Exhibit 10.12

                             IDM ENVIRONMENTAL CORP.

                       NONQUALIFIED STOCK OPTION AGREEMENT


     This Nonqualified  Stock Option Agreement  ("Option  Agreement") is between
IDM Environmental Corp., a New Jersey corporation (the "Company"),  and Frank A.
Falco ("Optionee"), who agree as follows:

     Section 1.  Introduction.  The Company  and the  Optionee  have  heretofore
agreed to amend the employment agreement between the Company and the Optionee to
delete the stock bonus provision of the employment  agreement.  As consideration
for  relinquishing  the stock bonus right under the  employment  agreement,  the
Company has agreed to grant to the Optionee,  among other  consideration,  stock
options in an amount determined to have an intrinsic value  approximately  equal
to the estimated value of the stock bonus right under the employment  agreement.
The Company, acting through its Board of Directors (the "Board"), has determined
that its interests will be advanced by the issuance to Optionee of  nonqualified
stock options as provided for by the amendment to the employment agreement.

     Section 2. Option.  Subject to the terms and conditions  contained  herein,
the  Company  hereby  irrevocably  grants  to  Optionee  the  right  and  option
("Option") to purchase from the Company 2,250,000 shares of the Company's common
stock,  $.001 par value ("Common Stock"),  at a price of $3.719 per share, being
the closing bid price of the Common  Stock on the last  trading day  immediately
preceding the grant of this Option.

     Section 3. Option  Period.  The Option  herein  granted may be exercised by
Optionee in whole or in part at any time during a five year period  beginning on
the date set forth below (the "Option Period").

     Section 4.  Procedure  for  Exercise.  The  Option  herein  granted  may be
exercised by the delivery by Optionee of written  notice to the Secretary of the
Company setting forth the number of shares of Common Stock with respect to which
the  Option is being  exercised.  The  notice  shall be  accompanied  by, at the
election of the Optionee,  (i) cash,  cashier's check,  bank draft, or postal or
express  money  order  payable to the order of the  Company,  (ii)  certificates
representing  shares of Common Stock theretofore owned by Optionee duly endorsed
for transfer to the Company, or (iii) any combination of the preceding, equal in
value to the aggregate exercise price.  Notice may also be delivered by telecopy
provided  that the exercise  price of such shares is received by the Company via
wire  transfer  on the same day the  telecopy  transmission  is  received by the
Company. The notice shall specify the address to which the certificates for such
shares are to be mailed. An option to purchase shares of Common Stock,  shall be
deemed to have been exercised  immediately prior to the close of business on the
date  (i)  written  notice  of such  exercise  and (ii)  payment  in full of the
exercise  price for the number of shares for which Options are being  exercised,
are both received by the Company and Optionee  shall be treated for all purposes
as the record holder of such shares of Common Stock as of such date.

<PAGE>


     As  promptly  as  practicable  after  receipt  of such  written  notice and
payment,  the Company shall deliver to Optionee  certificates  for the number of
shares  with  respect to which  such  Option  has been so  exercised,  issued in
Optionee's name or such other name as Optionee directs; provided,  however, that
such delivery  shall be deemed  effected for all purposes when a stock  transfer
agent of the Company shall have deposited such certificates in the United States
mail, addressed to Optionee at the address specified pursuant to this Section 4.

     Section 5. Death.  In the event the Optionee dies during the Option Period,
the options  previously  granted to  Optionee  may be  exercised  (to the extent
Optionee would have been entitled to do so at the date of death) at any time and
from  time to  time by the  guardian  of  Optionee's  estate,  the  executor  or
administrator  of  Optionee's  estate  or by  the  person  or  persons  to  whom
Optionee's  rights under this Option Agreement shall pass by will or the laws of
descent and distribution,  but in no event may the Option be exercised after its
expiration under the terms of this Option Agreement.

     Section  6.  Transferability.  This  Option  shall not be  transferable  by
Optionee  otherwise  than by  Optionee's  will or by the  laws  of  descent  and
distribution or pursuant to a qualified  domestic  relations order as defined in
the Code or Title I of the Employee  Retirement Income Security Act, as amended,
or the rules  thereunder.  During the lifetime of Optionee,  the Option shall be
exercisable only by Optionee.  Any heir or legatee of Optionee shall take rights
herein granted subject to the terms and conditions  hereof.  No such transfer of
this Option  Agreement  to heirs or legatees of Optionee  shall be  effective to
bind the  Company  unless the Company  shall have been  furnished  with  written
notice  thereof and a copy of such  evidence as the Board may deem  necessary to
establish the validity of the transfer and the  acceptance by the  transferee or
transferees of the terms and conditions hereof.

     Section  7. No Rights as  Shareholder.  Optionee  shall have no rights as a
shareholder  with respect to any shares of Common  Stock  covered by this Option
Agreement  until the Option is exercised by written  notice and  accompanied  by
payment as provided in Section 4 of this Option Agreement.

<PAGE>



     Section  8.  Extraordinary   Corporate   Transactions.   The  existence  of
outstanding  Options  shall  not  affect  in any way the  right  or power of the
Company  or its  shareholders  to  make  or  authorize  any or all  adjustments,
recapitalizations,  reorganizations  or other changes in the  Company's  capital
structure or its business, or any merger or consolidation of the Company, or any
issuance of the Common Stock or subscription  rights thereto, or any issuance of
bonds, debentures, preferred or prior preference stock ahead of or affecting the
Common Stock or the rights  thereof,  or the  dissolution  or liquidation of the
Company,  or any sale or transfer of all or any part of its assets or  business,
or any other  corporate  act or  proceeding,  whether of a similar  character or
otherwise.  If the  Company  recapitalizes  or  otherwise  changes  its  capital
structure, or merges,  consolidates,  sells all of its assets or dissolves (each
of the foregoing a "Fundamental  Change"),  then thereafter upon any exercise of
the Option,  Optionee shall be entitled to purchase under the Option, in lieu of
the  number  of shares of Common  Stock as to which  the  Option  shall  then be
exercisable,  the  number and class of shares of stock and  securities  to which
Optionee  would  have been  entitled  pursuant  to the terms of the  Fundamental
Change if, immediately prior to such Fundamental  Change,  Optionee had been the
holder of record of the number of shares of Common  Stock as to which the Option
is then exercisable.

     Section 9.  Changes  in Capital  Structure.  If the  outstanding  shares of
Common Stock or other  securities of the Company,  or both, for which the Option
is then exercisable  shall at any time be changed or exchanged by declaration of
a stock dividend, stock split,  combination of shares, or recapitalization,  the
number  and kind of shares of Common  Stock or other  securities  subject to the
Plan or subject to the Option and the exercise price, shall be appropriately and
equitably adjusted so as to maintain the proportionate number of shares or other
securities without changing the aggregate exercise price.

     Section 10.  Compliance With  Securities  Laws. Upon the acquisition of any
shares pursuant to the exercise of the Option herein  granted,  Optionee (or any
person  acting under  Section 6) will enter into such  written  representations,
warranties  and  agreements  as the Company may  reasonably  request in order to
comply with applicable securities laws or with this Option Agreement.

     Section  11.  Compliance  With  Laws.  Notwithstanding  any  of  the  other
provisions  hereof,  Optionee agrees that he or she will not exercise the Option
granted  hereby,  and that the Company will not be obligated to issue any shares
pursuant to this Option Agreement, if the exercise of the Option or the issuance
of such shares of Common  Stock would  constitute  a violation by Optionee or by
the  Company  of any  provision  of any law or  regulation  of any  governmental
authority.

<PAGE>



     Section 12.  Withholding  of Tax.  To the extent that the  exercise of this
Option or the disposition of shares of Common Stock acquired by exercise of this
Option  results in  compensation  income to Optionee for federal or state income
tax purposes,  Optionee shall pay to the Company at the time of such exercise or
disposition  (or such other time as the law  permits if  Optionee  is subject to
Section 16(b) of the Securities Exchange Act of 1934, as amended) such amount of
money as the Company may require to meet its  obligation  under  applicable  tax
laws or regulations;  and, if Optionee fails to do so, the Company is authorized
to withhold from any cash remuneration  then or thereafter  payable to Optionee,
any tax required to be withheld by reason of such resulting  compensation income
or Company  may  otherwise  refuse to issue or  transfer  any  shares  otherwise
required to be issued or transferred pursuant to the terms hereof.

     Section 13. No Right to  Employment.  Optionee who is an employee  shall be
considered  to be in the  employment of the Company so long as he or she remains
an employee of the Company or its  Affiliates.  Any  questions as to whether and
when  there  has been a  termination  of such  employment  and the cause of such
termination  shall be determined by the Board,  and its  determination  shall be
final.  Nothing  contained herein shall be construed as conferring upon Optionee
the right to continue in the employ of the Company, nor shall anything contained
herein  be  construed  or  interpreted   to  limit  the   "employment  at  will"
relationship between Optionee and the Company.

     Section 14.  Resolution of Disputes.  As a condition of the granting of the
Option hereby,  Optionee,  and Optionee's heirs,  personal  representatives  and
successors  agree that any  dispute or  disagreement  which may arise  hereunder
shall be determined by the Board in its sole  discretion and judgment,  and that
any such  determination and any interpretation by the Board of the terms of this
Option  Agreement  shall be final and shall be binding and  conclusive,  for all
purposes,   upon  the  Company,   Optionee,   and  Optionee's  heirs,   personal
representatives and successors.

     Section  15.  Legends  on  Certificate.  Unless an  effective  registration
statement has been filed with the  Securities and Exchange  Commission  covering
the shares issuable upon exercise of this Option, the certificates  representing
the shares of Common  Stock  purchased by exercise of the Option will be stamped
or otherwise  imprinted  with legends in such form as the Company or its counsel
may require with respect to any applicable  restrictions on sale or transfer and
the  stock   transfer   records  of  the  Company  will  reflect   stop-transfer
instructions with respect to such shares.

     Section 16. Notices.  Every notice  hereunder shall be in writing and shall
be given by  registered  or certified  mail.  All notices of the exercise of any
Option  hereunder shall be directed to IDM  Environmental  Corp.,  396 Whitehead
Avenue, South River, New Jersey 08882, Attention: Secretary. Any notice given by
the  Company to  Optionee  directed  to Optionee at the address on file with the
Company  shall be  effective  to bind  Optionee  and any other  person who shall
acquire rights hereunder. The Company shall be under no obligation whatsoever to
advise  Optionee of the existence,  maturity or termination of any of Optionee's
rights  hereunder and Optionee shall be deemed to have  familiarized  himself or
herself with all matters  contained  herein  which may affect any of  Optionee's
rights or privileges hereunder.

<PAGE>


     Section 17. Construction and  Interpretation.  Whenever the term "Optionee"
is used herein under circumstances  applicable to any other person or persons to
whom this award, in accordance  with the provisions of Section 6 hereof,  may be
transferred,  the word  "Optionee"  shall be deemed to  include  such  person or
persons.

     Section 18. Binding Effect. This Option Agreement shall be binding upon and
inure to the benefit of any  successors to the Company and all persons  lawfully
claiming under Optionee as provided herein.

     IN WITNESS  WHEREOF,  this  Nonqualified  Stock Option  Agreement  has been
executed as of the 18th day of February, 1998.

                                 IDM ENVIRONMENTAL CORP.


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



                                 OPTIONEE

                                 Frank A. Falco

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


b:/ms/nqsgran2.idm
idm97/98