AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 22, 1998.
REGISTRATION NO. 333-______
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
MFRI, INC.
(Exact name of registrant as specified in its charter)
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<S> <C>
DELAWARE 36-3922969
(State or other jurisdictiction (IRS Employer
of incorporation or organization) Identification No.)
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7720 LEHIGH AVENUE
NILES, ILLINOIS 60714
(847) 966-1000
(Address, including ZIP code, and telephone number,
including area code, of registrant's principal executive offices)
DAVID UNGER
CHAIRMAN OF THE BOARD OF DIRECTORS
MFRI, INC.
7720 LEHIGH AVENUE
NILES, ILLINOIS 60714
(847) 966-1000
(Name, address, including ZIP Code, and
telephone number, including area code, of agent for service)
COPIES TO:
HAL M. BROWN, ESQ.
RUDNICK & WOLFE
203 NORTH LASALLE STREET, SUITE 1800
CHICAGO, ILLINOIS 60601
(312) 368-4012
(312) 236-7516(TELECOPIER)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
FROM TIME TO TIME AFTER THE EFFECTIVE DATE OF THIS REGISTRATION
STATEMENT.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box.
<square>
If any of the securities being registered on this form are being offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box.
<square>X
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.
<square>
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.
<square>
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.
<square>
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CALCULATION OF REGISTRATION FEE
<S> <C> <C> <C> <C>
AMOUNT TO PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF BE REGISTERED AGGREGATE PRICE AGGREGATE REGISTRATION
SHARES PER UNIT{(1)} OFFERING PRICE FEE
TO BE
REGISTERED
Common Stock,
par value
$.01 per share 75,000 $8.13 $609,750 $180.00
</TABLE>
(1)Estimated solely for purposes of calculating the registration fee in
accordance with Rule 457(c) under the Securities Act of 1933, based on the
average of the high and low prices per share of the Common Stock reported on
the Nasdaq National Market on January 21, 1998.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL
OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED JANUARY 22, 1998
PROSPECTUS
75,000 Shares
MFRI, INC.
COMMON STOCK
This Prospectus relates to 75,000 shares ("Shares") of common stock,
par value $.01 per share (the "Common Stock"), of MFRI, Inc., a Delaware
corporation (the "Company"), which may hereafter be offered or sold from
time to time for the account of persons named under the caption "Selling
Stockholders."
The Shares may be issued from time to time pursuant to options issued
in connection with the purchase of TDC Filter Manufacturing, Inc., a
Delaware corporation, by the Company, which occurred on December 3, 1997.
The Shares may hereafter be offered or sold from time to time for the
account of persons named under the caption "Selling Stockholders" on the
Nasdaq National Market, or otherwise, at prices and on terms then
obtainable, in broker's transactions, special offerings, exchange
distributions, negotiated transactions, block transactions, or otherwise.
See "Selling Stockholders" and "Plan of Distribution." The Company will
not realize any proceeds from any sale of the Shares.
The Common Stock is traded on the Nasdaq National Market under the
symbol "MFRI." On January 21, 1998, the last reported sale price of the
Common Stock on the Nasdaq National Market was $8.13.
______________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION PASSED OR ANY STATE SECURITIES COMMISSION UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
______________
THE DATE OF THIS PROSPECTUS IS ___________, 1998
<PAGE>
NO DEALER, BROKER OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED OR
INCORPORATED HEREIN BY REFERENCE IN THIS PROSPECTUS, IN CONNECTION WITH THE
OFFERING MADE HEREBY, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED ON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR THE SELLING SHAREHOLDERS. THIS PROSPECTUS DOES NOT CONSTITUTE
AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER TO BUY THE SECURITIES TO
WHICH IT RELATES IN ANY JURISDICTION IN WHICH, OR TO ANY PERSON TO WHOM, IT
IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION OF AN OFFER. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY OFFER OR SALE MADE HEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE INFORMATION SET FORTH HEREIN OR IN THE AFFAIRS OF THE COMPANY
SINCE THE DATE HEREOF.
THIS PROSPECTUS, INCLUDING DOCUMENTS INCORPORATED HEREIN BY REFERENCE,
CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF
THE SECURITIES ACT AND SECTION 21E OF THE EXCHANGE ACT. FORWARD-LOOKING
STATEMENTS ARE INHERENTLY SUBJECT TO RISKS AND UNCERTAINTIES, MANY OF WHICH
CANNOT BE PREDICTED WITH ACCURACY AND SOME OF WHICH MIGHT NOT EVEN BE
ANTICIPATED. FUTURE EVENTS AND ACTUAL RESULTS, FINANCIAL AND OTHERWISE,
MAY DIFFER MATERIALLY FROM THE RESULTS DISCUSSED IN THE FORWARD-LOOKING
STATEMENTS. FACTORS THAT MIGHT CAUSE SUCH A DIFFERENCE INCLUDE, BUT ARE
NOT LIMITED TO, THOSE DISCUSSED IN "RISK FACTORS" HEREIN AND IN
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION" INCORPORATED BY REFERENCE IN THE COMPANY'S ANNUAL
REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED JANUARY 31, 1997, WHICH IS
INCORPORATED BY REFERENCE IN THIS PROSPECTUS.
TABLE OF CONTENTS
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PAGE
AVAILABLE INFORMATION ....................................... 3
RISK FACTORS ................................................ 3
THE COMPANY ................................................. 4
SELLING STOCKHOLDERS ........................................ 6
USE OF PROCEEDS ............................................. 6
PLAN OF DISTRIBUTION ........................................ 6
LEGAL MATTERS ............................................... 7
EXPERTS ..................................................... 7
INFORMATION INCORPORATED BY REFERENCE ....................... 8
</TABLE>
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith, files periodic reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission").
Such reports, proxy statements and other information can be inspected and
copied at the public reference facilities maintained by the Commission at
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and should also
be available for inspection and copying at the regional offices of the
Commission located at 75 Park Place, 14th Floor, New York, New York 10007
and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies
of such material can also be obtained from the Public Reference Section of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates. The Commission maintains a Web site that contains
reports, proxy and information statements, and other information about the
Company. The address of the Web site maintained by the Commission is
"http://www.sec.gov". The Common Stock is traded on the National Market
tier of the Nasdaq Stock Market ("Nasdaq"). Information filed by the
Company with Nasdaq may be obtained at 1735 K Street, N.W., Washington,
D.C. 20006.
This Prospectus constitutes a part of a registration statement on
Form S-3 (herein, together with all amendments and exhibits, the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), filed by the Company. This Prospectus does not contain
all of the information set forth in the Registration Statement. For
further information, reference is hereby made to the Registration
Statement, including the financial schedules and exhibits filed or
incorporated by reference as a part thereof, which may be examined at the
Public Reference Room of the Commission in Washington, D.C., without
charge, or copies of which may be obtained from the Commission upon payment
of the prescribed fees. Statements contained herein concerning the
provisions of documents filed herewith as exhibits are necessarily
summaries of such documents, and each such statement is qualified in its
entirety by reference to the copy of the applicable document filed with the
Commission.
RISK FACTORS
COMPETITION; BUSINESS. The businesses in which the Company is engaged
are highly competitive. In addition, new installations of baghouses are
subject to competition from alternative technologies, and the sale of
specialty piping systems and electronic leak detection and location systems
are subject to competition from alternative products. The business of
Thermal Care (as defined below) is dependent on the plastics industry. Any
adverse trends in the plastics industry may have a material adverse effect
on the business of Thermal Care. Thermal Care relies upon a single source
for key components of several of its products. Although the Company
believes that there are alternate sources available for such components,
there can be no assurance that the interruption of supplies of such
components would not have an adverse effect on the financial condition of
the Company, and that the Company, if required to do so, would be able to
negotiate agreements with alternative sources on acceptable terms.
GOVERNMENT REGULATION. The demand for the Company's leak detection
and location systems and secondary containment piping systems is driven
primarily by government regulation with respect to hazardous waste. Laws
such as the Federal Resource Conservation and Recovery Act, and standards
such as the National Emission Standard for Hydrocarbon Airborne
Particulates, have increased the demand for the Company's leak detection
and location and secondary containment piping systems. The Company's
filtration products business to a large extent is dependent on governmental
regulation of air pollution at the federal and state levels. The Company
believes that continuing growth in the sale of filtration products and
services will be materially dependent on continuing enforcement of
environmental laws such as the Federal Clean Air Act Amendments of 1990.
Although changes in such environmental regulations could significantly
alter the demand for the Company's products and services, the Company does
not believe that such a change is likely to decrease demand in the
foreseeable future.
ECONOMIC FACTORS. Although demand for many of the Company's products
is generally affected by its customers' need to comply with governmental
regulations, purchases of the Company's products at times may be delayed by
customers due to adverse economic factors.
DIVIDENDS. The Company has not paid dividends in the past and does
not anticipate paying cash dividends on the Common Stock in the foreseeable
future. The Company's line of credit agreement contains certain
restrictions on payment of dividends. The primary restriction limits
dividends to a cumulative amount of up to 25% of net income.
THE COMPANY
The Company is engaged in the manufacture and sale of filter bags for
use in industrial air pollution control systems known as "baghouses", and
also engineers, designs and manufactures specialty piping systems and leak
detection and location systems, and industrial water cooling equipment.
The Company, which was incorporated in Delaware in October 1993, is the
successor corporation to Midwesco Filter Resources, Inc. ("Midwesco
Filter").
Midwesco Filter was incorporated in Delaware in October 1989 as a
wholly-owned subsidiary of Midwesco, Inc. ("Midwesco"), an Illinois
corporation. On December 13, 1989, Midwesco Filter exchanged shares of its
common stock for the net assets constituting the Midwesco Filter Resources
division ("Filter Division") of Midwesco. The Filter Division was formed
from certain assets of the Filter Media division of the Kennecott
Corporation, acquired by Midwesco in June 1982, and certain assets of the
Filter Resources Corporation, acquired by Midwesco in December 1983.
On January 28, 1994 pursuant to a merger transaction ("Perma-Pipe
Transaction") between the Company, a subsidiary of the Company and Midwesco
Filter, the Company acquired the Perma-Pipe business ("Perma-Pipe") from
Midwesco for cash and 278,666 shares of Common Stock. Pursuant to the
Perma-Pipe Transaction, each share of common stock of Midwesco Filter was
exchanged for one share of Common Stock. Immediately prior to the
effective time of the Perma-Pipe Transaction, a public offering (the
"Offering") of shares of common stock of Midwesco Filter was consummated,
the net proceeds of which were used to repay bank debt related to
Perma-Pipe. Perma-Pipe is in the business of engineering, designing and
manufacturing specialty piping systems and leak detection and location
systems.
On September 30, 1994, the Company and an indirect wholly-owned
subsidiary of the Company, pursuant to a purchase agreement dated as of
such date ("Purchase Agreement"), acquired substantially all of the assets
of Ricwil Piping Systems Limited Partnership ("Ricwil LP") for cash and
55,710 shares of Common Stock, as adjusted in accordance with the terms of
the Purchase Agreement. Ricwil LP was a manufacturer of insulated piping
systems for district heating and cooling systems.
On December 6, 1995, Perma-Pipe acquired for cash the net assets and
leak detection business of Hagenuk GmbH.
On August 15, 1996, the Company, pursuant to an Asset Purchase
Agreement dated as of such date (the "Eurotech Agreement"), acquired
substantially all of the assets of Eurotech Air Filtration, Inc., an Oregon
corporation ("Eurotech"), for cash and 30,571 shares of Common Stock.
Pursuant to the Eurotech Agreement, Eurotech distributed such shares to its
four shareholders.
On December 30, 1996, the Company acquired the Thermal Care Division
("Thermal Care") and certain other specified assets and liabilities of
Midwesco by the merger of Midwesco with and into the Company (the
"Merger"). Through the Merger, an aggregate of 2,124,298 shares of Common
Stock were issued to the shareholders of Midwesco and the 1,717,666 shares
of Common Stock owned by Midwesco immediately prior to the consummation of
the Merger were cancelled. Thermal Care engineers, designs and
manufactures industrial water cooling equipment.
On December 3, 1997, the Company and a wholly-owned subsidiary,
pursuant to a Stock Purchase Agreement dated as of such date (the "TDC
Agreement"), acquired all of the outstanding shares of TDC Filter
Manufacturing, Inc., a Delaware corporation ("TDC"), and the related real
estate for cash and options to purchase an aggregate of 75,000 shares of
Common Stock.
The Company's filtration products business is carried on by Midwesco
Filter and TDC, and the piping system products business is carried on by
Perma-Pipe, Inc. Midwesco Filter and Perma-Pipe, Inc. are wholly-owned
subsidiaries of MFRI. As used herein, unless the context otherwise
requires, the term Company includes MFRI, Inc., Midwesco Filter, Thermal
Care, Perma-Pipe, Inc., TDC, and their subsidiaries and predecessors.
The Company's principal executive offices are located at 7720 Lehigh
Avenue, Niles, Illinois 60714 and its telephone number is (847) 966-1000.
Other information concerning the Company's management, business,
securities, and results of operations is incorporated by reference from its
reports filed with the Commission. See "Information Incorporated by
Reference."
SELLING STOCKHOLDERS
The Shares may be offered from time to time for the account of the
Selling Stockholders whose names are set forth in the table below. This
Prospectus also may be used by transferees, assignees, and pledgees of any
of the Selling Stockholders. The table sets forth information as of
December 31, 1997 with respect to the beneficial ownership of the Shares by
the Selling Stockholders. To the knowledge of the Company, none of the
Selling Stockholders has any material relationship with the Company except
as set forth in the footnotes to the following table and as more fully
described elsewhere in this Prospectus (including the information
incorporated by reference in this Prospectus).
<TABLE>
<CAPTION>
NO. OF SHARES OWNED NO. OF SHARES NO. OF SHARES
PRIOR TO Offering WHICH MAY BE WHICH MAY BE OWNED
SELLING STOCKHOLDER OFFERED AFTER OFFERING
<S> <C> <C> <C>
Roy E. Greenlees and Lorie 70,500 70,500 0
Greenlees as Joint Tenants
{(1)}
Janet Marshall{(2)} 4,500 4,500 0
</TABLE>
__________________________
{(1) }Roy E. Greenlees is a Director and President of TDC, which is a
wholly-owned subsidiary of the Company.
{(2) }Janet Marshall is Vice President of TDC.
USE OF PROCEEDS
This Prospectus relates solely to Shares being offered and sold
for the accounts of the Selling Stockholders. The Company will not
realize any proceeds from any sale of Shares by the Selling
Stockholders.
PLAN OF DISTRIBUTION
The Selling Stockholders may offer and sell Shares by means of
the Prospectus from time to time in one or more transactions,
directly by the Selling Stockholders, or through agents, dealers or
brokers to be designated from time to time; such offers and sales may
be effected over any national securities exchange or automated
interdealer quotation system on which shares of the Common Stock are
then listed, in negotiated transactions or in a combination of such
methods of sale; the selling price of the Shares may be at market
prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices; and the Shares may
also be offered in coordinated block transactions through
underwriters, dealers or agents, or otherwise who may receive
compensation in the form of underwriting or brokerage discounts,
concessions or commissions from the Selling Stockholders or the
purchasers of such Shares for whom they may act as agents. In
certain states, the Selling Stockholders may be required to offer and
sell Shares only through brokers and dealers registered in such
states.
The Selling Stockholders and any brokers or dealers that act in
connection with the sale of Shares hereunder may be deemed to be
"underwriters" within the meaning of Section 2(11) of the Securities
Act and any commissions received by them and any profit on the sale
of Shares as principal may be deemed to be underwriting discounts and
commissions under the Securities Act. Neither the Company nor the
Selling Stockholders can presently estimate the amount of such
compensation. The Company knows of no existing arrangements between
any selling Stockholder and any underwriter, broker, dealer, or other
agent relating to the sale or distribution of the Shares.
The Company will pay all of the expenses of the preparation,
printing and filing of the Registration Statement, any amendments or
supplements thereto, and prospectuses and revised prospectuses as
required to cover the transactions covered hereby, as well as the
Company's fees and disbursements of its counsel and accountants
relating to the Registration Statement, but the Company is not
obligated to pay any underwriting discounts and commissions, brokers'
commissions or charges, the legal fees and expenses of the Selling
Stockholders, or transfer taxes, if any, relating to the sale or
disposition of Shares by a Selling Shareholder. Each Selling
Stockholder may indemnify any broker, dealer, agent, or underwriter
that participates in transactions involving sales of the Shares
against certain liabilities, including liabilities arising under the
Securities Act.
The Selling Stockholders may also resell Shares in open market
transactions pursuant to the resale provisions of Rule 144 under the
Securities Act or in transactions otherwise permitted under the
Securities Act.
LEGAL MATTERS
Certain legal matters in connection with the Shares, including
the validity of the Shares, will be passed upon for the Company by
Rudnick & Wolfe, Chicago, Illinois.
EXPERTS
The Consolidated Financial Statements of MFRI, Inc. and
subsidiaries incorporated in this Prospectus by reference from the
Company's Annual Report on Form 10-K for the year ended January 31,
1997 and the Consolidated Financial Statements of Midwesco, Inc. and
subsidiaries incorporated in this Prospectus by reference from the
Company's Current Report on Form 8-K dated August 11, 1997 have been
audited by Deloitte & Touche LLP, independent auditors, as stated in
their reports, which are incorporated herein by reference, and have
been so incorporated in reliance upon the reports of such firm given
upon their authority as experts in accounting and auditing.
INFORMATION INCORPORATED BY REFERENCE
The following documents previously filed by the Company or its
predecessor with the Commission pursuant to the Exchange Act (SEC
File No. 0-18370) are hereby incorporated by reference into this
Prospectus:
(i) the Company's Current Report on Form 8-K dated
December 12, 1997;
(ii) the Company's Current Report on Form 8-K dated August
11, 1997;
(iii) the Company's Annual Report on Form 10-K for the
fiscal year ended January 31, 1997; and
(iv) the registration statement of Midwesco Filter
Resources, Inc., a predecessor and wholly-owned
subsidiary of the Company, on Form 8-A filed on March
13, 1990 registering common stock of the Company's
predecessor under Section 12(g) of the Securities
Exchange Act of 1934.
<PAGE>
All documents filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this
Prospectus and before the termination of the offering of shares of
the Common Stock made hereby are hereby incorporated by reference,
and such documents are deemed to be a part hereof from the date of
filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall
be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently
filed document which is or is deemed to be incorporated by reference
herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not, except as so modified or
superseded, constitute a part of this Prospectus.
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON,
INCLUDING ANY BENEFICIAL OWNER OF COMMON STOCK, TO WHOM A COPY OF
THIS PROSPECTUS IS DELIVERED, UPON THE ORAL OR WRITTEN REQUEST OF
SUCH PERSON, A COPY OF ANY AND ALL OF THE INFORMATION THAT HAS BEEN
INCORPORATED BY REFERENCE IN THIS PROSPECTUS (NOT INCLUDING EXHIBITS
TO THE INFORMATION THAT IS INCORPORATED BY REFERENCE UNLESS SUCH
EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE IN SUCH
INFORMATION). SUCH REQUEST SHOULD BE DIRECTED TO MICHAEL D. BENNETT,
SECRETARY, MFRI, INC., 7720 LEHIGH AVENUE, NILES, ILLINOIS 60714
(TELEPHONE (847) 966-1000).
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth expenses to be incurred in
connection with the issuance and distribution of the securities being
registered hereby:
S.E.C. registration fee $ 180.00
*Legal and accounting fees
and expenses $ 10,000.00
*Miscellaneous $ 1,820.00
Total $ 12,000.00
The Company has agreed to pay all of the expenses of the
preparation, printing and filing of the Registration Statement, any
amendments or supplements thereto, and prospectuses and revised
prospectuses as required to cover the transactions covered hereby, as
well as the Company's fees and disbursements of its counsel and
accountants relating to the Registration Statement, but the Selling
Stockholders will bear their pro rata portion of any underwriting
discounts and commissions, brokers' commissions or charges, or other
costs arising in the marketing of the Shares and their own legal fees
and expenses.
________________
* Estimated.
Item 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law authorizes
indemnification of directors, officers, employees and agents of the
Company; allows the advancement of costs of defending against
litigation; and permits companies incorporated in Delaware to
purchase insurance on behalf of directors, officers, employees and
agents against liabilities whether or not in the circumstances such
companies would have the power to indemnify against such liabilities
under the provisions of the statute.
The Company's Certificate of Incorporation and its By-Laws
provide for indemnification of its officers and directors to the full
extent permitted by Section 145 of the Delaware General Corporation
Law.
<PAGE>
The Company's Certificate of Incorporation eliminates, to the
fullest extent permitted by Delaware law, liability of a director to
the Company or its stockholders for monetary damages for a breach of
such director's fiduciary duty of care except for liability where a
director (a) breaches his or her duty of loyalty to the Company or
its stockholders, (b) fails to act in good faith or engages in
intentional misconduct or knowing violation of law, (c) authorizes
payment of an illegal dividend or a stock repurchase or (d) obtains
an improper personal benefit. While liability for monetary damages
has been eliminated, equitable remedies such as injunctive relief or
rescission remain available. In addition, a director is not relieved
of his responsibilities under any other law, including the federal
securities laws.
The Company has entered into indemnification agreements in the
form described below with each person who is currently a member of
the Board of Directors of the Company and will enter into such
agreements with persons who in the future become directors of the
Company. Such indemnification agreements provide for indemnification
against any and all expenses incurred in connection with, as well as
any and all judgments, fines, and amounts paid in settlement
resulting from, any threatened, pending, or completed action, suit,
or proceeding, whether civil, criminal, administrative, or
investigative (collectively an "Action"), by reason of the fact that
such director is or was a director, officer, employee or agent of the
Company, or is or was serving at the request of the Company as a
director, officer, employee or agent of another corporation,
partnership, joint venture, trust, or other enterprise. The
indemnification agreements provide that if any payment, advance or
indemnification of the director requires that he or she acted in good
faith, in a manner he or she reasonably believed to be for or not
opposed to the best interests of the Company or without reasonable
cause to believe his or her conduct was unlawful, then it shall be
presumed that he or she so acted unless proven otherwise by clear and
convincing evidence. The indemnification agreements also provide for
the advancement of all expenses, including reasonable attorneys'
fees, arising from the investigation of any claim, preparation for
the defense or defense or settlement of an Action. The
indemnification agreements authorize the Company to participate in
the defense of any action and to assume the defense thereof, with
counsel who shall be reasonably satisfactory to the director,
provided that the director shall be entitled to separate counsel of
his or her choosing if he or she reasonably believes that (i) there
exists conflicting interests between himself or herself and the
Company or other parties (the defense of whom the Company shall have
assumed) or (ii) there is any substantial likelihood that the Company
will be financially or legally unable to satisfy its obligations
under the Indemnification Agreement. The indemnification agreements
provide that a director's rights under such contract are not
exclusive of any other indemnification rights he or she may have
under any provision of law, the Company's Certificate of
Incorporation or By-laws, the vote of the Company's stockholders or
disinterested directors, other agreements or otherwise.
Item 16. EXHIBITS.
EXHIBIT EXHIBIT
NUMBER DESCRIPTION
2.1 Stock Purchase Agreement dated December 3, 1997 by and
between Roy E. Greenlees, Lorie Greenlees, Janet
Marshall and MFRI, Inc. incorporated by reference in
Current Report on Form 8-K dated December 12, 1997
(SEC File No. 0-18370).
5 Form of Opinion of Rudnick & Wolfe with respect to the
legality of the Common Stock being registered
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Rudnick & Wolfe (contained in Exhibit 5
hereof)
24 Power of Attorney of directors and certain officers of
the Company.
Item 17. UNDERTAKINGS.
The Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration
statement;
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration
statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) do
not apply if the registration statement is on Form S-3, Form S-8
or Form F-3, and the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed by the Registrant pursuant to Section 13
or 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial
BONA FIDE offering thereof.
(3) To remove from registration by means of a post-
effective amendment any of the securities being registered which
remain unsold at the termination of the offering.
The undersigned registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933, each
filing of the registrant's annual report pursuant to Section 13(a) or
15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial BONA FIDE offering thereof.
The undersigned registrant hereby undertakes to deliver or cause
to be delivered with the Prospectus, to each person to whom the
Prospectus is sent or given, the latest annual report to security
holders that is incorporated by reference in the Prospectus and
furnished pursuant to and meeting the requirements of Rule 14a-3 or
Rule 14c-3 under the Securities Exchange Act of 1934; and, where
interim financial information required to be presented by Article 3
of Regulation S-X is not set forth in the Prospectus, to deliver, or
cause to be delivered to each person to whom the Prospectus is sent
or given, the latest quarterly report that is specifically
incorporated by reference in the Prospectus to provide such interim
financial information.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and
is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Act and will be governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-3 and has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Niles, State
of Illinois, on January 22, 1998.
MFRI, INC.
By:/S/ DAVID UNGER
David Unger
Chief Executive Officer
By:/S/ DAVID UNGER
David Unger
Chairman of the Board
By:/S/ DAVID UNGER
David Unger
President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons
in the capacities and on the date indicated.
SIGNATURE TITLE DATE
/s/ David Unger* Director and Chairman of the
Board of Directors (Principal
Executive Officer) January 22, 1998
Henry M. Mautner* Director, Vice Chairman of
the Board of Directors January 22, 1998
Michael D. Bennett* Vice President, Secretary and
Treasurer (Principal Financial
and Accounting Officer) January 22, 1998
Arnold F. Brookstone* Director January 22, 1998
Don Gruenberg* Director January 22, 1998
Bradley E. Mautner* Director January 22, 1998
Eugene Miller* Director January 22, 1998
Gene K. Ogilvie* Director January 22, 1998
Stephen B. Schwartz* Director January 22, 1998
*By:/S/ DAVID UNGER
Individually and as Attorney- January 22, 1998
David Unger in-fact
<PAGE>
EXHIBIT 5
RUDNICK & WOLFE
203 NORTH LASALLE STREET
CHICAGO, ILLINOIS 60601-1293
January 22, 1998 (312) 368-4000
The Board of Directors
MFRI, Inc.
7720 Lehigh Avenue
Niles, IL 60714
Gentlemen:
We have examined the registration statement on Form S-3 filed
with the Securities and Exchange Commission on or about January 22,
1998, for registration under the Securities Act of 1933, as amended,
of 75,000 shares of common stock to be issued pursuant to certain
options granted on December 3, 1997 of MFRI, Inc. (the "Options"), a
Delaware corporation (the "Company"), par value $.01 per share
("Common Stock"). We have examined pertinent corporate documents and
records of the Company, including its Certificate of Incorporation,
By-Laws and the Options, and we are familiar with the corporate
proceedings had and contemplated in connection with the issuance of
such shares of Common Stock by the Company. We have also made such
other examinations as we have deemed necessary or appropriate as a
basis for the opinion hereinafter expressed.
On the basis of the foregoing, we are of the opinion that such
75,000 shares of Common Stock of the Company have been duly
authorized, and when issued in accordance with the terms of the
Options, will be legally issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion as an exhibit to
the registration statement and to the reference to our firm in the
registration statement under the caption "Legal Matters."
Very truly yours,
RUDNICK & WOLFE
By:/S/ HAL M. BROWN
Hal M. Brown, a Partner
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Registration
Statement of MFRI, Inc. on Form S-3 of our report dated April 18,
1997 with respect to the Consolidated Financial Statements of MFRI,
Inc. and subsidiaries appearing in the Annual Report on Form 10-K of
MFRI, Inc. for the year ended January 31, 1997, and of our report
dated May 28, 1996 (August 14, 1996 as to the second paragraph of
Note 6) with respect to the Consolidated Financial Statements of
Midwesco, Inc. and subsidiaries appearing in the Current Report on
From 8-K of MFRI, Inc. dated August 11, 1997, and to the reference to
us under the caption "Experts" in the Prospectus, which is part of
this Registration Statement.
/S/ DELOITTE & TOUCHE LLP
Deloitte & Touche LLP
Chicago, Illinois
January 22, 1998
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned,
being a director or officer, or both, of MFRI, Inc., a Delaware
corporation (the "Company"), does hereby constitute and appoint David
Unger, Henry M. Mautner, Bradley E. Mautner, Fati Elgendy and
Michael D. Bennett with full power of substitution and resubstitution
to each of said attorneys, to execute, file or deliver any and all
instruments and to do any and all acts and things which said
attorneys and agents, or any of them, deem advisable to enable the
Company to comply with the Securities Act of 1933, as amended, and
any requirements or regulations of the Securities and Exchange
Commission in respect thereto, in connection with the registration
under said Securities Act of the sale of shares of common stock of
the Company by certain stockholders of the Company, which shares are
to be issued by the Company in connection with options issued
pursuant to the Stock Purchase Agreement dated December 3, 1997
between Roy E. Greenlees, Lorie Greenlees and Janet Marshall and the
Company, including specifically, but without limitation of the
general authority hereby granted, the power and authority to sign his
or her name as director or officer, or both, of the Company, as
indicated below opposite his or her signature, to the registration
statements and any amendment, post-effective amendment, supplement or
papers supplemental thereto, to be filed with respect to said shares
of common stock, and each of the undersigned does hereby fully ratify
and confirm all that said attorneys and agents, or any one of them,
or the substitute of any of them, shall do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, each of the undersigned has subscribed these
presents, this 22nd day of January, 1998.
SIGNATURE TITLE
/S/ DAVID UNGER Director, Chairman of the Board of
David Unger Directors and President (Principal
Executive Officer)
/S/ HENRY M. MAUTNER Director and Vice Chairman of the
Board of
Henry M. Mautner Directors
/S/ GENE K. OGILVIE Director and Vice President
Gene K. Ogilvie
/S/ MICHAEL D. BENNETT Vice President, Secretary and
Treasurer
Michael D. Bennett (Principal Financial and
Accounting Officer)
/S/ ARNOLD F. BROOKSTONE Director
Arnold F. Brookstone
/S/ FATI ELGENDY Director and Vice President
Fati Elgendy
/S/ DON GRUENBERG Director and Vice President
Don Gruenberg
/S/ BRADLEY E. MAUTNER Director and Vice President
Bradley E. Mautner
/S/ EUGENE MILLER Director
Eugene Miller
/S/ STEPHEN B. SCHWARTZ Director
Stephen B. Schwartz
