SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. )
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Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (S) 240.14a-12
APW Ltd.
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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[X] No fee required
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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[ ] Fee paid previously with preliminary materials
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
APW LTD.
N22 W23685 RIDGEVIEW PARKWAY WEST
WAUKESHA, WISCONSIN 53188-1013
(262) 523-7600
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of
APW Ltd.:
Notice is hereby given that the Annual Meeting of Shareholders of APW Ltd.
(the "Company"), a Bermuda company, will be held at the offices of
PricewaterhouseCoopers, Financial Services Centre, Bishop's Court Hill, St.
Michael, Barbados, on Tuesday, January 16, 2001, at 3:00 p.m., Barbados Time,
for the following purposes:
1. To elect three directors to the board of directors for a term
expiring in 2004;
2. To consider and vote upon the APW Ltd. 2001 Outside Directors' Stock
Option Plan;
3. To consider and vote upon the APW Ltd. 2001 Stock Plan;
4. To appoint PricewaterhouseCoopers LLP as the independent auditors of
the Company;
5. To receive the report on the audited financial statements of APW
Ltd.; and
6. To transact such other business as may properly come before the
Meeting or any adjournment thereof;
all as set forth in the accompanying Proxy Statement.
The board of directors has fixed the close of business on November 23, 2000
as the record date for the determination of shareholders entitled to receive
notice of and to vote at the Meeting or any adjournment thereof.
This Notice and Proxy Statement are being mailed on or about December 4,
2000.
Whether or not you expect to attend the Meeting, please mark, sign, date
and return the enclosed proxy promptly in the accompanying envelope, which
requires no postage if mailed in the United States. It is important that your
shares be represented at the Meeting, whether your holdings are large or
small. If for any reason you should desire to revoke your proxy, you may do so
at any time before it is voted.
By Order of the Board of Directors,
Anthony W. Asmuth III
Secretary
Milwaukee, Wisconsin
December 4, 2000
APW LTD.
N22 W23685 RIDGEVIEW PARKWAY WEST
WAUKESHA, WISCONSIN 53188-1013
(262) 523-7600
PROXY STATEMENT
----------------
This Proxy Statement and accompanying proxy were first mailed to
shareholders on or about December 4, 2000
----------------
This Proxy Statement and accompanying proxy are furnished to the
shareholders of APW Ltd. (the "Company") in connection with the solicitation
of proxies by the board of directors of the Company for use at the Annual
Meeting of Shareholders on Tuesday, January 16, 2001 and at any adjournment
thereof. Accompanying this Proxy Statement is a Notice of Annual Meeting of
Shareholders and a form of proxy for the Meeting. The Company's Annual Report
on Form 10-K for the year ended August 31, 2000, which constitutes the 2000
Annual Report to Shareholders and accompanies this Proxy Statement, contains
financial statements and certain other information concerning the Company. The
Annual Report and such financial statements are neither a part of this Proxy
Statement nor incorporated herein by reference.
The shares represented by all properly executed proxies received in time
for the Meeting will be voted as specified on such proxies. In the absence of
contrary direction from a shareholder, proxies will be voted FOR all proposals
described in this Proxy Statement. A proxy may be revoked at any time before
it is exercised by giving written notice of revocation to the Secretary at the
Company's registered office, by submitting a later-dated proxy or by attending
the Meeting and voting in person. The cost of soliciting proxies, including
forwarding expense to beneficial owners of stock held in the name of another,
will be borne by the Company. The Company has retained Georgeson Shareholder
Communications Inc. to aid in the solicitation of proxies, including the
solicitation of proxies from brokerage firms, banks, nominees, custodians and
fiduciaries, for a fee of approximately $8,000 plus disbursements. In
addition, officers and employees of the Company may solicit the return of
proxies from certain shareholders by telephone. Such officers and employees
will receive no compensation therefor in addition to their regular
compensation. Shares held for accounts of participants in the Company's 401(k)
Savings Plan will be voted in accordance with the instructions of participants
or otherwise in accordance with the terms of such plan.
A majority of the votes entitled to be cast by shares entitled to vote,
represented in person or by proxy, constitutes a quorum for action on a matter
at the Meeting. Directors are elected by a plurality of the votes cast by the
holders of shares entitled to vote in the election at a meeting at which a
quorum is present. A "plurality" means that the individuals who receive the
largest number of votes are elected as directors up to the maximum number of
directors to be elected at the Meeting. The other proposals require a majority
of votes cast at a meeting where a quorum exists. Shares for which authority
is withheld to vote for director nominees and broker non-votes (i.e., proxies
from brokers or nominees indicating that such persons have not received
instructions from the
beneficial owners or other persons entitled to vote shares as to a matter with
respect to which the brokers or nominees do not have discretionary power to
vote) are considered present for purposes of establishing a quorum but will
have no effect on the election of directors or the other proposals except to
the extent that the failure to vote for a director nominee results in another
nominee receiving a larger number of votes.
On November 23, 2000, the record date for determining shareholders entitled
to receive notice of and to vote at the Annual Meeting, the Company's
outstanding capital stock consisted solely of 39,214,273 shares of common
stock and no outstanding shares of the Company's Series A Junior Subordinated
preferred stock. Each share of common stock outstanding on the record date is
entitled to one vote on all matters submitted at the Meeting.
CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of September 30, 2000 unless otherwise
indicated, certain information with respect to the beneficial ownership of
common stock by each executive officer of the Company named in the Summary
Compensation Table below and by the Company's executive officers and directors
as a group. Briefly stated, shares are deemed to be beneficially owned by any
person or group who has the power to vote or direct the vote or the power to
dispose or direct the disposition of such shares, or who has the right to
acquire beneficial ownership thereof within 60 days. To the knowledge of the
Company, no one is the beneficial owner of more than 5% of the common stock.
Amount and Nature of Percent
Beneficial Owner Beneficial Ownership(1) of Class(2)
---------------- ---------------------- ----------
William J. Albrecht,(3) Senior Vice
President........................... 236,611 *
Gustav H.P. Boel,(4) Senior Vice
President........................... 71,772 *
Richard D. Carroll,(5) Vice
President--Finance.................. 13,242 *
Peter Douglas, Director.............. -- --
Jack Heckel,(6) Director............. 21,251 *
L. Dennis Kozlowski,(7) Director..... 16,084 *
Joseph T. Lower, Vice President--
Finance and Bus. Dev................ 5,077 *
John J. McDonough,(8) Director....... 21,750 *
Gerald T. McGoey, Director........... -- --
Richard G. Sim,(9) Chairman, CEO and
President........................... 1,353,392 3.4%
John Ziemniak, Director.............. -- --
All Executive Officers and Directors
as a Group
(14 persons)(10).................... 2,002,901 4.9%
- --------
*Less than 1%.
(1) Unless otherwise noted, the specified persons have sole voting power
and/or dispositive power over the shares shown as beneficially owned.
(2) Based on 39,214,273 common shares outstanding as of September 30, 2000.
(3) Includes 2,000 shares held by Mr. Albrecht's spouse, 9,097 shares
allocated to Mr. Albrecht's 401(k) Savings Plan and 205,781 shares
issuable pursuant to options exercisable currently or within 60 days of
September 30, 2000. Excludes 19,708 deferred shares received upon the
exercise of options pursuant to the APW Ltd. option deferral program.
(4) Includes 2,718 shares allocated to Mr. Boel's 401(k) Savings Plan and
60,774 shares issuable pursuant to options exercisable currently or
within 60 days of September 30, 2000.
2
(5) Includes 944 shares allocated to Mr. Carroll's 401(k) Savings Plan and
9,698 shares issuable pursuant to options exercisable currently or within
60 days of September 30, 2000. Mr. Carroll has taken a management
position with the Company's thermal operations and resigned his position
as Vice President--Finance effective November 1, 2000.
(6) Includes 16,251 shares issuable pursuant to options exercisable currently
or within 60 days of September 30, 2000.
(7) Includes 14,084 shares issuable pursuant to options exercisable currently
or within 60 days of September 30, 2000.
(8) Includes 9,750 shares issuable pursuant to options exercisable currently
or within 60 days of September 30, 2000.
(9) Includes 18,710 shares held by a custodian for Mr. Sim's minor children
(with respect to which Mr. Sim disclaims beneficial ownership) and 5,566
shares allocated to Mr. Sim's 401(k) Savings Plan. Also includes 663,002
shares issuable pursuant to options exercisable currently or within 60
days of September 30, 2000. Excludes 528,673 deferred shares received
upon the exercise of options pursuant to the APW Ltd. option deferral
program.
(10) Includes options to purchase 988,225 shares exercisable currently or
within 60 days of September 30, 2000, 24,284 shares allocated to savings
plans, 2,000 shares held by a spouse, 18,710 shares held by a custodian
for minor children and 209,452 shares held by certain trusts with respect
to which certain officers have voting and dispositive power. Excludes
548,381 deferred shares received upon the exercise of options pursuant to
the APW Ltd. option deferral program.
The beneficial ownership information set forth above, and below under
"Election of Directors," is based on information furnished by the specified
persons or known to the Company and is determined in accordance with Rule 13d-
3 under the Securities Exchange Act of 1934, as required for purposes of this
Proxy Statement. It is not necessarily to be construed as an admission of
beneficial ownership for other purposes.
3
PROPOSAL 1
ELECTION OF DIRECTORS
At the Meeting, three directors are to be elected to serve three year terms
until the 2004 annual meeting of shareholders and until their successors shall
be elected and qualified. It is the intention of the persons named in the
accompanying form of proxy to nominate as directors and, unless otherwise
specified in a proxy by a shareholder, to vote such proxy for the election of
the persons named below. In the event any of the nominees should become unable
to serve as a director, an eventuality which management has no reason to
believe will occur, proxies may be voted for another nominee. Each person
named below is presently serving as a director of the Company.
DIRECTORS FOR ELECTION FOR A TERM ENDING 2004
Common Stock
Beneficially Owned at
September 30, 2000
---------------------------
Director Number of Percent
Name and Principal Position Age Since Shares of Class
- --------------------------- --- -------- ------------- ----------
Peter Douglas (1)..................... 44 2000 0 *
General Manager of ATI International
SRL (Barbados subsidiary of supplier
of 3D graphics and multimedia
technology for personal computers and
consumer electronics)
L. Dennis Kozlowski (2)............... 53 2000 16,084(3) *
Chairman of the Board, President and
Chief Executive Officer, Tyco
International Ltd. (manufacturer of
disposable and specialty products,
fire and safety services, flow
control, and electrical and
electronic components)
Richard G. Sim........................ 56 2000 1,353,392(4) 3.4%
Chairman of the Board, President and
Chief Executive Officer, APW Ltd.
(manufacturer of custom integrated
enclosure and electronics products)
- --------
*Less than 1%.
(1) Member of the Audit Committee and Compensation Committee of the board of
directors.
(2) Member of the Compensation Committee and Nominating Committee of the board
of directors.
(3) Includes options to purchase 14,084 shares exercisable currently or within
60 days of the record date.
(4) Includes options to purchase 663,002 shares exercisable currently or
within 60 days of the record date.
4
CONTINUING DIRECTORS
TERM ENDING 2002
Common Stock
Beneficially Owned at
September 30, 2000
----------------------------
Name and Principal Director Number of Percent
Position Age Since Shares of Class
- ------------------ --- -------- ------------ ----------
Jack L. Heckel (3)(5).... 69 2000 21,251(1) *
Retired President and
Chief Operating Officer,
GenCorp. Inc.
(manufacturer of
aerospace and defense,
polymer and automotive
products)
Gerald McGoey (3)(5)..... 52 2000 0 *
President, Jolian
Investments Limited
(Toronto based
investment firm)
TERM ENDING 2003
John J. McDonough (4)(5). 64 2000 21,750(2) *
Former Chief Executive
Officer, Newell
Rubbermaid Inc.
(manufacturer of
consumer products);
President and Chief
Executive Officer,
McDonough Capital
Company LLC (venture
capital investment firm)
John Ziemniak (4)(5)..... 46 2000 0 *
Managing Partner at
Mentor International
(privately owned U.K.
consultancy serving the
telecom, IT and media
markets)
- --------
(1) Includes options to purchase 16,251 shares exercisable currently or within
60 days of September 30, 2000.
(2) Includes options to purchase 9,750 shares exercisable currently or within
60 days of September 30, 2000.
(3) Member of Audit Committee of the board of directors.
(4) Member of Nominating Committee of the board of directors.
(5) Member of Compensation Committee of the board of directors.
All of the directors have held the positions with the Company, Applied
Power Inc. or other organizations shown in the above table during the past
five years, except that: (i) Jack L. Heckel was President and Chief Operating
Officer of GenCorp. Inc. from January 1987 through December 1993; (ii) John J.
McDonough was Chairman of SoftNet Systems, Inc. from July 1995 through July
1997 and also served as its Chief Executive Officer from September 1996
through July 1997, Vice Chairman of DENTSPLY International Inc. from February
1995 through October 1995, and Vice Chairman and Chief Executive Officer of
DENTSPLY International Inc. from June 1993 through February 1995; and (iii)
Mr. McGoey was Chief Corporate Officer of Bell Canada from 1994 to 1997.
Our board is divided into three classes with each director serving a three-
year term and one class being elected each year. Messrs. Douglas, Kozlowski
and Sim are in the class of directors whose term expires in 2001. Messrs.
Heckel and McGoey are in the class of directors whose term expires in 2002.
Messrs. McDonough and Ziemniak are in the class of directors whose term
expires in 2003. Each of these individuals will serve as a director until his
term ends, subject to his earlier death, resignation or removal.
As of August 31, 2000: Jack L. Heckel is a director of WD-40 Co., Inc. and
Advanced Tissue Sciences, Inc. L. Dennis Kozlowski is the Chairman and a
director of Tyco International Ltd., a director of RJR Nabisco Holdings Corp.,
and Chairman and a director of TyCom Ltd. John J. McDonough is a director of
Newell Rubbermaid Inc. and CGW Southeast Fund. Richard G. Sim is a director of
Applied Power Inc. d/b/a Actuant Corporation, IPSCO Inc. and Oshkosh Truck
Corporation. Peter Douglas is a director of Bico, Limited and other various
private Barbados companies. Gerald McGoey is a director of Budd Canada Ltd and
several private companies.
5
MANAGEMENT
Executive Officers
As of the record date, the names, ages and positions of all of our
executive officers are listed below:
Name Age Position
---- --- --------
Richard G. Sim 56 Chairman, President and Chief Executive Officer, Director
William J. Albrecht 49 Senior Vice President
Gustav H.P. Boel 56 Senior Vice President
Joseph T. Lower 33 Vice President--Finance and Business Development
Susan M. Hrobar 45 Vice President--Communications
Todd A. Adams 29 Controller
Anthony W. Asmuth III 58 Secretary
There are no family relationships among our directors or executive
officers. Set forth below are the name, office and position held with the
Company and principal occupations and employment during the past five or more
years of each of our executive officers.
Richard G. Sim--Chairman, President and Chief Executive Officer; Director.
Mr. Sim was elected President and Chief Operating Officer of our predecessor,
Applied Power Inc., in 1985; Chief Executive Officer in 1986 and Chairman of
the Board in 1988. From 1982 through 1985, Mr. Sim was a General Manager in
the General Electric Medical Systems Business Group. He is also Chairman of
the Board of Applied Power Inc. d/b/a Actuant Corporation and a director of
IPSCO Inc. and Oshkosh Truck Corporation.
William J. Albrecht--Senior Vice President. Mr. Albrecht was appointed
Senior Vice President of APW Ltd. in July 2000. He previously served as Senior
Vice President of Applied Power Inc.'s Electronics operations in North America
since January 2000 and Senior Vice President of the electronics business
segment since May 1999. Mr. Albrecht joined Applied Power Inc. in 1989 and
from 1989 to 1999 held a variety of positions ultimately serving as Senior
Vice President of the Engineered Solutions group. Prior to joining Applied
Power Inc., Mr. Albrecht was Director of National Accounts and Industrial
Power Systems at Generac Corp. from 1987 to 1989.
Gustav H.P. Boel--Senior Vice President. Mr. Boel was appointed Senior Vice
President of APW Ltd. in July 2000. He previously served as Senior Vice
President of Applied Power Inc.'s Electronics operations in Europe and Asia
since January 2000. Mr. Boel was appointed Senior Vice President of Applied
Power Inc.'s Industrial business segment in May 1999. Prior to 1999, Mr. Boel
held a wide variety of positions in Applied Power Inc.'s industrial business,
and except for a brief interruption in 1990-1991, was an employee of Applied
Power Inc. since 1972. Mr. Boel also serves as a director of Applied Power
Inc. d/b/a Actuant Corporation.
Joseph T. Lower--Vice President--Finance and Business Development. Mr.
Lower joined Applied Power Inc. in March 2000 as Vice President--Finance and
Business Development and has continued in that capacity with the Company. From
1997 to March 2000, Mr. Lower was employed with Credit Suisse First Boston as
Director, and prior to that Vice President, Mergers and Acquisitions. Prior to
that, Mr. Lower was employed with SPS Transaction Services, a technology-based
outsourcer, as Vice President, Corporate Development and Financial Planning.
6
Susan M. Hrobar--Vice President--Communications. Ms. Hrobar was named Vice
President-- Communications of Applied Power Inc. in January 2000 and has
continued in that capacity with the Company. Ms. Hrobar joined Applied Power
Inc. in 1994. She was the finance leader for the APITECH division until 1996,
and from 1996 to 1998 she was the finance leader for the Enerpac division.
From 1998 to 2000, Ms. Hrobar was the finance leader for the Industrial
business segment. Ms. Hrobar is a Certified Public Accountant.
Todd A. Adams--Controller. Mr. Adams was named Controller of Applied Power
Inc. in May 2000 and has continued as Controller with the Company. Mr. Adams
joined Applied Power Inc. in 1998 as Manager of Financial Planning & Analysis.
Mr. Adams was previously employed with IDEX Corporation from 1996 to 1998 and
from 1994 to 1996 with Nypro Chicago in accounting and financial roles. Mr.
Adams is a Certified Public Accountant.
Anthony W. Asmuth III--Secretary. Mr. Asmuth is a partner in the law firm
of Quarles & Brady LLP, Milwaukee, Wisconsin, having joined the firm in 1989.
Quarles & Brady LLP performs legal services for the Company and certain of its
subsidiaries. Mr. Asmuth also serves as Secretary of Applied Power Inc. d/b/a
Actuant Corporation.
Each officer is appointed by the board of directors and holds office until
he or she resigns, dies, is removed or a different person is appointed to the
office. The board of directors generally appoints officers at its meeting
following the Annual Meeting of Shareholders.
BOARD MEETINGS, COMMITTEES AND DIRECTOR COMPENSATION
Since the declaration of the spin-off of APW Ltd., there was one meeting of
the board of directors, one meeting of the Audit Committee, one meeting of the
Compensation Committee and one meeting of the Nominating Committee for the
year ended August 31, 2000. During the period in the last fiscal year in which
they served, all members of the board of directors attended at least 75% of
the aggregate number of meetings of the board of directors and all the
committees on which they served, except Mr. Kozlowski was unable to attend the
board of directors' meeting held on July 17, 2000.
For fiscal year 2000, non-employee directors of the Company were paid an
annual retainer of $19,000 plus $1,000 per board or committee meeting attended
and a stock option grant for 4,000 shares for serving on the board of
directors. Directors who are employees of the Company do not receive separate
remuneration in connection with their service on the board or board
committees.
The Compensation Committee of the board of directors determines the
compensation of the Company's executive officers, awards bonuses to such key
management personnel as the Committee selects and oversees the Company's stock
incentive, bonus and deferred compensation plans.
The Nominating Committee of the board of directors seeks qualified persons
for the position of director to recommend to the entire board of directors. In
carrying out its responsibilities, the Nominating Committee will consider
candidates suggested by other directors, employees and shareholders.
Suggestions of candidates to be considered by the Nominating Committee,
accompanied by biographical material, may be sent to the Secretary of the
Company at its corporate offices.
7
The Audit Committee of the board of directors: (i) reviews the scope and
timing of the audit of the Company's financial statements by the Company's
independent auditors; (ii) reviews with the independent auditors, and with the
Company's management, policies and procedures with respect to internal
auditing and financial and accounting controls; and (iii) reviews with the
independent auditors their reports on the Company's financial statements and
recommendations they make for improvements in the Company's internal controls
and the implementation of such recommendations.
The Audit Committee has adopted a written charter to govern its operation.
The Audit Committee Charter is attached hereto as Exhibit A. The Audit
Committee is comprised solely of independent directors as defined and required
by Sections 303.01(B) and 303.02 (D) of the New York Stock Exchange listing
standards.
Report of the Audit Committee
The Audit Committee of the board of directors oversees and monitors the
participation of the Company's management and independent auditors throughout
the financial reporting process. No member of the Committee is employed by or
has any other material relationship with the Company.
In connection with its function to oversee and monitor the financial
reporting process, the Audit Committee has, among other things, done the
following:
. reviewed and discussed the audited financial statements for the fiscal
year ended August 31, 2000, with the Company's management;
. discussed with PricewaterhouseCoopers LLP, the Company's independent
auditors, those matters required to be discussed by SAS 61 (Codification
of Statements on Auditing Standards, AU 380); and
. received the written disclosures and letter from PricewaterhouseCoopers
LLP required by Independence Standards Board Standard No. 1 (Independence
Standards Board Standard No. 1, Independence Discussions with Audit
Committees) and discussed with PricewaterhouseCoopers LLP its
independence.
Based upon the foregoing, the Committee recommended to the board of
directors that the audited financial statements be included in the Company's
annual report on Form 10-K for the fiscal year ended August 31, 2000.
Jack L. Heckel (Chairman)
Gerald T. McGoey
Peter A. Douglas
8
EXECUTIVE COMPENSATION
Report of the Compensation Committee of the Board of Directors on Executive
Compensation
Development of Compensation Approach and Objectives. The Compensation
Committee of the board of directors is responsible for establishing all of the
policies under which compensation is paid or awarded to the Company's
executive officers, and also determines the amount of such compensation. No
member of the Committee is employed by the Company. The Committee's objective
is to develop a total compensation program that is competitive in the
marketplace and provides significant incentive to increase shareholder value.
For the period from the spin-off of the Company until August 31, 2000, the
Committee generally continued the existing benefit levels and compensation
policies of Applied Power Inc. The Committee also granted performance options
to approximately 100 key employees which vest entirely in seven years and
become immediately exercisable if the common stock reaches $80 per share by
July 24, 2003 as an additional incentive program. For fiscal 2001, the
Committee intends to review its executive compensation policies relative to
market competitiveness, and then determine what changes in the compensation
program, if any, are appropriate for the following year. Compensation of the
Company's executive officers currently consists of three key components--
salary, bonus and stock options.
For fiscal 2000, the Committee in general retained the compensation
practices of Applied Power Inc., which spun-off the Company. Those amounts
were based on an outside consultant's recommendation. For 2001, the Company
intends to emphasize the use of stock and bonuses as a compensation philosophy
to incentivize management. The Committee will review compensation levels
prepared by management that generally follow historic Applied Power Inc.
levels of compensation.
Stock Incentive Component. Stock options are granted annually to executive
officers. Options may also be granted to other key employees whose present and
future contributions are especially important to the Company. All option
grants are priced at 100% of market value as of the date of grant. Unless
earlier terminated, options expire ten years after the date of grant and
generally become exercisable as to half of the shares granted two years after
the date of grant and fully exercisable five years after the date of grant. In
July 2000, the Committee awarded special performance options to incentivize
performance after the Company began independent operations which became
immediately exercisable if the common stock reaches $80 per share within three
years of grant.
Key Measurement Criteria for Bonuses. Bonus payments are made to each
executive officer based on the degree of year over year improvement of the
Company's financial performance. An executive may receive more, or less, than
the target bonus based on actual business results.
Each executive responsible for a business unit (or multiple business units)
is measured by the performance of that unit (or those units). The measuring
index utilized is "Combined Management Measure" ("CMM"), which is unit(s)
operating profit before amortization less a charge based on the net assets
employed by the unit(s). In fiscal 2000, CMM constituted 100% of the bonus
measurement for such executives. For all business unit executives, bonuses for
the fiscal year ended August 31, 2000 ranged from 0% to 200% of target.
Company executives not in charge of business units receive bonus payments
based upon the performance of the Company as a whole. For fiscal 2000, 100% of
each such executive's bonus was based on the Company's calculations of its
year over year economic value added improvement. This economic value added
calculation is (i) net operating profit after tax, defined as operating
earnings adjusted to eliminate the impact of, among other things, certain
accounting charges, less (ii) a capital charge, defined as the capital
employed in the business multiplied by the Company's weighted average cost of
capital. For the fiscal year ended August 31, 2000, bonuses for this group
equaled 250% of the executives' targeted bonuses due to the Company's
performance.
9
Chief Executive Officer Compensation. The Committee continued the
compensation programs established by Applied Power Inc. for the Chief
Executive Officer and awarded performance options. For fiscal 2001, the
Committee will set a compensation package with a significant weighting towards
bonus and stock options to incentivize management and align the Chief
Executive Officer's compensation with that of the shareholders returns.
Mr. Sim's fiscal 2000 bonus was based on the Company's year over year
economic value added improvement. Mr. Sim's fiscal 2000 bonus of $1,500,000
represents 250% of his target bonus. Mr. Sim also received a grant of 750,000
options which become immediately exercisable if the common stock reaches $80
per share within three years of grant.
Tax Deductibility of Executive Compensation. Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code") limits the Company's federal
income tax deduction to $1,000,000 per year for compensation paid to its chief
executive officer or any of the other executive officers named in the summary
compensation table of this Proxy Statement. Performance-based compensation is
not, however, subject to the deduction limit, provided certain requirements of
Section 162(m) are satisfied. The Company believes that its stock plans comply
with the final Section 162(m) regulations adopted by the Internal Revenue
Service. In order to preserve the deductibility of performance-based
compensation, the Company will generally seek to comply with Section 162(m) of
the Code to the extent such compliance is practicable and in the best
interests of the Company and its shareholders. The bonus to Mr. Sim has not
been structured to comply with the Section 162(m) limits.
John J. McDonough (Chairman)
Peter A. Douglas
Jack L. Heckel
L. Dennis Kozlowski
Gerald T. McGoey
John Ziemniak
10
Summary Compensation Table
The following table sets forth compensation awarded to, earned by or paid
to the Company's Chief Executive Officer and each of the Company's other four
most highly compensated executive officers who were serving as executive
officers during fiscal 2000 for services rendered to the Company and its
subsidiaries ("named executive officers"). The annual compensation amounts
include the compensation paid in fiscal 2000 while the officers were employed
by Applied Power Inc. The option amounts include options granted in fiscal
2000 by Applied Power Inc., with the amounts adjusted for the conversion from
Applied Power Inc. options to APW Ltd. options as a result of the spin-off.
Because the Company began operating in fiscal 2000, compensation information
for the fiscal years 1999 and 1998 from Applied Power Inc. is not presented in
the following table.
Long-Term
Compensa-
tion
Annual Compensation Awards
----------------------------------------------- ----------
Securities
Underlying
Options/ All Other
Name and Principal Other Annual SARs Compensation
Position Year Salary Bonus Compensation (1) (#)(2) ($)(3)
- ------------------ ---- -------- ---------- ---------------- ---------- ------------
Richard G. Sim (4)
Chairman, President and
Chief
Executive Officer 2000 $716,535 $1,500,000 $66,148 912,500 $20,668
William J. Albrecht (4)
Senior Vice President 2000 340,002 382,800 9,303 254,167 11,915
Gustav H.P. Boel (4)
Senior Vice President 2000 350,098 323,700(5) 4,297 254,167 7,494
Joseph T. Lower (4)
Vice President 2000 74,712 115,652 -- 125,000 6,191
Richard D. Carroll(4)
Vice President 2000 186,925(5) 207,900(5) 11,953 45,166 11,379
- --------
(1) Consists entirely of interest paid on the Deferred Plan except for Mr. Sim
who received $66,148 in connection with a loan in the face amount of
approximately $2,560,000 for a residence located in London, England
because his responsibilities require him to divide his time between the
Waukesha, Wisconsin and London, England offices of the Company.
(2) Consists entirely of stock options.
(3) The 2000 amount represents: (a) the Company's Savings Plan matching
contributions as follows: Mr. Sim--$2,625, Mr. Albrecht--$2,625, Mr.
Carroll--$2,625 and Mr. Boel--$2,625; (b) Company allocations under the
Savings Plan as follows: Mr. Sim--$4,800, Mr. Albrecht--$4,800, Mr.
Lower--$2,921, Mr. Carroll--$4,800 and Mr. Boel--$4,800; (c) auto payments
as follows: Mr. Sim--$13,243, Mr. Albrecht--$4,490, Mr. Lower--$3,250 and
Mr. Carroll--$3,900; and (d) imputed income: Mr. Boel--$69, Mr. Lower--$20
and Mr. Carroll--$54.
(4) The above payments reflect payments solely for fiscal year 2000. For
fiscal year 1999, the officers received the following: Mr. Sim--salary
$662,977, bonus $120,000; Mr. Albrecht--salary $290,964, bonus $75,600;
Mr. Boel--salary $243,078, bonus $155,000; Mr. Lower was not employed at
Applied Power Inc.; and Mr. Carroll--salary $145,192 (of which $11,250 was
deferred pursuant to the Applied Power Inc. Executive Deferred
Compensation Plan), bonus $70,680. For fiscal year 1998, the officers
received the following: Mr. Sim--salary $491,724, bonus $611,250; Mr.
Albrecht--salary $227,692, bonus $229,200 (of which
11
$114,708 was deferred pursuant to the Applied Power Inc. Executive Deferred
Compensation Plan); Mr. Boel--salary $191,442, bonus $180,000; Mr. Lower
was not employed at Applied Power Inc.; and Mr. Carroll--salary $128,846
(of which $9,375 was deferred pursuant to the Applied Power Inc. Executive
Deferred Compensation Plan), bonus $65,200.
(5) Includes amounts deferred pursuant to the APW Ltd. Executive Deferral
Compensation Plan, Mr. Boel--bonus $171,181; Mr. Carroll salary $9,000,
bonus $23,850.
Option/SAR Grants in Last Fiscal Year
The following table sets forth information concerning stock option grants
by APW Ltd. during the fiscal year to the named executive officers since the
declaration of the spin-off of the Company. No stock appreciation rights
("SARs") were granted in fiscal 2000. Prior grants by Applied Power Inc. in
fiscal 2000 and assumed by the Company are included below.
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation
Individual Grants for Option Term(3)
---------------------------------------------- ---------------------
Percent of
Total
Number of Options/SARs
Securities Granted to Exercise
Underlying Employees in or Base
Options/SARs Fiscal Price Expiration
Name Granted(#) Year(1) ($/Sh) Date(2) 5%($) 10%($)
- ---- ------------ ------------ -------- ---------- ---------- ----------
Richard G. Sim.......... 750,000 25.7% 36.3750 07/27/10 17,157,032 43,479,286
162,500(4) 5.6% 27.1443 10/26/09 2,774,022 7,029,316
William J. Albrecht..... 200,000 6.9% 36.3750 07/27/10 4,575,208 11,594,476
54,167(4) 1.9% 27.1443 10/26/09 924,680 2,343,320
Gustav H.P. Boel........ 200,000 6.9% 36.3750 07/27/10 4,575,208 11,594,476
54,167(4) 1.9% 27.1443 10/26/09 924,680 2,343,320
Joseph T. Lower......... 60,000 2.1% 36.3750 07/27/10 1,372,563 3,478,343
65,000(4) 2.2% 25.2404 03/20/10 1,031,781 2,614,735
Richard D. Carroll...... 30,000 1.0% 36.3750 07/27/10 686,281 1,739,171
10,833(4) * 26.1346 03/14/10 178,050 451,214
4,333(4) * 27.1443 10/26/09 73,968 187,450
- --------
(1) Based on stock option grants by the Company and grants in 2000 by Applied
Power Inc. assigned by the Company for an aggregate of 2,913,698 shares
made to all Company employees during the fiscal year ended August 31,
2000.
(2) Unless earlier terminated, options expire ten years from the date of
grant, become completely exercisable seven years after the date of grant
and become fully exercisable if the common stock reaches $80 per share. In
the event of a change in control of the Company, the Compensation
Committee may either provide for equivalent substitute options to be
granted to the optionees or a cash-out of the options based on the highest
fair market value per share of Company common stock during the 60-day
period immediately preceding the change in control.
(3) The dollar amounts under these columns are the result of calculations at
the 5% and 10% appreciation rates set by the Securities and Exchange
Commission and are not intended to forecast possible future appreciation,
if any, of the common stock price.
(4) Normal and customary options granted by Applied Power Inc. which were
assumed by the Company in connection with the spin-off and are, therefore,
shown as fiscal 2000 grants.
12
Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal Year-End
Option/SAR Values
The following table sets forth information for each of the named executive
officers concerning options exercised during fiscal 2000 since the Company
became independent of Applied Power Inc. and the number and value of stock
options outstanding at the end of the fiscal year. No SARs are outstanding.
The following chart excludes options that persons exercised while an officer
of Applied Power Inc.
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Shares Options/SARs at Options/SARs at
Acquired Fiscal Year-End(#) Fiscal Year-End($)(2)
on Value ----------------------- -----------------------
Exercise Realized Exer- Unexer- Exer- Unexer-
Name (#) ($) cisable cisable(1) cisable cisable(1)
- ---- -------- -------- ---------- ------------ ----------- -----------
Richard G. Sim(3)....... 0 0 608,835 1,086,916 $20,359,618 $11,930,596
William J. Albrecht(3).. 0 0 189,531 373,549 6,356,623 4,916,813
Gustav H.P. Boel........ 0 0 47,774 349,608 1,388,803 4,477,988
Joseph T. Lower......... 0 0 0 125,000 0 1,676,874
Richard D. Carroll...... 0 0 5,635 58,923 145,443 790,298
- --------
(1) Represents unvested options at the end of fiscal 2000.
(2) Based on the August 31, 2000 closing price of the common stock on the New
York Stock Exchange.
(3) During fiscal 2000, Mr. Albrecht and Mr. Sim exercised 15,167 and 424,062
shares, respectively, while officers of Applied Power Inc. and realized
$406,118 and $12,921,265, respectively.
Employment Agreement and Change-In-Control Arrangements
Effective November 1, 2000, the Company entered into change in control
agreements with five officers, Messrs. Sim, Albrecht, Boel and Lower and Ms.
Hrobar. The change in control agreement provides that upon a change in control
and triggering event, the officer can terminate his services and the Company
shall pay the officer in a lump sum equal to two and one-half times the sum of
the highest per annum base rate of salary in effect during the one-year period
immediately prior to the termination of employment plus the highest annual
bonus or incentive compensation earned by the officer under any cash bonus or
executive compensation plan of the Company during the three completed fiscal
years of the Company immediately preceding the termination date. For purposes
of the agreement, a change in control means:
. sale of over 50% of stock of APW Ltd. measured in terms of voting power
other than in a public offering; or
. sale by APW Ltd. of over 50% of its business or assets in one or more
transactions over a consecutive 12-month period; or
. a merger or consolidation of APW Ltd. with or into any other corporation
or corporations such that the shareholders of APW Ltd. prior to the
merger or consolidation do not own at least 50% of the surviving entity
measured in terms of voting power; or
. the acquisition by means of more than 25% of the voting power or common
stock of APW Ltd. by any person or group; or
. the election of directors constituting a majority of APW Ltd.'s board of
directors pursuant to a proxy solicitation not recommended by the APW
Ltd. board of directors.
13
For purposes of the agreement, a triggering event means:
. (a) reducing the base salary paid to the officer or (b) a material
reduction in the officer's bonus opportunity or (c) reducing the total
aggregate value of the fringe benefits received by the officer from the
levels received by the officer at the time of a change in control or
during the 180 day period immediately preceding the change in control; or
. a material change in the officer's position or duties or the officer's
reporting responsibilities 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
. a change in the location or headquarters where the officer is normally
expected to provide services to a location 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.
In the event that certain severance benefits may be subject to an excise
tax imposed by Section 4999 of the Code, then the officer will be entitled to
an additional payment to make the officer whole for the amount that would have
been received before the application of such excise tax and any income taxes.
Certain Relationships and Related Transactions
Effective July 31, 2000, Applied Power Inc. completed the spin-off of the
Company. The Company and Applied Power Inc. are parties to various agreements
providing for the separation of their respective business operations. These
agreements govern various interim and ongoing relationships between the
companies and include the following:
. Contribution Agreement, Plan and Agreement of Reorganization and
Distribution
. General Assignment, Assumption and Agreement regarding Litigation,
Claims, and other Liabilities
. Transitional Trademark Use and License Agreement
. Insurance Matters Agreement
. Bill of Sale and Assumption of Liabilities
. Employee Benefits and Compensation Agreement
. Tax Sharing and Indemnification Agreement
. Interim Administrative Services Agreement
. Confidentiality and Non Disclosure Agreement
Because these agreements were negotiated while the Company was a wholly-owned
subsidiary, they are not the result of negotiations between independent
parties, although Applied Power Inc. and the Company have set pricing terms
for interim services believed to be comparable to what could be achieved
through arms-length negotiations.
14
Performance Graph
The following graph shows the cumulative total shareholder return on the
common stock during the preceding month as compared to the returns on the
Standard & Poor's 500 Stock Index and a Peer Group.
The graph below compares the cumulative total return of our shares,
Standard & Poor's 500 Stock Index and a peer group that includes the following
businesses, which the Company considers to be a peer group Solectron,
Flextronics, Sanmina Corporation, Celestica Inc., Jabil Circuit Inc., SCI
Systems Inc., Plexus Corp. and C-MAC. The graph assumes that $100 was invested
in our shares, in the Standard & Poor's 500 Stock Index and the peer group
described on July 24, 2000 (the beginning of our when issued trading) and
reflects the annual return through August 31, 2000, assuming dividend
reinvestment. The comparisons in the graph below are based on historical data
and are not indicative of, or intended to forecast, possible future
performance of our shares. Because we began as an independent company in July
2000, the Company has not presented the prior history of Applied Power Inc.
STOCK PERFORMANCE GRAPH
--------------------------------------------------------
July 24, 2000 August 31, 2000
- -----------------------------------------------------------------------------------------
APW LTD. 100.0 118.1
- -----------------------------------------------------------------------------------------
PEER GROUP 100.0 117.6
- -----------------------------------------------------------------------------------------
S&P 500 STOCK INDEX 100.0 103.6
- -----------------------------------------------------------------------------------------
15
PROPOSAL 2
APPROVAL OF THE APW LTD. 2001 OUTSIDE DIRECTORS' STOCK OPTION PLAN
Shareholders of the Company are being asked to approve the APW Ltd. 2001
Outside Directors' Stock Option Plan. On July 17, 2000, subject to shareholder
approval, the board of directors adopted the plan. The plan is intended to
provide outside directors with incentive to promote the growth and development
of the Company and to provide outside directors an increased identification
with the shareholders of the Company by offering increased stock ownership. As
of November 2, 2000, the market price per share of the common stock underlying
the options granted pursuant to the plan was $47.375.
A copy of the plan is attached hereto as Exhibit B. The following summary
of the material terms of the plan is qualified in its entirety by reference to
the complete text of the plan.
The affirmative vote of holders of a majority of the shares cast at the
annual meeting, in person or by proxy, will be required for the approval of
the plan, provided the total vote cast on the plan represents over 50% of the
shares entitled to vote.
The board of directors unanimously recommends that you vote FOR approval of
the plan.
The purpose of the plan is to promote the growth and development of the
Company by providing increased incentives to the outside directors of the
Company. The Company currently has six outside directors eligible to
participate in the plan. The plan will be administered by the Compensation
Committee of the board of directors (the "Committee"). The Committee will be
constituted so as to permit the plan to comply with the provisions of Rule
16b-3 under the Securities Exchange Act of 1934.
The plan provides for the granting of nonqualified stock options to outside
directors of the Company. In addition, the plan provides that Company
directors who were previously directors of Applied Power Inc. and who were
granted options to purchase Applied Power Inc. common stock will be granted
substitute options to purchase common stock of the Company under this plan on
terms which are economically consistent with the prior Applied Power Inc.
stock options. The aggregate number of shares of common stock which may be
issued pursuant to options granted under the plan, including shares that may
be issued upon exercise of substitute stock options, is 200,000. This number
is subject to adjustment in the event of a stock split, stock distribution or
other capital event, as described in the plan.
The plan provides that an option to purchase 4,000 shares of the Company's
common stock will be automatically granted to each person then serving as an
outside director at the first meeting of the board of directors following each
annual meeting of shareholders. Each option granted under the plan is
evidenced by a stock option agreement between the Company and the outside
director. The agreement will contain the terms and conditions required by the
plan, along with any other terms or conditions that the Committee may deem
appropriate.
The exercise price at which shares may be purchased pursuant to an option
is 100% of the Fair Market Value (as defined in the plan) of the Company's
common stock on the date the option is granted. The option exercise price must
be paid in full at the time of exercise. Such payment may be made either in
cash, by check or by the delivery of shares of common stock which the outside
director, or his spouse, has owned for at least six months prior to the time
of exercise ("Delivered Stock"), or a combination of cash and Delivered Stock.
16
An option granted pursuant to the plan may be exercised, in whole or in
part, any time during the period beginning 11 months after the date of grant
and ending upon the earlier of ten (10) years from the date of grant, or two
(2) years from the date the director ceases to be a director.
Options granted under the plan may not be transferred or assigned except by
will or the laws of descent and distribution and, during the grantee's
lifetime may be exercised only by the grantee; however, the Committee, in its
discretion, may grant options that are transferable to family members.
The plan is effective July 17, 2000, subject to shareholder approval. It
provides that options may be granted any time prior to July 17, 2010. On that
date, the plan will expire, except as to options then outstanding, which will
remain in effect until they have been exercised, expire or otherwise
terminated. The plan may be terminated at any time by the board of directors.
The board of directors may also amend the plan from time to time, but
shareholder approval is required for certain material amendments.
Certain Federal Income Tax Consequences
The following is a brief summary of the principal federal income tax
consequences of the nonqualified stock options under the plan, based on
applicable provisions of the Code now in effect.
An optionee will not recognize taxable income at the time the option is
granted. Upon exercise of the option, an optionee will recognize compensation
income in an amount equal to the difference between the exercise price and the
fair market value of the shares at the date of exercise. The amount of such
difference will be a deductible expense to the Company for tax purposes. On a
subsequent sale or exchange of shares acquired pursuant to the exercise of an
option, the optionee will recognize a capital gain or loss, measured by the
difference between the amount realized on the disposition and the tax basis of
such shares. The tax basis will, in general, be the amount paid for the shares
plus the amount treated as compensation income at the time the shares were
acquired pursuant to the exercise of the option.
17
PROPOSAL 3
APPROVAL OF THE APW LTD. 2001 STOCK PLAN
Shareholders of the Company are also being asked to approve the APW Ltd.
2001 Stock Plan. On November 1, 2000, subject to shareholder approval, the
board of directors adopted the plan. The plan is intended to provide certain
key employees of the Company an increased identification with the shareholders
of the Company by offering increased stock ownership. No options have yet been
granted under the plan, nor is it anticipated that any such options or other
rights will be granted prior to shareholder approval. As of November 2, 2000,
the market price per share of the common stock underlying the options granted
pursuant to the plan was $47.375.
A copy of the plan is attached hereto as Exhibit C. The following summary
of the material features of the plan is qualified in its entirety by reference
to the complete text of the plan.
The affirmative vote of holders of a majority of the shares cast at the
Annual Meeting, in person or by proxy, will be required for approval of the
plan, provided the total vote cast on the plan represents over 50% of the
shares entitled to vote.
The board of directors unanimously recommends that you vote FOR approval of
the plan.
APW Ltd. 2001 Stock Plan
Under the plan, incentive stock options, nonqualified stock options and
restricted stock (each, an "Award") may be granted to any regular salaried
employee of the Company or a subsidiary of the Company, who, in the opinion of
the Committee, significantly contributes to the growth and success of the
Company. This includes employees who are members of the board of directors,
but excludes directors who are not employees of the Company or any of its
subsidiaries. Such eligible participants in the plan shall be referred to as
"Eligible Employees."
The total number of shares of common stock available for issuance under the
plan may not exceed two million (2,000,000) shares, although no Eligible
Employee may be granted an Award or Awards covering more than two hundred
fifty thousand (250,000) shares of common stock in any calendar year. These
stock thresholds are subject to adjustment in the event of a stock split,
stock distribution or other capital event, as described in the plan.
The plan will be administered by the Compensation Committee of the board of
directors (the "Committee"). The Committee shall be constituted so as to
permit the plan to comply with the provisions of Section 162(m) of the Code
and to afford plan participants an exemption for plan transactions pursuant to
Rule 16b-3 under the Securities Exchange Act of 1934. The Committee will be
empowered to adopt such rules, regulations and procedures and take such other
action as it deems necessary or proper for administration of the plan,
including any modification, extension or renewal of any option granted
thereunder. The Committee will have the authority to interpret the provisions
of the plan, which interpretations shall be final and conclusive.
Specifically, the Committee will be empowered, subject to any contrary
provisions of the plan, to designate the persons to whom Awards shall be
granted, to grant Awards in such forms and amounts as the Committee shall
determine, to impose such limitations, restrictions and conditions upon any
such Award as the Committee shall deem appropriate, and to waive in whole or
in part any limitations, restrictions or conditions imposed upon any such
Award as the Committee shall deem appropriate.
18
Stock Options
Stock Options ("Options") may be granted to Eligible Employees at any time
as determined by the Committee (subject to the volume limitation set forth
above). Options granted under the plan may be either "Incentive Stock Options"
under Section 422 of the Code or Options that are not intended to qualify as
Incentive Stock Options ("Nonqualified Stock Options"). Each Option will be
evidenced by an agreement between the Company and the grantee which will
contain the terms and conditions required by the plan and such other terms and
conditions not inconsistent therewith as the Committee may deem appropriate.
The exercise price of an Option granted under the plan will be determined
by the Committee; provided, however, that in the case of an Incentive Stock
Option, the exercise price may not be less than 100% of the Fair Market Value
(as defined in the plan) of the common stock when the Option is granted; and
provided further that the Committee may only grant a Nonqualified Stock Option
with an exercise price of less than 100% of the Fair Market Value of the
common stock on the condition that the grantee makes a cash payment to the
Company on the date of grant of at least the difference between the Fair
Market Value and the option price (i.e., the sum of the cash payment and the
exercise price must be equal to or in excess of the Fair Market Value of the
common stock on the date of grant).
For purposes of the plan, an Option will be considered as having been
granted on the date on which the Committee authorizes its grant (unless the
Committee has designated a later grant date). Options granted under the plan
may be exercisable at such times and subject to such restrictions and
conditions as the Committee in each instance approves, but no Option may be
exercisable prior to shareholder approval of the plan. Furthermore, the period
of exercisability of an Incentive Stock Option may not exceed ten years from
the date the Option is granted and no Option may be treated as an Incentive
Stock Option unless the grantee exercises the Option while employed by the
Company (or a subsidiary) or within three months after termination of
employment, unless such termination is caused by death or disability, in which
case the optionee has one year after such termination within which to
exercise.
An Option may be exercised in whole or in part from time to time as
specified in the Option agreement by the grantee giving a written notice of
exercise to the Company specifying the number of shares to be purchased,
accompanied by payment in full of the exercise price. The exercise price may
be paid either (i) in cash, (ii) by check, (iii) with the approval of the
Committee, through delivery of shares of common stock which have been
beneficially owned by the grantee, the grantee's spouse or both of them for a
period of at least six months prior to the exercise ("Delivered Stock"), or
(iv) through a combination of cash and Delivered Stock. Delivered Stock is
valued at its Fair Market Value as of the date of the exercise. The holder of
an Option shall not have any rights as a shareholder with respect to the
shares subject to the Option until certificates evidencing such shares are
delivered to him or her.
Special provisions are contained in the plan covering a merger,
consolidation or reorganization of the Company with another corporation in
which the Company is not the surviving corporation. In that circumstance, the
Committee may, subject to the approval of the board of directors of the
Company or the board of directors of any corporation assuming the obligations
of the Company under the plan, take action regarding each outstanding
unexercised option to either (i) substitute on an equitable and economically
equivalent basis an appropriate number of shares of the surviving corporation
for the shares of common stock covered by the Option, or (ii) cancel the
Option and provide for a payment to the optionee of an amount equal to the
cash value of the Option (determined in accordance with the provisions of the
plan). In addition, the plan permits Options to be granted to new Eligible
Employees who become such as a result of the Company's acquisition of property
or stock from an unrelated corporation in substitution for options granted to
such Eligible Employees by their former employer.
19
Restricted Stock
The Committee, at any time, may grant Awards of restricted stock under the
plan; provided, however, that no more than 125,000 shares of restricted stock
may be granted in the aggregate during any calendar year. The Committee may
condition the grant of restricted stock upon the attainment of specified
levels of revenue, earnings per share, net income, return on assets, return on
sales, customer satisfaction, stock price, costs, individual performance
measures or such other factors or criteria as the Committee shall determine.
The provisions of various restricted stock Awards need not be identical;
provided, however, that such restricted stock Awards shall be subject to the
following terms and conditions: (i) until all applicable restrictions lapse,
the grantee shall not be permitted to sell, assign, transfer, pledge, or
otherwise encumber the shares of restricted stock; (ii) the grantee shall have
all of the rights of a shareholder of the Company with respect to the shares
of restricted stock (including the right to vote the shares and the right to
receive any cash dividends); (iii) unless otherwise provided in the applicable
restricted stock agreement or pursuant to (iv) below, all shares of restricted
stock shall be forfeited by the grantee upon termination of employment; (iv)
in the event of a hardship or other special circumstances under which a
grantee's employment is involuntarily terminated (other than for cause), the
Committee may waive in whole or in part any or all remaining restrictions
attendant to shares of restricted stock held by such grantee; (v) upon the
lapse of all applicable restrictions, unlegended certificates for such shares
shall be delivered to the grantee; and (vi) each Award shall be subject to the
terms of a restricted stock agreement. All grantees of restricted stock shall
be issued a certificate in respect of such shares, registered in such
grantee's name and bearing an appropriate legend. In its discretion, the
Committee may require that the certificates evidencing such shares of
restricted stock be held in custody by the Company until the restrictions
thereon have lapsed.
Term of Plan
The plan will terminate ten years after its effective date, except as to
Awards then outstanding, which Awards shall remain in effect until they have
been exercised, the restrictions have lapsed or the Awards have expired or
been forfeited. The board of directors may also amend, modify, suspend or
terminate the plan from time to time; provided, however, that no such action
can be taken without shareholder approval if required by applicable law.
General Terms
The Company may require, as a condition to the exercise of an Option or the
issuance of an unrestricted stock certificate, that the grantee concurrently
pay to the Company any taxes which the Company is required to withhold by
reason of such exercise or lapse of restrictions. Such payment may be made
either in cash or, at the discretion of the Committee, and subject to all
applicable rules and regulations, through shares of Delivered Stock or shares
of stock withheld from the Award having a Fair Market Value equal to the
amount of the tax obligation. No Award granted under the plan shall be
transferable by a grantee other than by will or the laws of descent and
distribution; provided, however, that the Committee, in its discretion but in
accordance with Internal Revenue Service guidance, may grant Nonqualified
Stock Options that are transferable, without payment of consideration, to
family members of the grantee or to trusts or partnerships for such family
members.
Certain Federal Tax Consequences
The following is a brief summary of the principal federal income tax
consequences of Awards under the plan based on applicable provisions of the
Code now in effect.
20
An Eligible Employee realizes no taxable income at the time an Option is
granted under the plan. An Eligible Employee generally realizes no taxable
income at the time of an Award of restricted stock, so long as the restricted
stock is not vested. Stock is vested for this purpose if it is either
transferable or is not subject to a substantial risk of forfeiture.
With regard to Incentive Stock Options, no income is recognized by an
Eligible Employee upon transfer to him of shares pursuant to his exercise of
an Incentive Stock Option. In order to avail himself of this tax benefit, the
Eligible Employee must make no disposition of the shares so received before he
has held such shares for at least one year and at least two years have passed
since he was granted the Option. Assuming compliance with this and other
applicable tax provisions, an Eligible Employee will realize long-term capital
gain or loss when he disposes of the shares, measured by the difference
between the exercise price and the amount received for the shares at the time
of disposition. If an Eligible Employee disposes of shares acquired by
exercise of an Incentive Stock Option before the expiration of the above-noted
periods, any amount realized from such disqualifying disposition will be
taxable as ordinary income in the year of disposition to the extent the lesser
of (a) the Fair Market Value of the shares on the date the Option was
exercised, or (b) the amount realized upon such disposition, exceeds the
exercise price. Any amount realized in excess of the Fair Market Value on the
date of exercise is treated as long-term or short-term capital gain, depending
upon the holding period of the shares. If the amount realized upon such
disposition is less than the exercise price, the loss will be treated as long-
term or short-term capital loss, depending upon the holding period of the
shares. For purposes of the alternative minimum tax, the Eligible Employee
shall recognize income upon the transfer of shares to him pursuant to the
exercise of an Incentive Stock Option in an amount equal to the difference
between the Fair Market Value of the shares at the time of exercise and the
exercise price.
With regard to Nonqualified Stock Options, ordinary income generally is
realized by the Eligible Employee at the time of the exercise of an Option.
The amount of income is generally equal to the difference between the exercise
price and the Fair Market Value of the shares on the date of exercise. When an
Eligible Employee disposes of shares acquired upon the exercise of a
Nonqualified Stock Option, any amount received in excess of the Fair Market
Value of the shares on the date of exercise will be treated as long-term or
short-term capital gain, depending upon the holding period of the shares, and
if the amount received is less than the Fair Market Value of the shares on the
date of exercise, the loss will be treated as long-term or short-term capital
loss, depending upon on the holding period of the shares.
With regard to restricted stock, ordinary income is generally recognized by
an Eligible Employee at the time that such restricted stock vests. The amount
of income is generally equal to the excess of the Fair Market Value of the
shares at the time of vesting over the purchase price for such shares, if any.
When an Eligible Employee disposes of restricted stock, any amount received in
excess of the Fair Market Value of the shares on the date of vesting will be
treated as long-term or short-term capital gain, depending upon the holding
period of the shares, and if the amount received is less than the Fair Market
Value on the date of vesting, the loss will be treated as long-term or short-
term capital loss, depending on the holding period of the shares. Dividends
paid on restricted stock which has not vested and which has not been the
subject of an election under Section 83(b) of the Code are treated as
compensation income. Section 83(b) of the Code permits the Eligible Employee
to elect, not more than 30 days after the date of grant of the restricted
stock, to include as ordinary income the difference between the Fair Market
Value of the restricted stock on the date of grant and the purchase price of
the restricted stock, if any.
No deduction will be allowed to the Company for federal income tax purposes
at the time of the grant or exercise of any Incentive Stock Option. At the
time of a disqualifying disposition by an Eligible Employee, the Company will
be entitled to a deduction for the amount taxable to the Eligible Employee as
ordinary income. The Company will be entitled to a deduction for federal
income tax purposes at the same time and in the same
21
amount as the Eligible Employee is considered to have realized ordinary income
in connection with the exercise of a Nonqualified Stock Option and the grant
of restricted stock, assuming compliance with Section 162(m) of the Code.
The board of directors unanimously recommends that you vote FOR approval of
the plan.
PROPOSAL 4
APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY'S INDEPENDENT
AUDITORS
Under Section 89 of the Companies Act 1981 of Bermuda, the Company's
shareholders have the authority to appoint the independent auditors of APW
Ltd. and to authorize the board of directors to determine the auditors'
remuneration. Upon the recommendation of the Audit Committee, the accountants
have audited consolidated financial statements for the fiscal year ending
August 31, 2000. On November 1, 2000, the board of directors appointed
PricewaterhouseCoopers LLP as the Company's independent auditors, subject to
shareholder approval. The board of directors is asking shareholders to approve
such appointment for 2001 and the authority of the board to determine their
remuneration.
PricewaterhouseCoopers LLP served as the Company's independent auditors for
fiscal year 2000. PricewaterhouseCoopers LLP also audited other consolidated
financial statements of APW Ltd. filed with the SEC in connection with APW
Ltd.'s Form 10 registration statement. A representative of
PricewaterhouseCoopers LLP is not expected to be present at the Meeting.
The board recommends that you vote FOR approval of the appointment of
PricewaterhouseCoopers LLP as the Company's independent auditors and of the
authority of the board of directors to determine their remuneration.
RECEIVE, CONSIDER AND ACCEPT THE REPORT ON FINANCIAL STATEMENTS OF APW LTD.
In accordance with Section 84 of the Companies Act 1981 of Bermuda, the
audited consolidated financial statements of the Company for the fiscal year
ended August 31, 2000 will be presented at the Meeting. These statements have
been accepted by the directors of the Company. There is no requirement under
Bermuda law that such statements be approved by shareholders, and no such
approval will be sought at the Meeting.
OTHER INFORMATION
Section 16(a) Beneficial Ownership Reporting Compliance
Pursuant to Section 16(a) of the Securities Exchange Act of 1934, the
Company's directors, executive officers and persons who beneficially own 10%
or more of the common stock are required to report their initial ownership of
common stock and subsequent changes in that ownership to the Securities and
Exchange Commission and the New York Stock Exchange. Specific due dates for
those reports have been established and the Company is required to disclose in
this Proxy Statement any failure to file by those due dates during fiscal
2000. Based upon a review of such reports furnished to the Company, or written
representations that no reports were required, the Company believes that all
of those filing requirements were satisfied with respect to fiscal 2000.
22
Shareholder Proposals
Shareholder proposals must be received by the Company no later than August
6, 2001 in order to be considered for inclusion in the Company's annual
meeting proxy statement and form of proxy next year. Shareholder proposals not
intended to be included in the Company's annual meeting proxy statement and
form of proxy next year must be received by the Company no later than October
20, 2001 to be considered timely.
Additional Matters
If other matters do come before the Annual Meeting, including any matter as
to which the Company did not receive timely notice and any shareholder
proposal omitted from this Proxy Statement pursuant to applicable rules of the
Securities and Exchange Commission, it is intended that proxies will be voted
in accordance with the judgment of the person or persons exercising the
authority conferred thereby.
By Order of the Board of Directors,
Anthony W. Asmuth III
Secretary
Milwaukee, Wisconsin
December 4, 2000
It is important that proxies be returned promptly. Therefore, whether or
not you expect to attend the Annual Meeting in person, shareholders are
requested to complete, date, sign and return their proxies as soon as
possible.
A copy (without exhibits) of the Company's Annual Report on Form 10-K for
the fiscal year ended August 31, 2000, as filed with the Securities and
Exchange Commission, has been provided with this Proxy Statement. Additional
copies of the Form 10-K are available, free of charge, upon request directed
to Investor Relations, APW Ltd., N22 W23685 Ridgeview Parkway West, Waukesha,
Wisconsin 53188-1013, telephone: (262) 523-7600.
23
EXHIBIT A
APW LTD.
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
CHARTER
I. Purpose
The main function of the Audit Committee is to assist the Company's Board
of Directors ("Board") in fulfilling its oversight responsibilities by: (i)
reviewing the financial reports and other financial information provided by
the Company to its constituencies, (ii) monitoring the Company's systems of
internal financial and accounting controls, and (iii) monitoring and providing
oversight to the Company's auditing, accounting and financial reporting
processes generally. Consistent with this function, the Audit Committee should
encourage continuous improvement of, and should strive to foster adherence to,
the Company's policies, procedures and practices at all levels. The Audit
Committee's primary duties and responsibilities are to:
. Serve as an independent and objective party to monitor the Company's
financial reporting process and internal control system.
. Review and appraise the audit efforts of the Company's independent
auditors, providing for the independent auditors to account to the Board
through the Audit Committee.
. Create an open avenue of communication among the independent auditors,
financial and senior management, and the Board.
The Audit Committee will primarily fulfill these responsibilities by carrying
out the activities enumerated below.
II. Composition and Governance Issues
The Audit Committee shall be comprised of three or more directors as
determined by the Board, each of whom shall be outside directors, free from
any relationship that, in the opinion of the Board, would interfere with the
exercise of his or her independent judgment as a member of the Committee. A
director will not be deemed independent if he or she is: (1) employed by the
Company or any affiliate of the Company within the past five years; (2)
currently compensated by the Company or any affiliate of the Company, other
than compensation for board service or benefits under retirement plans; (3) a
member of the immediate family of any person who, within the past five years,
has been an executive officer of the Company or any affiliate of the Company;
(4) a partner in, or controlling shareholder or executive officer of, a
company which has made or received significant payments to or from the Company
within the past five years; and (5) an executive officer of another company,
where any of the Company's executives serves on the other company's
compensation committee. All members of the Committee shall have a working
familiarity with basic finance and accounting practices, and at least one
member of the Committee shall have accounting or related financial management
expertise.
The members of the Committee shall be annually elected by the Board at a
meeting of the Board and shall maintain such positions until their successors
shall be duly elected and qualified. Unless a Chair is elected by the full
Board, the members of the Committee may designate a Chair by majority vote of
the full Committee membership.
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III. Meetings
The Committee shall meet at least twice annually and more frequently as
circumstances dictate. As part of its commitment to open communication, the
Committee should meet as needed, and at least annually, with management and
the independent accountants in separate executive sessions to discuss any
matters that the Committee or each of these groups believe should be discussed
privately.
IV. Roles and Responsibilities
A. Internal Control
. Evaluate whether management is properly and adequately emphasizing the
importance of internal control measures throughout the organization.
. Inquire of the independent auditors about fraud, illegal acts,
deficiencies in internal control, and other matters effecting internal
controls within the Company.
. Focus on the extent to which the Company and its external auditors or
other designees review the effectiveness and security of the Company's
computer systems and applications, and the need for and adequacy of
contingency plans for processing financial information in the event of a
systems failure; and
. Ascertain whether internal control recommendations made by the accounting
department and external auditors have been implemented by management.
B. Financial Reporting
1. General
. Review significant accounting and reporting issues, including issued
and pending professional and regulatory pronouncements, and
understand their impact, or potential impact, on the Company's
financial statements and operations; and
. Inquire of management and the external auditors as to the existence
of any significant financial, accounting or reporting risks or
exposures and the Company's plans to address such risks. Seek the
auditor's judgment about the quality of the Company's accounting and
reporting practices, including the clarity and accuracy of the
Company's financial disclosures and the degree of aggressiveness or
conservatism of the Company's accounting policies and underlying
estimates.
2. Annual Financial Reports
. Review the annual financial statements and determine whether they are
complete and consistent with information known to Committee members,
and assess through inquiry whether the financial statements reflect
appropriate accounting principles;
. Review all complex and/or unusual transactions such as restructuring
charges and derivative disclosures which are material to the
Company's financial statements;
. Understand the basis for the Company's accounting in material,
judgmental areas such as those involving valuation of assets and
liabilities, including, for example, the accounting for and
disclosure of obsolete or slow-moving inventory; warranty, product,
and environmental liabilities; litigation reserves; and other
commitments and contingencies;
. Meet with management and the external auditors to review the
financial statements and the results of the audit; and
A-2
. Consider management's handling of proposed audit adjustments
identified by the external auditors.
3. Interim Financial Statements
. Gain an understanding as to how management develops and summarizes
quarterly financial information, the extent to which the external
auditors review quarterly financial information, and whether that
review is performed on a pre- or post-issuance basis;
. Management shall review the quarterly financial results with the
Chairman of the Audit Committee before such results are released, and
the Chairman may call a meeting, either telephonically or in person,
of the Audit Committee to review the interim financial results if he
believes such a meeting is desirable for any reason.
C. Review of Compliance
. If applicable, review the results of management's investigation and
follow-up (including disciplinary action) on any fraudulent acts or
accounting irregularities;
. Be satisfied that compliance matters have been considered in the
preparation of the financial statements; and
. Review the findings of any examinations or reviews by regulatory agencies
such as the Securities and Exchange Commission.
D. External Audit
. Review the external auditors' proposed audit scope and approach;
. Review and approve audit fees to the external auditors;
. Review and confirm the independence of the external auditors by reviewing
a statement to be provided by the external auditors on the nonaudit
services provided and the auditors' assertion of their independence in
accordance with professional standards; and
. Review the performance of the external auditors and recommend to the
Board the appointment or discharge of the external auditors.
E. Other Responsibilities
. Ensure that significant findings and recommendations made by the external
auditors are received and discussed on a timely basis;
. Review, with the Company's counsel, any legal matters that could have a
significant impact on the Company's financial statements;
. If necessary, institute special investigations and, if appropriate, hire
special counsel or experts to assist;
. Perform other oversight functions as requested by the full Board; and
. Review and reassess the adequacy of the charter on an annual basis and
receive approval of changes from the Board.
F. Reporting Responsibilities
. Regularly update the Company's Board about Committee activities and make
appropriate recommendations.
A-3
EXHIBIT B
APW LTD.
OUTSIDE DIRECTORS' STOCK OPTION PLAN
I. Introduction
1.01 Purpose. This plan shall be known as the APW Ltd. Outside Directors'
Stock Option Plan (the "Plan"). The purpose of this Plan is to promote the
growth and development of APW Ltd. by providing increased incentives for the
directors of the Company. This Plan provides for the granting of non-qualified
stock options.
1.02 Effective Date. The effective date of the Plan shall be July 17, 2000,
subject to approval of the Plan by the shareholders of APW Ltd. Options
granted prior to such shareholder approval shall be expressly conditioned upon
such shareholder approval of the Plan.
1.03 Substitute Options. APW Ltd. is the result of a spin-off from Applied
Power Inc. APW Ltd. directors who were previously directors of Applied Power
Inc. and were granted options to purchase Applied Power Inc. common stock
shall be granted substitute options to purchase APW Ltd. common stock under
this Plan on terms which are to be economically consistent with the prior
Applied Power Inc. stock options.
II. Plan Definitions
2.01 Definitions. For Plan purposes, except where the context clearly
indicates otherwise, the following terms shall have the meanings set forth
below:
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
(c) "Committee" shall mean the Compensation Committee of the Board, as
described in Section 4.01.
(d) "Company" shall mean APW Ltd., a Bermuda corporation.
(e) "Company Stock" shall mean common stock of the Company and such
other stock and securities as may be substituted therefor pursuant to
Section 3.02.
(f) "Fair Market Value" on any date shall mean, with respect to Company
Stock, if the stock is then listed and traded on a registered national
securities exchange, or is quoted in the NASDAQ National Market System, the
mean of the high and low sale prices recorded in composite transactions as
reported in the Wall Street Journal (Midwest Edition). In the absence of
reported sales on such date, or if the stock is not so listed or quoted,
but is traded in the over-the-counter market, "Fair Market Value" shall be
the mean of the closing bid and asked prices for such shares on such date
as reported in the Wall Street Journal (Midwest Edition), or, if not so
reported as obtained from a bona fide market maker in such shares.
(g) "Optionee" shall mean any person who has been granted an option
under the Plan.
(h) "Outside Director" shall mean a director of the Company who is not
also an employee of the Company.
(i) "Substitute Options" shall mean an option granted under the Plan in
substitution for an option to purchase common stock of Applied Power Inc.
B-1
III. Shares Subject to Option
3.01 Available Shares. The total number of shares of Company Stock that may
be issued under the Plan, including shares that may be issued upon exercise of
a Substitute Option, shall in the aggregate not exceed two hundred thousand
(200,000) shares. Shares subject to and not issued under an option which
expires, terminates, is canceled or forfeited for any reason under the Plan
shall again become available for the granting of options.
3.02 Changes in the Number of Available Shares. If any stock dividend is
declared upon the Company Stock, or if there is any stock split, stock
distribution, or other recapitalization of the Company with respect to the
Company Stock, resulting in a split or combination or exchange of shares, the
aggregate number and kind of shares which may thereafter be offered under the
Plan shall be proportionately and approximately adjusted and the number and
kind of shares then subject to options granted to employees under the Plan and
the per share option price therefor shall be proportionately and appropriately
adjusted, without any change in the aggregate purchase prices to be paid
therefor.
IV. Administration
4.01 Administration by the Committee. The Plan shall be administered by the
Compensation Committee of the Board, or such other committee of the Board as
the Board may from time to time determine. The Committee shall be constituted
so as to permit the Plan to comply with the provisions of Rule 16b-3 under the
Securities Exchange Act of 1934 (or any successor rule).
4.02 Committee Powers. The Committee is empowered to adopt such rules,
regulations and procedures and take such other action as it shall deem
necessary or proper for the administration of the Plan and, in its discretion,
may modify, extend or renew any option theretofore granted. The Committee
shall also have authority to interpret the Plan, and the decision of the
Committee on any questions concerning the interpretation of the Plan shall be
final and conclusive. The Committee may consult with counsel, who may be
counsel for the Company, and shall not incur any liability for any action
taken in good faith in reliance upon the advice of counsel.
Subject to the provisions of the Plan, the Committee shall have full and
final authority to:
(a) designate the persons to whom options shall be granted;
(b) grant options in such form and amount as the Committee shall
determine;
(c) impose such limitations, restrictions and conditions upon any such
option as the Committee shall deem appropriate, and
(d) waive in whole or in part any limitations, restrictions or
conditions imposed upon any such option as the Committee shall deem
appropriate.
V. Stock Options
5.01 General. Each year, upon the first meeting of the Company's Board of
Directors following the Company's annual meeting of shareholders, each person
then serving the Company as an Outside Director at that time shall
automatically be granted an option to purchase four thousand (4,000) shares,
subject to adjustment under Section 3.02 hereof. Each option granted under the
Plan shall be evidenced by a stock option agreement
B-2
between the Company and the Grantee which shall contain the terms and
conditions required by this Article V, and such other terms and conditions,
not inconsistent herewith, as the Committee may deem appropriate in each case.
5.02 Option Price. The price at which each share of Company Stock covered
by an option may be purchased shall be one hundred percent (100%) of the Fair
Market Value of the Company Stock on the date the option is granted.
5.03 Period for Exercise. Each stock option agreement shall state the
period or periods of time within which the option may be exercised by the
Optionee, in whole or in part, which shall be the period or periods of time as
may be determined by the Committee, provided that unless otherwise determined
by the Committee:
(a) Options will vest eleven (11) months after grant.
(b) If the option is not earlier exercised or terminated, all rights to
exercise an option shall expire ten (10) years from the date the option was
granted.
(c) Upon termination of service as a director of the Company for any
reason other than death, after the director shall have continuously so
served for eleven (11) months after the date of option grant, the director
may, at any time within two (2) years after the date of such termination,
but in no event later than the date of expiration of the option, exercise
the option to the extent he or she was entitled to do so on the date of
termination.
(d) If an Optionee dies while serving as a director of the Company, or
within two (2) years after termination of such service, the personal
representative of the Optionee's estate or the person or persons to whom
the option is transferred by will or the laws of descent and distribution
may, at any time within two (2) years after the date of death, but not
later than the date of expiration of the option, exercise the option to the
extent the Optionee was entitled to do so on the date of death.
(e) All options shall become immediately exercisable in full upon a
change in control (as determined by the Committee).
5.04 Method of Exercise. Each option may be exercised in whole or in part
from time to time as specified in the stock option agreement. Each Optionee
may exercise an option by giving written notice of the exercise to the
Company, specifying the number of shares to be purchased, accompanied by
payment in full of the purchase price therefor. The purchase price may be paid
in cash, by check, or, with the approval of the Committee, by delivering
shares of Company Stock which have been beneficially owned by the Optionee,
the Optionee's spouse, or both of them for a period of at least six months
prior to the time of exercise ("Delivered Stock") or a combination of cash and
Delivered Stock. Delivered Stock shall be valued at its Fair Market Value
determined as of the date of exercise of the option. No Optionee shall be
under any obligation to exercise any option hereunder. An Optionee shall not
have any rights of a stockholder with respect to the shares subject to the
option until such shares shall have been delivered to him or her.
5.05 Merger, Consolidation or Reorganization. In the event of a merger,
consolidation or reorganization with another corporation in which the Company
is not the surviving corporation, the Committee may, subject to the approval
of the Board of Directors of the Company, or the board of directors of any
corporation assuming the obligations of the Company hereunder, take action
regarding each outstanding and unexercised option pursuant to either clause
(a) or (b) below:
(a) Appropriate provision may be made for the protection of such option
by the substitution on an equitable basis of appropriate shares of the
surviving corporation, provided that the excess of the aggregate Fair
Market Value of the shares subject to such option immediately before such
substitution over the
B-3
exercise price thereof is not more than the excess of the aggregate fair
market value of the substituted shares made subject to option immediately
after such substitution over the exercise price thereof; or
(b) The Committee may cancel such option. In such event, the Company,
or the corporation assuming the obligations of the Company hereunder, shall
pay the Optionee an amount of cash (less normal withholding taxes) equal to
the excess of the highest Fair Market Value per share of the Company Stock
during the 60-day period immediately preceding the merger, consolidation or
reorganization over the option exercise price, multiplied by the number of
shares subject to such option.
5.06 Withholding Taxes. Pursuant to applicable federal and state laws, the
Company is or may be required to collect withholding taxes upon the exercise
of an option or the lapse of stock restrictions. The Company may require, as a
condition to the exercise of an option or the issuance of a stock certificate,
that the Optionee concurrently pay to the Company (either in cash or, at the
request of Grantee but in the discretion of the Committee and subject to such
rules and regulations as the Committee may adopt from time to time, in shares
of Delivered Stock) the entire amount or a portion of any taxes which the
Company is required to withhold by reason of such exercise or lapse of
restrictions, in such amount as the Committee or the Company in its discretion
may determine. In lieu of part or all of any such payment, the Optionee may
elect, subject to such rules and regulations as the Committee may adopt from
time to time, or the Company may require that the Company withhold from the
shares to be issued that number of shares having a Fair Market Value equal to
the amount which the Company is required to withhold.
VI. General
6.01 Nontransferability. No option shall be transferable by an Optionee
otherwise than by will or the laws of descent and distribution, provided that
in accordance with Internal Revenue Service guidance, the Committee, in its
discretion, may grant options that are transferable, without payment of
consideration, to family members of the Optionee or to trusts or partnerships
for such family members. The Committee may also amend outstanding stock
options to provide for such transferability.
6.02 General Restriction. Each option shall be subject to the requirement
that if at any time the Board or the Committee shall determine, in its
discretion, that the listing, registration, or qualification of securities
upon any securities exchange or under any state or federal law, or the consent
or approval of any government regulatory body, is necessary or desirable as a
condition of, or in connection with, the granting of such option or the issue
or purchase of securities thereunder, such option may not be exercised in
whole or in part unless such listing, registration, qualification, consent or
approval shall have been effected or obtained free of any conditions not
acceptable to the Board or the Committee.
6.03 No Promise of Continued Service as a Director. Nothing in the Plan or
in any option granted under the Plan shall confer on any director any right to
continue as a director of the Company or affect the right of the Company to
terminate his or her service to the Company at any time.
6.04 Expiration and Termination of the Plan. The Plan will terminate ten
(10) years after the effective date of the Plan, except as to options then
outstanding under the Plan, which options shall remain in effect until they
have been exercised, the restrictions have lapsed or the options have expired
or been forfeited. The Plan may be abandoned or terminated at any time by the
Board of Directors of the Company, except with respect to any options then
outstanding under the Plan.
B-4
6.05 Amendments. The Board may from time to time amend, modify, suspend or
terminate the Plan; provided, however, that no such action shall be made
without shareholder approval where such change would be required in order to
comply with Rule 16b-3 under the Securities Exchange Act of 1934 (or any
successor rule) or the Code. Subject to the terms and conditions and within
the limitations of the Plan, the Committee may modify, extend or renew
outstanding options granted under the Plan, accept the surrender of
outstanding options (to the extent not theretofore exercised), reduce the
exercise price of outstanding options, or authorize the granting of new
options in substitution therefor (to the extent not theretofore exercised).
Notwithstanding the foregoing, no modification of an option (either directly
or through modification of the Plan) shall, without the consent of the
Optionee, alter or impair any rights of the Optionee under the option.
6.06 Construction. Except as otherwise required by applicable federal laws,
the Plan shall be governed by, and construed in accordance with, the laws of
the State of Wisconsin.
B-5
EXHIBIT C
APW LTD.
2001 STOCK PLAN
I. Introduction
1.01 Purpose. This plan shall be known as the APW Ltd. 2001 Stock Plan (the
"2001 Plan" or the "Plan"). The purpose of the Plan is to provide incentive
for key employees of APW Ltd. and its Subsidiaries to improve corporate
performance on a long-term basis, and to attract and retain key employees.
1.02 Effective Date. The effective date of the Plan shall be November 1,
2000, subject to approval of the Plan by the shareholders of APW Ltd. Any
Award granted prior to such shareholder approval shall be expressly
conditioned upon such shareholder approval of the Plan.
II. Plan Definitions
2.01 Definitions. For Plan purposes, except where the context clearly
indicates otherwise, the following terms shall have the meanings set forth
below:
(a) "Award" shall mean the grant of any form of stock option or
restricted stock.
(b) "Board" shall mean the Board of Directors of the Company.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
(d) "Committee" shall mean the Compensation Committee of the Board, as
described in Section 4.01.
(e) "Company" shall mean APW Ltd., a Bermuda corporation.
(f) "Company Stock" shall mean common stock of the Company and such
other stock and securities as may be substituted therefor pursuant to
Section 3.02.
(g) "Eligible Employee" shall mean any regular salaried employee of the
Company or a Subsidiary who satisfies all of the requirements of Section
5.01.
(h) "Fair Market Value" on any date shall mean, with respect to Company
Stock, if the stock is then listed and traded on a registered national
securities exchange, or is quoted in the NASDAQ National Market System, the
mean of the high and low sale prices recorded in composite transactions as
reported in the Wall Street Journal (Midwest Edition). In the absence of
reported sales on such date, or if the stock is not so listed or quoted,
but is traded in the over-the-counter market, "Fair Market Value" shall be
the mean of the closing bid and asked prices for such shares on such date
as reported in the Wall Street Journal (Midwest Edition), or, if not so
reported as obtained from a bona fide market maker in such shares.
(i) "Grantee" shall mean any person who has been granted an Award, under
the Plan.
(j) "Option Period" shall mean the period of time provided pursuant to
Section 6.04 within which a stock option may be exercised.
(k) "Subsidiary" shall mean any corporation now or hereafter in
existence in which the Company owns, directly or indirectly, a voting stock
interest of more than fifty percent (50%).
C-1
III. Shares Subject to Option
3.01 Available Shares. The total number of shares of Company Stock that may
be issued under the Plan shall in the aggregate not exceed two million
(2,000,000) shares. Shares subject to and not issued under an option which
expires, terminates, is canceled or forfeited for any reason under the Plan
and shares of restricted Company Stock which have been forfeited before the
Grantee has received any benefits of ownership, such as dividends from the
forfeited shares, shall again become available for the granting of Awards.
3.02 Changes in the Number of Available Shares. If any stock dividend is
declared upon the Company Stock, or if there is any stock split, stock
distribution, or other recapitalization of the Company with respect to the
Company Stock, resulting in a split or combination or exchange of shares, the
aggregate number and kind of shares which may thereafter be offered under the
Plan shall be proportionately and approximately adjusted and the number and
kind of shares then subject to options granted to employees under the Plan and
the per share option price therefor shall be proportionately and appropriately
adjusted, without any change in the aggregate purchase prices to be paid
therefor.
IV. Administration
4.01 Administration by the Committee. The Plan shall be administered by the
Compensation Committee of the Board, or such other committee of the Board as
the Board may from time to time determine. The Committee shall be constituted
so as to permit the Plan to comply with the provisions of Rule 16b-3 under the
Securities Exchange Act of 1934 (or any successor rule) and Section 162(m) of
the Code.
4.02 Committee Powers. The Committee is empowered to adopt such rules,
regulations and procedures and take such other action as it shall deem
necessary or proper for the administration of the Plan and, in its discretion,
may modify, extend or renew any option theretofore granted. The Committee
shall also have authority to interpret the Plan, and the decision of the
Committee on any questions concerning the interpretation of the Plan shall be
final and conclusive. The Committee may consult with counsel, who may be
counsel for the Company, and shall not incur any liability for any action
taken in good faith in reliance upon the advice of counsel. The Committee may
adopt such procedures and subplans as are necessary or appropriate to permit
participation in the Plan by Eligible Employees who are foreign nationals or
employed outside of the United States.
Subject to the provisions of the Plan, the Committee shall have full and
final authority to:
(a) designate the persons to whom Awards shall be granted;
(b) grant Awards in such form and amount as the Committee shall
determine;
(c) impose such limitations, restrictions and conditions upon any such
Award as the Committee shall deem appropriate; and
(d) waive in whole or in part any limitations, restrictions or
conditions imposed upon any such Award as the Committee shall deem
appropriate.
V. Participation
5.01 Eligibility. Key employees of the Company and its Subsidiaries
(including officers and employees who may be members of the Board) who, in the
sole opinion of the Committee, contribute significantly to the growth and
success of the Company or a Subsidiary shall be eligible for Awards under the
Plan. From among all
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such Eligible Employees, the Committee shall determine from time to time those
Eligible Employees to whom Awards shall be granted. No Eligible Employee may
be granted an Award or Awards covering more than two hundred fifty thousand
(250,000) shares of Company Stock in any calendar year (subject to adjustment
as provided in Section 3.02). No Eligible Employee shall have any right
whatsoever to receive an Award unless so determined by the Committee.
5.02 No Employment Rights. The Plan shall not be construed as conferring
any rights upon any person for a continuation of employment, nor shall it
interfere with the rights of the Company or any Subsidiary to terminate the
employment of any person or to take any other action affecting such person.
VI. Stock Options
6.01 General. Stock options granted under the Plan may be in the form of
incentive stock options (within the meaning of the Code) or nonqualified stock
options. Each option granted under the Plan shall be evidenced by a stock
option agreement between the Company and the Grantee which shall contain the
terms and conditions required by this Article VI, and such other terms and
conditions, not inconsistent herewith, as the Committee may deem appropriate
in each case.
6.02 Option Price. The price at which each share of Company Stock covered
by an option may be purchased shall be determined in each case by the
Committee and set forth in each stock option agreement. In no event shall such
price be less than one hundred percent (100%) of the Fair Market Value of the
Company Stock when the option is granted. Notwithstanding the foregoing, the
Committee may grant nonqualified stock options with an option price of less
than 100% of the Fair Market Value of the Company Stock on the condition that
the Grantee make a cash payment to the Company on the date of grant of at
least the difference between the Fair Market Value of the Company Stock and
the option price (i.e., the sum of the cash payment and the option price must
be equal to or in excess of the Fair Market Value of the Company Stock on the
date of grant). Employees who own, directly or indirectly, within the meaning
of Code 425(d), more than 10% of the voting power of all classes of stock of
the Company or any parent or subsidiary corporation shall not be eligible to
receive an incentive stock option hereunder unless the purchase price per
share under such option is at least 110% of the Fair Market Value of the stock
subject to the option and such option by its terms is not exercisable after
the expiration of 5 years from the date such option is granted.
6.03 Date Option Granted. For purposes of the Plan, a stock option shall be
considered as having been granted on the date on which the Committee
authorized the grant of the option, except where the Committee has designated
a later date, in which event the later date shall constitute the date of grant
of the option; provided, however, that in either case notice of the grant of
the option shall be given to the employee within a reasonable time.
6.04 Period for Exercise. Each stock option agreement shall state the
period or periods of time within which the option may be exercised by the
Grantee, in whole or in part, which shall be the period or periods of time as
may be determined by the Committee, provided that:
(a) No option granted under this Plan may be exercised prior to
shareholder approval of the Plan,
(b) No Option Period for an incentive stock option may exceed ten (10)
years from the date the option is granted, and
(c) No option may be treated as an incentive stock option unless the
Grantee exercises the option while employed by the Company or a Subsidiary
or within three months after termination of employment, or if termination
is caused by death or disability, within one year after such termination.
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6.05 Special Rule for Incentive Stock Options. For so long as Section 422
(or any successor provision) of the Code so provides, the aggregate Fair
Market Value (determined as of the date the incentive stock option is granted)
of the number of shares with respect to which incentive stock options are
exercisable for the first time by a Grantee during any calendar year shall not
exceed One Hundred Thousand Dollars ($100,000) or such other limit as may be
required by the Code.
6.06 Method of Exercise. Subject to Section 6.04, each option may be
exercised in whole or in part from time to time as specified in the stock
option agreement. Each Grantee may exercise an option by giving written notice
of the exercise to the Company, specifying the number of shares to be
purchased, accompanied by payment in full of the purchase price therefor. The
purchase price may be paid in cash, by check, or, with the approval of the
Committee, by delivering shares of Company Stock which have been beneficially
owned by the Grantee, the Grantee's spouse, or both of them for a period of at
least six months prior to the time of exercise ("Delivered Stock") or a
combination of cash and Delivered Stock. Delivered Stock shall be valued at
its Fair Market Value determined as of the date of exercise of the option. No
Grantee shall be under any obligation to exercise any option hereunder. The
holder of an option shall not have any rights of a stockholder with respect to
the shares subject to the option until such shares shall have been delivered
to him or her.
6.07 Merger, Consolidation or Reorganization. In the event of a merger,
consolidation or reorganization with another corporation in which the Company
is not the surviving corporation, the Committee may, subject to the approval
of the Board of Directors of the Company, or the board of directors of any
corporation assuming the obligations of the Company hereunder, take action
regarding each outstanding and unexercised option pursuant to either clause
(a) or (b) below:
(a) Appropriate provision may be made for the protection of such option
by the substitution on an equitable basis of appropriate shares of the
surviving corporation, provided that the excess of the aggregate Fair
Market Value of the shares subject to such option immediately before such
substitution over the exercise price thereof is not more than the excess of
the aggregate fair market value of the substituted shares made subject to
option immediately after such substitution over the exercise price thereof;
or
(b) The Committee may cancel such option. In such event, the Company, or
the corporation assuming the obligations of the Company hereunder, shall
pay the employee an amount of cash (less normal withholding taxes) equal to
the excess of the highest Fair Market Value per share of the Company Stock
during the 60-day period immediately preceding the merger, consolidation or
reorganization over the option exercise price, multiplied by the number of
shares subject to such option.
6.08 Substitute Options. Notwithstanding the provisions of Sections 6.02
and 6.03 above, in the event that the Company or a Subsidiary consummates a
transaction described in Section 424(a) of the Code (e.g., the acquisition of
property or stock from an unrelated corporation), persons who become Eligible
Employees on account of such transaction may be granted options in
substitution for options granted by their former employer. If such substitute
options are granted, the Committee, in its sole discretion and consistent with
Section 424(a) of the Code, may determine that such substitute options shall
have an exercise price less than one hundred (100%) of the Fair Market Value
of the shares on the grant date.
6.09 Deferral of Stock Option Gain. The Committee may permit, in its
discretion, an optionee who exercises a stock option to defer the taxable
income attributable to such exercise. In the event the Committee elects to
permit such deferrals, the Committee shall identify the optionees to whom such
deferral elections shall be made available and establish procedures for
implementing such deferrals. An optionee who defers a stock option gain under
this Plan or any other Company stock option plan shall be credited with deemed
dividends under this Plan on such terms as the Committee shall prescribe. All
deferrals which are permitted under this section and all deemed dividends
shall be distributed in APW Ltd. common stock.
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VII. Restricted Stock
7.01 Administration. Shares of restricted stock may be issued either alone
or in addition to other Awards granted under the Plan; provided that a maximum
of 125,000 shares of restricted stock may be granted in any calendar year
(subject to adjustment as provided in Section 3.02). The Committee shall
determine the Eligible Employees to whom and the time or times at which grants
of restricted stock will be made, the number of shares to be awarded, the time
or times within which such Awards may be subject to forfeiture and any other
terms and conditions of the Awards. The Committee may condition the grant of
restricted stock upon the attainment of specified levels of revenue, earnings
per share, net income, return on assets, return on sales, customer
satisfaction, stock price, costs, individual performance measures or such
other factors or criteria as the Committee shall determine. The provisions of
restricted stock Awards need not be the same with respect to each recipient.
7.02 Awards and Certificates. Each individual receiving a restricted stock
Award shall be issued a certificate in respect of such shares of restricted
stock. Such certificate shall be registered in the name of such individual and
shall bear an appropriate legend referring to the terms, conditions, and
restrictions applicable to such Award, substantially in the following form:
"The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions (including
forfeiture) of the APW Ltd. 2001 Stock Plan and a Restricted Stock
Agreement. Copies of such Plan and Agreement are on file at the offices of
APW Ltd."
The Committee may require that the certificates evidencing such shares be held
in custody by the Company until the restrictions thereon shall have lapsed and
that, as a condition of any restricted stock Award, the Grantee shall have
delivered a stock power, endorsed in blank, relating to the Company Stock
covered by such Award.
7.03 Terms and Conditions. Shares of restricted stock shall be subject to
the following terms and conditions:
(a) Until the applicable restrictions lapse, the Grantee shall not be
permitted to sell, assign, transfer, pledge or otherwise encumber shares of
restricted stock.
(b) The Grantee shall have, with respect to the shares of restricted
stock, all of the rights of a stockholder of the Company, including the
right to vote the shares and the right to receive any cash dividends.
Unless otherwise determined by the Committee, cash dividends shall be
automatically paid in cash and dividends payable in Company Stock shall be
paid in the form of additional restricted stock.
(c) Except to the extent otherwise provided in the applicable Restricted
Stock Agreement and (d) below, all shares still subject to restriction
shall be forfeited by the Grantee upon termination of a Grantee's
employment for any reason.
(d) In the event of hardship or other special circumstances of a Grantee
whose employment is involuntarily terminated (other than for cause), the
Committee may waive in whole or in part any or all remaining restrictions
with respect to such Grantee's shares of restricted stock.
(e) If and when the applicable restrictions lapse, unlegended
certificates for such shares shall be delivered to the Grantee.
(f) Each Award shall be confirmed by, and be subject to the terms of, a
Restricted Stock Agreement.
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VIII. Withholding Taxes.
8.01 General Rule. Pursuant to applicable federal and state laws, the
Company is or may be required to collect withholding taxes upon the exercise
of an option or the lapse of stock restrictions. The Company may require, as a
condition to the exercise of an option or the issuance of a stock certificate,
that the Grantee concurrently pay to the Company (either in cash or, at the
request of Grantee but in the discretion of the Committee and subject to such
rules and regulations as the Committee may adopt from time to time, in shares
of Delivered Stock) the entire amount or a portion of any taxes which the
Company is required to withhold by reason of such exercise or lapse of
restrictions, in such amount as the Committee or the Company in its discretion
may determine.
8.02 Withholding from Shares to be Issued. In lieu of part or all of any
such payment, the Grantee may elect, subject to such rules and regulations as
the Committee may adopt from time to time, or the Company may require that the
Company withhold from the shares to be issued that number of shares having a
Fair Market Value equal to the amount which the Company is required to
withhold.
8.03 Special Rule for Insiders. Any such request or election (to satisfy a
withholding obligation using shares) by an individual who is subject to the
provisions of Section 16 of the Securities Exchange Act of 1934 shall be made
in accordance with the rules and regulations of the Securities and Exchange
Commission promulgated thereunder.
IX. General
9.01 Nontransferability. No Award shall be transferable by a Grantee
otherwise than by will or the laws of descent and distribution, provided that
in accordance with Internal Revenue Service guidance, the Committee, in its
discretion, may grant nonqualified stock options that are transferable,
without payment of consideration, to family members of the Grantee or to
trusts or partnerships for such family members. The Committee may also amend
outstanding stock options to provide for such transferability.
9.02 General Restriction. Each Award shall be subject to the requirement
that if at any time the Board or the Committee shall determine, in its
discretion, that the listing, registration, or qualification of securities
upon any securities exchange or under any state or federal law, or the consent
or approval of any government regulatory body, is necessary or desirable as a
condition of, or in connection with, the granting of such Award or the issue
or purchase of securities thereunder, such Award may not be exercised in whole
or in part unless such listing, registration, qualification, consent or
approval shall have been effected or obtained free of any conditions not
acceptable to the Board or the Committee.
9.03 Expiration and Termination of the Plan. The Plan will terminate ten
(10) years after the effective date of the Plan, except as to Awards then
outstanding under the Plan, which Awards shall remain in effect until they
have been exercised, the restrictions have lapsed or the Awards have expired
or been forfeited. The Plan may be abandoned or terminated at any time by the
Board of Directors of the Company, except with respect to any Awards then
outstanding under the Plan.
9.04 Amendments. The Board may from time to time amend, modify, suspend or
terminate the Plan; provided, however, that no such action shall be made
without shareholder approval where such change would be required in order to
comply with Rule 16b-3 under the Securities Exchange Act of 1934 (or any
successor rule)
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or the Code. Subject to the terms and conditions and within the limitations of
the Plan, the Committee may modify, extend or renew outstanding Awards granted
under the Plan, accept the surrender of outstanding options (to the extent not
theretofore exercised), reduce the exercise price of outstanding options, or
authorize the granting of new options in substitution therefor (to the extent
not theretofore exercised). Notwithstanding the foregoing, no modification of
an Award (either directly or through modification of the Plan) shall, without
the consent of the Grantee, alter or impair any rights of the Grantee under
the Award.
9.05 Construction. Except as otherwise required by applicable federal laws,
the Plan shall be governed by, and construed in accordance with, the laws of
the State of Wisconsin.
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APW LTD.
ANNUAL MEETING OF SHAREHOLDERS - JANUARY 16, 2001
P R O X Y
COMMON STOCK
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
(Continued from Reverse Side)
APW LTD. 2001 ANNUAL MEETING
1. Election of Directors: 1 - PETER DOUGLAS 2 - L. DENNIS KOZLOWSKI [ ] FOR all nominees [ ] WITHHOLD
3 - RICHARD G. SIM listed to the left AUTHORITY
(except as specified to vote for all
below). nominees listed
to the left.
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
the number(s) of the nominee(s) in the box provided to the right). _______________________________________
- --------------------------------------------------------------------------------
2. Approval of the APW Ltd. 2001 Outside Directors' Stock Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Approval of the APW Ltd. 2001 Stock Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Approval of the appointment of PricewaterhouseCoopers LLP as APW Ltd.'s
independent auditors.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. In their discretion, upon such other business as may properly come before
the Meeting or any adjournment thereof;
all as set out in the Notice and Proxy Statement relating to the Meeting,
receipt of which is hereby acknowledged.
Check appropriate box Date ________________ NO. OF SHARES
Indicate changes below:
Address Change? [ ] Name Change? [ ] [ ]
SIGNATURE(S) IN BOX
PLEASE SIGN PERSONALLY AS NAME APPEARS
AT LEFT. When signing as attorney,
executor, administrator, personal
representative, trustee or guardian,
give full title as such. If signer is a
corporation, sign full corporate name by
duly authorized officer. If stock is
held in the name of two or more persons,
all should sign.
- --------------------------------------------------------------------------------
APW LTD.
ANNUAL MEETING OF SHAREHOLDERS - JANUARY 16, 2001
P R O X Y
COMMON STOCK
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
RICHARD G. SIM and ANTHONY W. ASMUTH III, and each of them, are hereby
authorized as Proxies, with full power of substitution, to represent and vote
the common stock of the undersigned at the Annual Meeting of Shareholders of APW
Ltd., a Bermuda company, to be held on Tuesday, January 16, 2001, or any
adjournment thereof, with like effect as if the undersigned were personally
present and voting upon the matters indicated on the reverse side of this card.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER SPECIFIED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE
VOTED FOR ALL NOMINEES LISTED UNDER ITEM 1 AND FOR PROPOSALS 2 THROUGH 4.
IMPORTANT - THIS PROXY MUST BE SIGNED AND DATED ON THE REVERSE SIDE.
(Continued on Reverse Side)