<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[X] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
MFRI, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
<PAGE> 2
MFRI LOGO
May , 2000
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
NOTICE IS HEREBY GIVEN that the annual meeting of stockholders of MFRI,
Inc. (the "Company") will be held at The Standard Club, 320 South Plymouth
Court, Chicago, Illinois on Tuesday, June 27, 2000, at 10:00 a.m., Chicago time,
for the following purposes:
1. to elect directors;
2. to consider a proposal to amend the Company's Certificate of
Incorporation to increase the authorized number of shares of common stock from
15,000,000 shares to 50,000,000 shares; and
3. to transact such other business as may properly come before the meeting.
By order of the Board of Directors,
MICHAEL D. BENNETT
Secretary
<PAGE> 3
------------------
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of the Company for use at the annual
meeting of stockholders to be held on June 27, 2000 and at any adjournment
thereof. Only stockholders of record at the close of business on May 12, 2000
will be entitled to notice of and to vote at the meeting. The Company had
outstanding 4,922,364 shares of common stock as of the close of business on
March 31, 2000. There are no other voting securities. Each stockholder is
entitled to one vote per share for the election of directors, as well as on all
other matters. If the accompanying proxy form is signed and returned, the shares
represented thereby will be voted; such shares will be voted in accordance with
the directions on the proxy form or, in the absence of direction as to any
proposal, they will be voted for such proposal; and it is intended that they
will be voted for the nominees named herein, except to the extent authority to
vote is withheld. The stockholder may revoke the proxy at any time prior to the
voting thereof by giving written notice of such revocation to the Company, by
executing and duly delivering a subsequent proxy or by attending the meeting and
voting in person.
In case any nominee named herein for election as a director is not
available when the election occurs, proxies in the accompanying form may be
voted for a substitute as well as for the other persons named herein. The
Company expects all nominees to be available and knows of no matters to be
brought before the meeting other than those referred to in the accompanying
notice of annual meeting. If, however, any other matters properly come before
the meeting, it is intended that proxies in the accompanying form will be voted
thereon in accordance with the judgment of the persons voting such proxies.
The presence at the annual meeting, in person or by proxy, of the holders
of a majority of the outstanding shares of common stock of the Company ("Common
Stock") shall constitute a quorum. Abstentions will be treated as shares that
are present and entitled to vote for purposes of determining the presence of a
quorum but as unvoted for purposes of determining the approval of any matter
submitted to the stockholders for a vote. If a broker indicates on the proxy
that it does not have discretionary authority as to certain shares to vote on a
particular matter, those shares will not be considered as present and entitled
to vote with respect to that matter.
A plurality of the votes of the shares present in person or represented by
proxy at the meeting will be required to elect the directors. The vote of the
majority of the outstanding shares of Common Stock of the Company is necessary
to approve the proposal to amend the Company's Certificate of Incorporation to
increase the authorized number of shares of Common Stock.
In addition to the use of the mails, proxies may be solicited by directors,
officers, or regular employees of the Company in person, by telegraph, by
telephone or by other means. The cost of the proxy solicitation will be paid by
the Company.
The Company's fiscal year ends January 31. Years described as 1999, 1998
and 1997 are the fiscal years ended January 31, 2000, 1999 and 1998,
respectively.
This Proxy Statement and the form of proxy are first being mailed on May
, 2000 to stockholders of the Company.
2
<PAGE> 4
PRINCIPAL STOCKHOLDERS AND SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth as of March 31, 2000, with respect to any
person who is known to the Company to be the beneficial owner of more than 5% of
the outstanding shares of common stock of the Company, the name and address of
such owner, the number of shares of common stock beneficially owned, the nature
of such ownership, and the percentage such ownership is of the outstanding
shares of Common Stock:
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE PERCENT OF
OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP OUTSTANDING SHARES
------------------- ----------------------- ------------------
<S> <C> <C>
David Unger 539,455(1) 11.0%
7720 Lehigh Avenue
Niles, IL 60714
Henry M. Mautner 444,216(2) 9.0%
7720 Lehigh Avenue
Niles, IL 60714
Heartland Advisors, Inc. 1,082,700(3) 22.0%
789 North Water Street
Milwaukee, WI 53202
Dimensional Fund Advisors Inc. 247,200(4) 5.0%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
</TABLE>
- ------------
(1) Includes 31,000 shares that are subject to stock options granted by the
Company that were exercisable on March 31, 2000 or which became exercisable
within 60 days thereafter. Includes 21,500 shares held in joint tenancy with
Reporting Person's spouse, 10,750 of which the Reporting Person disclaims
beneficial ownership of. Also includes 12,454 shares owned by the Reporting
Person's spouse all of which the Reporting Person disclaims beneficial
ownership of.
(2) Includes 31,000 shares that are subject to stock options granted by the
Company that were exercisable on March 31, 2000 or which became exercisable
within 60 days thereafter. Includes 5,500 shares held in joint tenancy with
Reporting Person's spouse, 2,750 of which the Reporting Person disclaims
beneficial ownership of.
(3) According to a Schedule 13G dated January 20, 2000, such securities are held
in investment advisory accounts of Heartland Advisors, Inc. As a result,
various persons have the right to receive or the power to direct the receipt
of dividends from, or the proceeds from the sale of, the securities. The
interests of one such account, Heartland Value Fund, a series of Heartland
Group, Inc., a registered investment company, relates to more than 5% of the
class.
(4) According to a Schedule 13G dated February 11, 2000, such securities are
owned by advisory clients of Dimensional Fund Advisors Inc., no one of
which, to the knowledge of Dimensional Fund Advisors, Inc., owns more than
5% of the class. Dimensional Fund Advisors Inc. disclaims beneficial
ownership of all such securities.
3
<PAGE> 5
The following table sets forth as of March 31, 2000, certain information
concerning the ownership of securities of the Company of each director, nominee
and executive officer named in the Summary Compensation Table hereof ("Named
Executive Officers") and all directors and executive officers of the Company as
a group:
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENT OF
NAME OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP OUTSTANDING SHARES
------------------------ ----------------------- ------------------
<S> <C> <C>
David Unger............................ 539,455(1) 11.0%
Henry M. Mautner....................... 444,216(2) 9.0%
Gene K. Ogilvie........................ 45,675(3) *
Fati A. Elgendy........................ 59,107(4) 1.2%
Don Gruenberg.......................... 14,779(5) *
Bradley E. Mautner..................... 172,905(6) 3.5%
Arnold F. Brookstone................... 16,500(7) *
Eugene Miller.......................... 15,500(8) *
Stephen B. Schwartz.................... 13,700(9) *
Dennis Kessler......................... 2,750(10) *
All directors and executive officers as
a group (17 persons)................. 1,440,044 29.3%
</TABLE>
- ------------
* Less than 1%
(1) Includes 31,000 shares that are subject to stock options granted by the
Company that were exercisable on March 31, 2000 or which became exercisable
within 60 days thereafter. Includes 21,500 shares held in joint tenancy
with Reporting Person's spouse, 10,750 of which the Reporting Person
disclaims beneficial ownership of. Also includes 12,454 shares owned by the
Reporting Person's spouse all of which the Reporting Person disclaims
beneficial ownership of.
(2) Includes 31,000 shares that are subject to stock options granted by the
Company that were exercisable on March 31, 2000 or which became exercisable
within 60 days thereafter. Includes 5,500 shares held in joint tenancy with
Reporting Person's spouse, 2,750 of which the Reporting Person disclaims
beneficial ownership of.
(3) Includes 31,000 shares that are subject to stock options granted by the
Company that were exercisable on March 31, 2000 or which became exercisable
within 60 days thereafter. Includes 500 shares owned by the Reporting
Person's mother over which the Reporting Person has power of attorney, all
of which the Reporting Person disclaims beneficial ownership of.
(4) Includes 49,500 shares that are subject to stock options granted by the
Company that were exercisable on March 31, 2000 or which became exercisable
within 60 days thereafter. Includes 5,000 shares held in joint tenancy with
Reporting Person's spouse, 2,500 of which the Reporting Person disclaims
beneficial ownership of.
(5) Includes 12,000 shares that are subject to stock options granted by the
Company that were exercisable on March 31, 2000 or which became exercisable
within 60 days thereafter. Includes 1,000 shares held in joint tenancy with
Reporting Person's spouse, 500 of which the Reporting Person disclaims
beneficial ownership of.
(6) Includes 11,500 shares that are subject to stock options granted by the
Company that were exercisable on March 31, 2000 or which became exercisable
within 60 days thereafter. Includes 200 shares held as custodian for the
Reporting Person's minor children, all of which the Reporting Person
disclaims beneficial ownership of.
4
<PAGE> 6
(7) Includes 13,500 shares that are subject to stock options granted by the
Company that were exercisable on March 31, 2000 or which became exercisable
within 60 days thereafter. Includes 3,000 shares held in a trust of which
the Reporting Person is trustee.
(8) Includes 13,500 shares that are subject to stock options granted by the
Company that were exercisable on March 31, 2000 or which became exercisable
within 60 days thereafter. Includes 2,000 shares held in a trust of which
the Reporting Person is trustee.
(9) Includes 13,500 shares that are subject to stock options granted by the
Company that were exercisable on March 31, 2000 or which became exercisable
within 60 days thereafter. Includes 200 shares held in a trust of which the
Reporting Person is trustee.
(10) Includes 2,750 shares that are subject to stock options granted by the
Company that were exercisable on March 31, 2000 or which became exercisable
within 60 days thereafter.
5
<PAGE> 7
NOMINEES FOR ELECTION AS DIRECTORS
Ten directors are to be elected at the meeting to hold office until the
annual meeting of stockholders in 2001 and until their respective successors are
elected and qualified. All of the nominees were previously elected directors by
the stockholders.
<TABLE>
<CAPTION>
FIRST BECAME A
DIRECTOR
OF THE
OFFICES AND POSITIONS, IF ANY, COMPANY OR A
NAME HELD WITH THE COMPANY; AGE PREDECESSOR
- ---- ------------------------------ --------------
<S> <C> <C>
David Unger Director, Chairman of the Board, President and Chief 1989
Executive Officer of the Company; Age 65
Henry M. Mautner Director and Vice Chairman of the Board of the 1989
Company; Age 73
Gene K. Ogilvie Director and Vice President of the Company; President 1989
and Chief Operating Officer of Midwesco Filter
Resources, Inc.; Age 60
Fati A. Elgendy Director and Vice President of the Company; President 1994
and Chief Operating Officer of Perma-Pipe, Inc.;
Age 51
Bradley E. Mautner Director and Vice President of the Company; Age 44 1995
Don Gruenberg Director and Vice President of the Company; President 1997
and Chief Operating Officer of Thermal Care, Inc.;
Age 57
Arnold F. Brookstone Director of the Company; Age 70 1990
Eugene Miller Director of the Company; Age 74 1990
Stephen B. Schwartz Director of the Company; Age 65 1995
Dennis Kessler Director of the Company; Age 61 1998
</TABLE>
David Unger has been employed by the Company and its predecessors in
various executive and administrative capacities since 1958, served as President
of Midwesco, Inc. ("Midwesco") from 1972 through January 1994, and was Vice
President from February 1994 through December 1996. He was also a director of
Midwesco from 1972 through December 1996 and served that company in various
executive and administrative capacities from 1958 until the consummation of the
Merger (as defined herein). He is a director and Vice President of the company
formed to succeed to the non-Thermal Care business of Midwesco.
Henry M. Mautner has been employed by the Company and its predecessors in
various executive and administrative capacities since 1949 and served as
Chairman of the Board of Directors of Midwesco from 1972 through December 1996.
Since the consummation of the Merger, he has served as the Chairman of the
company formed to succeed to the non-Thermal Care business of Midwesco. Mr.
Mautner is the father of Bradley E. Mautner.
Gene K. Ogilvie has been employed by the Company and its predecessors in
various executive capacities since 1969. He has been general manager of Midwesco
Filter Resources, Inc. ("Midwesco Filter") (a wholly owned subsidiary of the
Company) or its predecessor since 1980 and President and Chief Operating Officer
of Midwesco Filter since 1989. From 1982 until the consummation of the Merger in
December 1996, he served as Vice President of Midwesco.
Fati A. Elgendy, who has been associated with the Company and its
predecessors since 1978, was Vice President, Director of Sales of the Perma-Pipe
Division of Midwesco from 1990 to 1991. In 1991, he became Executive Vice
President of the Perma-Pipe Division, a position he continued to hold after the
acquisition by the Company to form Perma-Pipe, Inc. on January 28, 1994. In
March 1995, Mr. Elgendy became President and Chief Operating Officer of Perma
Pipe, Inc. (a wholly owned subsidiary of the Company).
6
<PAGE> 8
Bradley E. Mautner has been employed by the Company and its predecessors in
various executive and administrative capacities since 1978, has served as Vice
President of the Company since December 1996 and has been a director of the
Company since 1995. From 1994 to the consummation of the Merger, he served as
President of Midwesco and since December 30, 1996 he has served as President of
the company formed to succeed to the non-Thermal Care business of Midwesco. In
addition, since February 1996, he has served as the Chief Executive Officer of
Midwesco Services, Inc. (formerly known as Mid Res, Inc.). From February 1988 to
January 1996, he served as the President of Mid Res, Inc. Bradley E. Mautner is
the son of Henry M. Mautner.
Don Gruenberg has been employed by the Company and its predecessors in
various executive capacities since 1974, with the exception of a period in
1979-1980. He has been general manager of Thermal Care, Inc. ("Thermal Care") (a
wholly owned subsidiary of the Company) or its predecessor since 1980, and was
named President and Chief Operating Officer of Thermal Care in 1988. He has been
a Vice President and Director of the Company since December 1996.
Arnold F. Brookstone served as Executive Vice President and Chief Financial
and Planning Officer of Stone Container Corporation, an international pulp and
paper manufacturer, from January 1991 until his retirement in January 1996. Mr.
Brookstone is a director of Abitibi-Consolidated, Inc., a manufacturer of paper
products; Donnelly Corporation, a manufacturer of automotive products; and a
number of privately held companies. He is also Chairman of the Board of Trustees
of the ABN AMRO family of mutual and money market funds.
Eugene Miller served as Vice Chairman of the Board of Directors and Chief
Financial Officer of USG Corporation, a building materials holding company, from
March 1987 until his retirement as of May 31, 1991. Mr. Miller is currently
Executive-In-Residence and Adjunct Professor of Florida Atlantic University. Mr.
Miller is a director of IMX Pharmaceuticals, Inc., a marketer of over-the-
counter drug products. He also serves as a director of several privately held
companies.
Stephen B. Schwartz served as a senior vice president of IBM Corporation
from 1990 until his retirement in 1992. From 1957 to 1990, Mr. Schwartz served
in various capacities for IBM Corporation. Mr. Schwartz is currently a director
of Niagara Mohawk Power Company, an electric and gas utility company.
Dennis Kessler has been President of Kessler Management Consulting, LLC
since February 1998. Prior to February 1998, Mr. Kessler was Co-President of
Fel-Pro Incorporated, which manufactured and distributed gaskets, engine parts
and industrial chemicals. Mr. Kessler served in various capacities with Fel-Pro
since 1964. Mr. Kessler is currently a director of Universal Automotive
Industries, Inc., a manufacturer and distributor of brake rotors, drums, disc
brake pads, relined brake shoes, wheel cylinders and brake hoses for the
automotive aftermarket. He also serves as a director of a privately held
company.
BOARD OF DIRECTORS
Directors who are not employees of the Company or a parent or subsidiary of
the Company are compensated by a fee of $2,000 for each day of attendance at
Board meetings, $1,000 for attendance at each Audit Committee meeting and a $200
fixed fee per hour for engagement in any other activity on behalf of the Company
authorized by the Board of Directors and are reimbursed for expenses.
Pursuant to the Company's 1990 Independent Directors Stock Option Plan, as
amended (the "Directors Plan"), an option to purchase 10,000 shares of Common
Stock of the Company is granted automatically to each director who is not an
employee of the Company, any of its subsidiaries, any parent of the Company or
any of such parent's subsidiaries on the date he or she is first elected as a
director of the Company, and an option to purchase 1,000 shares of Common Stock
is granted each May 1 thereafter. Option exercise prices will be at the fair
market value of the Common Stock on the date of grant. Options granted under the
Directors Plan are not intended to
7
<PAGE> 9
be "incentive stock options." The aggregate number of shares which may be sold
pursuant to the Directors Plan may not exceed 100,000. Such options may be
exercised for periods of up to ten years from the date of grant.
The Company has entered into indemnification agreements with each person
who is currently a member of the Board of Directors of the Company and expects
to enter into such agreements with persons who may in the future become
directors of the Company. In general, such 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, 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 Board of Directors of the Company held meetings five times during 1999.
The Board of Directors has a standing Committee of Independent Directors, as
well as standing Compensation and Audit Committees; it does not have a standing
Nominating Committee.
Grants under the Company's 1994 Stock Option Plan are determined by the
Committee of Independent Directors, consisting of Eugene Miller (Chairman),
Arnold F. Brookstone, Stephen B. Schwartz and Dennis Kessler. The Committee of
Independent Directors held two meetings during 1999.
The Compensation Committee, consisting of Stephen B. Schwartz (Chairman),
David Unger, Henry M. Mautner, Arnold F. Brookstone, Eugene Miller, and Dennis
Kessler, reviews the compensation paid to the officers of the Company, reports
to the stockholders with respect to the compensation paid to the officers of the
Company, approves material departures from the Company's past compensation
policies, determines the optionees and grant amounts under the Company's 1993
Stock Option Plan and makes recommendations to the Board with respect to the
Company's compensation policies. The Compensation Committee held one meeting
during 1999.
The Audit Committee consists of Arnold F. Brookstone (Chairman), Eugene
Miller, Stephen B. Schwartz and Dennis Kessler. The Board of Directors adopted
and approved a charter for the Audit Committee on April 18, 2000. Under the
charter, a copy of which is attached hereto as Appendix 1, the Audit Committee's
responsibilities include, among other things:
- Recommending the selection and discharge of the independent auditors for
approval by the Board of Directors and approving the fees of the
independent auditors;
- Reviewing independence with the independent auditors annually, including
the consideration of other services provided by the independent auditors
or their affiliates, and obtaining on an annual basis written
confirmation of the independence of the independent auditors;
- Considering the results of the review of the interim financial statements
by the independent auditors;
- Reviewing the Company's compliance with applicable accounting and
financial reporting rules;
- Considering and reviewing with the independent auditors the adequacy of
the Company's internal controls, including computerized information
system controls and security;
- Considering, in consultation with the independent auditors, the audit
scope and plan of the independent auditors;
- Reviewing with management and the independent auditors the results of
annual audits and related matters;
8
<PAGE> 10
- Reviewing with the independent auditors any impending changes in
accounting and financial reporting rules and the expected impact of such
changes on the Company; and
- Conducting or authorizing investigations into any matters within the
Audit Committee's scope of responsibilities.
It is not the duty of the Audit Committee to plan or conduct audits or to
determine that the Company's financial statements are complete or constitute a
fair presentation or are in accordance with generally accepted accounting
principles. These matters are the responsibility of management and the
independent auditor.
During 1999, the Audit Committee held three meetings. The Board of
Directors has determined that all members of the Audit Committee are
"independent" as that term is defined in Section 4460(d)(2)(B) of the listing
standards of The Nasdaq Stock Market.
REPORT OF AUDIT COMMITTEE
Included in the Company's Annual Report on Form 10-K for the year ended
January 31, 2000 are the consolidated balance sheets of the Company and its
subsidiaries as of January 31, 2000 and 1999, and the related consolidated
statements of income, stockholders' equity and cash flows for each of the three
years in the period ended January 31, 2000. These statements (the "Audited
Financial Statements") are the subject of a report by the Company's independent
auditors, Deloitte & Touche LLP.
The Audit Committee reviewed and discussed the Audited Financial Statements
with the Company's management and with the independent auditors prior to
publication and filing. The Audit Committee discussed with the Independent
Auditors the matters required to be discussed by Statement of Auditing Standards
No. 61. The Audit Committee received from the independent auditors the written
disclosures and letter required by Independence Standards Board Standard No. 1
and has discussed with the independent auditors their independence with respect
to the Company.
Based upon the review and discussions referred to above, the Audit
Committee recommended to the Company's Board of Directors that the Audited
Financial Statements be included in the Company's Annual Report on Form 10-K for
the year ended January 31, 2000 for filing with the Securities and Exchange
Commission.
This Report of the Audit Committee shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, except to the extent that the
Company specifically incorporates this information by reference, and shall not
otherwise be deemed filed under any such acts.
Arnold F. Brookstone, Chairman
Eugene Miller
Stephen B. Schwartz
Dennis Kessler
Members of the Audit Committee
9
<PAGE> 11
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information regarding compensation
paid by the Company during each of the Company's last three years ended January
31, 2000 to the Company's Chief Executive Officer and to each of the four other
most highly compensated executive officers who was serving as an executive
officer of the Company at the end of 1999 whose salary and incentive
compensation for 1999 exceeded $100,000.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION ---------------
---------------------------------- SECURITIES
INCENTIVE UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY COMPENSATION OTHER(1) OPTIONS/SARS(#) COMP.(2)
--------------------------- ---- ------ ------------ -------- --------------- ---------
<S> <C> <C> <C> <C> <C> <C>
David Unger 1999 $180,000 $ 88,501 $3,200 4,000 $20,000
Chairman and Chief 1998 180,000 27,705 3,200 5,000 20,000
Executive Officer 1997 170,000 97,552 3,198 10,000 20,000
Fati A. Elgendy 1999 $125,000 $158,339 $3,200 4,000 $15,000
Vice President, 1998 125,000 93,516 3,200 5,000 15,000
President, Perma-Pipe, Inc. 1997 125,000 55,081 3,233 10,000 15,000
Gene K. Ogilvie 1999 $125,000 $127,863 $3,200 4,000 $15,000
Vice President, 1998 125,000 91,189 3,200 5,000 15,000
President, Midwesco 1997 125,000 193,199 4,588 10,000 15,000
Filter Resources, Inc.
Don Gruenberg 1999 $120,000 $129,251 $3,200 4,000 $15,000
Vice President, 1998 120,000 124,277 3,200 5,000 15,000
President, Thermal 1997 120,000 153,357 3,192 10,000 15,000
Care, Inc.
Henry M. Mautner 1999 $135,000 $ 88,501 $2,400 4,000 $20,000
Vice Chairman 1998 135,000 27,705 2,400 5,000 20,000
1997 125,000 97,552 2,351 10,000 20,000
</TABLE>
- ------------
(1) Represents contributions made by the Company to the Named Executive
Officer's account under the 401(k) Plan.
(2) Represents accrual of non-qualified deferred compensation.
10
<PAGE> 12
1999 OPTION GRANTS
The following table sets forth certain information regarding option grants
to the Named Executive Officers during 1999.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
NUMBER OF PERCENT OF STOCK PRICE
SECURITIES TOTAL APPRECIATION FOR
UNDERLYING OPTIONS OPTION TERM
OPTIONS GRANTED IN EXERCISE EXPIRATION ----------------------
NAME GRANTED FISCAL YEAR PRICE DATE 5% 10%
---- ---------- ----------- -------- ---------- -- ---
<S> <C> <C> <C> <C> <C> <C>
David Unger 4,000 3.52% $4.25 04/30/09 $10,691 $27,094
Fati A. Elgendy 4,000 3.52 4.25 04/30/09 10,691 27,094
Gene K. Ogilvie 4,000 3.52 4.25 04/30/09 10,691 27,094
Don Gruenberg 4,000 3.52 4.25 04/30/09 10,691 27,094
Henry M. Mautner 4,000 3.52 4.25 04/30/09 10,691 27,094
</TABLE>
1999 YEAR-END UNEXERCISED STOCK OPTIONS
The following table sets forth information relating to stock options held
by the Named Executive Officers.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT FISCAL YEAR END OPTIONS AT FISCAL YEAR END
--------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
David Unger 25,000 14,000 $ 0 $ 0
Fati A. Elgendy 43,500 14,000 0 0
Gene K. Ogilvie 25,000 14,000 0 0
Don Gruenberg 7,250 12,750 0 0
Henry M. Mautner 25,000 14,000 0 0
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
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 MFRI (the "Merger"). Immediately prior
to the effectiveness of the Merger, Midwesco contributed all of its assets and
liabilities to a new subsidiary, except certain specified assets and
liabilities. Pursuant to the Merger, the shareholders of Midwesco, including
Messrs. Unger, H. Mautner, B. Mautner, Ogilvie, Elgendy and Gruenberg, placed an
aggregate of 300,000 shares of the Company's Common Stock received by them in
the Merger into an escrow account to support Midwesco's indemnification
obligations pursuant to the Merger (the "Indemnification Escrow"). The
Indemnification Escrow terminated on December 30, 1999, three years after the
effective time of the Merger. No claims were made on the Indemnification Escrow
and all 300,000 shares of the Company's Common Stock in the Indemnification
Escrow were released from escrow and distributed on December 30, 1999 to the
respective stockholders owning such Common Stock.
David Unger, Chairman of the Board and Chief Executive Officer of the
Company, and Henry M. Mautner, Vice Chairman of the Board of the Company, serve
on the Compensation Committee of the Company's Board of Directors; however, both
Mr. Unger and Mr. Mautner abstain from voting on matters related to their
individual compensation. Prior to the Merger, Messrs. Unger and Mautner also
served on the Board of Directors of Midwesco and Mr. Unger serves on the Board
of Directors of Midwesco Services, Inc. (formerly known as Mid Res, Inc.), a
50%-owned affiliate of the
11
<PAGE> 13
company formed to succeed to the non-Thermal Care business of Midwesco. Henry M.
Mautner is Chairman and director of the company formed to succeed to the
non-Thermal Care business of Midwesco. David Unger is Vice President and
director of the company formed to succeed to the non-Thermal Care business of
Midwesco. Michael D. Bennett, Vice President and Chief Financial Officer of the
Company, is Vice President and director of Midwesco Services, Inc. and Vice
President of the company formed to succeed to the non-Thermal Care business of
Midwesco. Bradley E. Mautner, Vice President and director of the Company, is
President of the company formed to succeed to the non-Thermal Care business of
Midwesco and Chief Executive Officer and a director of Midwesco Services, Inc.
The Company provides certain services and facilities to companies primarily
owned by Messrs. Unger and H. Mautner and those companies provide certain
services to the Company at cost pursuant to a Services Agreement. Any material
change to the terms of the Services Agreement must be approved by a majority of
the directors, including a majority of the independent directors. During 1999,
the Company received $365,000 and paid $239,000 under the Services Agreement.
The Company leases its primary building from Messrs. Unger and H. Mautner
under a lease agreement. During 1999, the Company paid $610,000 under this
agreement. Any material change to the terms of the lease agreement must be
approved by a majority of the directors, including a majority of the independent
directors.
REPORT OF COMPENSATION COMMITTEE OF BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
The Company considers the following general guidelines in determining the
compensation of its officers and key employees:
- Salary set at levels sufficient to attract and retain employees capable
of contributing materially to the Company's long-term success;
- Annual incentive compensation related to profit in excess of a threshold
amount of the Company or of the Company's subsidiary in which the officer
or key employee is employed;
- Stock options; and
- Non-qualified deferred compensation.
The Company also makes annual contributions to the accounts of eligible
employees in the 401(k) Employee Savings and Protection Plan.
The Company's 1993 Stock Option Plan ("1993 Plan") and the 1994 Stock
Option Plan ("1994 Plan") (collectively, the "Plans") were adopted in order to
provide officers and other key employees with long-term incentives in order to
create an interest in the Company parallel to that of the Company's public
stockholders. Option exercise prices will be no less than fair market value of
the Common Stock on the date of grant. Under the Plans, options may be granted
to key employees (including officers, whether or not directors) of the Company,
its subsidiaries, Midwesco, and its affiliates. The options granted under the
Plans may be exercised for periods of up to ten years from the date of grant.
Under the 1993 Plan, 100,000 shares of Common Stock of the Company are reserved
for issuance upon the exercise of options granted thereunder. Under the 1994
Plan, 250,000 shares of Common Stock of the Company are reserved for issuance
upon the exercise of options granted thereunder, which number shall be increased
by the number equal to 2% of the aggregate number of shares of Common Stock
outstanding as of the last day of the most recently ended fiscal year of the
Company. Provided the Company does not issue any additional shares of its Common
Stock, the maximum number of shares which may be sold to all optionees pursuant
to the 1994 Plan during the term of the 1994 Plan will be 1,081,709. The
Committee believes additional incentive compensation should be made available to
officers and other key employees, which will increase the effectiveness of the
Company's executive compensation program.
12
<PAGE> 14
The Committee believes that the combination of salary, incentive
compensation (which varies directly with the Company's operating profitability),
and stock options (the ultimate value of which is determined by future share
price growth), constitutes an executive compensation program which encourages
enhancement of Company profitability and stockholder value.
The compensation of David Unger, Chairman of the Board and Chief Executive
Officer of the Company, reflected in the Summary Compensation Table, was based
on his contribution to the Company. Mr. Unger's annual incentive compensation
decreased significantly in 1998 based on the decrease in the Company's pretax
earnings. His annual incentive compensation increased significantly in 1999
based on the increase in the Company's pretax earnings. Although a member of the
Compensation Committee, Mr. Unger abstains from voting on matters related to his
individual compensation.
Fati A. Elgendy, Vice President of the Company and President of Perma-Pipe,
receives annual compensation consisting of a base salary and incentive
compensation. Mr. Elgendy's incentive compensation is calculated on a basis
similar to that of the Company's other officers. Mr. Elgendy's annual incentive
compensation increased in 1998 and 1999 as a result of the application of the
then-applicable incentive formulas to the actual operating results.
Gene K. Ogilvie, Vice President of the Company and President of Midwesco
Filter, receives annual compensation consisting of a base salary and incentive
compensation. Mr. Ogilvie's incentive compensation is calculated on a basis
similar to that of the Company's other officers. Mr. Ogilvie's annual incentive
compensation decreased significantly in 1998 as the profitability of Midwesco
Filter decreased significantly compared to the threshold amount. His annual
incentive compensation increased significantly in 1999 as the profitability of
Midwesco Filter increased significantly compared to the threshold amount.
Don Gruenberg, Vice President of the Company and President and Chief
Operating Officer of Thermal Care, receives annual compensation consisting of a
base salary and incentive compensation. Mr. Gruenberg's incentive compensation
is calculated on a basis similar to that of the Company's other officers. Mr.
Gruenberg's incentive compensation decreased significantly in 1998 and 1999
compared to 1997 as profitability of Thermal Care decreased significantly
compared to the threshold amount.
The compensation of Henry M. Mautner, Vice Chairman of the Board of the
Company, reflected in the Summary Compensation Table, was based on his
contribution to the Company. Mr. Mautner's annual incentive compensation
decreased significantly in 1998 based on the decrease in the Company's pretax
earnings. His annual incentive compensation increased significantly in 1999
based on the increase in the Company's pretax earnings. Although a member of the
Compensation Committee, Mr. Mautner abstains from voting on matters related to
his individual compensation.
Stephen B. Schwartz, Chairman
Arnold F. Brookstone
Dennis Kessler
Henry M. Mautner
Eugene Miller
David Unger
Members of the Compensation Committee
13
<PAGE> 15
STOCK PRICE PERFORMANCE GRAPH
The Stock Price Performance Graph compares the yearly percentage change in
the Company's cumulative total stockholder return on its Common Stock with the
cumulative total returns of the Nasdaq Market Index (the "Nasdaq Index") and the
Russell 2000 Index. The Company has selected the Russell 2000 Index, which is an
index of companies with similar market capitalizations to the Company, as the
most appropriate comparison, because the Company has three distinctly different
businesses and no industry "peer" group is comparable to the Company. The
comparison assumes $100 investments on February 1, 1995 in the Company's Common
Stock, the Nasdaq Index and the Russell 2000 Index, and further assumes
reinvestment of dividends.
COMPARE 5-YEAR CUMULATIVE TOTAL RETURN
AMONG MFRI, INC.,
NASDAQ MARKET INDEX AND RUSSELL 2000 INDEX
[STOCK PRICE PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
January 31,
- -----------------------------------------------------------------------------------------------
1995 1996 1997 1998 1999 2000
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
MFRI, Inc. $100.00 $122.50 $156.88 $172.50 $115.00 $ 82.50
- -----------------------------------------------------------------------------------------------
Russell 2000 Index 100.00 130.07 154.71 182.64 182.64 212.10
- -----------------------------------------------------------------------------------------------
Nasdaq Market Index 100.00 140.02 184.26 217.04 338.74 506.71
- -----------------------------------------------------------------------------------------------
</TABLE>
PROPOSED AMENDMENT TO THE CERTIFICATE OF INCORPORATION
TO INCREASE THE AUTHORIZED NUMBER OF SHARES
The Board of Directors has adopted, subject to stockholder approval, an
amendment to the Company's Certificate of Incorporation to increase the
Company's authorized number of shares of Common Stock, par value $0.01 per
share, from 15,000,000 shares to 50,000,000 shares.
The additional Common Stock to be authorized by adoption of the amendment
would have identical rights to the currently outstanding Common Stock of the
Company. Adoption of the proposed amendment and issuance of the Common Stock
would not affect the rights of the holders of currently outstanding Common Stock
of the Company, except for effects incidental to increasing the number of shares
of the Company's Common Stock outstanding, such as dilution of the earnings per
share and voting rights of current holders of Common Stock. If the amendment is
14
<PAGE> 16
adopted, it will become effective upon the filing of a Certificate of Amendment
of the Company's Certificate of Incorporation with the Secretary of State of the
State of Delaware.
In addition to the 4,922,364 shares of Common Stock outstanding at March
31, 2000, the Board has reserved 937,921 shares for issuance under stock option
plans and warrants, an additional 393,788 shares are expected to be reserved for
issuance under stock option plans, and a total of 6,254,073 shares are currently
reserved for issuance upon exercise of the rights granted under that certain
Rights Agreement dated as of September 15, 1999 between the Company and Harris
Trust and Savings Bank, as rights agent (the "Rights Agreement"). The purpose of
the Rights Agreement is to protect and maximize the value of the outstanding
equity interest in the Company in the event of a coercive attempt to take over
the Company in a manner or on terms not approved by the Board of Directors. In
connection with the execution of the Rights Agreement, the Board of Directors of
the Company on September 15, 1999, declared a dividend per share of Common Stock
of one right to purchase one share of Common Stock for $25.00 (a "Right") and
reserved for issuance 6,254,073 shares of common stock upon exercise of the
Rights granted under the Rights Agreement.
Although at present the Board of Directors has no plans to issue additional
shares of the Company's Common Stock, it desires to have such shares available
to provide additional flexibility to use the Company's capital stock for
business and financial purposes in the future. The additional shares may be
used, without further stockholder approval, for various purposes including,
without limitation, raising capital, providing equity incentives to employees,
officers, directors and certain consultants of the Company, establishing
strategic relationships with other companies, and expanding the Company's
business or product line through the acquisition of other businesses or
products.
In addition to the possible uses described above, if the proposal to
increase the number of authorized shares of Common Stock is adopted, some of the
additional shares of Common Stock that would become available for issuance would
be reserved by the Company for issuance under the Rights Agreement, in addition
to the 6,254,073 shares already reserved for issuance thereunder, in order give
full effect to the provisions of the Rights Agreement. Although this proposal to
increase the authorized Common Stock has been prompted by business and financial
considerations and not by the threat of any hostile takeover attempt (nor is the
Board currently aware of any such attempts directed at the Company),
nevertheless, stockholders should be aware that the approval of this proposal to
amend the Company's Certificate of Incorporation could facilitate future efforts
to deter or prevent changes in control of the Company, including transactions in
which stockholders might otherwise receive a premium for their shares over
then-current market prices.
The affirmative vote of the holders of a majority of the shares of the
Common Stock will be required to approve the proposed amendment to the Company's
Certificate of Incorporation. As a result, abstentions and broker non-votes will
have the same effect as negative votes.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THE PROPOSAL TO AMEND
THE COMPANY'S CERTIFICATE OF INCORPORATION.
15
<PAGE> 17
AUDITORS
Representatives of Deloitte & Touche LLP, the Company's auditors, are
expected to be present at the meeting and will be available to respond to
appropriate questions and may make a statement if they so desire.
STOCKHOLDER PROPOSALS
Any proposal which a stockholder intends to present at the annual meeting
of stockholders in 2001 must be received by the Company by February , 2001 in
order to be eligible for inclusion in the proxy statement and proxy form
relating to such meeting. In addition, if any business should properly come
before such annual meeting other than that which is stated in such proxy
statement, then, if the Company does not receive notice of such matter by April
, 2001, the persons designated in such proxy form will have discretionary
authority to vote or refrain from voting on any such proposal.
INCORPORATION BY REFERENCE
The Company's Audited Financial Statements, Management's Discussion and
Analysis of Financial Condition and Results of Operations, and Quantitative and
Qualitative Disclosures About Market Risk contained in the Company's Annual
Report on Form 10-K for the fiscal year ended January 31, 2000 previously filed
with the Securities and Exchange Commission by the Company (SEC File No.
0-18370) are incorporated by reference in this proxy statement.
IMPORTANT
All stockholders are cordially invited to attend the meeting in person.
If you cannot be present at the meeting, please sign and date the enclosed
Proxy and mail it PROMPTLY in the enclosed self-addressed envelope. No postage
need be affixed if mailed in the United States.
16
<PAGE> 18
APPENDIX 1
MFRI, INC.
AUDIT COMMITTEE CHARTER
AS ADOPTED ON APRIL 18, 2000
A. ORGANIZATION
The Audit Committee shall be organized as follows:
1. The Audit Committee shall consist of three (3) or more directors
elected annually by the Board of Directors.
2. Each member of the Audit Committee shall be "independent" as defined
in the rules of the NASD.
3. Each member of the Audit Committee shall be financially literate and
at least one (1) of the members shall have expertise in the area of
accounting or financial management.
4. The Audit Committee shall annually review its charter and recommend
to the Board of Directors any charter changes that the Audit
Committee considers advisable.
5. The Audit Committee shall meet as frequently as circumstances
require, but in no event less than two times per year. The Audit
Committee may ask members of management or others to attend meeting
and provide pertinent information as necessary.
6. The Audit Committee will have direct access to financial, legal, and
other staff of and advisors to the Company. Such advisors may assist
the members in defining their rules and responsibilities, consult
with members regarding a specific audit or other issues that may
arise in the course of the Audit Committee's duties.
7. The Audit Committee shall report periodically to the Board of
Directors on matters within the scope of the Audit Committee's
responsibility.
8. The Audit Committee shall elect a Chairman and a Deputy Chairman,
each to serve until a successor is elected.
B. SCOPE OF RESPONSIBILITIES.
The Audit Committee shall have the following responsibilities:
1. Recommend the selection and discharge of the independent auditors for
approval by the Board of Directors, and approve compensation of the
independent auditors.
2. The independent auditors shall be accountable to the Audit Committee
and to the Board of Directors.
3. Review independence with independent auditors annually, including the
consideration of other services provided by the independent auditors or
their affiliates. Obtain on an annual basis written confirmation of the
independence of the independent auditors.
4. Serve as a channel of communication between the independent auditors
and the Board of Directors.
5. Review with the independent auditors the coordination of audit
efforts to assure completeness of coverage, reduction of redundant
efforts and the effective use of audit resources.
6. Conduct separate executive sessions with management and with the
independent auditors relating to the areas within the scope of Audit
Committee responsibility.
17
<PAGE> 19
7. Consider the results of the review of the interim financial
statements by the independent auditors. The Audit Committee Chairman (or
in the extended absence of the Chairman, the Deputy Chairman) will
discuss the results of the review with the independent auditors and the
Company's Chief Financial Officer prior to public announcement of the
interim results. The Chairman or Deputy Chairman will convene the Audit
Committee by telephone or in person if in his judgment there is an issue
that warrants such a meeting.
8. Recommend to the Board of Directors the inclusion of the audited
financial statements in the Company's annual report on Form 10-K.
9. Prepare an annual report of the Audit Committee to be included in the
Company's annual meeting proxy statement.
10. Review the Company's compliance with applicable accounting and
financial reporting rules, including SEC, NASD and AICPA rules.
11. Inquire of management and of the independent auditors about
significant risks or exposures and assess the steps management has taken
to minimize such risk to the Company.
12. Consider and review with the independent auditors:
(a) The adequacy of the Company's internal controls including
computerized information system controls and security.
(b) The findings and recommendations of the independent auditors
together with management's responses with respect to the Company's
internal controls.
13. Consider and review with management and the independent auditors:
(a) Significant findings during the year, including the status of
previous audit recommendations.
(b) Any difficulties encountered in the course of audit work including
any restrictions on the scope of activities or access to required
information.
14. Inquire as to the independent auditors' independent qualitative
judgments about the appropriateness, not just the acceptability, of the
accounting principles and the clarity of the financial disclosure
practices used or proposed to be adopted by the Company.
15. Inquire as to the independent auditors' views about whether
management's choices of accounting principles are conservative,
moderate, or aggressive from the perspective of income, asset, and
liability recognition, and whether those principles are common practices
or are minority practices.
16. Consider, in consultation with the independent auditors, the audit
scope and plan of the independent auditors.
17. Review with management and the independent auditors the results of
annual audits and related comments deemed appropriate including:
(a) The independent auditors' audit of the Company's annual financial
statements, accompanying footnotes and its report thereon.
(b) Any significant changes required in the independent auditors' audit
plans.
(c) Any difficulties or disputes with management encountered during the
course of the audit.
(d) The Company's compliance with its loan covenants.
18
<PAGE> 20
(e) Other matters related to the conduct of the audit, which are to be
communicated to the Audit Committee under Generally Accepted
Auditing Standards.
18. Review with the independent auditors any impending changes in
accounting and financial reporting rules, including SEC, NASD and AICPA
rules, and the expected impact of such changes on the Company.
19. Conduct or authorize investigations into any matters within the Audit
Committee's scope of responsibilities. The Audit Committee is empowered
to use the Company's professional advisors or to retain independent
counsel and other independent professionals to assist in the conduct of
any investigation.
20. Discuss with management the status of pending litigation, taxation
matters and areas of oversight to the legal and compliance area as may
be appropriate.
21. The Audit Committee has the responsibility to exercise the powers set
out in this Charter. However, it is not the duty of the Audit Committee
to plan or conduct audits or to determine that the Company's financial
statements are complete or constitute a fair presentation or are in
accordance with generally accepted accounting principles. These matters
are the responsibility of management and the independent auditor. It is
also not the duty of the Audit Committee to resolve disagreements, if
any, between management and the independent auditor, or to ensure
compliance with laws and regulations.
19
<PAGE> 21
MFRI, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. / /
1. Election of Directors
Nominees: David Unger, Henry M. Mautner, Gene K. Ogilvie, Fati A. Elgendy,
Bradley E. Mautner, Don Gruenberg, Arnold F. Brookstone, Eugene Miller,
Stephen B. Schwartz, Dennis Kessler. (INSTRUCTION: TO WITHHOLD AUTHORITY TO
VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE THAT NOMINEE'S NAME IN THE SPACE
PROVIDED AT THE RIGHT AND MARK THE OVAL "FOR ALL NOMINEES EXCEPT")
<TABLE>
<CAPTION>
For Withheld For All Nominees
Except
<S> <C> <C>
/ / / / / /
</TABLE>
- ----------------------------------------
Nominee Exceptions
2. Approval of the proposal to amend the Company's Certificate of
Incorporation to increase the authorized number of shares of common stock
from 15,000,000 to 50,000,000 shares
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
/ / / / / /
</TABLE>
3. In accordance with their discretion upon all other matters that may
properly come before said meeting and any adjournment thereof.
Dated: ________________ , 2000
- ----------------------------------------
Signature
- ----------------------------------------
Signature
NOTE: PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. FOR JOINT ACCOUNTS, BOTH
OWNERS SHOULD SIGN. WHEN SIGNING AS EXECUTOR, ADMINISTRATOR, ATTORNEY, TRUSTEE
OR GUARDIAN, ETC., PLEASE SIGN YOUR FULL TITLE.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH SPECIFICATIONS MADE. IF NO CHOICES
ARE INDICATED, THIS PROXY WILL BE VOTED FOR EACH OF THE NOMINEES LISTED UNDER
ITEM 1 AND FOR THE PROPOSAL IN ITEM 2.
The undersigned hereby revokes any proxy or proxies heretofore given to vote
such shares at said meeting or at any adjournment thereof.
- --------------------------------------------------------------------------------
PROXY PROXY
MFRI, INC.
FOR SHARES OF COMMON STOCK SOLICITED ON
BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING
OF STOCKHOLDERS TO BE HELD ON JUNE 27, 2000
The undersigned hereby appoints DAVID UNGER, HENRY M. MAUTNER and MICHAEL
D. BENNETT, and each of them, proxies with power of substitution and revocation,
acting by majority of those present and voting, or if only one is present and
voting then that one, to vote, as designated on the reverse side hereof, all of
the shares of stock of MFRI, INC. which the undersigned is entitled to vote, at
the annual meeting of stockholders to be held at The Standard Club, 320 South
Plymouth Court, Chicago, Illinois on June 27, 2000 at 10:00 a.m. Chicago time,
and at any adjournment thereof, with all the powers the undersigned would
possess if present.
PLEASE VOTE, SIGN AND DATE ON REVERSE SIDE AND RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE. NO POSTAGE NEED BE AFFIXED IF MAILED IN THE UNITED STATES.
