Exhibit 10.1

MFRI, INC.

FORM OF INDEMNIFICATION AGREEMENT

THIS AGREEMENT made at Niles, Illinois as of  __________________, by and between
MFRI, INC., a Delaware corporation (the “Company”), and the undersigned (the
“Indemnified Party”).

WITNESSETH:

WHEREAS, the Company desires and has requested the Indemnified Party to serve or
continue to serve as a director or officer of the Company or both; and

WHEREAS, the Board of Directors of the Company, has determined that it is in the
best interests of the Company to provide for indemnification of the Indemnified
Party to induce the Indemnified Party to become a director or officer of the
Company or to continue to serve as a director or officer of the Company or both.

NOW, THEREFORE, in consideration of the mutual agreements and covenants herein
contained and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the undersigned parties do hereby agree as
follows:

1.            Indemnification. The Company shall indemnify and hold harmless the
Indemnified Party from and against any and all costs, expenses and liabilities
of any nature or kind, whether realized or contingent, including but not limited
to, attorneys’ fees, judgments, fines and amounts paid in settlement actually
and reasonably incurred by the Indemnified Party (“Expenses”), which arise out
of or in connection with any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative
(collectively an “Action”) to which the Indemnification Party is, was or is
threatened to be made a party by reason of the fact that the Indemnified Party
is or was a director, officer, employee or agent of the Company, or another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise, at the request of the Company, to the extent of the highest and most
advantageous to the Indemnified Party, of one or any combination of the
following:

 

(a)

the benefits provided under this Agreement;

(b)          the benefits provided by the Company’s Certificate of Incorporation
in effect on the date hereof;

(c)          the benefits provided by the Certificate, the Company’s Amended and
Restated By-Laws or their equivalent in effect at the time Expenses are incurred
by the Indemnified Party;

(d)          the benefits allowable under the Delaware Business Corporation Law
and Delaware decisional law in effect at the date hereof;

(e)          the benefits allowable under the laws of the jurisdiction under
which the Company exists at the time Expenses are incurred by the Indemnified
Party;

(f)           the benefits available under any liability insurance obtained by
the Company; and

(g)          such other benefits as are or may be otherwise available to the
Indemnified Party.

Combination of two or more of the benefits provided by (a) through (g) shall be
available to the extent that the Applicable Document (as defined below) does not
require that the benefits provided therein be exclusive of other benefits. The
document or law providing for the benefits listed in items (a) through (g) above
is called the “Applicable Document” in this Agreement.

2.            Advances. The Company shall advance the reasonable costs and
expenses, including reasonable attorneys’ fees, arising from the investigation
of any claim, preparation for the defense or defense or settlement of an Action.

3.            Defense. The Company shall be entitled to participate in the
defense of any action and to assume the defense thereof, with counsel who shall
be reasonably satisfactory to the Indemnified Party provided, however, that the
Indemnified Party shall be entitled to separate counsel selected by him if he
shall reasonably believe that (i) there exist conflicting interests between
himself 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 as expressed herein.
After notice from the Company to the Indemnified Party of its election to assume
the defense of such action pursuant to the preceding sentence, the Company shall
not be liable to the Indemnified Party without the consent of the Company in
connection with the defense of the Action.

4.            Time of Payment. At the Indemnified Party’s request, upon written
notice to the Company, the Company shall pay the Expenses as and when incurred
by the Indemnified Party within thirty (30) days of its receipt of such request,
together with reasonable documentation (consistent, in the case of attorneys’
fees, with Company practice in payment of legal fees) evidencing the amount and
nature of such Expenses, subject to its also having received such a notice and
Undertaking.

5.            Non-Exclusivity. The provisions for indemnification and
advancement of expenses set forth in this Agreement shall not be deemed
exclusive of any other rights which the Indemnified Party may have under any
provision of law, the Company’s Certificate of Incorporation or Bylaws, the vote
of the Company’s stockholders or disinterested directors, other agreements, or
otherwise, whether as to actions in his official capacity or actions in another
capacity while occupying his position as a director, officer, employee, or
agent. The Indemnified Party’s rights hereunder shall continue after the
Indemnified Party has ceased acting as a director, officer, employee, or agent
and shall inure to the benefit of the heirs, successors and assigns of the
Indemnified Party.

6.            Insurance. The Company agrees that the provisions hereof shall
remain in effect regardless of whether liability or other insurance coverage is
at any time obtained or retained by the Company. Notwithstanding any other
provision of this Agreement to the contrary, the Company shall not be liable to
the Indemnified Party for any amounts actually paid on behalf of the Indemnified
Party pursuant to any insurance policy maintained by the Company or any
affiliate of the Company.

7.            Presumption. If any payment, advance or indemnification of the
Indemnified Party under this Agreement or otherwise shall require that he acted
in good faith, in a manner he reasonably believed to be for or not opposed to
the best interests of the Company or without reasonable cause to believe his
conduct was unlawful, then it shall be presumed that he so acted unless proven
otherwise by clear and convincing evidence.

8.            Cooperation in Defense. The Indemnified Party and the Company
shall cooperate to the extent reasonably possible with each other and with the
Company’s insurers in connection with the defense of any Action.

9.            Enforcement. In the event that any dispute or controversy shall
arise under this Agreement between the Indemnified Party and the Company with
respect to whether the Indemnified Party is entitled to indemnification in
connection with any Proceeding or with respect to the amount of Expenses or
Monetary Losses incurred, then with respect to each such dispute or controversy
the Indemnified Party may seek to enforce the Agreement through legal action.
The prevailing party shall be entitled to prompt reimbursement of any costs and
expenses (including, without limitation, reasonable attorneys’ fees) incurred in
connection with such legal action; provided that the Indemnified Party shall not
be obligated to reimburse the Company unless the court which resolves the
dispute determines that the Indemnified Party acted in bad faith in bringing
such action.

10.          Binding Effect. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective heirs,
successors and assigns.

11.         Waiver. Failure to insist upon strict compliance with any of the
terms or provisions hereof shall not be deemed a waiver of such term or
provision, nor shall any waiver or relinquishment of any right or remedy
hereunder at any one or more times be deemed a waiver of such right or remedy at
any other time or times. Such waiver of any term or condition of this Agreement
shall not affect any other term or condition of this Agreement which shall
remain in full force and effect.

12.          Severability. If any provision hereof shall be adjudicated invalid
or unenforceable by a court of competent jurisdiction, such adjudication shall
not affect the validity or enforceability of any other provision hereof, and
such invalid or unenforceable provision shall be severed from this Agreement.

13.          Entire Agreement. This Agreement (together with the applicable
provisions of the Company’s Certificate of Incorporation and Bylaws) constitutes
the entire agreement between the parties with respect to the subject matter
hereof, and all prior negotiations, understandings, and agreements are merged
herein. Notwithstanding any provision of this Agreement to the contrary, if the
Indemnified Party is a party to any other indemnification agreement between the
Company and such Indemnified Party, this Agreement shall not be exclusive and
the Indemnified Party shall continue to have such rights as may be provided to
such Indemnified Party under such other agreement. This Agreement may not be
modified, amended, or rescinded except pursuant to a written instrument signed
by the party against whom enforcement is sought.

14.          Governing Law. Except as otherwise provided herein, this Agreement
shall be governed by and construed in accordance with the laws of the State of
Delaware.

III.        

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first written above.

 

 

 

MFRI, INC., a Delaware corporation

 

 

 

 

 

 

By:

 

 

 

David Unger

 

Its:

Chairman

 

 

 

 

 

 

 

INDEMNIFIED PARTY

 

 

 

 

 

 

 

Name