THERMO-MIZER ENVIRONMENTAL CORP, PRE 14A, 1998-05-11

THERMO-MIZER ENVIRONMENTAL CORP
PRE 14A, 1998-05-11
MEDICAL, DENTAL & HOSPITAL EQUIPMENT & SUPPLIES

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PRELIMINARY PROXY MATERIALS

THERMO-MIZER ENVIRONMENTAL CORP.
900 East Hazelwood Avenue
Rahway, New Jersey 07065

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 12, 1998 AT 10:00 A.M.

To the Shareholders of
Thermo-Mizer Environmental Corp.:

Notice is hereby given that the Annual Meeting of Shareholders (the
"Meeting") of Thermo-Mizer Environmental Corp., a Delaware corporation (the
"Company"), will be held at the Montvale Inn, 100 Chestnut Ridge Road, Montvale,
New Jersey 07645, on June 12, 1998, at the hour of 10:00 a.m. local time for the
following purposes:

(1) To elect one director for a term of three years as authorized by the
Company's By-Laws, as amended;

(2) To ratify the appointment of the independent auditors;

(3) To approve an amendment to the Company's Articles of
Incorporation to change the name of the Company to Laminaire
Corporation;

(4) To approve an amendment to the Company's Articles of
Incorporation to increase the authorized shares of Common
Stock which the Company shall have authority to issue from
25,000,000 shares of a par value of $.001 per share to
40,000,000 shares of a par value of $.001 per share as
recommended by the Company's Board of Directors;

(5) To ratify the amendment of the Company's Articles of
Incorporation to effect a one-for-four reverse stock split;

(6) To consider and approve the adoption of a Stock Incentive Plan for
the Company; and

(7) To transact such other business as may properly come before the
Meeting.

Only shareholders of record at the close of business on May 15, 1998
are entitled to notice of and to vote at the meeting or any adjournment thereof.

By Order of the Board of Directors

May 19, 1998 Antonio Garay, President

<PAGE>

IF YOU WISH TO VOTE IN FAVOR OF EACH OF THE PROPOSALS AND FOR THE
NOMINEES PRESENTED, CHECK THE APPROPRIATE BOX, SIGN, DATE AND RETURN
THE ENCLOSED PROXY IN THE ENCLOSED ENVELOPE WHICH REQUIRES NO POSTAGE
IF MAILED IN THE UNITED STATES. IN ANY EVENT YOUR PROMPT RETURN OF A
SIGNED AND DATED PROXY WILL BE APPRECIATED.
THERMO-MIZER ENVIRONMENTAL CORP. 900 East Hazelwood Avenue
Rahway, New Jersey 07065

June 12, 1998

PROXY STATEMENT

This Proxy Statement and the accompanying proxy are furnished by the
Board of Directors of the Company in connection with the solicitation of proxies
for use at the 1998 Annual Meeting of Shareholders (the "Meeting") referred to
in the foregoing notice. It is contemplated that this Proxy Statement, together
with the accompanying form of proxy and the Company's Annual Report on Form
10-KSB for the fiscal year ended December 31, 1997 will be mailed to
shareholders on or about May 19, 1998.

The record date for the determination of shareholders entitled to
notice of and to vote at the Meeting is May 15, 1998. On that date, there were
issued and outstanding, 11,938,155 shares of Common Stock, par value $.001 per
share. The presence, in person or by proxy, of the holders of a majority of the
shares of Common Stock outstanding and entitled to vote at the Meeting is
necessary to constitute a quorum. In deciding all questions, a shareholder shall
be entitled to one vote, in person or by proxy, for each share held in his or
her name on the record date.

All proxies received pursuant to this solicitation will be voted
(unless revoked) at the Meeting on June 12, 1998, or any adjournments thereof,
in the manner directed by a shareholder and, if no direction is made, in favor
of the proposals. Any shareholder giving a proxy has the power to revoke it any
time prior to voting, but a revocation will not be effective until the Company
has received a revoking instrument or a proper proxy of later date. Mere
attendance at the meeting, without such revoking instrument, will not revoke the
proxy.

The favorable vote of holders of a majority of the shareholders present
at the Meeting is required to approve all proposals.

As of the date of this Proxy Statement, the Board of Directors knows of
no matters other than the foregoing that will be presented at the Meeting. If
any other business should properly come before the Meeting, the accompanying
form of proxy will be voted in accordance with the judgment of the persons named
therein, and discretionary authority to do so is included in the proxies. All
expenses in connection with the solicitation of this proxy will be paid by the
Company. In addition to solicitation by mail, officers, directors and regular
employees of the Company who will receive no extra compensation for their
services, may solicit proxies by telephone, telegraph or personal calls.
Management does not intend to use specially engaged employees or paid solicitors
for such solicitation. Management intends to solicit proxies which are held of
record by brokers, dealers, banks, or voting trustees, or their nominees, and
may pay the

<PAGE>

reasonable expenses of such record holders for completing the mailing of
solicitation materials to persons for whom they hold the shares. All
solicitation expenses will be borne by the Company.

SECURITY OWNERSHIP AND CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT

The following table sets forth certain information known to the Company
regarding beneficial ownership of the Company's Common Stock at March 31, 1998
by (i) each person known by the Company to own, directly or beneficially, more
than 5% of the Company's Common Stock at such date (assuming that all shares
issued to such persons are still held by them), (ii) each of the Company's
directors, and (iii) all officers and directors of the Company as a group.
Except as otherwise indicated, the Company believes that the beneficial owners
of the Common Stock listed below, based on information furnished by such owners,
have sole investment and voting power with respect to such shares, subject to
community property laws, where applicable.

NAME AND ADDRESS OF NUMBER OF PERCENT Of
BENEFICIAL OWNER (6) SHARES OWNED (5) SHARES OWNED (4)

Jon J. Darcy (1) 539,750 5.1

Edward Sundberg 1,500 -

Edward A. Heil (2) - -

K. Ivan F. Gothner - -

Charles J. Garay - -

Gerard M. Gallagher - -

Steven W. Schuster (3) 17,000 -

David Morgenstern 609,488 5.7
Norwood Venture Group(4) 2,083,333 16.3
Austost Anstalt Schaan(4) 1,693,535 14.9

UFH Endowment (4) 1,678,780 14.8

Arcadia Mutual Fund Co., Inc (4) 3,021,354 27.1

Directors and Officers As a Group 558,250 5.2
</TABLE>

1. Excludes 441,543 shares held in three trusts for Mr. Darcy's children
over which Mr. Darcy disclaims beneficial ownership.

2. Excludes 80,000 shares owned by a company in which Mr. Heil is managing
director. Mr. Heil disclaims beneficial ownership thereof.

3. Excludes 41,000 shares held by the law firm in which Mr. Schuster is a
partner.

<PAGE>

4. Excludes the assumed conversion of warrants and options which have
exercise or conversion prices in excess of the current market price.
Assumes that convertible debt having an aggregate principal amount of
$1,187,500 will be converted at a price of $.24 per share. Includes the
issuance of

<PAGE>

2,083,333 shares of Common Stock to Norwood Venture Group upon
conversion of a promissory note in the principal amount of $500,000;
the issuance of 687,500 shares of Common Stock to each of UFH
Endowment, and Austost Anstalt Schaan and the issuance of 447,917
shares of Common Stock to Arcadia Mutual Fund Co., Inc. upon conversion
by each entity of $165,000 outstanding principal amount of convertible
debentures.

5. Excludes all options held by the respective individuals which have
exercise prices above the current market price or which are not
redeemable.

6. The address for each officer or director listed above is 960 East
Hazelwood Avenue, Rahway, New Jersey 07065.

PROPOSAL ONE: ELECTION OF DIRECTORS

Management recommends that you vote in favor of the nominees
named to the Board of Directors

The By-laws of the Company, as amended, provide for a
staggered Board of Directors. The Board of Directors currently consists of five
(5) members in the following class and terms: Class II directors elected for a
two-year term (Edward A. Heil, K. Ivan Gothner); and Class III directors elected
for a three-year term (Jon J. Darcy, Edward A. Sundberg). As provided by the
By-laws, successors to directors whose terms expire will be elected for
three-year terms.

One (1) director is to be elected at the meeting, to hold
office for a period of three years. It is intended that votes will be cast
pursuant to such proxy for the election of the one person whose name is first
set forth below unless authority to vote for one or more of the nominees is
withheld by the enclosed proxy, in which case it is intended that votes will be
cast for those nominees, if any, with respect to whom authority has not been
withheld. If all of the nominees should become unable or unwilling to serve as a
director, it is intended that the proxy be voted, unless authority is withheld,
for the election of such person, if any, as shall be designated by the Board of
Directors. Directors will be elected by a majority of the votes cast at the
Meeting.

The following information is submitted concerning the one
nominee for election as director of the Company:

Nominees for Election

The following individual is the nominee for director of the
Company.

Charles J. Garay

<PAGE>

The Board of Directors is currently made up of the following:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>

Class Term First
of of Became Principal
Director Office Director Occupation

Edward A. Heil II 2 years 1995 Consultant

K. Ivan F. Gothner II 2 years 1995 Director of
securities firm

Jon J. Darcy III 3 years 1978 Director

Edward A. Sundberg III 3 years 1995 President of
consulting
firm

Charles J. Garay I 3 years 1997 Former President
of Laminaire
</TABLE>

All Directors hold office until the completion of their term of office,
which is not longer than three years, or until their successors have been
elected. The Company has a staggered Board of Directors. Mr. Garay's term
expires in 1998. The terms of Messrs. Heil and Gothner expire in 1999. The terms
of Messrs. Darcy and Sundberg expire in 2000. All officers are appointed
annually by the Board of Directors and, subject to existing employment
agreements, serve at the discretion of the Board.

The Board of Directors has an Audit Committee, Finance, Operating and
Compensation Committee. The Audit Committee reviews the results and scope of the
audit and other services provided by the Company's independent auditors, reviews
and evaluates the Company's internal audit and control. The Finance Committee,
established in February 1998, oversees the Company's treasury function. The
Operating Committee, established in February 1998, reviews and establishes the
Company's strategies, goals and direction.

The executive officers and directors of the Company are as follows:

Name Age Position with Company

Edward A. Sundberg 50 Chairman of the Board, Director
Antonio Garay 50 President
Jon J. Darcy 50 Director
Gerard M. Gallagher 62 Chief Financial Officer
Edward A. Heil 47 Director
K. Ivan F. Gothner 39 Director
Charles J. Garay 58 Director
Steven W. Schuster 43 Secretary
</TABLE>

<PAGE>

Background of Executive Officers and Directors

Antonio Garay was elected President of the Company in April 1998. From 19__
to October 1997 he was _____ and ______ of Laminaire. Mr. Garay holds a Bachelor
of ______ degree etc. etc. etc.

Edward A. Sundberg has been President of ConsultAmerica, Inc., a
business-consulting firm, since 1992. From 1989 to 1992, he was Executive Vice
President of ISS International Service Systems, Inc. Mr. Sundberg holds a
Bachelor of Science degree from the United States Naval Academy and a Master of
Business Administration from Boston University.

Edward A. Heil is a certified public accountant and a managing
director, since January 1992, in Independent Network Group, Inc., a financial
consulting firm. From 1984 through December 1991 he was a partner in the
accounting firm, Deloitte & Touche, LLP. From 1973 to 1984 he was employed in
various professional capacities by Deloitte & Touche, LLP. Mr. Heil holds
Bachelor of Arts and Master of Business Administration degrees from New York
University.

K. Ivan F. Gothner has been a Managing Director of The Adirondack Group
LLC, a financial consulting firm, since March 1997. Prior thereto, he was
employed as a managing director of First United Equities, Inc., a broker-dealer
that is a member of the National Association of Securities Dealers, Inc., since
August 1995. He was President of Breasy Medical Equipment (US), Inc. from
October 1994 to August 1995. From January 1993 through September 1994 he was
General Partner of Adirondack Partners, LP. From 1990 to 1992 he was a Senior
Vice President at Barclays Bank of New York. Prior thereto, he was a Senior Vice
President at Kleinwort Benson Limited, an investment banking firm. Mr. Gothner
holds Bachelor of Arts and Master of Arts degrees from Columbia University. Mr.
Gothner is also a director of The Ashton Technology Group, Inc., a
publicly-traded company headquartered in Philadelphia.

Charles J. Garay, the founder of Laminaire became a member of the Board of
Directors in October 1997 upon the completion of the Laminaire acquisition. From
1968 to October 1997 he was President and Chief Executive Officer of Laminaire.
Mr. Garay attended Rutgers University.

Jon J. Darcy co-founded the Company in 1978, was an executive with it
since inception and was President from 1987 until April 1998. He has a Bachelor
of Science degree from the State University of New York Maritime College.

Gerard M. Gallagher became Chief Financial Officer of the Company in
February 1998. For the preceding five years, he served as an independent
consultant to a variety of businesses. He is a graduate of Iona College.

Steven W. Schuster has been secretary of the Company since July 1996. He is
a member of McLaughlin & Stern, LLP, counsel to the Company, since 1995. Mr.
Schuster has practiced corporate and securities law for the past 18 years. He
received a Bachelor of Arts degree from Harvard University and a Juris Doctorate
from New York University. Mr. Schuster is a director of ACTV, Inc., an
interactive television company.

<PAGE>

Outside directors receive $4,000 per year plus $350 per
meeting as compensation for serving on the Board of Directors. All Directors are
reimbursed by the Company for expenses incurred in attending Directors'
meetings. Firms associated with outside directors and the Company's Secretary
received an aggregate of $217, 675 (principally for professional fees associated
with the acquisition of Laminaire and the negotiation of the financing therefor,
and in the case of Mr. Schuster, legal services). In addition, the directors who
served as of October 15, 1997 each received options to purchase up to 100,000
shares of common stock at an exercise price equal to the average conversion
price of convertible debentures converted between the period January 1, 1998 and
April 15, 1998. Mr. Schuster received an option to purchase 50,000 shares. Each
option also includes the right to purchase two Class A Redeemable Warrants at a
price of $.05 per warrant. These options become exercisable on April 16, 1998
and remain exercisable for a period of five years thereafter.

During the fiscal year ended June 30,1997 the Board of
Directors held six meetings. During the fiscal year ended December 31, 1997, the
Board of Directors held five meetings.

Executive Compensation
The following tabulation shows the total compensation paid by the Company to its
executive officers for the fiscal years ended June 30, 1996, June 30, 1997 and
the transition fiscal year ended December 31, 1997.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>

Long Term
Compensation Awards Payouts

Annual Compensation (1)

Name and Other Annual Restricted Stock Options/ LTIP All Other
Principal Position Year Salary Bonus Compensation Awards ($) SARs Payouts Compensation
- ------------------ ------------ ---------- ---- ------- ------------

Jon J. Darcy 1997 (6 mos.) $71,170 $4,000 -- -- -- --
President 1997 123,000 8,000 -- -- -- --
1996 123,000 8,000 -- -- -- --

</TABLE>

In fiscal 1996, Mr. Darcy received options to purchase 95,000 shares at
an exercise price of $.83 per share, the market price of the shares on the date
of issuance. In October 1997, Mr. Darcy received options to purchase up to
100,000 shares of common stock at an exercise price equal to the average
conversion price of convertible debentures converted between the period January
1, 1998 and April 15, 1998. Each option also includes the right to purchase two
Class A Redeemable Warrants at a price of $.05 per warrant. These options become
exercisable on April 16, 1998 and remain exercisable for a period of five years
thereafter.

No other employee or officer received annual compensation of as much as
$100,000.

In October 1997, the Company entered into Memorandums of Understanding
with three directors under which firms with which they are associated receive
fees for consulting services performed. The fees specified are $10,000 per month
for firms associated with Messrs. Heil and Sundberg and $4,000 per month for a
firm associated with Mr. Gothner.

The Board of Directors has established a compensation committee
comprised of outside directors to review compensation matters as well as any new
employment contracts. The Company has a health and disability plan and a 401(k)
plan for its employees.

<PAGE>

Employment Agreements

In July 1997, the Company entered into a three-year employment
agreement with Jon J. Darcy, former President of the Company, under which he
will receive an annual salary of $135,000, $ 145,000 and $155,000, respectively,
during each of the three fiscal years in the period ended June 30, 2000. Subject
to renewal for two additional three-year terms unless terminated for cause. The
contract also provides for the issuance of stock options based on the
achievement of specified operating performance, the use of a car and that the
Board of Directors may award Mr. Darcy bonuses and other incentive compensation
as it deems appropriate, based upon the Company's operating performance or other
reasonable criteria and includes a restrictive covenant limiting Mr. Darcy's
ability to obtain employment with a competitor or potential competitor.

In June 1996, the Company entered into three-year employment agreements
with three software engineers under which it is obligated to pay annual salaries
of $60,000 to each such engineer. The agreements contain
covenants-not-to-compete and confidentiality agreements, as well as provisions
for severance pay if the Company terminates any or all such agreements for other
than cause.

The Company is obligated under contracts with two Laminaire executives
to pay annual salaries aggregating $220,000. Such contracts are cancelable with
30 days notice but require severance payments for periods ranging from six to
nine months through _________________.

Certain Transactions

On October 16, 1997, the Company acquired all of the outstanding shares
of Common Stock of Laminaire from Garay LLC for a purchase price of $3,200,000,
subject to adjustment based on Laminaire's operating performance during the
period immediately prior to the acquisition. Garay LLC is an affiliate of
Charles Garay, who became a director of the Company after the acquisition of
Laminaire was completed. The purchase price consisted of a cash payment of
$1,000,000, a convertible promissory note in the principal amount of $2,200,000
(the "First Note") and a promissory note with a principal amount to be
determined (the "Second Note").

First Note, Second and Third Notes - The First Note bears interest at
the rate of 10% per annum and is payable in 60 equal monthly installments of
principal and interest of $33,830 commencing November 16, 1997 with a final
payment of principal of $1,000,000 due on October 16, 2002. The First Note is
convertible into shares of Common Stock at a conversion price per share equal to
$1 per share. The First Note becomes convertible for a period of two years
commencing April 16, 1998 in amounts not exceeding $500,000 for each four month
period. The holder of the First Note is entitled to demand registration of the
Common Stock issuable upon conversion of the First Note on one occasion at the
Company's expense commencing April 16, 1999 and is also entitled to piggyback
registration for such shares of Common Stock with respect to any registration
statement filed by the Company with the exception of a registration statement to
be filed in connection with any of the securities issued in connection with
obtaining the financing for the Company's acquisition of Laminaire.

The Second Note will be in a principal amount equal to the difference
between (a) the Stockholders' Equity (as defined) of Laminaire as of September
30, 1997 minus $200,000 minus (b) the Stockholders' Equity of Laminaire as of
September 30, 1996. In the event that the adjustment to the purchase price is

<PAGE>

negative, the principal amount of the First Note will be reduced by such amount.
The Second Note, which bears interest at the rate of 15% per annum, was to be
due on March 31, 1998; however, the final principal amount thereof has not yet
been determined.

In conjunction with the acquisition of Laminaire, the Company issued a
promissory note to Charles Garay in the principal amount of $90,479 (the "Third
Note"). The Third Note, and all accrued interest at the rate of 20% per annum,
is due May 13, 1998.

The Company's obligations under the First and Second Notes are secured
by first priority security interests in the real property and all tangible and
intangible personal property, including inventory and accounts receivable, of
Laminaire and the inventory and equipment of the Company and a subordinate
security interest in the accounts receivable of the Company. The subordinate
security interest is subordinate to the interests of the holders of convertible
debentures and convertible promissory notes in the principal amount of $500,000.
The agreements underlying First and Second Notes also contain restrictions on
the Company's ability to transfer cash from Laminaire and require the Company to
comply with various financial ratios.

During the six months ended December 31, 1997 and the fiscal years
ended June 30, 1997 and 1996, the Company paid professional, consulting and
legal fees amounting to $217,675 (of which $126,180 relates to the acquisition
of Laminaire or obtaining the financing therefor); $332,953(of which $153,924
relates to the acquisition of Laminaire or obtaining the financing therefor) and
$97,095 (of which $40,220 relates to services associated with the initial public
offering) to directors or firms related to directors or officers. The law firm
in which the Company's Secretary is a partner also received 41,000 shares of
common stock in satisfaction of fees owed in fiscal 1997.

Subsequent to June 30, 1997 but prior to the closing of the Laminaire
acquisition, the Company issued convertible debentures (the "First Debentures")
to ten investors, in the aggregate principal amount of $1,450,000 pursuant to
Regulation S under the Securities Act of 1933, as amended, (the "Securities
Act"). Concurrent with the closing of the acquisition of Laminaire on October
16, 1997, the Company also issued 326,521 shares of its Common Stock to a single
investor for aggregate consideration of $200,000 pursuant to Regulation S under
the Securities Act and issued convertible debentures (the "Debentures") to three
investors in the principal amount of $300,000 pursuant to Regulation S under the
Securities Act. Arcadia Mutual Fund Co., Inc. purchased Debentures in the
aggregate principal amount of $500,000. Austost Anstalt Schaan purchased
Debentures in the aggregate principal amount of $325,000. David Morgenstern
purchased Debentures in the aggregate principal amount of $100,000. UFH
Endowment Ltd. purchased Debentures in the aggregate principal amount of
$325,000. The Company will pay interest to the holders of the Debenture at the
rate of 5% per annum. Interest on the Debentures is payable in cash or Common
Stock of the Company, at the Company's discretion. The Debentures, which are
unsecured, are convertible into shares of the Company's Common Stock at any time
beginning 41 days after the date of issuance, at a price per share equal to the
lesser of 70% of the average closing bid price for the five trading

<PAGE>

days preceding: (i) the date of conversion or (ii) the date of closing, October
16, 1997. Through March 31, 1998, an aggregate of $1,562,500 of the principal
amount of the Debentures have been converted into 7,621,059 shares of Common
Stock.

Concurrent with the closing of the acquisition of Laminaire, the
Company issued a convertible promissory note (the "Convertible Note") to Norwood
Venture Corp. in the principal amount of $500,000 pursuant to Regulation D under
the Securities Act. The Company is obligated pay interest to the holders of the
Convertible Note at the rate of 10% per annum. The Company's obligations under
the Convertible Note are secured by a first in the Company's accounts receivable
and a lien that is second in priority to that of Garay LLC, the seller of the
common stock of Laminaire, with respect to the inventory and equipment of the
Company and the accounts receivable, inventory and equipment of Laminaire.
Laminaire also executed a guaranty in favor of Norwood with respect to the
Company's obligations under the Convertible Note. The Convertible Note is
convertible into shares of the Company's Common Stock at any time at a price per
share equal to the lesser of 70% of the average closing bid price for the five
trading days preceding (i) the date of conversion or (ii) the date of closing,
October 16, 1997. The Company agreed to register the shares of Common Stock
issuable upon conversion of the Convertible Note under the Securities Act. In
addition, the Company is obligated to pay Norwood $10,000 per month commencing
January 16, 1998 until such shares of Common Stock are registered under the
Securities Act.

On October 22, 1997, the Board of Directors approved consulting
arrangements with Ridge Associates and ConsultAmerica, Inc., which are
affiliates of Mr. Heil and Mr. Sundberg, respectively. The consulting
arrangements provide for payments of $10,000 per month at the discretion of the
Company.

The affirmative vote of holders of a majority of the Company's
outstanding Voting Stock is required for the election of each nominee for
director.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THE
ELECTION OF THE ONE DIRECTOR HEREIN NAMED
(Item No. 1 on the proxy card).

PROPOSAL TWO: RATIFICATION OF APPOINTMENT OF
INDEPENDENT AUDITORS

Management Recommends That You Vote in Favor of the
Appointment of the Independent Auditors

Since ______, the firm of Eichler Bergsman & Co., LLP independent
auditors, has examined and reported on the Company's financial statements. The
Board of Directors has appointed Eichler Bergsman & Co., LLP as independent
auditors to examine and report on the consolidated financial statements of the
Company for the current year ending December 31, 1999 subject to stockholder
approval.

During the fiscal year ended June 30, 1997 and transition fiscal year ended
December 31, 1998, Eichler Bergsman & Co., LLP provided the Company with audit
services, including examinations of and reporting on the Company's consolidated
financial statements, as well as those of its subsidiaries. Audit

<PAGE>

services also included a review of filings with the Securities and Exchange
Commission and the annual report to shareholders.

Ratification of the appointment of Eichler Bergsman & Co., LLP as
independent auditors requires the affirmative vote a majority of the votes cast
at the meeting by holders of the Corporation's Common Stock.

A representative of Eichler Bergsman & Co., LLP will be present at the
Annual Meeting.

THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR"
RATIFICATION OF THIS APPOINTMENT
(Item No. 2 on the proxy card).

PROPOSAL THREE: TO AMEND ARTICLE FIRST OF THE COMPANY'S
ARTICLES OF INCORPORATION

Management Recommends That You Vote in Favor of the
Amendment to the Articles of Incorporation

General

The Board of Directors of the Company has unanimously adopted, subject
to stockholder approval, a resolution providing that Article FIRST of the
Company's Articles of Incorporation be amended to change the name of the Company
from Thermo-Mizer Environmental Corp. to Laminaire Corporation.

In the event of a negative vote of the shareholders to this Proposal
No. 3, the Company will retain the name of Thermo-Mizer Environmental Corp.

The Board of Directors recommends that the stockholders vote "FOR" approval
of this Proposal No. 3

Reasons for the Proposal

On October 16, 1997, the Company acquired all of the outstanding shares
of Common Stock of Laminaire Corporation ("Laminaire") from Garay LLC for a
purchase price of $3,200,000, subject to adjustment based on Laminaire's
operating performance during the period immediately prior to the acquisition.
Laminaire, based in Rahway, New Jersey, manufactures and distributes cleanroom
products and also produces a variety of electronic circuit boards. Garay LLC is
an affiliate of Charles Garay, who became a director of the Company following
the acquisition of Laminaire. Since Laminaire is the Company's wholly-owned
subsidiary and is responsible for the majority of all operations and revenues
for the Company, the Board of Directors has determined that it is in the
Company's best interest to change its name to be identical with that of the
operating subsidiary.

<PAGE>

THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THE
AMENDMENT TO CHANGE THE NAME OF THE COMPANY TO LAMINAIRE
CORPORATION
(Item No. 3 on the proxy card).

PROPOSAL FOUR: INCREASE OF AUTHORIZED SHARES

Management recommends that you vote in favor of the increase of authorized
shares

The Board of Directors proposes to increase the authorized shares of
Common Stock which the Company shall have authority to issue from 25,000,000
shares at a par value of $.001 per share to 40,00,000 shares of a par value of
$.001 per share. The resolution approved by the Board of Directors is as
follows:

RESOLVED, that Article FOURTH of the Company's Certificate of
Incorporation be, and hereby, is amended to increase the number of
authorized shares.

FOURTH: The total number of shares of stock which the
corporation shall have authority to issue is Forty Million
(40,000,000). The par value of each of such shares is One Tenth of One
($.001) Cent. All such shares are of one class and are shares of Common
Stock.

The corporation may issue its entire authorized capital stock or such
part thereof as the directors may determine, for such consideration as
from time to time, may be fixed by the Board of Directors, or otherwise
prescribed by law. Any and all such shares when so issued and sold
shall be fully paid and non-accessible, and the holder of such shares
shall be liable to the corporation or its creditors in respect thereto.
Every share of such stock shall be equal to every other share of such
stock.

In addition, the Company may wish to use Common Stock for additional
financings or for acquisitions, although it does not currently have any present
intent, agreement or understanding regarding such a transaction.

Management believes that it is in the Company's best interests to
increase the Company's authorized capitalization.

THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE
"FOR" THE INCREASE IN AUTHORIZED SHARES
(Item No. 4 on the proxy card).

PROPOSAL FIVE: APPROVAL OF REVERSE STOCK SPLIT

Management recommends that you vote in favor of the adoption of the
proposed One-for-Four Reverse Stock Split

On May 6, 1998, the Board of Directors adopted resolutions to effect a
one-for-four reverse stock split of the Company's outstanding Common Stock,
$.001 par value. The Board announced that it had

<PAGE>

authorized the reverse stock split "...in an effort to spur interest in the
Company's stock and to enhance shareholder value." Stockholders are hereby being
requested to ratify the one-for-four reverse stock split of the Common Stock as
authorized by the Board of Directors effective June 15, 1998, and in connection
therewith, to amend Article FOURTH of the Company's Articles of Incorporation.

It should be noted that the Company has been informed by NASDAQ that
the Company's Common Stock will be delisted from NASDAQ effective May 23, 1998
because the bid price of the Company's Common Stock has fallen below $1.00 for
30 days and therefore does not meet NASDAQ's minimum maintenance criteria. The
Board of Directors has recommended approval of this stock split in part to
enable the Company to comply with NASDAQ's listing criteria of a $1.00 minimum
bid price. As of May 18, 1998, the closing bid price per share of Common Stock
was $_____. There can be no assurance that the price will increase in direct
proportion to the split or at all. No assurance can be given that the price of
the Company's stock will reach $1.00 for ten consecutive trading days to comply
with such maintenance criteria or that the $1.00 price can be sustained. The
Board of Directors believe that maintaining the NASDAQ listing will help
maintain liquidity in the market for the Company's Common Stock and facilitate
capital raising transactions, of which there can be no assurance. In the event
that the market price per share of Common Stock increases by less than 400% in
inverse proportion to the one-for-four reverse split, the Company's aggregate
market value will be reduced.

The resolution approved by the Board of Directors is as follows:

RESOLVED, that the one-for-four reverse stock split of the Company's
Common Stock, $.001 par value authorized by the Board of Directors and changing
each share of the Company's Common Stock, $.001 par value outstanding at June
16, 1998 into one-fourth (1/4th) of one share of new Common Stock, $.001 par
value, without reducing, distributing or withdrawing the existing capital of
this Corporation, be and the same is confirmed, ratified and approved.

THE BOARD OF DIRECTORS RECOMMEND A VOTE IN FAVOR OF THE
RATIFICATION OF THE ONE-FOR-FOURTH REVERSE STOCK SPLIT.

(Item No. 5 on the proxy card).

PROPOSAL SIX: APPROVAL OF PROPOSED STOCK INCENTIVE PLAN

Management recommends that you vote in favor of the adoption of the
proposed Incentive Stock Plan

The Board of Directors has unanimously approved and unanimously
recommends that the shareholders adopt the Company's 1998 Stock Incentive Plan
(the "Plan"). Approval of this proposal will require the affirmative vote of a
majority of the shares present in person or represented by proxy at the Meeting.
The Plan would provide a means whereby employees, officers, directors,
consultants and independent contractors ("Qualified Grantees") may acquire the
Common Stock of the Company pursuant to grants of Incentive Stock Options,
("ISO") whereby Qualified Grantees may purchase shares of Common Stock pursuant
to "nonqualified stock options" and whereby Qualified Grantees may acquire the
right to

<PAGE>

participate in the appreciation of the Common Stock pursuant to "Stock
Appreciation Rights". A summary of the significant provisions of the Plan, as
amended, is set forth below. A copy of the full Plan is annexed as Exhibit A to
this Proxy Statement. The following description of the Plan is qualified in its
entirety by reference to the Plan itself.

The Plan shall be administered by a committee (the
"Committee") all of whose members are "disinterested persons" as that term is
defined in Rule 16b-3(d)(3) of the General Rules and Regulations under the
Securities Exchange Act of 1934, consisting of two or more directors appointed
by, and who serve at the pleasure of, the Board of Directors. Subject to the
express terms of the Plan, the Committee has the sole discretion to determine to
whom among those eligible, and the time or times at which, options and/or Stock
Appreciation Rights may be exercised. In making such determinations, the
Committee may take into account the nature and period of service of eligible
employees, their level of compensation, their past, present and potential
contributions to the Company and such other factors as the Committee in its
discretion deems relevant.

The Committee may amend, suspend, or terminate the Plan at any
time, except that no amendment may be adopted without the approval of
shareholders which would (i) increase the benefits accruing to participants
under the Plan; (ii) materially increase the number of securities which may be
issued under the Plan; or (iii) change the eligibility requirements for
participation in the Plan.

Unless the Plan is terminated earlier by the Board of
Directors, the Plan will terminate on May 1, 2008.

Subject to adjustments resulting from changes in
capitalization and assuming approval of this Proposal by shareholders, no more
than 1,000,000 shares of Common Stock may be issued pursuant to the exercise of
options or Stock Appreciation Rights granted under the Plan. Grants of Stock
Appreciation Rights will be deducted from the 1,000,000 shares authorized for
issuance pursuant to the Plan.

Under certain circumstances involving a change in the number
of shares of Common Stock without the receipt by the Company of any
consideration therefor, such as a stock split, stock consolidation or payment of
a stock dividend, the class and aggregate number of shares of Common Stock in
respect of which options may be granted under the Plan, the class and number of
shares subject to each outstanding option and the option price per share will be
proportionately adjusted. In addition, if the Company is involved in a merger,
consolidation, dissolution or liquidation, the options or Stock Appreciation
Rights granted under the Plan will be adjusted or, under certain conditions,
will terminate, subject to the right of the option holder or Stock Appreciation
Rights holder to exercise his option or stock appreciation right or a comparable
option substituted at the discretion of the Company prior to such event. An
option or Stock Appreciation Rights may not be transferred other than by will or
by laws of descent and distribution, and during the lifetime of the option
holder may be exercised only by such holder. If any option expires or terminates
for any reason, without having been exercised in full, the unpurchased shares
subject to such option will be available again for purposes of the Plan.

Subject to the provisions of the Plan, the Committee shall
have full and final authority to select those individuals who are eligible to
receive options pursuant to the Plan, the terms and conditions of which shall be
set forth in an option agreement between the Company and the optionee.

<PAGE>

The exercise price of each option or stock appreciation right
is determined by the Board of Directors or the Committee, but may not be less
than 110% of the fair market value of the shares of Common Stock covered by the
option or stock appreciation right for employees of the Company and 100% for
nonemployee directors of the Company on the date the option or stock
appreciation right is granted.

An ISO holder who meets the eligibility requirements of
Section 422 of the Code will not realize income for Federal income tax purposes,
and the Company will not be entitled to a deduction, on either the grant or the
exercise of ISO. If the ISO holder does not dispose of the shares acquired
within two years after the date the ISO was granted to him or within one year
after the transfer of the shares to him, (i) any proceeds realized on a sale of
such shares in excess of the option price will be treated as long-term capital
gain and (ii) the Company will not be entitled to any deduction for Federal
income tax purposes with respect to such shares.

If an ISO holder disposes of shares during the two-year or
one-year periods referred to above (a "Disqualifying Disposition"), the ISO
holder will not be entitled to the favorable tax treatment afforded to incentive
stock options under the Code. Instead, the ISO holder will realize ordinary
income for Federal income tax purposes in the year the Disqualifying Disposition
is made, in an amount equal to the excess, if any, of the fair market value of
the shares of Common Stock on the date of exercise over the exercise price.

An ISO generally will recognize long-term capital gains or
loss, as the case may be, if the Disqualifying Disposition is made more than one
year after the shares are transferred to the ISO holder. The amount of any such
gain or loss will be equal to the difference between the amount realized on the
Disqualifying Disposition and the sum of (x) the exercise price and (y) the
ordinary income realized by the ISO holder as a result of the Disqualifying
Disposition.

The Company will be allowed in the taxable year of a
Disqualifying Disposition a deduction in the same amount as the ordinary income
recognized by the ISO holder provided all necessary withholding requirements are
met.

Notwithstanding the foregoing, if the Disqualifying
Disposition is made in a transaction with respect to which a loss (if sustained)
would be recognized to the ISO holder, then the amount of ordinary income
required to be recognized upon the Disqualifying Disposition will not exceed the
amount by which the amount realized from the disposition exceeds the exercise
price. Generally, a loss may be recognized if the transaction is not a "wash"
sale, a gift or a sale between certain persons or entities classified under the
Code as "related persons."

For purposes of computing the alternative minimum tax with
respect to shares acquired pursuant to the exercise of ISOs, the different
between the fair market value of the shares on the date of exercise over the
exercise price will be an item of tax preference in the year of exercise if the
shares are not subject to a Risk of Forfeiture; if the shares are subject to a
Risk of Forfeiture, the amount of the tax preference taken into account in the
year the Risk of Forfeiture ceases will be the excess of the fair market value
of the shares at the date they cease to be subject to a Risk of Forfeiture over
the exercise price. The basis of the shares for alternative minimum tax
purposes, generally, will be an amount equal to the price, increased by the
amount of the preference taken into account in computing the alternative minimum
taxable income. The rate of tax applied in general to alternative minimum
taxable income is 24%.

<PAGE>

The affirmative vote of holders of a majority of the Company's
outstanding Voting Stock is required for approval of the Plan.

THE BOARD OF DIRECTORS RECOMMEND A VOTE IN FAVOR OF THE ADOPTION
OF THE PROPOSED STOCK INCENTIVE PLAN
(Item No. 6 on the proxy card).

MISCELLANEOUS

Audit Matters

It is expected that a representative of Eichler Bergsman & Co. LLP will
be present at the Annual Meeting of Shareholders and will be available to
respond to appropriate questions.

The Company's Annual Report on Form 10-KSB for the period ended
December 31, 1997 is being mailed to shareholders with this Proxy Statement.

Proposals of Security Holders

Proposals of security holders intended to be presented at the 1999
Annual Meeting must be received by the Company for inclusion in the Company's
Proxy Statement and form of proxy relating to that meeting no later than January
31, 1999.

Other Business

The Board of Directors knows of no business that will come before the
meeting for action except as described in the accompanying Notice of Meeting.
However, as to any such business, the persons designated as proxies will have
discretionary authority to act in their best judgment.

By Order of the Board of Directors

Antonio Garay, President

May 19, 1998

THERMO-MIZER ENVIRONMENTAL CORP.
1998 STOCK INCENTIVE PLAN

1. Purpose.

The purpose of this Plan is to enable Thermo-Mizer Environmental Corp. and
its affiliates to recruit and retain capable employees for the successful
conduct of its business and to provide an additional incentive to directors,
officers and other eligible key employees, consultants and advisors upon whom
rest major responsibilities for the successful operation and management of the
Company and its affiliates.

2. Definitions.

For purposes of the Plan:

2.1 "Adjusted Fair Market Value" means, in the event of a Change in
Control, the greater of (i) the highest price per Share of Common Stock paid to
holders of the Shares of Common Stock in any transaction (or series of
transactions) constituting or resulting in a Change in Control or (ii) the
highest Fair Market Value of a Share during the ninety (90) day period ending on
the date of a Change in Control.

2.2 "Affiliate Corporation" or "Affiliate" shall mean any corporation,
directly or indirectly, through one of more intermediaries, controlling,
controlled by or under common control with the Company.

2.3 "Agreement" means the written agreement between the Company and an
Optionee evidencing the grant of an Award.

2.4 "Award" means an Incentive Stock Option, Nonqualified Stock Option or
Stock Appreciation Right granted or to be granted pursuant to the Plan.

2.5 "Board" means the Board of Directors of the Company.

2.6 "Cause" means:

(a) Solely with respect to Nonemployee Directors, the commission of an act
of fraud or an act of embezzlement, misappropriation or conversion of assets or
opportunities of the Company or any Affiliate, and

(b) For all other purposes, unless otherwise defined in the Agreement
evidencing a particular Award, an Optionee (other than a Nonemployee Director)
(i) intentional failure to perform reasonably assigned duties, (ii) dishonesty
or willful misconduct in

<PAGE>

the performance of duties, (iii) involvement in a transaction in connection
with the performance of duties to the Company which transaction is adverse to
the interests of the Company and which is engaged in for personal profit, or
(iv) willful violation of any law, rule or regulation in connection with the
performance of duties (other than traffic violations or similar offenses).

2.7 "Change in Capitalization" means any increase or reduction in the
Number of Shares, or any change (including, but not limited to, a change in
value) in the Shares or exchange of Shares for a different number or kind of
shares or other securities of the Company, by reason of a reclassification,
recapitalization, merger, consolidation, reorganization, spin-off, split-up,
issuance of warrants or rights or debentures, stock dividend, stock split or
reverse stock split, combination or exchange of shares, repurchase of shares,
change in corporate structure or otherwise.

2.8 A "Change in Control" shall mean the occurrence during the term of the
Plan of either of any "person" (as such term is used in Section 13(c) and 14(d)
of the Exchange Act), other than a trustee or other fiduciary holding securities
under an employee benefit plan of the Company or a corporation owned directly or
indirectly by the stockholders of the Company, is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of Securities of the Company representing 50% or more of the total
voting power represented by the Company's then outstanding voting securities.

2.9 "Code" means the Internal Revenue Code of 1986, as amended.

2.10 "Committee" means a committee, as described in Section 3.1, appointed
by the Board to administer the Plan and to perform the functions set forth
herein.

2.11 "Company" means Thermo-Mizer Environmental Corp. (including any and
all subsidiaries currently existing or hereafter acquired or established).

2.12 "Director Option" means an Option for Shares, Stock Appreciation
Rights or Units granted pursuant to Section 6.

2.13 "Disability" means a physical or mental infirmity which impairs an
Optionee's ability to perform substantially his or her duties for a period of
one hundred eighty (180) consecutive days.

2.14 "Disinterested Director" means a director of the Company who is
"disinterested" within the meaning of Rule 16b-3 under the Exchange Act.

2.15 "Eligible Individual" means any director (other than a Nonemployee
Director),

<PAGE>

officer or employee of, or consultant or advisor to, the Company or an
Affiliate who is receiving cash compensation and who is designated by the
Committee as eligible to receive Awards subject to the conditions set forth
herein.

2.16 "Employee Option" means an option granted pursuant to Section 5.

2.17 "Exchange Act" means the Securities Exchange Act of 1934, as amended.

2.18 "Fair Market Value" on any date means the average of the high and low
sales prices of the Shares on such date on the principal securities exchange on
which such Shares are listed, or if such Shares are not so listed or admitted to
trading, the arithmetic mean of the per Share closing bid price and closing
asked price per Share on such date as quoted on the quotation system of the
Nasdaq Stock Market, Inc. or such other market in which such prices are
regularly quoted, or, if there have been no published bid or asked quotations
with respect to Shares on such date, the Fair Market Value as established by the
Board in good faith and, in the case of an Incentive Stock Option, in accordance
with Section 422 of the Code.

2.19 "Incentive Stock Option" means an Option satisfying the requirements
of Section 422 of the Code and designated by the Committee as an Incentive Stock
Option.

2.20 "Nonemployee Director" means a director of the Company who is not an
employee of the Company or an Affiliate.

2.21 "Nonqualified Stock Option" means an Option which is not an Incentive
Stock Option.

2.22 "Option" means a Nonqualified Stock Option, an Incentive Stock Option,
a Director Option, an Employee Option or any or all of them.

2.23 "Optionee" means a person to whom an Option is being granted under the
Plan.

2.24 "Outside Director" means a director of the Company who is an "outside
director" within the meaning of Section 162(m) of the Code and the regulations
promulgated thereunder.

2.25 "Parent" means any corporation which is a parent corporation (within
the meaning of Section 424(e) of the Code) with respect to the Company.

2.26 "Plan" means the Thermo-Mizer Environmental Corp. 1996 Stock Option
Plan.

2.27 "Pooling Transaction" means an acquisition of the Company in a
transaction which

<PAGE>

is intended to be treated as a "pooling of interests" under generally
accepted accounting principles as defined in Opinion No. 16 of the Accounting
Principles Board.

2.28 "Shares"" means the common stock, par value $.001 per share, of the
Company and any securities or other consideration issuable in respect of Shares
in connection with a Change in Capitalization or Change in Control.

2.29 "Stock Appreciation Right" or "SARs" means a right to receive all or
some portion of the increase in the value of the Shares as provided in Section 8
hereof.

2.30 "Subsidiary" means any corporation which is a subsidiary corporation
(within the meaning of Section 424(f) of the Code) with respect to the Company.

2.31 "Successor Corporation" means a corporation, or a parent or subsidiary
thereof within the meaning of 424(a) of the Code, which issues or assumes a
stock option in a transaction to which Section 424(a) of the Code applies.

2.32 "Ten Percent Stockholder" means an Eligible Individual, who, at the
time an Incentive Stock Option is to be granted to him or her owns (within the
meaning of Section 422(b) (6) of the Code) stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company, or of a Parent or a Subsidiary thereof.

2.33 "Unit" means a security consisting of one share of Common Stock and
two Class B Warrants.

2.34 "Class B Warrant" shall be exercisable at an exercise price equal to
the greater of $3.00 per share or 120% of the offering price in a secondary
public offering by the Company.

3. Administration.

3.1 The Plan shall be administered by the Committee which shall hold
meetings at such times as may be necessary for the proper administration of the
Plan. The Committee shall keep minutes of its meetings. A quorom shall consist
of not fewer than two (2) members of the Committee and a majority of a quorom
may authorize any action. Any decision or determination reduced to writing and
signed by a majority of all of the members shall be as fully effective as if
made by a majority,vote at a meeting duly called and held. The Committee shall
consist of at least two (2) directors of the Company each of whom shall be a
Disinterested Director and an Outside Director. No member of the Committee shall
be liable for any action, failure to act, determination or interpretation made
in good faith with respect to this Plan or any

<PAGE>

transaction hereunder, except for liability arising from his or her own
willful misfeasance, gross negligence or reckless disregard of his or her
duties. The Company hereby agrees to indemnify each member of the Committee for
all costs and expenses and, to the extent permitted by applicable law, any
liability incurred in connection with defending against, responding to,
negotiating for the settlement of or otherwise dealing with any claim, cause of
action or dispute of any kind arising in connection with any actions in
administering this Plan or in authorizing or denying authorization to any
transaction hereunder.

3.2 Subject to the express terms and conditions set forth herein, the
Committee shall have the power from time to time to:

(a) determine those Eligible Individuals to whom Employee Options shall be
granted under the Plan and the number of Employee Options to be granted and to
prescribe the terms and conditions (which need not be identical) of each such
Employee Option, including the purchase price per Share subject to each Employee
Option, and make any amendment or modification to any Option Agreement
consistent with the terms of this Plan;

(b) construe and interpret the Plan and the Options granted hereunder and
to establish, amend and revoke rules and regulations for the administration of
the Plan, including, but not limited to, correcting any defect or supplying any
omission, or reconciling any inconsistency in the Plan or in any Agreement, in
the manner and to the extent it shall deem necessary or advisable so that the
Plan complies with applicable law, including Rule 16b-3 under the Exchange Act
and the Code to the extent applicable, and otherwise to make the Plan fully
effective. All decisions and determinations by the Committee or the exercise of
this power shall be final, binding and conclusive upon the Company, its
Affiliate Corporations, the Options, and all other persons having any interest
therein;

(c) determine the duration and purposes for leaves of absence which may be
granted to an Optionee on an individual basis without constituting a termination
of employment or service for purposes of this Plan;

(d) exercise its discretion with respect to the powers and rights granted
to it as set forth in the Plan; and

(e) exercise such powers and perform such acts as it deems necessary or
advisable to promote the best interests of the Company with respect to the Plan.

4. Stock Subject to the Plan.

4.1 The maximum number of Shares that may be made the subject of Options

<PAGE>

granted under the Plan is 1,000,000. Upon a Change in Capitalization the
maximum number of Shares shall be adjusted in number and kind pursuant to
Section 11. The Company shall reserve for purposes of the Plan, out of its
authorized but unissued Shares or out of Shares held in the Company's treasury,
or partly out of each, such number of Shares as shall be determined by the
Board.

4.2 Upon the granting of an Option, the number of Shares available under
Section 4.1 for the granting of further Options shall be reduced by the number
of shares subject to such Option granted. Whenever any outstanding Option or
portion thereof expires, is canceled or is otherwise terminated for any reason
without having been exercised or payment having been made in respect of the
entire Option, the Shares allocable to the expired, canceled or otherwise
terminated portion of the Option may again be the subject of Options granted
hereunder.

5. Option Grants for Eligible Individuals.

5.1 Authority of Committee. Subject to the provisions of the Plan, the
Committee shall have full and final authority to select those Eligible
Individuals who will receive Employee Options, the terms and conditions of which
shall be set forth in an Agreement.

5.2 Purchase Price. The purchase price or the manner in which the purchase
price is to be determined for Shares under each Employee Option shall be
determined by the Committee and set forth in the Agreement; provided, however,
that the purchase price per Share under each Incentive Stock Option shall not be
less than 100% of the Fair Market Value of a Share on the date the Incentive
Stock Option is granted (110% in the case of an Incentive Stock Option granted
to a Ten-Percent Stockholder).

5.3 Maximum Duration. Employee Options granted hereunder shall be for such
term as the Committee shall determine, provided that an Incentive Stock Option
granted hereunder shall not be exercisable after the expiration of ten (10)
years from the date it is granted (five (5) years in the case of an Incentive
Stock Option granted to a Ten-Percent Stockholder), and a Nonqualified Stock
Option shall not be exercisable after the expiration of ten (10) years from the
date it is granted. The Committee may, subsequent to the granting of any
Employee Option, extend the term thereof but in no event shall the term as so
extended exceed the maximum term provided for in the preceding sentence.

5.4 Vesting. Subject to Section 7.5 hereof, each Employee Option shall
become exercisable in such installments (which need not be equal) and at such
times as may be designated by the Committee and set forth in the Agreement. To
the extent not exercised, installments shall accumulate and be exercisable, in
whole or in part, at any time after becoming exercisable, but not later than the
date the Employee Option expires. The Committee may

<PAGE>

accelerate the exercisability of any Option or portion thereof at any time.

5.5 Modification. No modification of an Employee Option shall adversely
alter or impair any rights or obligations under the Employee Option without the
Optionee's consent.

6. Option Grants for Nonemployee Directors.

6.1 Purchase Price. The purchase price for Shares, SARs or Units under each
Director Option shall be not less than to 100% of the Fair Market Value of such
Shares or Units on the date immediately preceding the date of the grant.

6.2 Vesting. Subject to Sections 6.3 and 7.5 each Director Option shall
become exercisable within four (4) equal annual installments beginning on the
date of grant; provided, however, that the Optionee continues to serve as a
Director as of such dates. If an Optionee ceases to serve as a Director for any
reason, the Optionee shall have no rights with respect to that portion of a
Director Option which has not then vested pursuant to the preceding sentence and
the Optionee shall automatically forfeit that portion of the Director Option
which remains unvested.

6.3 Limitations on Amendment. The provisions in this Section 6 and Section
7.1 shall not be amended more than once every six (6) months, other than to
comport with changes in the Code or the rules and regulations thereunder.

7. Terms and Conditions Applicable to All Options.

7.1 Duration. Each Option shall terminate on the date which is the tenth
anniversary of the grant date, unless terminated earlier as follows:

(a) If an Optionee's employment or service terminates for any reason other
than Disability, death or Cause, the Optionee may for a period of three (3)
months after such termination exercise his or her Option to the extent, and only
to the extent, such Option or portion thereof was vested and exercisable as of
the date of the Optionee's employment or service terminated, after which time
the Option shall automatically terminate in full.

(b) If an Optionee's employment or service terminates by reason of the
Optionee's Disability, the Optionee may, for a period of one (1) year after such
termination, exercise his or her Option to the extent, and only to the extent,
such Option or portion thereof was vested and exercisable as of the date the
Optionee's employment or service terminated, after which time the Option shall
automatically terminate in full.

<PAGE>

(c) If an Optionee's employment or service terminates for Cause, the Option
granted to the Optionee hereunder shall immediately terminate in full and no
rights thereunder may be exercised.

(d) If an Optionee dies while employed or in the service of the Company or
an Affiliate or within the three (3) month or twelve (12) month period described
in clause (a) or (b), respectively, of this Section 7.1 the Option granted to
the Optionee may be exercised at any time within twelve (12) months after the
Optionee's death by the person or persons to whom such rights under the Option
shall pass by will, or by the laws of descent and distribution, after which time
the Option shall terminate in full; provided, however, that an Option may be
exercised to the extent, and only to the extent, such Option or portion thereof
was exercisable on the date of death or earlier termination of the Optionee's
services as a Director.

Notwithstanding clauses (a) through (d) above, the Agreement evidencing the
grant of an Employee Option may, in the Committee's sole and absolute
discretion, set forth additional or different terms and conditions applicable to
Employee Options upon a termination or change in status of the employment or
service of an Eligible Individual. Such terms and conditions may be determined
at the time the Employee Option is granted or thereafter.

7.2 Non-transferability. No Option granted hereunder shall be transferable
by the Optionee to whom granted except by will or the laws of descent and
distribution, and an Option may be exercised during the lifetime of such
Optionee only by the Optionee or his or her guardian or legal representative.
The terms of such Option shall be final, binding and conclusive upon the
beneficiaries, executors, administrators, heirs and successors of the Optionee.

7.3 Method of Exercise. The exercise of an option shall be made only by a
written notice delivered in person or by mail to the Secretary or Chief
Financial Officer of the Company at the Company's principal executive office,
specifying the number of Shares to be purchased and accompanied by payment
therefor and otherwise in accordance with the Agreement pursuant to which the
Option was granted. The purchase price for any Shares purchased pursuant to the
exercise of an Option shall be paid in full in cash upon such exercise.
Notwithstanding the foregoing, the Committee shall have discretion to determine
at the time of grant of each Employee Option or at any later date (up to and
including the date of exercise) that the form of payment acceptable in respect
of the exercise of such Employee Option may consist of either of the following
(or any combination thereof): (I) cash or (ii) the transfer of Shares to the
Company upon such terms and conditions as determined by the Committee. The
Optionee shall deliver the Agreement evidencing the Option to the Secretary or
Chief Financial Officer of the Company who shall endorse thereon a notation of
such exercise and return such Agreement to the Optionee. No fractional Shares
(or cash in lieu thereof) shall be issued upon exercise of an Option and the
number of Shares that may be purchased upon exercise shall be rounded to the

<PAGE>

nearest number of whole Shares.

7.4 Rights of Optionees. No Optionee shall be deemed for any purpose to be
the owner of any Shares subject to any Option unless and until (i) the Option
shall have been exercised pursuant to the terms thereof, (ii) the Company shall
have issued and delivered the Shares to the Optionee and (iii) the Optionees
name shall have been entered as a stockholder of record on the books of the
Company. Thereupon, the Optionee shall have full voting, dividend and other
ownership rights with respect to such Shares, subject to such terms and
conditions as may be set forth in the applicable Agreement.

7.5 Effect of Change in Control. In the event of a Change in Control, all
Options outstanding on the date of such Change in Control shall become
immediately and fully vested and exercisable. In addition, to the extent set
forth in an Agreement evidencing the grant of an Employee Option, an Optionee
will be permitted to surrender for cancellation within sixty (60) days after
such Change in Control, any Employee Option or portion of an Employee Option to
the extent not yet exercised and the Optionee will be entitled to receive a cash
payment in an amount equal to the excess, if any of (x) (A) in the case of a
Nonqualified Stock Option, the greater of (1) the Fair Market Value, on the date
preceding the date of surrender, of the Shares subject to the Employee Option or
portion thereof surrendered or (2) the Adjusted Fair Market Value of the Shares
subject to the Employee Option or portion thereof surrendered or (B) in the case
of an Incentive Stock Option, the Fair Market Value, on the date preceding the
date of surrender, of the Shares subject to the Employee Option or portion
thereof surrendered, over (y) the aggregate purchase price for such Shares under
the Employee Option or portion thereof surrendered; provided, however, that in
the case of an Employee Option granted within six (6) months prior to the Change
in Control to any Optionee who may be subject to liability under Section 16(b)
of the Exchange Act, such Optionee shall be entitled to surrender for
cancellation his or her Option during the sixty (60) day period commencing upon
the expiration of six (6) months from the date of grant of any such Employee
Option. In the event an Optionee's employment or service with the Company is
terminated by the Company following a Change in Control, each Option held by the
Optionee that was exercisable as of the date of termination of the Optionee's
employment or service shall remain exercisable for a period ending not before
the earlier of the first anniversary of the termination of the Optionee's
employment or service or the expiration of the stated term of the Option.

8. Stock Appreciation Rights. The Committee may, in its discretion, either
alone or in connection with the grant of an Employee Option, grant Stock
Appreciation Rights in accordance with the Plan, the terms and conditions of
which shall be set forth in an Agreement. If granted in connection with an
Option, a Stock Appreciation Right shall cover the same Shares covered by the
Option (or such lesser number of Shares as the Committee may determine) and
shall, except as provided in this Section 8, be subject to the same terms.

<PAGE>

8.1 Time of Grant. A Stock Appreciation Right may be granted (i) at any
time if unrelated to an Option, or (ii) if related to an Option, either at the
time of grant, or at any time thereafter during the term of the Option.

8.2 Stock Appreciation Right Related to an Option.

(a) Exercise. Subject to Section 8.8, a Stock Appreciation Right granted in
connection with an Option shall be exercisable at such time or times and only to
the extent that the related Options are exercisable, and will not be
transferable except to the extent the related Option may be transferable. A
Stock Appreciation Right granted in connection with an Incentive Stock Option
shall be exercisable only if the Fair Market Value of a Share on the date of
exercise exceeds the purchase price specified in the related Incentive Stock
Option Agreement.

(b) Amount Payable. Upon the exercise of a Stock Appreciation Right related
to an Option, the holder shall be entitled to receive an amount determined by
multiplying (A) the excess of the Fair Market Value of a Share on the date
preceding the date of exercise of such Stock Appreciation Right over the per
Share purchase price under the related Option, by (B) the number of Shares as to
which such Stock Appreciation Right is being exercised. Notwithstanding the
foregoing, the Committee may limit, in any manner, the amount payable with
respect to any Stock Appreciation Right by including such a limit in the
Agreement evidencing the Stock Appreciation Right at the time it is granted.

(c) Treatment of Related Options and Stock Appreciation Rights Upon
Exercise. Upon the exercise of a Stock Appreciation Right granted in connection
with an Option, the Option shall be canceled to the extent of the number of
Shares as to which the Stock Appreciation Right is exercised, and upon the
exercise of an Option granted in connection with a Stock Appreciation Right or
the surrender of such Option pursuant to Section 7.3, the Stock Appreciation
Right shall be canceled to the extent of the number of Shares as to which the
Option is exercised or surrendered.

8.3 Stock Appreciation Right Unrelated to an Option. The Committee may
grant to Eligible Individuals Stock Appreciation Rights unrelated to Options.
Stock Appreciation Rights unrelated to Options shall contain such terms and
conditions as to exercisability (subject to Section 8.8), vesting and duration
as the Committee shall determine, but, in no event, shall they have a term of
greater than ten (10) years. Upon exercise of a Stock Appreciation Right
unrelated to an Option, the holder shall be entitled to receive an amount
determined by multiplying (A) the excess of the Fair Market Value of a Share on
the date preceding the date of exercise of such Stock Appreciation Right over
the Fair Market Value of a Share on the date the Stock Appreciation Right was
granted, by (B) the number of Shares as to which the Stock Appreciation Right is
being exercised. Notwithstanding the foregoing, the Committee may limit,

<PAGE>

in any manner, the amount payable with respect to any Stock Appreciation
Right by including such a limit in the Agreement evidencing the same Stock
Appreciation Right at the time it is granted.

8.4 Method of Exercise. Stock Appreciation Rights shall be exercised by a
holder only by a written notice delivered in person or by mail to the Secretary
or Chief Financial Officer of the Company at the Company's principal executive
office, specifying the number of Shares with respect to which the Stock
Appreciation Right is being exercised. If requested by the Committee, the holder
shall deliver the Agreement evidencing the Stock Appreciation Right being
exercised and the Agreement evidencing any related Option to the Secretary or
Chief Financial Officer of the Company who shall endorse thereon a notation of
such exercise and return such Agreement to the holder.

8.5 Form of Payment. Payment of the amount determined under Sections 8.2(b)
or 8.3 may be made in the discretion of the Committee, solely in whole Shares in
a number determined at their Fair Market Value in the date preceding the date of
exercise of the Stock Appreciation Right, or solely in cash, or in a combination
of cash and Shares. If the Committee decides to make full payment in Shares and
the amount payable results in a fractional Share, payment for the fractional
Share will be made in cash. Notwithstanding the foregoing, no payment in the
form of cash may be made upon the exercise of a Stock Appreciation Right
pursuant to Sections 8.2(b) or 8.3 to an officer of the Company who is subject
to liability under Section 16(b) of the Exchange Act, unless the exercise of
such Stock Appreciation Right is made either (i) during the period beginning on
the third business day and ending on the twelfth business day following the date
of release for publication of the Company's quarterly or annual statements of
earnings (the "Window Period") or (ii) pursuant to an irrevocable election to
receive cash made at least six (6) months prior to the exercise of such Stock
Appreciation Right.

8.6 Restrictions. No Stock Appreciation Right may be exercised before a
date six (6) months after the date on which it is granted.

8.7 Modification. No modification of an Award shall adversely alter or
impair any rights or obligations under the Agreement without the holder's
consent.

8.8 Effect of Change in Control. In the event of a Change in Control but
subject to Section 8.6, all Stock Appreciation Rights shall become immediately
and fully exercisable. In addition, to the extent set forth in an Agreement
evidencing the grant of a Stock Appreciation Right, a holder will be entitled to
receive a payment in cash or stock, in either case, with a value equal to the
excess, if any, of (A) the greater of (x) the Fair Market Value, on the date
preceding the date of exercise, of the underlying Shares subject to the Stock
Appreciation Right or portion thereof exercised and (y) the Adjusted Fair Market
Value, on the date preceding

<PAGE>

the date of exercise, of the Shared over (B) the aggregate Fair Market
Value, on the date the Stock Appreciation Right was granted, of the Shares
subject to the Stock Appreciation Right or portion thereof exercised; provided,
however, that in the case of a Stock Appreciation Right granted within six (6)
months of the Change in Control to any holder who may be subject to liability
under Section 15(b) of the Exchange Act, such holder shall be entitled to
exercise his or her Stock Appreciation Right during the sixty (60) day period
commencing upon the expiration of six months from the date of grant of any such
Stock Appreciation Right. In the event of a holder's employment or service with
the Company is terminated by the Company following a Change in Control, each
Stock Appreciation Right held by the holder that was exercisable as of the date
of termination of the holder's employment or service shall remain exercisable
for a period ending but not before the earlier of the first anniversary of the
termination of the holder's employment or service or the expiration of the
stated term of the Stock Appreciation Right.

9. Adjustment Upon Changes n Capitalization.

(a) In the event of a Change in Capitalization, the Committee shall
conclusively determine the appropriate adjustments, if any, to the (i) maximum
number of Shares with respect to which Options may be granted under the Plan,
(ii) maximum number of Shares with respect to which Options may be granted to
any Eligible Individual during the term of the Plan, (iii) the number of Shares
which are subject to outstanding Options granted under the Plan, and the
purchase price therefor, if applicable, and (iv) the number of Shares in respect
of which Director Options are to be granted under Section 6.

(b) Any such adjustment in the Shares subject to Incentive Stock Options
(including any adjustments in the purchase price) shall be made in such manner
as not to constitute a modification as defined by Section 424(h)(3) of the Code
and only to the extent otherwise permitted by Sections 422 and 424 of the Code.

(c) If, by reason of a Change of Capitalization, an Optionee shall be
entitled to exercise an Option with respect to new, additional or different
shares of stock, such new, additional or different shares shall thereupon be
subject to all of the conditions, restrictions and performance criteria which
were applicable to the Shares subject to the Option, prior to such Change in
Capitalization.

10. Effect of Certain Transactions. Subject to Sections 7.5 and 8.8 or as
otherwise provided in an Agreement, in the event of (i) the liquidation or
dissolution of the Company or (ii) a merger or consolidation of the Company, the
Plan and the Options issued hereunder shall continue in effect in accordance
with their respective terms.

11. Interpretation.

<PAGE>

(a) The Plan is intended to comply with Rule 16b-3 promulgated under the
Exchange Act and the Committee shall interpret and administer the provisions of
the Plan or any Agreement in a manner consistent therewith. Any provisions
inconsistent with such Rule shall be inoperative and shall not affect the
validity of the Plan.

(b) The Director Options described in Section 6 are intended to qualify as
formula awards under Rule 16b-3 promulgated under the Exchange Act (thereby
preserving the disinterested status of Nonemployee Directors receiving such
Awards) and the Committee shall interpret and administer the provisions of the
Plan or any Agreement in a manner consistent therewith. Any provisions
inconsistent with the foregoing intent shall be inoperative and shall interpret
and administer the provisions of the Plan or any Agreement in a manner
consistent therewith. Any provisions inconsistent with the foregoing intent
shall be inoperative and shall not affect the validity of the Plan.

(c) Unless otherwise expressly stated in the relevant Agreement, each
Option granted under the Plan is intended to be performance-based compensation
within the meaning of Section 162(m)(4)(C) of the Code. The Committee shall not
be entitled to exercise any discretion otherwise authorized hereunder with
respect to such Options if the ability to exercise such discretion or the
exercise of such discretion itself would cause the compensation attributable to
such Options to fail to qualify as performance-based compensation.

12. Pooling Transactions.

Notwithstanding anything contained in the Plan or any Agreement to the
contrary, in the event of a Change in Control which is also intended to
constitute a Pooling Transaction, the Committee shall take such actions, if any,
which are specifically recommended by an independent public accounting firm
engaged by the Company to the extent reasonably necessary in order to assure
that the Pooling Transaction will qualify as such, including but not limited to
(i) deferring the vesting, exercise, payment or settlement in respect of any
Option, (ii) providing that the payment or settlement in respect of any Option
be made in the form of cash, Shares or securities of a successor or acquiree of
the Company, or a combination of the foregoing, and (iii) providing for the
extension of term of any Option to the extent necessary to accommodate the
foregoing, but not beyond the maximum term permitted for any Option.

13. Termination and Amendment of the Plan.

The Plan shall terminate on the preceding the tenth anniversary of the date
of its adoption by the stockholders of the Company, and no Option may be granted
thereafter. Subject to Section 6.5, the Board may sooner terminate the Plan, and
the Board may at any time and from time to time amend, modify or suspend the
Plan; provided, however, that:

<PAGE>

(a) No such amendment, modification, suspension or termination shall impair
or adversely alter any Award already granted under the Plan, except with the
consent of the Optionee or holder of an SAR nor shall any amendment,
modification or termination deprive any Optionee or holder of an SAR of any
Shares which he or she may have acquired through or as a result of the Plan; and

(b) To the extent necessary under Section 16(b) of the Exchange Act and the
rules and regulations promulgated thereunder or other applicable law, no
amendment shall be effective unless approved by the stockholders of the Company
in accordance with applicable law and regulations.

14. Non-Exclusivity of the Plan.

The adoption of the Plan by the Board shall not be construed as amending,
modifying or rescinding any previously approved incentive arrangement or as
creating any limitations on the power of the Board to adopt such other incentive
arrangements as it may deem desirable, including, without limitation, the
granting of stock options otherwise than under the Plan, and such arrangements
may be either applicable generally or only in specific cases.

15. Limitation of Liability.

As illustrative of the limitations of liability of the Company, but not
intended to be exhaustive thereof, nothing in the Plan shall be construed to:

(a) give any person any right to be granted an Option other than at the
sole discretion of the Committee;

(b) give any person any rights whatsoever with respect to Shares except as
specifically provided in the Plan;

(d) be evidence of any agreement or understanding, expressed or implied,
that the Company will employ any person at any particular rate of compensation
or for any particular period of time.

16. Regulations and Other Approvals; Governing Law.

<PAGE>

16.1 Except as to matters of Federal law, this Plan and the rights of all
persons claiming hereunder shall be construed and determined in accordance with
the laws of the State of New Jersey.

16.2 The obligation of the Company to sell or deliver Shares with respect
to Options granted under the Plan shall be subject to all applicable laws, rules
and regulations, including all applicable Federal and state securities laws, and
the obtaining of all such approvals by governmental agencies as may be deemed
necessary or appropriate by the Committee.

16.3 The Board may make such changes as may be necessary or appropriate to
comply with the rules and regulations of any government authority, or to obtain
for Eligible Individuals granted Incentive Stock Options the tax benefits under
the applicable provisions of the Code and regulations promulgated thereunder.

16.4 Each Option is subject to the requirement that, if at any time the
Committee determines, in its discretion, that the listing, registration or
qualification of Shares issuable pursuant to the Plan is required by any
securities exchange or under any state or federal law, or the consent or
approval or any governmental regulatory body is necessary or desirable as a
condition of, or in connection with, the grant of an Option or the issuance of
Shares, no Options shall be granted or payment made or Shares issued, in whole
or in part, unless listing, registration, qualification, consent or approval has
been effected or obtained free of any conditions as acceptable to the Committee.

16.5 Notwithstanding anything contained in the Plan or any Agreement to the
contrary, in the event that the disposition of Shares acquired pursuant to the
Plan is not covered by a then current registration statement under the
Securities Act of 1933, as amended (the "Securities Act"), and is not otherwise
exempt from such registration, such Shares shall be restricted against transfer
to the extent required by the Securities Act and Rule 144 or other regulations
thereunder. The Committee may require an individual receiving Shares pursuant to
an Award granted under the Plan, as a condition precedent to receipt of such
Shares, to represent and warrant to the Company in writing that the Shares
acquired by such individual are acquired without a view to any distribution
thereof and will not be sold or transferred other than pursuant to an exemption
applicable under the Securities Act as amended, or the rules and regulations
promulgated thereunder. The certificates evidencing any of such Shares shall be
appropriately amended to reflect their status as restricted securities as
aforesaid.

17. Miscellaneous.

17.1 Multiple Agreements. The terms of each Award granted to an Eligible
Individual may differ from other Awards granted under the Plan at the same time,
or at some

<PAGE>

other time. The Committee may also grant more than one Award to a given
Eligible Individual during the term of the Plan, either in addition to, or in
substitution for, one or more Awards previously granted to that Eligible
Individual.

17.2 Withholding of Taxes.

(a) At such times as an Optionee or holder of an SAR recognizes taxable
income in connection with the receipt of Shares or cash hereunder (a "Taxable
Event"), the Optionee or holder shall pay other amounts as may be required by
law to be withheld by the Company in issuance or release from escrow of such
Shares or the payment of such cash. The Company shall have the right to deduct
from any payment of cash to an Optionee or holder an amount equal to the
Withholding Taxes in satisfaction of the obligation to pay Withholding Taxes. In
satisfaction of the obligation to pay Withholding Taxes to the Company, the
Optionee or holder may make a written election (the "Tax Election"), which may
be accepted or rejected in the discretion of the Committee to have withheld a
portion of the Shares then issuable to him or her having an aggregate Fair
Market Value, on the date preceding the date of such issuance, equal to the
Withholding Taxes, provided that in respect of an Optionee or holder who may be
subject to liability under Section 16(b) of the Exchange Act either; (i)(A) the
Tax Election is made at least six (6) months prior to the date of the Taxable
Event and (B) the Tax Election is irrevocable with respect to all Taxable Events
of a similar nature occurring prior to the expiration of six (6) months
following a revocation of the Tax Election; or (ii)(A) the Tax Election is made
at least six (6) months after the date the Award was granted, (B) the Award is
exercised during the Window Period and (C) the Tax Election is made during the
Window Period in which the related Award is exercised or prior to such Window
Period and subsequent to the immediately preceding Window Period.
Notwithstanding the foregoing, the Committee may, by the adoption of rules or
otherwise, (i) modify this Section 17.2 (other than as regards Director Options)
or impose such other restrictions or limitations on Tax Elections to be made at
such times and subject to such other conditions as the Committee determines will
constitute exempt transactions under Section 16(b) of the Exchange Act.

(b) If an Optionee makes a disposition, within the meaning of Section 424
(c) of the Code and regulations promulgated thereunder, of any Share or Shares
issued to such Optionee pursuant to the exercise of an Incentive Stock Option
within the two-year period commencing on the day after the date of the grant or
within the one-year period commencing on the day after the date of transfer of
such Share or Shares to the Optionee pursuant to such exercise, the Optionee
shall, within ten (10) days of such disposition, notify the Company thereof, by
delivery of written notice to the Company at its principal executive office.

17.3 Effective Date. The effective date of the Plan shall be as determined
by the Board, subject only to the approval by the affirmative vote of the
stockholders.