Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangement of Certain Officers.

On December 5, 2012, the Board of Directors of MFRI, Inc. ("Company") adopted a Deferred Stock Purchase Plan ("Plan"), pursuant to which (i) each non-employee director ("Director") of the Company may elect to receive deferred awards of the Company's common stock, $0.01 par value per share ("Common Stock"), in lieu of some or all of his or her annual cash retainer; and (ii) the Chairman of the Board, Chief Executive Officer, President, Chief Operating Officer, certain Company executive officers, and divisional presidents of the Company (each, an "Officer"), including Officers who are members of the Board, may elect to receive deferred awards of Common Stock in lieu of a portion of his or her annual cash incentive compensation (if any) for a given year, up to 50% of such compensation. Awards under the Plan are valued at the fair market value of the Common Stock on the date of grant and are fully vested on the date of the award. The Director or Officer is entitled to receive the shares of Common Stock represented by his or her deferred award upon his or her separation of service from the Company.

---