<PAGE> 1
EXHIBIT 10.31
AQUA-CHEM, INC.
P.O. BOX 421
MILWAUKEE, WI 53201
October 15, 1999
Mr. David Tenniswood
1080 Pilgrim Street
Birmingham, MI 48009-4613
Dear David:
I am pleased to advise that the Aqua-Chem, Inc. ("AQM") Board of
Directors met today and unanimously approved that an offer of employment be
extended to you. If the arrangements described herein are acceptable, please so
indicate by signing and returning the enclosed copy of this letter which will
then serve as your employment agreement with AQM. The suggested terms are as
follows:
POSITION AND DUTIES. You will become a full time employee of AQM and
serve as its President and Chief Executive Office, reporting directly
to the Board of Directors. Your duties will consist of those
traditionally associated with the positions of President and CEO and
you agree to devote your full business time and best efforts to the
performance of such duties. The preceding requirements shall not
preclude occasional involvement in your family business or serving on
boards of directors, provided that the same do not materially interfere
with the performance of your duties hereunder.
COMPENSATION. Your salary will be Nine Thousand Dollars ($9,000) per
week which, after reduction for withholding required by law, will be
paid semi-monthly in accordance with AQM's normal payroll practices. In
addition, you will be entitled to four weeks paid vacation per
employment year and will be eligible to participate in all fringe
benefit programs (other than short term and long term incentive
compensation plans) AQM from time to time elects to make available to
its executive employees. In lieu of participation in AQM's short term
and long term incentive compensation plans, you will be provided with
stock options as hereinafter set forth.
STOCK OPTIONS. Prior to October 31, 1999, the terms of a non-statutory
stock option arrangement will be finalized and a formal stock option
agreement executed. The stock option arrangements will be structured
with the goal of providing you with the opportunity for Two Million
Five Hundred Thousand Dollars ($2,500,000) of appreciation (i.e., the
difference between the projected future value of a share of AQM Common
Stock and the initial option price of $3.75 per share multiplied by the
number of shares covered by the option) on the assumption of a future
Common Stock value equal to a multiple of eight times targeted EBITDA
minus senior obligations to retire debt and preferred stock. While the
goal is $2,500,000 of appreciation, the actual value of the option
program will, of course, be dependent upon the actual price at which
AQM is sold and could be more or less than such amount. The options
will be fully vested and exercisable immediately upon granting. In the
event your employment terminates prior to a sale of AQM, AQM will have
the right but not the obligation: (A) to the extent the options have
not been exercised, to terminate the options by paying you an amount
equal to (i) the number of shares covered by the unexercised options,
multiplied by an amount
<PAGE> 2
equal to (ii) the value of a share of AQM Common Stock on the date of
termination of employment as determined by an investment banking firm
selected by the AQM Board of Directors minus the initial option price
of $3.75 per share, and (B) to the extent the options have been
exercised, to require you to sell the stock back to AQM at a per share
price equal to the value of a share of AQM Common Stock on the date of
termination of employment as determined by an investment banking firm
selected by the AQM Board of Directors. Notwithstanding anything to the
contrary herein, if for any reason the stock option arrangements have
not been finalized by October 31, 1999, either AQM or you shall have
the right to terminate this agreement without further liability to the
other except for AQM's obligations for accrued but unpaid salary to the
date of such termination as set forth above and your confidentiality
and non-disclosure obligations as hereinafter set forth.
EXPENSE REIMBURSEMENT. AQM understands that you will be commuting on a
weekly basis from Birmingham, Michigan and does not expect you to
relocate to Milwaukee. You will be responsible for all living expenses
in Milwaukee and commuting expenses between Birmingham and Milwaukee.
AQM will reimburse you for other ordinary and necessary business
expenses in accordance with AQM's normal expense reimbursement policies
applicable to all employees as in effect from time to time.
TERM. The employment term shall commence on October 18, 1999 and shall
continue until terminated for any reason or no reason by either you or
AQM upon thirty days prior written notice to the other party. Your
employment shall also automatically terminate upon your death or
"disability" as defined in the AQM long term disability insurance plan
as in effect from time to time. Upon termination of your employment and
the payment in full of all accrued by unpaid salary through the date of
termination and all other amounts due you pursuant to the express terms
of this agreement and those of the AQM fringe benefit programs in which
you are a participant, AQM shall have no further obligation or
liability to you in connection with your employment or the termination
thereof.
RESTRICTIONS. You agree to be bound by the terms of the standard AQM
Confidentiality and Non-Disclosure Agreement, a copy of which is
attached hereto and by this reference incorporated herein. You also
agree that for a period of two years following the termination of your
employment you will not (i) attempt to hire any person who was employed
by AQM during the twelve month period preceding the date of termination
of employment or (ii) directly or indirectly provide services to any
company that during such twelve month period competed with any business
conducted by AQM. The foregoing restriction as to the performance of
services shall (i) be limited to the United States and those foreign
countries within which AQM directly or through its independent sales
representatives sold products or actively solicited orders for its
products (other than by general advertisements) during the preceding
twelve month period and (ii) not preclude your providing services to a
company which among its businesses includes businesses which compete
with AQM, provided that your are not directly or indirectly involved in
such competing businesses.
MISCELLANEOUS. This letter agreement contains the entire agreement of
the parties, may be amended only by a written instrument signed by the
parties and shall be governed by the laws of Wisconsin. The parties
hereby agree that the proper venue for the resolution of any disputes
will be the Milwaukee County Circuit Court.
<PAGE> 3
If you are in agreement with the preceding, please so indicate
by signing and returning the enclosed copy of this letter. All of the members of
the AQM Board are pleased that you are taking on this project and look forward
to working with you.
Sincerely,
Aqua-Chem, Inc.
By /s/ James A. Kettinger
-----------------------
Agreed to and accepted as of the 19th day of October, 1999.
/s/ David M. Tenniswood
-----------------------
David Tenniswood
