Document:

<PAGE>

EXECUTIVE STAFF FISCAL 2001 BONUS MEASUREMENTS
----------------------------------------------

The fiscal 2001 bonus plan for executive staff will consist of the following:

a)  100% - Actuant year-over-year improvement in Consolidated Combined
    Management Measure (CMM)
b)  Additional upside/downside tied to Debt Reduction Multiplier

Supporting Definitions:

Consolidated CMM = Operating Profit (before amortization) less Asset Carrying
  Charge of 20% of total debt, shareholders' equity and accumulated amortization
  of intangible assets

Debt Reduction Multiplier = actual debt reduction/$35.0 million

Bonus Targets:
-------------
                                   0%              100%            250%
                                                  (Target)
                                   ------------------------------------

Consolidated CMM                   $38.9 million   $42.8 million   $48.6 million

<TABLE>
<CAPTION>
Name                 Functional Area                Proposed Bonus Payout @ 100%
--------------------------------------------------------------------------------
<S>                  <C>                            <C>
Robert Arzbaecher    Chief Executive Officer                  $220,000
Andrew Lampereur     Chief Financial Officer                  $ 64,750
Ralph Keller         Vice President of Operations             $ 63,000
Joe O'Connor         Vice President of Human Resources        $ 39,000
Terry Braatz         Treasurer                                $ 28,250
Dawn Doering         Corporate Controller                     $ 23,750
</TABLE>
<PAGE>

BUSINESS UNIT LEADER FISCAL 2001 BONUS MEASUREMENTS
---------------------------------------------------

The fiscal 2001 bonus plan for business unit leaders will consist of the
following:

a)  80% - Business unit year-over-year improvement in Field CMM
b)  20% - Consolidated CMM improvement

Supporting Definitions:

Field CMM = Operating Profit (before amortization) less Asset Carrying Charge of
  20% of Net Assets Employed

Net Assets Employed = Net accounts receivable + net inventory + prepaid assets +
  net fixed assets + other long-term assets (excluding intangible assets) -
  accounts payable - accrued current liabilities

Bonus Targets:
--------------

Todd Hicks; Vice President, Enerpac-
<TABLE>
<CAPTION>
                                             0%                                       100%                250%
                                                                                     (Target)
                                             ------------------------------------------------------------------------------
<S>                                          <C>                                      <C>                 <C>
Enerpac CMM                                  less than or equal to 80% of prior year  115% of prior year  160% of prior year
Consolidated CMM                             $38.9 million                            $42.8 million       $48.6 million
Payout                                       $0                                       $56,000             $140,000
</TABLE>

Arthur Kerk; Vice President, Engineered Solutions-Europe and Asia-
<TABLE>
<CAPTION>
                                             0%                                       100%                250%
                                                                                     (Target)
                                             ------------------------------------------------------------------------------
<S>                                          <C>                <C>                   <C>
Engineered Solutions-Europe and Asia CMM     less than or equal to 80% of prior year  115% of prior year  160% of prior year
Consolidated CMM                             $38.9 million                            $42.8 million       $48.6 million
Payout                                       0 Dfl                                    105,000 Dfl         262,500 Dfl
</TABLE>

Jerry Peiffer; Vice President, Engineered Solutions-Americas-
<TABLE>
<CAPTION>
                                             0%                                       100%                250%
                                                                                     (Target)
                                             ------------------------------------------------------------------------------
<S>                                          <C>                <C>                   <C>
Engineered Solutions-Americas CMM            less than or equal to 80% of prior year  115% of prior year  160% of prior year
Consolidated CMM                             $38.9 million                            $42.8 million       $48.6 million
Payout                                       $0                                       $56,000             $140,000
</TABLE>
<PAGE>

MULTI-UNIT BUSINESS LEADER FISCAL 2001 BONUS MEASUREMENTS
---------------------------------------------------------

The fiscal 2001 bonus plan for multi-unit business leader will consist of the
following:

a)  60% - Business unit year-over-year improvement in Operating Profit
    (excluding amortization) (DP)
b)  20% - GB CMM improvement
c)  20% - Consolidated CMM improvement

Bonus Targets:
--------------

Brian Kobylinski; Vice President, Distribution and OEM-
<TABLE>
<CAPTION>
                                0%                                          100%                 250%
                                                                           (Target)
                                -----------------------------------------------------------------------------------
<S>                             <C>                                        <C>                   <C>
Distribution and OEM DP         less than or equal to 80% of prior year    115% of prior year    160% of prior year
GB CMM                          less than or equal to 80% of prior year    115% of prior year    160% of prior year
Consolidated CMM                $38.9 million                              $42.8 million         $48.6 million
Payout                          $0                                         $49,000               $122,500
</TABLE><PAGE>

                          CHANGE IN CONTROL AGREEMENT
                                      FOR
                     [                                   ]

     This Agreement is made as of          , 1999 (the "Effective Date"),
between APW Tools & Supplies, Inc., an indirect wholly owned subsidiary of
Applied Power Inc., a Wisconsin corporation (the "Company"), and [           ]
(the "Executive").

     WHEREAS, the Executive is a valued employee of the Company; and

     WHEREAS, the Company desires to enter into this Change in Control Agreement
with the Executive to provide the Executive with contractual assurances to
induce the Executive to remain as an employee of the Company notwithstanding the
possibility, threat or occurrence of a Change in Control (as defined below) of
Applied Power Inc., provided that the Executive remains in his current position
at the time of a Change in Control.

     NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, the Executive and the Company agree as follows:

     1.   Employment and Duties. The Company hereby employs Executive as Direct
Marketing Leader with all powers and authority as are customary to this
position, and Executive hereby accepts employment with the Company in accordance
with the terms and conditions set forth herein. Executive shall have such
executive responsibilities as is customary with this position and as the
Company's Board of Directors or the President (as the case may be) shall from
time to time assign to him. Executive agrees to devote his full time (excluding
annual vacation time), skill, knowledge, and attention to the business of the
Company and the performance of his duties under this Agreement.

     2.   Termination, Bonus, and Severance Pay.

          a.  As used in this Agreement, a Change in Control means:

               (i) a sale of over 50% of the stock of Applied Power Inc.
          measured in terms of voting power, other than in a public offering or
          in connection with acquisition by Applied Power Inc. of a business
          filing reports under Section 13 or 15(d) of the Securities Exchange
          Act of 1934; or

               (ii) the sale by Applied Power Inc. (but not the spin-off to
          shareholders) of over 50% of its business or assets in one or more
          transactions over a consecutive 12-month period; or
<PAGE>

               (iii)  a merger or consolidation of Applied Power Inc. with or
          into any other corporation or corporations such that the shareholders
          of Applied Power Inc. prior to the merger or consolidation do not own
          at least 50% of the surviving entity measured in terms of voting
          power; or

               (iv) the acquisition by any means of more than 25% of the voting
          power or common stock of Applied Power Inc. by any person or group of
          persons (with group defined by the definitions under Section 13(d)(3)
          of the Securities Exchange Act of 1934, as amended); or

               (v) the election of directors constituting a majority of Applied
          Power Inc.'s board of directors pursuant to a proxy solicitation not
          recommended by Applied Power Inc.'s board of directors.

          b.   As used in this Agreement, a Triggering Event means:

               (i) (a) reducing the total base compensation amount paid by the
     Company to the Executive or (b) modifying the bonus plan applicable to the
     Executive which results in the Executive earning less than the then
     existing bonus plan or (c) reducing the total aggregate value of the fringe
     benefits received by the Executive from the Company from the levels
     received by the Executive at the time of a Change in Control or during the
     120 day period immediately preceding the Change in Control; or

               (ii) a material change in the Executive's position or duties,
     Executive's reporting responsibilities, or persons reporting to the
     Executive from the levels existing at the time of a Change in Control or
     during the 180 day period immediately preceding the Change in Control; or

               (iii)     a change in the location or headquarters where the
     Executive is expected to provide services of 40 or more miles from the
     previous location existing at the time of the Change in Control or during
     the 180 day period immediately preceding the Change in Control.

          c.  After a Change in Control and if a Triggering Event occurs within
     18 months of the date of a Change in Control, the Executive may voluntarily
     terminate his services. Upon termination, voluntary or involuntary, after a
     Change in Control and a Triggering Event within 18 months after the date of
     the Change in Control, the Company shall: (i) continue to provide welfare
     benefits as customarily offered by the Company to the Executive at the
     Change in Control for a 12 month period after termination at no cost to the
     Executive; and (ii) pay in one lump sum (a) within 30 days after the
     termination date or (b) such later date as selected by Executive the total
     amount that would be received by the Executive over a period of 12 months
     after the termination (based upon compensation amounts paid to the

                                      -2-
<PAGE>

     Executive at the date of the Change in Control) including amounts that
     would be paid for bonuses during the 12 month period after the termination
     (provided the bonus amount shall be based on the amount due, assuming the
     Executive met 100% of the performance targets). For purposes hereof,
     welfare benefits will include the Executive's right to a car and such other
     welfare benefits available to the Executive at the time of the Change in
     Control.

          d.  In the event that the severance benefits payable to the Executive
     under this section or any other payments or benefits received or to be
     received by the Executive from the Company (whether payable pursuant to the
     terms of this Agreement, any other plan, agreement or arrangement with the
     Company) or any corporation ("Affiliate") affiliated with the Company
     within the meaning of Section 1504 of the Internal Revenue Code of 1986, as
     amended (the "Code"), in the opinion of tax counsel selected by the
     Company's independent auditors and reasonably acceptable to the Executive,
     constitute "parachute payments" within the meaning of Section 280G(b)(2) of
     the Code, and the present value of such "parachute payments" equals or
     exceeds three times the average of the annual compensation payable to the
     Executive by the Company (or an Affiliate) and includable in the
     Executive's gross income for federal income tax purposes for the five
     calendar years preceding the year in which a Change in Control of the
     Company occurred ("Base Amount"), such severance benefits shall be reduced
     to an amount the present value of which (when combined with the present
     value of any other payments or benefits otherwise received or to be
     received by the Executive from the Company (or an Affiliate) that are
     deemed "parachute payments") is equal to $1 less than the Base Amount,
     notwithstanding any other provision to the contrary in this Agreement. The
     severance benefits shall not be reduced to the extent that (A) the
     Executive shall have effectively waived his receipt or enjoyment of any
     such payment or benefit which triggered the applicability of this section,
     or (B) in the opinion of tax counsel, the severance benefits (in their full
     amount or as partially reduced, as the case may be) plus all other payments
     or benefits which constitute "parachute payments" within the meaning of
     Section 280G(b)(2) of the Code are reasonable compensation for services
     actually rendered, within the meaning of Section 280G(b)(4) of the Code,
     and such payments are deductible by the Company. The Base Amount shall
     include every type and form of compensation includable in the Executive's
     gross income in respect of his employment by the Company (or an Affiliate),
     except to the extent otherwise provided in temporary or final regulations
     promulgated under Section 280G(b) of the Code. For purposes of this section
     only, a Change in Control shall have the meaning of a "change in ownership
     or control" as set forth in Section 280G(b) of the Code and any temporary
     or final regulations promulgated thereunder. The present value of any non-
     cash benefit or any deferred cash payment shall be determined by the
     Company's independent auditors in accordance with the principles of
     Sections 280G(b)(3) and (4) of the Code.

          e.  The Executive shall have the right to request that the Company at
     its sole expense obtain a ruling from the Internal Revenue Service
     ("Service") as to whether any or all payments or benefits determined by
     such tax counsel are, in the view of the Service, "parachute payments"
     under Section 280G. If a ruling is sought pursuant to the Executive's

                                      -3-
<PAGE>

     request, no severance benefits payable under this Agreement shall be made
     to the Executive until after 15 days from the date of such ruling. For
     purposes of this section, the Executive and the Company agree to be bound
     by the Service's ruling as to whether payments constitute "parachute
     payments" under Section 280G. If the Service declines, for any reason, to
     provide the ruling requested, the tax counsel's opinion provided in this
     section with respect to what payments or benefits constitute "parachute
     payments" shall control, and the period during which the severance benefits
     may be deferred shall be extended to a date 15 days from the date of the
     Service's notice indicating that no ruling would be forthcoming.

               In the event that Section 280G, or any successor statute, is
     repealed, this Section shall cease to be effective on the effective date of
     such repeal. The parties to this Agreement recognize that final regulations
     under Section 280G of the Code may affect the amounts that may be paid
     under this Agreement and agree that, upon issuance of such final
     regulations, this Agreement may be modified as in good faith deemed
     necessary in light of the provisions of such regulations to achieve the
     purposes of this Agreement, and that consent to such modifications shall
     not be unreasonably withheld.

          f.  Notwithstanding any provision herein, no amounts will be due under
     this Agreement in the event the Executive's employment is terminated by the
     Company for cause. The term "for cause" shall mean solely the following
     events:

               (i) Executive has been convicted of a felony which has adversely
          affected the Company's reputation;

               (ii) Executive has materially misappropriated Company funds,
          property or opportunities; or

               (iii)  Executive has materially breached any of the provisions of
          this Agreement after having been provided by written notice a
          reasonable opportunity (not less than 15 business days) to cure such
          breach.

     3.   Confidential Information. As a supplement to any other confidentiality
provisions applicable to the Executive, Executive acknowledges that all
Confidential Information is and shall continue to be the exclusive proprietary
property of the Company, whether or not disclosed to or entrusted to the custody
of Executive. Executive will not, either during the term hereof or at any time
thereafter, disclose any Confidential Information, in whole or in part, to any
person or entity other than to employees or affiliates of the Company, for any
reason or purpose, unless the Company gives its prior written consent to such
disclosure or is required to carry out the duties. Executive also will not,
either during the term hereof or at any time thereafter, use in any manner any
Confidential Information for his own purposes or for the benefit of any person
or entity except the Company and its affiliates whether such use consists of
duplication, removal, oral communication, disclosure, transfer or other
unauthorized use thereof, unless the Company gives its prior written consent to
such use. As used herein, the term "Confidential Information" refers to all
information and materials not

                                      -4-
<PAGE>

in the public domain belonging to, used by or in the business of the Company
(the "Business") relating to its business strategies, products, pricing,
customers, technology, programs, costs, employee compensation, marketing plans,
developmental plans, computer programs, computer systems, inventions,
developments, formulae, processes, designs, drawings, trade secrets of every
kind and character and competitive information. "Confidential Information" also
includes confidential information belonging to other companies and disclosed to
the Executive by the Company.

     4.   Non-competition and Inventions.

          a.  During the period of employment of Executive and for a period of
     one year after Executive's termination of employment for any reason,
     Executive shall not directly or indirectly as a principal, agent, owner,
     employee, consultant, advisor, trustee, beneficiary, distributor, partner,
     co-venturer, officer, director, stockholder or in any other capacity, nor
     will any entity owned by Executive:

               (i) divert or attempt to divert any business from the Company or
          engage in any act likely to cause any customer or supplier of the
          Company to discontinue or curtail its business with the Company or to
          do business with another entity, firm, business, activity or
          enterprise directly or indirectly competitive with the Company; or

               (ii) contact, sell or solicit to sell or attempt to contact, sell
          or solicit to sell products competitive to those sold by the Company
          to any customer of the Company with which Executive had contact while
          performing services for the Company; or

               (iii) solicit or attempt to solicit any employee of the Company
          for employment or retention.

          Notwithstanding the provisions above, Executive may acquire securities
     of any entity the securities of which are publicly traded, provided that
     the value of the securities of such entity held directly or indirectly by
     Executive immediately following such acquisition is less than 5% of the
     total value of the then outstanding class or type of securities acquired.

          b.  Executive acknowledges and agrees that the restrictions set forth
     in this section 4 are founded on valuable consideration and are reasonable
     in duration and geographic area in view of the circumstances under which
     this Agreement is executed and that such restrictions are necessary to
     protect the legitimate interests of the Company. If, in any judicial
     proceeding, a court shall refuse to enforce any separate covenant set forth
     herein, then such unenforceable covenant shall be deemed eliminated from
     this section 4 for the purpose of that proceeding to the extent necessary
     to permit the remaining separate covenants to be enforced.

                                      -5-
<PAGE>

          c.  The Executive hereby sells, transfers and assigns to the Company
     the entire right, title and interest of the Executive in and to all
     inventions, ideas, disclosures and improvements, whether patented or
     unpatented, and copyrightable materials, made or conceived by the
     Executive, solely or jointly, or in whole or in part, during the period
     Executive is bound by this Agreement which (i) relate to methods,
     apparatus, designs, products, processes or devices sold, leased, used or
     under construction or development by the Company or any subsidiary or (ii)
     otherwise relate to or pertain to the business, functions or operations of
     the Company or any subsidiary, or (iii) arise (wholly or partly) from the
     efforts of the Executive during the Term hereof in connection with his
     performance of his duties hereunder. The Executive shall communicate
     promptly and disclose to the Company, in such form as the Company requests,
     all information, details and data pertaining to the aforementioned
     inventions, ideas, disclosures and improvements; and, whether during the
     term hereof or thereafter, the Executive shall execute and deliver to the
     Company such formal transfers and assignments and such other papers and
     documents as may be required of the Executive to permit the Company to file
     and prosecute the patent applications and, as to copyrightable material, to
     obtain copyright thereon. This provision does not relate to any invention
     for which (i) no equipment, supplies, facilities or trade secret
     information of the Company was used and which was developed entirely on the
     Executive's own time and which does not relate (A) directly to the business
     of the Company, or (B) to the Company's actual or demonstrably anticipated
     research or development; or (ii) does not result in any work performed by
     the Executive for the Company.

          (d) The provisions in this paragraph are a supplement to any other
     non-compete provisions applicable to the Executive in any other agreement.

     5.   Miscellaneous.

          a.  This Agreement shall be governed by and construed in accordance
     with the internal laws of the State of Wisconsin, without reference to
     principles of conflict of laws. The captions of this Agreement are not part
     of the provisions hereof and shall have no force or effect. This Agreement
     may not be amended or modified otherwise than by a written agreement
     executed by the parties hereto or their respective successors and legal
     representatives.

          b.  All notices and other communications hereunder shall be in writing
     and shall be given by hand delivery to the other party or by registered or
     certified mail, return receipt requested, postage prepaid, addressed as
     follows:

     If to the Executive, to his address appearing on the records of the
Company.

                                      -6-
<PAGE>

     If to the Company:       Applied Power Inc.
                              N22 W23685 Ridgeview Parkway West
                              Waukesha, WI  53188-1013
                              Attention: President

     With a copy to:          Quarles & Brady LLP
                              411 East Wisconsin Avenue
                              Milwaukee, WI  53202
                              Attention:  Anthony W. Asmuth III, Esq.

     or to such other address as either party shall have furnished to the other
     in writing in accordance herewith. Notice and communications shall be
     effective when actually received by the addressee.

          c.  The invalidity or unenforceability of any provision of this
     Agreement shall not affect the validity or enforceability of any other
     provision of this Agreement.

          d.  The Company may withhold from any amounts payable under this
     Agreement such federal, state, local or foreign taxes as shall be required
     to be withheld pursuant to any applicable law or regulation.

          e.  The Executive's or the Company's failure to insist upon strict
     compliance with any provisions hereof or any other provision of this
     Agreement or the failure to assert any right the Executive or the Company
     may have hereunder, including, without limitation, the right of the
     Executive to terminate employment for cause pursuant to this Agreement,
     shall not be deemed to be a waiver of such provision or right or any other
     provision or right of this Agreement.

          f.  The Executive and the Company acknowledge that, except as may
     otherwise be provided herein (including, without limitation, the rights
     pursuant to a Triggering Event) or under any other written agreement
     between the Executive and the Company, the employment of the Executive by
     the Company is "at will" and, except in connection with or 180 days before
     a Change in Control or within 18 months following a Change in Control, the
     Executive's employment and this Agreement may be terminated by the Company
     at any time, in which case the Executive shall have no further rights under
     this Agreement.

          g.  The Company agrees that if it breaches any payment obligation
     hereunder, the Company will pay all reasonable attorney fees and costs
     incurred by Executive in enforcing Executive's rights hereunder.

          h.  This Agreement may be executed in one or more counterparts, each
     of which shall be deemed to be an original, but all of which together shall
     constitute one and the same instrument.

                                      -7-
<PAGE>

          i.  If the Company sells, leases, exchanges or otherwise disposes of,
     in a single transaction or series of related transactions, all or
     substantially all of its property and assets, or if the Company ceases to
     exist as a separate entity as a result of a merger or otherwise, then the
     Company will, as a condition precedent to any such transaction, cause
     effective provision to be made so that the person or entity acquiring such
     property and assets or succeeding to the business of the Company as the
     surviving entity of a merger or otherwise, as applicable, becomes bound by,
     and replaces the Company under, this Agreement.

     6.   Injunctive Relief. Executive acknowledges and agrees that irreparable
injury will result to the Company in the event Executive breaches any covenant
contained in this Agreement and that the remedy at law for such breach will be
inadequate. Therefore, if Executive engages in any act in violation of the
provisions of this Agreement, the Company shall be entitled, in addition to such
other remedies and damages as may be available to it by law or under this
Agreement, to injunctive or other equitable relief to enforce the provisions
hereof.

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

                                    APW Tools & Supplies, Inc.

                                    By:
                                       ------------------------------------

                                    [                      ]

                                       ------------------------------------

                                      -8-

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