<PAGE>

                                                                    Exhibit 10.3
                                                                    EXHIBIT D



                 GENERAL ASSIGNMENT, ASSUMPTION AND AGREEMENT
              REGARDING LITIGATION, CLAIMS AND OTHER LIABILITIES



                                    Between

                              APPLIED POWER INC.

                                      and

                                   APW LTD.



                            Dated __________, 2000
<PAGE>

                                                                       EXHIBIT D

                               TABLE OF CONTENTS

                 GENERAL ASSIGNMENT, ASSUMPTION AND AGREEMENT
              REGARDING LITIGATION, CLAIMS AND OTHER LIABILITIES

<TABLE>
<CAPTION>
                                                                            Page
                                                                            ----
<S>                                                                         <C>
1.   Assignment and Assumption............................................     2
     1.1  General Assignment..............................................     2
     1.2  Accounting Records..............................................     4
     1.3  General Assumption..............................................     4
     1.4  Special Assumption Arrangements.................................     6
     1.5  Liabilities Not Assumed.........................................     6
     1.6  Allocation of Joint Assets and Liabilities......................     7
     1.7  Classification of Litigation and Claims.........................     7

2.   Assumed Liabilities, Exculpation and Indemnification by APW..........     7

3.   Exculpation and Indemnification by API...............................     8

4.   Specific Indemnification Issues......................................     9
     4.1  Worker's Compensation...........................................     9
     4.2  Specific Litigation Retained by API.............................     9
     4.3  Officer, Director, Employee or Agent Liability..................    10
     4.4  Post-Effective Date Contracts Between API & APW.................    10
     4.5  Joint Liability.................................................    10

5.   Notice and Payment of Claims.........................................    10
     5.1  Procedure for Notification......................................    10
     5.2  Waiver of Objection.............................................    11
     5.3  Insurance Coverage..............................................    11

6.   Defense of Third-Party Claims........................................    11
     6.1  Assumption of Third-Party Claims................................    11
     6.2  Settlement of Third-Party Claims................................    12
     6.3  Indemnification After Settlement................................    12
     6.4  Third-Party Joint  Liability Claim..............................    12

7.   Cooperation and Preservation of Records..............................    12
     7.1  General.........................................................    12
     7.2  Availability of Records.........................................    13
     7.3  Retention of Records............................................    13
     7.4  Cost of Access to Records.......................................    13
</TABLE>

                                    D-ToC-1
<PAGE>

<TABLE>
<S>                                                                         <C>
     7.5  Confidential or Proprietary Records.............................  13

8.   Dispute Resolution...................................................  13
     8.1  General.........................................................  13
     8.2  Arbitration.....................................................  13
     8.3  Legal Proceedings...............................................  14

9.   Notices..............................................................  14
     9.1  General.........................................................  14
     9.2  Change in Address...............................................  14

10.  Amendment and Non-Waiver.............................................  14
     10.1 Written Amendment and Waiver....................................  14
     10.2 Limited Amendment or Waiver.....................................  14

11.  Miscellaneous........................................................  14
     11.1 Governing Law...................................................  14
     11.2 Entire Agreement................................................  14
     11.3 Parties In Interest.............................................  15
     11.4 Effectiveness...................................................  15
     11.5 Reformation and Severability....................................  15
     11.6 Titles and Headings.............................................  15
     11.7 Counterparts....................................................  15
</TABLE>

                                    D-ToC-2
<PAGE>

                                                                       EXHIBIT D

                 GENERAL ASSIGNMENT, ASSUMPTION AND AGREEMENT
              REGARDING LITIGATION, CLAIMS AND OTHER LIABILITIES

     This Agreement, dated as of __________, 2000, between APPLIED POWER INC., a
Wisconsin corporation with offices at 6101 N. Baker Road, Milwaukee, WI  53209
("API"), and APW LTD., a Bermuda corporation with offices at N22 W23685
Ridgeview Parkway West, Waukesha, Wisconsin 53188-1013 ("APW"), shall govern the
rights and obligations of API and APW with respect to the assignment of assets
and assumption of liabilities associated with, or arising out of, the assets,
business or operations of the electronics or enclosure business ("Electronics
Business") as set forth on Schedule 1 hereto.  Reference is made to the
Contribution Agreement, Plan and Agreement of Reorganization and Distribution
between the parties (the "Contribution Agreement:).  After the spin-off, API
will continue to operate the industrial business ("Industrial Business").  APW
and the corporations and other entities listed on Schedule 1 will conduct the
Electronic Business.  The term "API" when used in this Agreement shall not be
construed to include the Electronics Business where such construction would have
the effect of negating any obligation of APW and its subsidiaries or the
Electronics Business hereunder.  The term "APW" when used in this Agreement
shall not be construed to include API and its subsidiaries or any enterprise
other than those which will conduct the Electronics Business where such
construction would have the effect of negating any obligation of APW and its
subsidiaries or such other enterprises hereunder.


                                   RECITALS

     WHEREAS, API hereby and by certain other instruments of even date herewith
transfers or will transfer to APW, effective as of 12:01 a.m., Central Standard
Time, __________, 2000, or such other date as specified as the effective date
("Effective Date") in or pursuant to the Contribution Agreement, those assets of
API arising out of, relating to, or associated with API's Electronics Business
as conducted by the Electronics Business including the assets described in
Section 1.1 hereof ("Electronics Assets") in accordance with the Contribution
Agreement between the parties, and including, without limitation, assets
associated, in whole or in part, with the past, present and future development,
production, manufacture, marketing, use, storage, distribution, disposal and
sale of the electronics and enclosure and related products manufactured by the
Electronics Business ("Electronics Business Products") throughout the world.

     WHEREAS, the parties hereto intend, by this Agreement and the other
agreements and instruments provided for in the Contribution Agreement, to cause
API to convey to APW all of the business and assets of the Electronics Business
owned by API, including, without limitation, the subsidiaries and other
enterprises listed on Schedule 1.
<PAGE>

     WHEREAS, the parties further intend that APW shall assume certain of the
liabilities of API.

     WHEREAS, and without limiting the generality of the foregoing, the parties
acknowledge that, as of the Effective Date, there will be pending certain
litigation brought and threatened against API, and there are certain claims
alleged against API associated with or arising out of the Electronics Business,
which may include, without limitation, civil actions, workers' compensation
proceedings, administrative and regulatory proceedings, investigations, audits,
inquiries, demands, claims and threatened actions ("Litigation and Claims").

     WHEREAS, it is anticipated that after the Effective Date there may be
further Litigation and Claims brought, threatened or alleged against API
associated with or arising out of the activities of the Electronics Business
prior to the Effective Date and other instances of Litigation and Claims
brought, threatened or alleged against either APW or API associated with or
arising out of the activities of the other party after the Effective Date.

     WHEREAS, by this Agreement API and APW seek to implement the general
principle that with the exceptions noted herein, in the Contribution Agreement
and in the other agreements and instruments provided for in the Contribution
Agreement including any Schedules, Exhibits or Annexes thereto (collectively,
"Contribution Documents"), APW shall be responsible for any Litigation and
Claims directly and primarily associated with or directly and primarily arising
at any time out of the Electronics Business and the assets, business and
operations used and conducted by APW, currently or previously, following the
Effective Date and API shall be responsible for any Litigation and Claims
associated with or arising at any time out of API's other assets, business and
operations, including former operations of API not directly relating to the
Electronics Business.

     NOW THEREFORE, in consideration of the premises and the mutual promises
contained in this Agreement, the Contribution Documents, the parties hereto
agree as follows:

1.   Assignment and Assumption.

     1.1  General Assignment.  At the Effective Date, and except as specifically
          ------------------
provided in the Contribution Documents, API hereby assigns, transfers, conveys
and delivers to APW and APW hereby accepts the assets, whether tangible or
intangible, known or unknown, arising out of, relating to, or associated with
the Electronics Business, Electronics Business Products or Electronics Assets
except as specifically provided elsewhere in the Contribution Documents, and
except for assets the disposition of which is subject to separate agreements
between the parties, all other assets, tangible or intangible, known or unknown,
related to, arising out of, or associated with, or used or held for use in the
Electronics Business, whether or not reflected or required to be reflected on
the books and records of API and its subsidiaries, including any subsidiary's
ledgers ("Accounting Records"), as of the Effective Date, including without
limitation:

          (a)  all of the outstanding equity securities of the entities listed
               on Schedule 1 hereto which are owned by API;

                                      D-2
<PAGE>

          (b)  to the extent related to the Electronics Business, all airplanes,
               automobiles and trucks owned or leased by API and subsidiaries,
               and all associated spare parts, as reflected on the Accounting
               Records, as of the Effective Date ("Transportation Equipment"),
               including without limitation, the Transportation Equipment shown
               on Attachment A hereto;

          (c)  to the extent used in the Electronics Business, Electronics
               Business Products or Electronics Assets, all customer lists
               (including sales and service lists), prospect lists, and supplier
               records, correspondence and product literature, artwork,
               Accounting Records and files, design, development and
               manufacturing files, vendor and customer drawings, formulas and
               specifications for equipment and raw materials currently used in
               the operation of the Electronics Business, wherever located
               ("Business Records") and in whatever form such Business Records
               may exist as of the Effective Date;

          (d)  to the extent related to the Electronics Business, Electronics
               Business Products or Electronics Assets, the rights of API under
               all agreements for the purchase by or the furnishing to or for
               the benefit of the Electronics Business of raw materials, parts,
               supplies and services relating to the Electronics Business,
               including the Electronics Business Products, as of the Effective
               Date ("Purchase Orders");

          (e)  the rights, title, and interest of API or its subsidiaries under
               every agreement or contract to sell Electronics Business Products
               and services arising before the Effective Date, and any bids or
               offers made by API or its subsidiaries to sell Electronics
               Business Products or services in connection therewith to the
               extent such Electronics Business Products have not been shipped
               or such services have not been rendered prior to the Effective
               Date ("Sales Orders");

          (f)  the rights of API or its subsidiaries under the miscellaneous
               agreements and assets listed on Exhibit B hereto ("Miscellaneous
               Agreements") including, without limitation, corporate assets of
               API listed on Exhibit B hereto;

          (g)  all trade accounts and notes receivable related to the sale of
               Electronics Business Products and services ("Receivables") as
               reflected on the Accounting Records as of the Effective Date;

          (h)  to the extent related primarily to the Electronics Business,
               Electronics Business Products or Electronics Assets, prepaid
               expenses as reflected on the Accounting Records, as of the
               Effective Date; and

          (i)  cash in the amount of $250,000.

                                      D-3
<PAGE>

Except as specifically provided above or elsewhere in the Contribution
Documents, APW will not receive any of the API cash on hand, cash in banks, cash
equivalents and investments.  APW will also retain checkbooks and canceled
checks, or any tax and Accounting Records located at APW's headquarters,
provided that API shall be entitled to copies of tax and Accounting Records
relating to the Industrial Business located at APW headquarters, with API and
APW sharing the copying expense equally.

     1.2  Accounting Records.  The parties acknowledge and agree that the
          ------------------
Accounting Records as of the Effective Date will be prepared by APW as soon as
practicable after the Effective Date.  Each party agrees to use the normal
accounting procedures and practices, consistent with past practices, in
preparing the Accounting Records which will be used as a reference for conveying
the assets and liabilities to APW.  In case of any differences or questions
about the preparation of such documents, the parties agree to resolve any
controversy in accordance with Section 8 of this Agreement.

     1.3  General Assumption.  At the Effective Date, and except as specifically
          ------------------
provided in the Contribution Documents, APW hereby irrevocably assumes the
obligations and liabilities of API incurred by the Electronics Business or
otherwise to the extent arising out of, relating to or associated with the
Electronics Business, the Electronics Business Products or the Electronics
Assets, whether matured or unmatured, liquidated or unliquidated, fixed or
contingent, known or unknown, and whether arising out of circumstances existing
prior to or on and after the Effective Date, (such liabilities and obligations,
being herein referred to collectively as the "Assumed Liabilities") except as
provided elsewhere in the Contribution Documents, and except for obligations,
liabilities and expenses the allocation of responsibility for which is subject
to separate agreements between the parties as set forth in the Contribution
Documents, all other obligations, liabilities and expenses directly and
primarily relating to, arising out of, or associated with the Electronics
Business, Electronics Business Products or any Electronics Assets, whether or
not reflected or required to be reflected in the Accounting Records, including
without limitation:

          (a)  obligations and liabilities directly and primarily arising out
               of, relating to, or associated with all Transportation Equipment;

          (b)  obligations and liabilities directly and primarily arising out
               of, relating to, or associated with all Sales Orders and all
               Receivables;

          (c)  obligations and liabilities directly and primarily arising out
               of, relating to, or associated with all Purchase Orders;

          (d)  obligations and liabilities directly and primarily arising out
               of, relating to, or associated with all Miscellaneous Agreements;

          (e)  obligations and liabilities arising out of, relating to, or
               associated with all accounts payable associated with the
               Electronics Business as reflected on the Accounting Records, as
               of the Effective Date;

                                      D-4
<PAGE>

          (f)  obligations and liabilities arising out of, relating to, or
               associated with all product warranty obligations, including any
               product recall obligations or liabilities whenever arising
               directly and primarily with respect to Electronics Business
               Products, whether shipped prior to or on or after the Effective
               Date;

          (g)  obligations and liabilities resulting from claims for personal
               injury or property damage or consequential damage which are
               caused by any actual or alleged defect in or actual or alleged
               breach of warranty directly and primarily related to any
               Electronics Business Products or the Electronics Assets or
               Electronics Business, whether arising prior to or on or after the
               Effective Date;

          (h)  all Litigation and Claims pending as of the Effective Date
               against API or any API subsidiary ("Pending Electronics Business
               Litigation") and all Litigation and Claims brought against APW or
               API, or any APW or API subsidiary, after the Effective Date ("New
               Electronics Business Litigation"), in each case if and solely to
               the extent that such Litigation and Claims (in whole or in part)
               directly and primarily arise out of or are associated with
               (regardless of the party named in the allegation or complaint)
               the Electronics Business, any Electronics Business Products or
               any Electronics Assets, or the assets, business and operations
               used and conducted by APW on and after the Effective Date, or
               directly and primarily arise out of, relate to or are associated
               with APW's obligations, covenants, warranties, representations,
               assumptions and agreements contained or reflected in the
               Contribution Documents, or any other activities of APW (whether
               or not in the ordinary course of business and whether occurring
               before or on or after the Effective Date);

          (i)  except to the extent provided to the contrary by Section 4.2,
               every and all obligations, liabilities and expenses (including
               closure or remediation costs) of API for harm or alleged harm to
               the environment directly and primarily arising out of or
               associated with the Electronics Business, any Electronics
               Business Products or any Electronics Assets ("Environmental
               Liabilities"); provided, however, APW does not assume any such
               obligations, liabilities or expenses with respect to the disposal
               or use by API of Electronics Business Products or APW products
               purchased by API after the Effective Date or those listed on
               Schedule 1.3(i); and

          (j)  all liabilities of API in any instance where APW is operating as
               agent or subcontractor under Section 4.3 of the Contribution
               Agreement or any agreement or instrument provided for therein
               provided that APW will not be responsible for or indemnify API
               for any claims, damages, liabilities and expenses whatsoever to
               the extent such arose out of or in connection with

                                      D-5
<PAGE>

               API's performance of or omission to perform any of its remaining
               obligations under Section 4.3 of the Contribution Agreement.

APW shall be responsible for the Assumed Liabilities, regardless of when or
where such Assumed Liabilities arose or arise, or whether the facts on which
they are based occurred prior to or subsequent to the Effective Date, regardless
of where or against whom such Assumed Liabilities are asserted (including any
Assumed Liabilities arising out of claims made by APW's directors, officers,
employees, agents, subsidiaries and affiliates against API) or whether asserted
prior or subsequent to the Effective Date and regardless of whether such Assumed
Liabilities arose from negligence, reckless, violation of law, fraud, or
misrepresentation by API or any of its directors, officers, employees, agents,
subsidiaries or affiliates.

     1.4  Special Assumption Arrangements.  The parties acknowledge and agree
          -------------------------------
that certain assets and obligations, liabilities, and expenses relating to,
arising out of or associated with the Electronics Business, the Electronics
Business Products and the Electronics Assets as of the Effective Date are the
subject of separate agreements between the parties.  The transfer of assets and
assumption of obligations, liabilities, and expenses provided for in this
Agreement is subject in all respects to the provisions of such separate
agreements insofar as the provisions of this Agreement may be deemed to relate
to the subject matter of such separate agreements and this Agreement shall not
be deemed to effect the transfer of any asset or assumption of any obligation,
liability, or expense expressly provided for pursuant to any of the separate
agreements.

     1.5  Liabilities Not Assumed.  Notwithstanding anything to the contrary,
          -----------------------
APW does not assume any obligation, liability or expense if and to the extent
that:  (i) such obligation, liability, or expense (in whole or in part) arises
out of or is associated with the assets, business or operations of API other
than the Electronics Business, Electronics Business Products or Electronics
Assets, or (ii) API has expressly agreed to retain such obligation, liability,
or expense pursuant to the Contribution Documents (such obligations,
liabilities, and expenses referred to in clauses (i) and (ii) of this sentence,
together with all obligations, liabilities, and expenses of API arising out of
or associated with Pending API Litigation and New API Litigation (each as
hereinafter defined), being referred to herein as "Retained Liabilities,"
including the liabilities listed in Schedule 1.5 hereto). APW does not assume,
and shall not be responsible for, any Litigation and Claims pending as of the
Effective Date against API or any API subsidiary except subsidiaries listed on
Exhibit 1, exclusive of Litigation and Claims set forth in Section 1.3(h) or
specifically assumed by APW in the Contribution Documents ("Pending API
Litigation"), or Litigation and Claims brought, threatened or alleged against
API, including any subsidiary, exclusive of Litigation and Claims set forth in
Section 1.3(h) or specifically assumed by APW in the Contribution Documents,
after the Effective Date ("New API Litigation").

          API shall be responsible for the Retained Liabilities, regardless of
when or where any such obligation, liability, or expense arose or arise, or
whether the facts on which they are based occurred prior to or subsequent to the
Effective Date, regardless of where or against whom such obligation, liability,
or expense is asserted or determined or whether asserted or determined prior to
or subsequent to the Effective Date.

                                      D-6
<PAGE>

     1.6  Allocation of Joint Assets and Liabilities.  The parties are only
          ------------------------------------------
aware of one joint contract involving the purchase of steel.  The parties agree
that by this Agreement, API and APW, except as specifically provided in the
Contribution Documents, seek to transfer, assign, and convey to APW, and/or have
APW assume, as the case may be, the assets and liabilities of the Electronics
Business, Electronics Business Products and the Electronics Assets.  By this
Agreement and except as otherwise provided in the Contribution Documents
(including certain corporate assets), API does not intend to transfer, assign,
and convey to APW and have APW assume, as the case may be, the assets and
liabilities of API business, products, assets other than the Electronics
Business, Electronics Business Products or Electronics Assets.  The assets and
liabilities listed on Schedule 1.6 hereto shall remain assets and liabilities of
API.

          In the case of an asset or liability, if any, which relates to, arises
out of, or is associated with both the Electronics Business and API, both
parties agree to apportion the asset or liability among the parties in
accordance with their respective interests in or responsibility for such asset
or liability.  If the asset or liability is not divisible, the asset or
liability will be wholly allocated to the party to which party's business the
indivisible asset or liability primarily relates.  The parties will make this
decision in accordance with Section 8 of this Agreement.  The parties will use
reasonable efforts to resolve any controversy or disputes as promptly as
possible.

     1.7  Classification of Litigation and Claims.  Each party acknowledges that
          ---------------------------------------
the other party has previously informed each other of all Pending Electronics
Business Litigation known to such party, other than workers' compensation
claims.  Such information was prepared by API to the best of its ability based
upon facts reasonably available to it as of the date hereof.  There may be
additional Pending Electronics Business Litigation either commenced or
threatened between the date such information was provided and the Effective Date
or which was not reasonably identifiable and which should have been included in
such information. The parties agree that such Litigation and Claims when
identified shall be classified as Pending Electronics Business Litigation. The
parties also agree that with respect to certain Litigation and Claims currently
considered to be Pending Electronics Business Litigation, or later deemed as
included, it may be or become difficult to determine whether they were properly
so classified, in which case the parties agree to appropriately reclassify any
such Litigation and Claims as newly discovered facts may indicate or, in the
case of disputed facts, to negotiate their proper handling under Section 6 or
Section 8 hereof.

2.   Assumed Liabilities, Exculpation and Indemnification by APW.

     2.1  Subject to the provisions of Section 4 hereof, from and after the
Effective Date, APW shall, without any further responsibility or liability of or
recourse to, API, or any subsidiary of API or any of their respective directors,
shareholders, officers, employees, agents, consultants, representatives,
successors, transferees or assignees, exclusive of APW and its subsidiaries
(collectively, the "API Parties"), absolutely and irrevocably assume and be
solely liable and responsible for the Assumed Liabilities.  Neither API nor any
of the other API Parties shall be liable to APW or any subsidiary of APW or any
of their respective directors, shareholders, officers, employees, agents,
consultants, customers, representatives, successors, transferees or assignees
for any reason whatsoever on account of (i) any Assumed Liabilities or (ii) any
obligations, liabilities

                                      D-7
<PAGE>

or expenses arising out of or associated with or any Litigation and Claims
arising out of or associated with the assets, business and operations used and
conducted by APW following the Effective Date, arising from or associated with
APW's obligations, covenants, warranties, representations, assumptions,
agreements contained or reflected in the Contribution Documents, or any other
activities of APW (whether or not in the ordinary course of business, and
whether occurring before or on or after the Effective Date), except as otherwise
specifically provided in the Contribution Documents; provided, that API shall
remain liable to APW for any breach by API and its subsidiaries of any of its
obligations, covenants, warranties, representations, assumptions or agreements
contained or reflected in the Contribution Documents. The matters with respect
to which the liability of API and the other API Parties is excluded pursuant to
clauses (i) and (ii) of the preceding sentence are hereby referred to as the
"Electronics Business Liabilities."

          APW shall fully indemnify, defend, save and hold harmless API and each
of the other API Parties from and against all claims, liabilities, obligations,
leases, costs, costs of defense (as and when incurred, and including reasonable
outside attorneys' and consultants' or others' fees), expenses, fines, taxes,
levies, imports, duties, deficiencies, assessments, charges, penalties,
allegations, demands, damages (including but not limited to actual, punitive or
consequential, foreseen or unforeseen, known or unknown), settlements, awards or
judgments of any kind or nature whatsoever, to the extent directly and primarily
arising out of or associated with the Electronics Business Liabilities (all of
which are hereinafter in this Section collectively called the "API Damages").

          Except as specifically provided elsewhere, the indemnities provided by
APW hereunder shall extend to any and all Electronics Business Liabilities of
whatsoever nature, including, without limitation, any and all Electronics
Business Liabilities with respect to environment, health, safety, personal
injury, property damage, employment, benefits, compensation, pension rights,
claims arising out of contracts, product liability, warranty, merchantability or
fitness of goods for any particular purpose, conformity of goods to contractual
requirements, deceptive trade practice, misrepresentation, fraud or any other
actual breach or violation of any obligation or requirement arising out of, or
in connection with, Electronics Assets, the Electronics Business, Electronics
Business Products or the assets, business and operations of APW.

3.   Exculpation and Indemnification by API.

     3.1  Subject to the provisions of Section 4 hereof, from and after the
Effective Date, API shall, without any further responsibility or liability of,
or recourse to, APW, or any subsidiary of APW or any of their respective
directors, shareholders, officers, employees, agents, consultants,
representatives, successors, transferees or assignees (collectively, the "APW
Parties"), absolutely retain and be solely liable and responsible for the
Retained Liabilities.  From and after the Effective Date, neither APW nor any of
the other APW Parties shall be liable to API or any subsidiary of API or any of
their respective directors, shareholders, officers, employees, agents,
consultants, customers, representatives, successors, transferees or assignees
for any reason whatsoever:  (i) on account of any Retained Liabilities; or (ii)
on account of any obligations, liabilities or expenses arising out of or
associated with the breach by API of any of its obligations under the
Contribution Documents.  The

                                      D-8
<PAGE>

matters with respect to which API retains liability pursuant to clauses (i) and
(ii) of the preceding sentence are herein referred to as the "API Liabilities."

          API shall fully indemnify, defend, save and hold harmless APW and each
of the other APW Parties from and against, all claims, liabilities, obligations,
leases, costs, costs of defense (as and when incurred, and including reasonable
outside attorneys' and consultants' fees), expenses, fines, taxes, levies,
imports, duties, deficiencies, assessments, charges, penalties, allegations,
demands, damages (including but not limited to actual, punitive or
consequential, foreseen or unforeseen, known or unknown), settlements, awards or
judgments of any kind or nature whatsoever, to the extent directly and primarily
arising out of or associated with the API Liabilities or, except as otherwise
provided in the Contribution Documents, that otherwise are related to, arise
from, or associated with the ownership, use, possession, operation or conduct of
the assets, business or operations of API, other than the Electronics Assets and
APW assets, Electronics Business and APW's business or Electronics Business
Products or APW's products, before or after the Effective Date (all of which are
hereinafter collectively called the "APW Damages").

          Except as specifically provided in the Contribution Documents, the
indemnities provided by API hereunder shall extend to any and all API
Liabilities of whatsoever nature, including, without limitation, any and all API
Liabilities with respect to environment, health, safety, personal injury,
property damage, employment, benefits, compensation, pension rights, claims
arising out of contracts, product liability, warranty, merchantability or
fitness for any particular purpose of goods, conformity of goods to contractual
requirements, deceptive trade practice misrepresentation, fraud or any other
alleged or actual breach or violation of any obligation of or requirement
arising out of, or in connection with, the assets, business or operations of API
other than the Electronics Business, Electronics Assets, Electronics Business
Products or the assets, business and operations of APW.

4.   Specific Indemnification Issues.

     4.1  Worker's Compensation.  Workers' compensation claims filed with the
          ---------------------
appropriate state administrative agency prior to the Effective Date by a person
employed at the time of filing by API alleging that prior to the Effective Date
such employee was injured while employed by API shall be considered to be API
Liabilities.  Any workers' compensation claims made against APW (including any
subsidiaries) which are filed either on or after the Effective Date shall be
considered to be Assumed Liabilities.  Any workers' compensation claims made
against API which are filed after the Effective Date shall be considered to be
API Liabilities.  In the event a party has a claim filed against it after the
Effective Date which the party believes should be the responsibility of the
other party (i.e. a misfiled claim), the parties agree to use the procedures set
forth at Section 8 of the Agreement to resolve any dispute or controversy.

     4.2  Specific Litigation Retained by API. The parties agree that API will
          -----------------------------------
remain solely responsible for the pending claims listed on Schedule 4.2 hereto,
and will indemnify the APW parties in respect thereto.

                                      D-9
<PAGE>

     4.3  Officer, Director, Employee or Agent Liability.  It is understood and
          ----------------------------------------------
agreed that, with respect to any obligation, liability, or expense or any
Litigation and Claims arising out of or associated with, an act or omission of
any officer, director, employee or agent of API or any of its subsidiaries prior
to the Effective Date, the respective obligations of APW and API pursuant to
this Agreement (including their respective indemnification obligations) shall be
indemnified by API and otherwise, in full force and effect, regardless of
whether such person was, at the time of such act or omission, an officer,
director, employee or agent of the Electronics Business (including APW
employees, officers or directors) or of API (excluding the Industrial Business)
and regardless of whether such obligation, liability, or expense or Litigation
and Claims are alleged or determined in any judgment, award or decree after
trial to arise out of or be associated with such person's negligence, gross
negligence, recklessness or intentional conduct or culpability.

     4.4  Post-Effective Date Contracts Between API & APW.  It is acknowledged
          -----------------------------------------------
that after the Effective Date the parties and their subsidiaries may have arms
length negotiated business relationships between and among each other, which
relationships are or shall be described in contracts, agreements and other
documents entered into in the normal course of business.  Such documents may
include agreements by the parties and their affiliates and subsidiaries to
supply after the Effective Date materials or services.  Such business
relationships shall not be subject to the indemnity or other provisions hereof
or any other agreements covered by the Contribution Documents, unless the
parties expressly agree to such in the agreements governing such relationships.

     4.5  Joint Liability.  In the event a claim, demand, action or proceeding
          ---------------
is brought by a third party in which the liability as between API and APW is
determined after trial in any judgment, award or decree to be joint or in which
the entitlement to indemnification hereunder is not readily determinable, the
parties shall negotiate in good faith in an effort to agree, as between API and
APW, on the proper allocation of liability or entitlement to indemnification, as
well as the proper allocation of the costs of any joint defense or settlement
pursuant to Section 6.4, all in accordance with the provisions of and the
principles set forth in this Agreement.  In the absence of any such agreement,
such allocation of liability or entitlement to indemnification, and such
allocation of costs, shall be subject to ultimate resolution between API and APW
based upon all of the relevant facts and circumstances pursuant to Section 8 and
consistent with the policy set forth in the last whereas recital of this
Agreement.

5.   Notice and Payment of Claims.

     5.1  Procedure for Notification.  If either a party to this Agreement or a
          --------------------------
person entitled to a defense and/or indemnification under this Agreement ("the
Indemnified Party") determines that it is or may be entitled to a defense or
indemnification by APW or API, as the case may be ("the Indemnifying Party"),
under this Agreement:

          (a)  The Indemnified Party shall deliver promptly to the Indemnifying
               Party a written notice and demand for a defense or
               indemnification, specifying the basis for the claim for defense
               and/or indemnification, the nature of the claim,

                                     D-10
<PAGE>

               and, if known, the amount for which the Indemnified Party
               reasonably believes it is entitled to be indemnified;

          (b)  The Indemnifying Party shall have 30 days from receipt of the
               notice requesting indemnification within which to either (1)
               assume the defense of such litigation or claim; (2) pay the claim
               in immediately available funds; (3) reserve its rights pending
               negotiations under Section 6.4; or (4) object in accordance with
               Section 5.2. This 30 day period may be extended by express
               agreement of the parties.

          (c)  However, if the amount for which the Indemnifying Party may be
               liable is not known or reasonably determinable at the time of
               such notice, the Indemnified Party shall deliver to the
               Indemnifying Party a further notice specifying the amount for
               which the Indemnified Party reasonably believes it is entitled to
               be indemnified as soon as reasonably practicable after such
               amount is known or reasonably determinable and the Indemnifying
               Party shall have a further opportunity to take action as set
               forth above. Nothing in this subparagraph shall be interpreted to
               abrogate or delay an Indemnifying Party's obligation to provide
               the other with a defense under this Agreement.

     5.2  Waiver of Objection.  The Indemnifying Party may object to the claim
          -------------------
for defense and/or indemnification set forth in any notice; provided, however,
that if the Indemnifying Party does not give the Indemnified Party written
notice setting forth its objection to such claim (or the amount thereof) and the
grounds therefor within the same 30-day period (or any extended period), the
Indemnifying Party shall be deemed to have acknowledged its liability to provide
a defense or for the amount of such claim and the Indemnified Party may exercise
any and all of its rights under applicable law to collect such amount or obtain
such defense.  Any objection to a claim for a defense or indemnification shall
be resolved in accordance with Section 8.

     5.3  Insurance Coverage.  The right to a defense or indemnification under
          ------------------
this Agreement applies only insofar as defense and indemnification are not
covered by insurance proceeds or the provision of legal defense received by a
party from its insurance carrier.  Nevertheless, the potential availability of
insurance coverage to API or APW shall not relieve the other party of its
obligations for defense or indemnification hereunder, or delay either party's
obligation to the other to assume a defense or pay any sums due hereunder.  Once
proceeds are received appropriate adjustments will be made under the Insurance
Matters Agreement, dated as of the date hereof, between API and APW, which
governs the rights and obligations of API and APW with respect to such
insurance.

6.   Defense of Third-Party Claims.

     6.1  Assumption of Third-Party Claims.  If the Indemnified Party's claim
          --------------------------------
for indemnification is based, under this Agreement, on a claim, demand,
investigation, action or proceeding, judicial or otherwise, brought by a third
party, and the Indemnifying Party does not object under Section 5.2 hereof, the
Indemnifying Party shall, within the 30-day period (or any extended period)
referred to

                                     D-11
<PAGE>

in Section 5 above, assume the defense of such third-party claim at its sole
cost and expense and shall thereafter be designated as the case handler. Any
such defense shall be conducted by attorneys employed by the Indemnifying Party.
The Indemnified Party may retain attorneys of its own choosing to participate in
such defense at the Indemnified Party's sole cost and expense.

     6.2  Settlement of Third-Party Claims.  If the Indemnifying Party assumes
          --------------------------------
the defense of any such third-party claim, the Indemnifying Party may settle or
compromise the claim without the prior consent of the Indemnified Party so long
as all present and future claims against the Indemnified Party relating to such
third-party claim(s) are irrevocably and unconditionally released in full.

     6.3  Indemnification After Settlement.  The Indemnifying Party shall pay to
          --------------------------------
the Indemnified Party in immediately available funds the amount for which the
Indemnified Party is entitled to be indemnified within 30 days after the
settlement or compromise of such third-party claim or the final unappealable
judgment of a court of competent jurisdiction (or within such longer period as
agreed to by the parties).  If the Indemnifying Party does not assume the
defense of any such third-party claim, the Indemnifying Party shall be bound by
the result obtained with respect thereto by the Indemnified Party, except that
the Indemnifying Party has the right to contest that it is obligated to the
Indemnified Party under the terms of this Agreement, provided the Indemnifying
Party shall have raised its objections in a timely manner under Section 5.2.

     6.4  Third-Party Joint Liability Claim.  In the event a claim, demand,
          ---------------------------------
action or proceeding is brought by a third party in which the liability as
between API and APW is alleged to be joint or in which the entitlement to
indemnification hereunder is not readily determinable (or, if an objection, in
good faith, pursuant to Section 5.2 has been received), the parties shall
cooperate in a joint defense.  Such joint defense shall be under the general
management and supervision of the party which is expected to bear the greater
share of the liability, as determined by representatives of API and APW, and
which will be considered the case handler, unless otherwise agreed, provided,
however, that neither party shall settle or compromise any such joint defense
matter without the consent of the other.  The costs of such joint defense, any
settlement and any award or judgment (unless the award or judgment specifies
otherwise) shall be borne as the parties may agree or, in the absence of such
agreement, such costs shall be borne by the party incurring such costs, subject
to ultimate resolution between APW and API based upon all of the relevant facts
and circumstances pursuant to Section 8.

7.   Cooperation and Preservation of Records.

     7.1  General.  APW and API shall cooperate with one another fully and in a
          -------
timely manner in connection with the defense of any Pending Electronics Business
Litigation, Threatened Electronics Business Litigation, New Electronics Business
Litigation, Assumed Liabilities, Retained Liabilities or any other actual or
threatened claim, investigation, audit or administrative or judicial action or
proceeding brought or commenced by a third party (including any governmental
agency or authority) involving any matter affecting the potential liability of
API or APW, so long as API and APW are not directly adverse in a lawsuit between
each other in that specific matter.

                                     D-12
<PAGE>

     7.2  Availability of Records.  The cooperation required by this Section,
          -----------------------
shall include, without limitation, making available to the other party during
such normal business hours and upon reasonable notice, appropriate books,
records and information ("Litigation Records"), officers and employees (without
substantial interruption of employment) necessary or useful in connection with
any accrued or actual or threatened claim, investigation, audit, action or
proceeding, so long as API and APW are not directly adverse in a lawsuit between
each other in that specific matter.

     7.3  Retention of Records.  Each party shall continue in force or, at the
          --------------------
request of the other party, shall issue notices exempting from destruction at
the expiration of normal records retention periods any Litigation Records which
the requesting party represents may be necessary to the defense of, or required
to be produced in discovery in connection with, any claim, investigation, audit,
action or proceeding and shall refrain from destroying any  Litigation Records
until authorized by the requesting party.  The requesting party shall notify the
other party promptly when the Litiga  tion Records are no longer required to be
maintained.

     7.4  Cost of Access to Records.  The party requesting access to Litigation
          -------------------------
Records or officers and employees pursuant to Section 7.2 or preservation of
Litigation Records under Section 7.3 shall bear all reasonable out-of-pocket
expenses (except reimbursement of salaries, employee benefits and general
overhead) incurred in connection with providing such Litigation Records or
officers and employees.

     7.5  Confidential or Proprietary Records.  The party providing Litigation
          -----------------------------------
Records under this Section 7 may elect, upon a reasonable basis and within a
reasonable time, to designate all or a portion of the Litigation Records as
confidential or proprietary.  If Litigation Records are so designated, the party
receiving them will treat them as it would its own confidential or proprietary
information and will take all reasonable steps to protect and safeguard the
Litigation Records while in its own custody and will attempt to shield the
information contained in the Litigation Records from disclosure by motions to
quash, motions for a protective order, reduction or other appropriate actions.

8.   Dispute Resolution.

     8.1  General.  In an effort to resolve informally and amicably any claim or
          -------
controversy arising out of or related to the interpretation or performance of
this Agreement without resorting to litigation, a party shall first notify the
other of any difference or dispute hereunder that requires resolution.  API and
APW each shall designate an employee to investigate, discuss and seek to settle
the matter between them.  If the two are unable to settle the matter within 30
days after such notification (or such longer period as may be agreed upon), the
matter shall be submitted to a senior officer of API and APW, respectively, for
consideration.

     8.2  Arbitration.  If settlement cannot be reached through the efforts of
          -----------
the senior officers within an additional 30 days or such longer period as may be
agreed upon, the parties shall consider arbitration or other alternative means
to resolve the dispute.

                                     D-13
<PAGE>

     8.3  Legal Proceedings.  If the parties are unable to agree on an
          -----------------
alternative dispute resolution mechanism as set forth in Section 8.2, either
party may initiate legal proceedings to resolve such matter.

9.   Notices.

     9.1  General.  All notices and communications required or permitted under
          -------
this Agreement shall be in writing and any communication or delivery hereunder
shall be deemed to have been duly made if actually delivered, or if mailed by
first class mail, postage prepaid, or by air express service, with charges
prepaid and addressed as follows:

          If to API:             Applied Power Inc.
                                 6101 N. Baker Road
                                 Milwaukee, WI  53209
                                 Attention: __________

          If to APW:             APW LTD.
                                 N22 W23685 Ridgeview Parkway West
                                 Waukesha, Wisconsin 53188-1013
                                 Attention: __________

     9.2  Change in Address.  Either party may, by written notice so delivered
          -----------------
to the other, change the address to which future delivery shall be made.

10.  Amendment and Non-Waiver.

     10.1 Written Amendment and Waiver.  This Agreement may not be altered or
          ----------------------------
amended nor any rights hereunder be waived, except by an instrument in writing
executed by the party or parties to be charged with the amendment or waiver.

     10.2 Limited Amendment or Waiver.  No waiver of any term, provision or
          ---------------------------
condition of this Agreement or failure to exercise any right, power or remedy or
failure to enforce any provision of this Agreement, in any one or more
instances, shall be deemed to be a further or continuing waiver of any such
term, provision or condition or as a waiver of any other term, provision or
condition or enforcement right of this Agreement or deemed to be an impairment
of any right, power or remedy or acquiescence to any breach.

11.  Miscellaneous.

     11.1 Governing Law. This Agreement and the transactions contemplated hereby
          -------------
shall be construed in accordance with and governed by the internal laws of the
State of Wisconsin.

     11.2 Entire Agreement.  The Contribution Documents constitute the entire
          ----------------
understanding of the parties hereto with respect to the subject matter hereof,
superseding all negotiations, prior

                                     D-14
<PAGE>

discussions and prior agreements and understandings relating to their subject
matter; provided, however, that the specific provisions of any other agreement
between the parties executed and delivered by the parties in connection with the
closing under the Contribution Agreement shall not be superseded by this
Agreement and to the extent any such other agreement is in conflict herewith,
such specific agreement shall control.

     11.3 Parties In Interest.  Neither party may assign its rights or delegate
          -------------------
any of its duties under this Agreement without prior written consent of the
other. This Agreement shall be binding upon, and shall inure to the benefit of,
the parties hereto and their respective successors and assigns. Nothing
contained in this Agreement, express or implied, is intended to confer upon any
third party any benefits, rights or remedies.

     11.4 Effectiveness.  This Agreement shall become effective at the Effective
          -------------
Date and may be terminated by API at any time prior thereto without any
liability on API's part.

     11.5 Reformation and Severability. If any provision of this Agreement shall
          ----------------------------
be held to be invalid, unenforceable or illegal in any jurisdiction under any
circumstances for any reason, (a) that provision shall be reformed to the
minimum extent necessary to cause such provision to be valid, enforceable and
legal and preserve the original intent of the parties, or (b) if that provision
cannot be so reformed, it shall be severed from this Agreement. The holding
shall not affect or impair the validity, enforceability or legality of the
provision in any other jurisdiction or under any other circumstances. Neither
the holding nor the reformation or severance shall affect or impair the
legality, validity or enforceability of any other provision of this Agreement to
the extent that the other provision is not itself actually in conflict with any
applicable law.

     11.6 Titles and Headings. All titles and headings have been inserted solely
          -------------------
for the convenience of the parties and are not intended to be a part of this
Agreement or to affect its meaning or interpretation.

     11.7 Counterparts.  This Agreement, and any other agreement to be executed
          ------------
in connection herewith, may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.

                                     D-15
<PAGE>

     IN WITNESS WHEREOF the Parties have caused this Agreement to be executed by
their duly authorized officers as of this _____ day of __________, 2000.

                              APPLIED POWER INC.


                              By: _________________________________________
                                  President and Chief Executive Officer


                              APW LTD.


                              By: _________________________________________
                                  President and Chief Executive Officer

                                     D-16