EXHIBIT
10(i)
 NINTH AMENDMENT TO AMENDED
AND                                                                    
RESTATED LOAN AND SECURITY AGREEMENT
  THIS NINTH AMENDMENT TO AMENDED AND
RESTATED LOAN AND SECURITY AGREEMENT (“Ninth Amendment”) is made as of
this ___ day of April, 2010, by and among BANK OF AMERICA, N.A., a
national banking association (“Bank of America”) with an office at 135 South
LaSalle Street, 4th Floor, Chicago,
Illinois 60603, individually as a Lender and as Agent (“Agent”) for itself and
any other financial institution which is or becomes a party hereto (each such
financial institution, including Bank of America, is referred to hereinafter
individually as a “Lender” and collectively as the “Lenders”), the LENDERS and MFRI, INC., a Delaware
corporation (“MFRI”), MIDWESCO
FILTER RESOURCES, INC., a Delaware corporation (“Midwesco”), PERMA‐PIPE, INC., a Delaware
corporation (“Perma‐Pipe”), THERMAL CARE, INC., a Delaware
corporation (“Thermal Care”), TDC FILTER MANUFACTURING,
INC., a Delaware corporation (“TDC”), MIDWESCO MECHANICAL AND ENERGY,
INC., a Delaware corporation (“Mechanical”) and FREEZONE HOLDINGS LIMITED LIABILITY
COMPANY, a Delaware limited liability company (“Freezone”) and PERMA-PIPE CANADA, INC., a
Delaware corporation (“Perma‐Pipe Canada”).  Capitalized terms used in this
Agreement have the meanings assigned to them in Appendix A, General
Definitions.  Accounting terms not otherwise specifically defined herein
shall be construed in accordance with GAAP consistently applied.  MFRI,
Midwesco, Perma‐Pipe, Thermal Care, TDC, Mechanical, Freezone and Perma‐Pipe
Canada are sometimes hereinafter referred to individually as a “Borrower” and
collectively as “Borrowers”.
  WHEREAS, Borrowers (other than
Mechanical, Freezone and Perma‐Pipe Canada), Agent, and the Lender signatories
thereto hereto entered into that certain Amended and Restated Loan and Security
Agreement dated December 15, 2006, as amended by that First Amendment to Amended
and Restated Loan and Security Agreement dated February 28, 2007 by and among
Borrowers (other than Freezone and Perma‐Pipe Canada), Agent and Lenders, by
that certain Second Amendment to Amended and Restated Loan and Security
Agreement dated August 28, 2007 by and among Borrowers (other than Freezone and
Perma‐Pipe Canada), Agent and Lenders, by that certain Third Amendment to
Amended and Restated Loan and Security Agreement dated December 13, 2007 by
and among Borrowers (other than Freezone and Perma‐Pipe Canada), Agent and
Lenders, by that certain Fourth Amendment to Amended and Restated Loan and
Security Agreement dated April 17, 2008 by and among Borrowers (other than
Freezone and Perma‐Pipe Canada), Agent and Lenders, by that certain Fifth
Amendment to Amended and Restated Loan and Security Agreement dated September 7,
2008 by and among Borrowers (other than Freezone and Perma‐Pipe Canada), Agent
and Lenders, by that certain Sixth Amendment to Amended and Restated Loan and
Security Agreement dated January 12, 2009 by and among Borrowers (other than
Freezone and Perma‐Pipe Canada), Agent and Lenders, by that certain Seventh
Amendment to Amended and Restated Loan and Security Agreement dated August 5,
2009 by and among Borrowers (other than Freezone and Perma‐Pipe Canada), Agent
and Lenders and by that certain Eighth Amendment to Amended and Restated Loan
and Security Agreement dated December 9, 2009 by and among Borrowers, Agent and
Lenders (said Amended and Restated Loan and Security Agreement, as amended from
time to time, the “Loan Agreement”); and
  WHEREAS, Borrowers, Agent and
Lenders desire to amend the Loan Agreement as provided herein, including,
without limitation, to add Freezone and Perma‐Pipe Canada as an additional
Borrower;
  
 NOW, THEREFORE, in consideration
of the following terms and conditions, the parties agreed as
follows:
  1. Definitions. 
Except as otherwise specifically provided for herein, all capitalized terms used
herein without definition shall have the meanings contained in the Loan
Agreement.
  2. Amended
Definitions and Additional Definition.  The definitions of
“Applicable Margin” and “Borrowing Base” are hereby deleted from Appendix A to
the Loan Agreement and the following are inserted in their stead.  The
following definition of “NOLV Percentage” is hereby inserted into Appendix A in
appropriate alphabetical order.
  “Applicable Margin ‐
from April 1, 2010 to, but not including, the first Adjustment Date (as
hereinafter defined) the percentages set forth below with respect to the Base
Rate Revolving Portion, the Base Rate Equipment Portion, the Base Rate Term
Portion, the LIBOR Equipment Portions, the LIBOR Revolving Portions, the LIBOR
Term Portions and the Unused Line Fee:
  Base Rate Revolving Portion
            0.50%Base Rate Term Portion
            0.75%LC Fees
            2.50%LIBOR Revolving Portions
            2.50%LIBOR Term
      Portions
            2.75%Unused Line Fee
            0.375% 
 The percentages set forth above with respect to the Base Rate
Equipment Portion, Base Rate Revolving Portion, Base Rate Term Portion, LIBOR
Revolving Portions, LIBOR Equipment Portions, LIBOR Term Portions and Unused
Line Fee will be adjusted on the first day of the month following delivery by
Borrowers to Agent of the financial statements required to be delivered pursuant
to subsection 8.1.3(ii) of the Agreement for each April 30,
July 31, October 31 and January 31 during the Term, commencing with
the month ending July 31, 2010 (each such date an “Adjustment Date”), effective
prospectively, by reference to the applicable “Financial Measurement” (as
defined below) for the four quarters most recently ending in accordance with the
following table.
 Level I
            < 1.20 to
      1
            0.75%
            1.00%
            2.75%
            2.75%
            3.00%
            0.375%Level II
            > 1.20 to 1, but < 1.40
      to 1
            0.50%
            0.75%
            2.50%
            2.50%
            2.75%
            0.375%Level III
            > 1.40 to 1
            0.50%
            0.50%
            2.25%
            2.25%
            2.50%
            0.375%   
 provided that,
(i) if MFRI’s audited financial statements for any fiscal year delivered
pursuant to subsection 8.1.3(i) of the Agreement reflect a Financial
Measurement that yields a higher Applicable Margin than that yielded by the
monthly financial statements previously delivered pursuant to
subsection 8.1.3(ii) of the Agreement for the last month of such fiscal
year, the Applicable Margin shall be readjusted retroactively for the period
that was incorrectly calculated and (ii) if Borrowers fail to deliver the
financial statements required to be delivered pursuant to
subsection 8.1.3(i) or subsection 8.1.3(ii) of the Agreement on or
before the due date thereof, including any applicable grace period, the interest
rate shall automatically adjust to the highest interest rate set forth above,
effective prospectively from such due date until the next Adjustment Date. 
For purposes hereof, “Financial Measurement” shall mean the Fixed Charge
Coverage Ratio (as such term is defined in Exhibit 8.3 to
the Agreement).
  *      *     
*
  Borrowing Base – as
at any date of determination thereof, an amount equal to the lesser
of:
  (i)         the Revolving Credit
Maximum Amount minus the unpaid
principal balance of the Term Loan; or
  (ii)        an amount equal
to:
  (x)        the sum of:
  (a)        eighty‐five percent (85%) of the
net amount of Eligible Accounts (other than Eligible Accounts arising from Short
Term Projects) outstanding at such date; plus
  (b)        the lesser of Seven Million
Dollars ($7,000,000) or eighty‐five percent (85%) of the net amount of Eligible
Accounts arising from Short Term Projects outstanding at such date; plus
  (c)        the least of (1) Sixteen
Million Dollars ($16,000,000), (2) fifty‐five percent (55%) of the value of
Eligible Inventory at such date or (3) eighty‐five percent (85%) of the NOLV
Percentage of the value of Eligible Inventory as of such date.
  The limitations set forth
in the immediately preceding sentence and each of the advance rates set forth
above may be adjusted downward by Agent, as Agent shall deem necessary or
appropriate in its reasonable credit judgment.  For purposes hereof,
(1) the net amount of Eligible Accounts at any time shall be the face
amount of such Eligible Accounts less any and all returns, rebates, discounts
(which may, at Agent’s option, be calculated on shortest terms), credits,
allowances or excise taxes of any nature at any time issued, owing, claimed by
Account Debtors, granted, outstanding or payable in
  
  
 connection with such
Accounts at such time and (2) the amount of Eligible Inventory shall be
determined on a first-in, first-out, lower of cost or market basis in accordance
with GAAP.
  *      *     
*
  NOLV Percentage – the
net orderly liquidation value of Inventory, expressed as a percentage, expected
to be realized at an orderly, negotiated sale held within a reasonable period of
time, net of all liquidation expenses, as determined from the most recent
appraisal of Borrowers’ Inventory performed by an appraiser and on terms
satisfactory to Agent.”
  3. Term of
Agreement.  Section 4.1 of the Loan Agreement is hereby deleted and
the following is inserted in its stead:
  “SECTION 4.  TERM
AND TERMINATION
  “4.1     Term of
Agreement.  Subject to the right of Lenders to cease making Loans to
Borrowers during the continuance of any Default or Event of Default, this
Agreement shall be in effect for a period through and including November 30,
2013 (the “Term”), unless terminated as provided in Section 4.2
hereof.”
  4. Distributions. 
Subsection 8.2.7 of the Loan Agreement is hereby deleted and the following is
inserted in its stead:
  “8.2.7  Distributions. 
Except as otherwise provided for in Section 8.2.6, declare or make, or permit
any Subsidiary of any Borrower to declare or make, any Distributions, except
for:
  (i)         Distributions by any
Subsidiary of a Borrower to another Borrower;
  (ii)        Distributions paid solely
in Securities of a Borrower or any of its Subsidiaries;
  (iii)       Distributions by MFRI in
amounts necessary to permit MFRI to repurchase Securities of MFRI from employees
of MFRI or any of its Subsidiaries upon the termination of their employment, so
long as no Default or Event of Default exists at the time of or would be caused
by the making of such Distributions and the aggregate cash amount of such
Distributions, measured at the time when made, does not exceed Fifty Thousand
Dollars ($50,000) in any fiscal year of MFRI; and
  (iv)       Repurchases by MFRI of
outstanding shares of its publicly owned common stock provided that after
giving effect to any such repurchase, each of the following conditions precedent
is satisfied:  (1) no Default of Event of Default has occurred and is
continuing; (2) Availability equals or exceeds Four Million Dollars
($4,000,000); (3) the aggregate amount of such repurchases does not exceed One
Million Five Hundred Thousand Dollars ($1,500,000); and (4)the Fixed Charge
Coverage Ratio for the most recently ended twelve month period computed on a pro
forma basis
  
  
 treating the repurchase in
question and all other such repurchases made within the current month as having
been made within such most recently ended twelve month period equals or exceeds
1.10 to 1.”
  5. Financial
Covenants.  Exhibit 8.3 of the
Loan Agreement is hereby deleted and Exhibit 8.3 attached
to this Ninth Amendment is inserted in its stead.
  6. Waiver.  Lenders
and Agent waive any Event of Default resulting from the failure of Borrowers to
achieve the minimum Fixed Charge Coverage Ratio for any period ended prior to
the date of this Ninth Amendment as required by Section 8.3 and Exhibit 8.3 of the
Loan Agreement.  The waiver contained in this Section 6 only pertains to
the minimum Fixed Charge Coverage Ratio for periods ended prior to the date of
this Ninth Amendment.
  7. Amendment
Fee.  In order to induce Agent and Lenders to agree to enter into
this Ninth Amendment, Borrowers agree to pay to Agent, for the ratable benefit
of Lenders, an amendment fee equal to $60,000.  Said amendment fee shall be
due and payable and shall be deemed fully earned and non‐refundable on the date
hereof.
  8. Conditions
Precedent.  This Ninth Amendment shall become effective upon
satisfaction of each of the following conditions precedent:
  (A)       Borrowers, Agent and Lenders
shall have executed and delivered to each other this Ninth Amendment;
and
  (B)       Borrowers shall have paid to
Agent, for the ratable benefit of Lenders, the amendment fee referred to
above.
  9. Governing
Law.  This Ninth Amendment shall be governed by, and construed in
accordance with, the laws of the State of Illinois, without regard to the
principles thereof relating to conflict of laws.
  10. Execution
in Counterparts.  This Ninth Amendment may be executed in any number
of counterparts, which shall, collectively and separately, constitute one
Agreement.
  11. Continuing
Effect.  Except as otherwise provided herein, the Loan Agreement
remains in full force and effect.
  (Signature Page
Follows)




(Signature Page to Ninth Amendment
to


Amended and Restated Loan and
Security Agreement)


MFRI,
      INC.
                  By:  /s/Michael D. Bennett
                  Name: Michael D.
      Bennett
                  Title: VP and
      CFOMIDWESCO
      FILTER RESOURCES, INC.
                  By:   /Michael D. Bennett
                  Name: Michael D.
      Bennett
                  Title: VPPERMA-PIPE,
      INC.
                  By:   /Michael D. Bennett
                  Name: Michael D.
      Bennett
                  Title: VP:THERMAL
      CARE, INC.
                  By:  Michael D. Bennett
                  Name: Michael D.
      Bennett
                  Title: VPTDC
      FILTER MANUFACTURING, INC.
                  By:  /Michael D. Bennett
                  Name: Michael D.
      Bennett
                  Title: VPMIDWESCO
      MECHANICAL AND ENERGY, INC.
                  By:    /Michael D. Bennett
                  Name: Michael D.
      Bennett
                  Title: VP
  
 Signature Page to Ninth Amendment
to


Amended and Restated Loan and
Security Agreement)


FREEZONE
      HOLDINGS LIMITED LIABILITY COMPANY
                By:   /Michael D. Bennett
                Name: Michael D.
      Bennett
                Title: ManagerPERMA-PIPE
      CANADA, INC.
                By:   /Michael D. Bennett
                Name: Michael D.
      Bennett
                Title: VPBANK OF AMERICA, N.A.,
      as Agent and as a Lender
                By:  /s/ Brian Conole
                Name:Brian
      Conole
                Title:Senior Vice
      President













EXHIBIT
8.3




FINANCIAL COVENANTS




DEFINITIONS




Availability Threshold
– for each period within the Term commencing each May 31 and ending each
January 31, $5,000,000.  For each period within the Term commencing each
February 1 and ending each April 30, $3,500,000.




Cash Flow –
with respect to any fiscal period, EBITDA for such period minus(i) Capital Expenditures (excluding, however, Capital Expenditures
financed by third party financing) made within such period, (ii) income taxes
paid in cash in such period, (iii) Interest Expense paid in cash within such
period and (iv) principal payments of Money Borrowed (other than Revolving
Credit Loans) made within such period.




Consolidated Net Income
(Loss) – with respect to any fiscal period, the net income (or
loss) of MFRI determined in accordance with GAAP on a Consolidated basis;
provided, however, Consolidated Net Income shall not include:  (a) the
income (or loss) of any Person (other than a Subsidiary of any Borrower) in
which a Borrower or any of its wholly‐owned subsidiaries has an ownership
interest unless received in a cash distribution or requiring the payment of
cash; (b) the income (or loss) of any Person accrued prior to the date it became
a Subsidiary of a Borrower or is merged into or consolidated with a Borrower;
(c) all amounts included in determining net income (or loss) in respect of the
write‐up of assets on or after the Closing Date, including the subsequent
amortization or expensing of the written‐up portion of the assets; (d)
extraordinary gains as defined under GAAP; and (e) gains from asset dispositions
(other than sales of inventory); and any increase or decrease in expenses
resulting from the implementation of FASB 146.




EBITDA – with
respect to any fiscal period, the sum of Consolidated Net Income (Loss) before
Interest Expense, income taxes, depreciation and amortization for such period
(but excluding any extraordinary gains for such period), plus the amount of
any expenses or charges deducted from Consolidated Net Income for the applicable
period in connection with the closure and write down of TDC’s facility at
1331 South 55th Court, Cicero,
Illinois; provided that the
aggregate amount of add‐backs to EBITDA as a result of any such charges or
expenses shall not exceed $2,500,000, plus the amount of
any expenses or charges deducted from Consolidated Net Income for the applicable
periods ending on or prior to January 31, 2012 in connection with the
closure and write down of Midwesco’s South African Subsidiary; provided that the
aggregate amount of add‐backs to EBITDA as a result of any such charges or
expenses shall not exceed $500,000, all as determined for Borrowers and their
Subsidiaries on a Consolidated basis and in accordance with GAAP.




Fixed Charge Coverage
Ratio – with respect to any fiscal period, the ratio of
(i) EBITDA for such period minus Capital
Expenditures (excluding, however, (a) Capital Expenditures financed by
third party financing and (b) up to $6,000,000 of Capital Expenditures incurred
within the applicable period and prior to












January 31, 2012 with respect to
the start up of Perma Pipe’s Saudi Arabian Subsidiary) minus income taxes
paid in cash in such period to (ii) the sum of Interest Expense paid in
cash within such period plus principal
payments of Money Borrowed (other than Revolving Credit Loans) made within such
period.




Interest Coverage
Ratio – with respect to any fiscal period, the ratio of
(i) EBITDA for such period to (ii) Interest Expense paid in cash in such
period, all as defined for MFRI and its subsidiaries on a Consolidated basis in
accordance with GAAP.




Interest
Expense – with respect to any fiscal period, interest expense paid
or accrued for such period, including without limitation the interest portion of
Capitalized Lease Obligations, plus the Letter of Credit and LC Guaranty fees
owing for such period, all as determined for MFRI and its Subsidiaries on a
Consolidated basis and in accordance with GAAP.




Measurement
Period – the most recently ended one month period ending
February 28, 2010, two month period ending March 31, 2010, three month
period ending April 30, 2010, four month period ending May 31, 2010, five
month period ending June 30, 2010, six month period ending July 31, 2010, seven
month period ending August 31, 2010, eight month period ending September 30,
2010, nine month period ending October 31, 2010, ten month period ending
November 30, 2010, eleven month period ending December 31, 2010 and twelve month
period ending January 31, 2011 and the last day of each month
thereafter.




COVENANTS




Minimum Fixed Charge Coverage
Ratio.  If at any time Availability is less than the
Availability Threshold, then Borrowers shall not permit Fixed Charge Coverage
Ratio for the most recently ended Measurement Period to be less than 1.00 to
1.