each unanimously determined that the merger is advisable and fair to the unaffiliated stockholders and has approved and adopted the merger agreement and the transactions contemplated thereby, including the merger. Accordingly, the board of directors of JLM unanimously recommends that stockholders vote “FOR” approval and adoption of the merger agreement and the related transactions contemplated thereby, including the merger.

In reaching its determination that the merger is advisable and fair to and in the best interests of JLM and its unaffiliated stockholders, the special committee consulted with JLM’s management, its legal and financial advisors, and considered a number of factors, which included (but did not consist exclusively of) the following:

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The special committee also considered the following negative factors:

The special committee also recognized that certain officers and stockholders of JLM have interests in the merger that are different from JLM’s other stockholders. See “Special Factors—Interests of Certain Persons in the Merger” beginning on page 37 of this proxy statement for a more detailed description of such interests.

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In the judgment of the special committee, the potential benefits of the transaction outweigh the potential negative elements of the above-described considerations.

The foregoing discussion of the information and factors discussed by the special committee is not meant to be exhaustive but summarizes the material factors considered by the special committee in making its recommendation. In view of the complexity and wide variety of information and factors considered, both positive and negative, the special committee did not find it practical to and did not quantify, rank or otherwise attach or assign any relative or specific weight to the various factors or, except as specifically stated herein, determine that any factor was of particular importance. The special committee viewed its position and recommendation as being based on the totality of the information presented and the factors considered, including thorough discussions with JLM’s management and legal and financial advisors However, the special committee did place a special emphasis on the consideration payable in connection with the proposed merger and the receipt of a favorable fairness opinion from its financial advisor. In addition, individual members of the special committee may have given differing weights to different factors and may have viewed certain factors more positively or negatively than others. Throughout its deliberations, the special committee consulted with management and its legal and financial advisors.

As a result of its consideration of the foregoing, the special committee determined that the merger agreement and the transactions contemplated thereby, including the merger, are fair to and in the best interests of JLM and its unaffiliated stockholders and unanimously approved and recommended that the entire membership of the board of directors approve and adopt the merger agreement and the transactions contemplated thereby, including the merger.

Members of the Special Committee

A. Gordon Tunstall. Mr. Tunstall, the chairman of the special committee, has been a director of JLM since 2001. Mr. Tunstall is President of Tunstall Consulting, Inc., which was founded in 1980. Mr. Tunstall was the Chief Financial Officer of Swann Oil Company from 1975 to 1980. He served as Group Vice President for Provident National Bank in Philadelphia from 1972 to 1975. He was an audit manager for PriceWaterhouse Coopers from 1966 to 1972. He serves as a director of K Force Inc., Advanced Lighting Technologies and Horizon Medical Products. He received a B.S. in Accounting from Widener College in 1966.

Jerry L. Weinstein. Mr. Weinstein has been a director of JLM since 1997. Mr. Weinstein served as Vice President of Owens Corning—Specialty & Foam Products Division from 1994 to 1999. From 1980 to 1994, Mr. Weinstein was President and Chief Executive Officer of UC Industries, Inc., an independent manufacturer of plastic products for the building materials industry.

Vincent J. Naimoli. Mr. Naimoli has been a director of JLM since 2000. Mr. Naimoli has been Managing General Partner and Chief Executive Officer of the Tampa Bay Devil Rays since 1995. From 1975 to 1995, Mr. Naimoli held executive positions with various companies such as Harvard Industries, Inc., Ladish Co., Tampa Bay Baseball group, Doehler-Jarvis, Inc., Harding Services Corp., Lancaster Capital Corp., Electrolux and Regina Corps., and Anchor Industries International.

Opinion of the Special Committee’s Financial Advisor

Pursuant to an engagement letter dated August 22, 2003, the special committee retained BB&T Capital Markets, a division of Scott & Stringfellow, Inc., for the purpose of rendering its opinion to the special committee in connection with the proposed merger transaction with the buyer group. In accordance with the terms of the engagement letter, BB&T delivered to the special committee on October 22, 2003 a written opinion of BB&T with respect to the fairness, from a financial point of view, to the stockholders, other than the buyer group, of the merger consideration proposed in connection with the merger. The full text of such opinion, which is attached hereto as Annex B and incorporated herein by reference, sets forth a description of the procedures followed, assumptions made, matters considered, areas of reliance on others, and qualifications and limitations on the review undertaken in connection with such opinion.

No limitations were imposed on the scope of BB&T’s analysis or the procedures to be followed by BB&T in rendering its opinion. The opinion was addressed only to the special committee for its consideration in

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connection with the merger, relates only to the fairness, from a financial point of view, to the stockholders, other than the buyer group, of the merger consideration, and does not address any other aspect of the merger, including, without limitation:

The summary description of the opinion set forth below is qualified in its entirety by the full text of such opinion, and such opinion should be read carefully and in its entirety in connection with the proxy material. BB&T has consented to the use of its opinion in connection with this proxy statement and to the inclusion of the summary set forth below. In arriving at its opinion, BB&T, among other things:

Representatives of BB&T participated in a meeting of the special committee held on October 30, 2003 at which the special committee discussed and approved the merger and recommended the merger to the entire board of directors and the stockholders for their approval. At the meeting, BB&T confirmed its written opinion, dated October 22, 2003, to the special committee that, based upon and subject to BB&T’s review of the foregoing financial and other information, its analysis described below, its experience as an investment banking firm and other factors BB&T deemed relevant, but subject to the limitations set forth below and in reliance on the assumptions set forth below, the merger consideration was, as of October 22, 2003, fair, from a financial point of view, to the stockholders, other than the buyer group.

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In rendering its opinion, BB&T assumed and relied upon without independent verification the accuracy and completeness of all information that was provided or otherwise made available to BB&T, that was discussed with or otherwise reviewed by or for BB&T or that was publicly available. BB&T did not attempt and assumed no responsibility to verify such information independently. With respect to the financial projections, BB&T assumed, and BB&T was advised by JLM’s management, that the projections were reasonably prepared on a basis reflecting the best currently available estimates and judgments of the management of JLM as to the future financial performance of JLM and that such forecasts would be realized in the amounts and at the times contemplated. BB&T expressed no opinion with respect to the projections or the assumptions, estimates or judgments on which such projections were based. In addition, BB&T assumed,

BB&T did not make any independent valuation or appraisal of the assets, liabilities or solvency of JLM, nor was BB&T furnished with any such appraisals. The opinion took into account economic, financial, market and other conditions as those conditions existed and could be evaluated as of the date of the opinion and BB&T’s experience in preparing business valuations in general.

In arriving at its opinion, BB&T was not authorized to solicit, and did not solicit, indications of interest from any party, nor did it have discussions with any party other than JLM with respect to a merger of JLM or an acquisition of JLM or any of its assets. Furthermore, BB&T was not authorized to negotiate the terms of the merger and has based its opinion solely on the terms of the merger agreement as negotiated by others. BB&T did not determine or recommend the type or amount of the consideration to be paid to the stockholders. BB&T was not retained as an advisor or agent to the stockholders or any other person other than advisor to the special committee. Below is a summary of the material analyses performed by BB&T and reviewed with the special committee in connection with the written opinion delivered to the special committee on October 22, 2003 and confirmed to the special committee on October 30, 2003.

Premiums Paid Analysis

BB&T reviewed purchase price premiums paid for the stock of (i) all publicly-traded companies and (ii) all publicly-traded companies in transactions valued at $50 million or less for the twelve months ended June 30, 2003. In this analysis, BB&T measured the median purchase price premiums paid by acquirors over the prevailing stock market prices of acquirees one day, five days, and 30 days prior to the announcement of the transactions. To imply a value for JLM’s shares, these premiums were applied to the prices of JLM’s shares for the same periods relative to (i) Philip Sassower’s resignation from JLM’s board of directors and simultaneous public announcement of an interest in a strategic transaction with JLM on May 30, 2003 and (ii) the public announcement of the $1.40 per share offer price on June 24, 2003.

The premiums paid analysis of all public acquisitions resulted in:

Premiums Paid Analysis—All Public Acquisitions

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The premiums paid analysis of all public acquistions valued at $50 million and less resulted in:

Premiums Paid Analysis—Public Acquisitions Valued at $50 Million and Less

The premium of the offer of $1.40 per share to the stockholders was:

No company or transaction used in the comparable company analyses, the comparable transactions analysis or the premiums paid analysis as a comparison is identical to JLM or the merger. An analysis of the results of the foregoing is not mathematical; rather, it involves complex considerations and judgments concerning differences in financial and operating characteristics of the companies to which JLM and the merger are being compared and other factors that could affect the public trading value of such companies. Accordingly, the results of the premium paid analysis supports BB&T’s conclusion that the merger consideration is fair from a financial point of view to the stockholders, other than the buyer group.

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Discounted Cash Flow Analysis

BB&T performed a discounted cash flow analysis based on financial projections provided to BB&T by JLM’s senior management. The discounted cash flow analysis is based on the projected future unlevered free cash flows of JLM, after taking into consideration capital expenditures and working capital requirements. These cash flows are discounted back to a present value at an appropriate rate and are added to a terminal value, which is determined by applying an earnings multiplier to JLM’s projected EBITDA in the year 2005 and discounting that value back to the present. The discounted cash flow analysis yielded an equity value range of $0.72 per share to $0.88 per share with a median equity value of $0.79 per share utilizing a range of discount rates and an equity value range of $0.38 per share to $1.21 per share with a median equity value of $0.79 per share utilizing a range of terminal multiples. Accordingly, the results of the discounted cash flow analysis supports BB&T’s conclusion that the merger consideration is fair, from a financial point of view, to the stockholders, other than the buyer group.

Comparable Public Company Analysis

As part of its analysis, BB&T compared financial information of JLM with corresponding publicly available information for a group of five publicly-traded marketers and distributors and/or manufacturers of specialty chemicals that BB&T considered most comparable with JLM, which included: Aceto Corporation, Ashland, Inc., Georgia Gulf Corporation, Hawkins, Inc., and Univar NV. These companies are referred to below as the “comparable companies.” BB&T analyzed the relative performance of JLM by comparing market trading statistics for JLM with those of the comparable companies. The market trading information used in ratios provided below is as of October 29, 2003. The market trading information used in the valuation analysis were:

An analysis of the multiples for the comparable companies yielded:

Comparable Companies Analysis

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BB&T applied a 30% control premium to the implied equity per share values (which are calculated by (a) multiplying the derived trading multiples for the comparable companies by the appropriate financial measure for JLM; (b) subtracting JLM’s debt and adding JLM’s cash in the case of implied equity per share values based on JLM’s revenue, EBITDA and EBIT and (c) dividing by the total number of shares outstanding) for JLM derived from the comparable companies analysis to account for the fact that the derived trading multiples for the comparable companies represent a minority interest while the derived multiples for the merger represent a 100% interest. In instances where the implied equity per share value was negative, no control premium was applied. This adjustment should be viewed only as an approximation reflecting BB&T’s qualitative judgment and experience as to the significance of this variance between JLM and the comparable companies and not as a definitive indication of relative value. Furthermore, BB&T noted that the comparable companies were larger in many respects and generally in better financial condition and more profitable than JLM. For example, the median revenue for the latest twelve-month period of the comparable companies was approximately 5x larger than the revenue of JLM for the latest twelve-month period, and the median EBIT margin for the latest twelve-month period of the comparable companies was approximately 4.8% while the EBIT margin of JLM for the latest twelve-month period was negative (1.2%). As a result, BB&T placed significantly less emphasis on the quantitative results of this analysis.

As it pertains to the comparable companies analysis, BB&T determined that the implied equity per share values for JLM were as follows:

The following table sets forth the multiples implied by the merger:

JLM Industries, Inc. Transaction Multiples

When the multiples implied by the merger are compared to the comparable companies analysis, the revenue and book value multiples are below that of the comparables while the EBITDA multiple exceeds that of the comparables. As JLM’s trailing twelve-months net income and EBIT are negative, they did not provide precise

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valuation measurements that could be compared to the comparable companies analysis; however, they indicate that the merger consideration exceeds the implied equity per share values under these valuation measurements. Accordingly, the results of the comparable companies analysis support BB&T’s conclusion that the merger consideration is fair, from a financial point of view, to the stockholders, other than the buyer group.

Accordingly, although certain of the results of this analysis result in values greater than the merger consideration, overall the results of the comparable companies analysis support BB&T’s conclusion that the merger consideration is fair, from a financial point of view, to the stockholders, other than the buyer group. However, since JLM is smaller and significantly less profitable than the comparable companies, as described above, BB&T therefore placed less emphasis on such results.

Comparable Transaction Analysis

Using publicly available information, BB&T analyzed transactions involving specialty chemical marketing and distribution companies and industrial chemical manufacturing companies since 1998. The selected transactions used in the analysis of specialty chemical marketers and distributors were (acquiror/acquiree):

The selected transactions used in the analysis of industrial chemical manufacturers were (acquiror/acquiree):

BB&T compared the relative performance of JLM to certain transaction multiples implied by the comparable transactions. In each comparable transaction, BB&T calculated for the target company:

This analysis of specialty chemical marketers and distributors yielded:

Comparable Transactions Analysis—Specialty Chemical Marketers & Distributors

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This analysis of industrial chemical manufacturers yielded:

Comparable Transactions Analysis—Industrial Chemical Manufacturers

As it pertains to the comparable transactions analysis, BB&T noted that the market conditions, rationales for and circumstances surrounding each transaction were unique and that the comparable target companies were generally in better financial condition and more profitable than JLM. For example, the EBIT margin for the latest twelve-month period of the comparable target companies was approximately 4.5% while JLM’s EBIT margin for the latest twelve months was negative (1.2%). As a result, BB&T placed significantly less emphasis on the quantitative results of this analysis.

As it pertains to the comparable transactions analysis of specialty chemical marketers and distributors, BB&T determined the implied median equity per share valuations were as follows:

As it pertains to the comparable transactions analysis of industrial chemical manufacturers, BB&T determined the implied median equity per share valuations were as follows:

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Table of Contents

The following table sets forth the multiples implied by the merger:

JLM Industries, Inc. Transaction Multiples

When the multiples implied by the merger are compared to both the specialty chemical marketers and distributors comparable transactions analysis and the industrial chemical manufacturers comparable transactions analysis, the revenue and book value multiples are below that of the comparables and the EBITDA multiple exceeds that of the comparables. As JLM’s trailing twelve-months net income and EBIT are negative, they did not provide precise valuation measurements that could be compared to the specialty chemical marketers and distributors comparable transactions analysis and the industrial chemical manufacturers comparable transactions analysis; however, overall, they indicate the merger consideration exceeds the implied equity per share values under these valuation measurements. Accordingly, although certain of the results of this analysis result in values greater than the merger consideration, the results of the comparable transactions analysis support BB&T’s conclusion that the merger consideration is fair, from a financial point of view, to the stockholders, other than the buyer group. However, since JLM is smaller and significantly less profitable than the comparable companies as described above, BB&T therefore placed less emphasis on such results,