Exhibit 10.3

 

EXECUTION COPY

 

STOCK OPTION AGREEMENT

 

STOCK OPTION AGREEMENT dated as of October 10, 2003 (this “Agreement”) by and
among Euramax International, Inc., a Delaware corporation (“Parent”), Amerimax
Pennsylvania, Inc., a Pennsylvania corporation and an indirect subsidiary of
Parent (the “Purchaser”), and Berger Holdings, Ltd., a Pennsylvania corporation
(the “Company”).

 

W I T N E S S E T H:

 

WHEREAS, concurrently with the execution and delivery of this Agreement, the
parties hereto are entering into an Agreement and Plan of Merger (as such
agreement may hereafter be amended from time to time, the “Merger Agreement”)
which provides, upon the terms and subject to the conditions set forth therein,
for (i) Parent and Purchaser to commence a tender offer (such offer, including
any amendments and changes thereto (including those contemplated by the Merger
Agreement), the “Offer”) to purchase all of the outstanding shares of common
stock, par value $.01 per share (the “Company Common Stock”), of the Company at
a price of $3.90 per share, net to the seller in cash, without interest (the
“Offer Price”) and (ii) the subsequent merger of Purchaser with and into the
Company (the “Merger”) on the terms and conditions set forth in the Merger
Agreement;

 

WHEREAS, as a condition to the willingness of Parent and Purchaser to enter into
the Merger Agreement, Parent and Purchaser have required that the Company agree,
and in order to induce Parent and Purchaser to enter into the Merger Agreement,
the Company has agreed, to grant to Purchaser certain options to purchase shares
of Company Common Stock (shares of Company Common Stock being for purposes
hereof, the “Shares”) upon the terms and subject to the conditions of this
Agreement; and

 

WHEREAS, capitalized terms used but not defined in this Agreement shall have the
meanings ascribed to them in the Merger Agreement.

 

NOW, THEREFORE, the parties hereto agree as follows:

 

ARTICLE 1

The Top-up Option

 

Section 1.01.                             Grant of Top-Up Stock Option.  Subject
to the terms and conditions set forth herein, the Company hereby grants to
Purchaser an irrevocable option (the “Top-Up Stock Option”) to purchase that
number of authorized but unissued Shares (the “Top-Up Option Shares”) equal to
the number of Shares that, when added to the number of Shares owned by Purchaser
and Parent immediately following consummation of the Offer, shall constitute
80.01% of the Fully Diluted Shares (assuming the issuance of the Top-Up Option
Shares) at a purchase

 

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price per Top-Up Option Share equal to the Offer Price; provided, however, that
in no event shall Purchaser have the right hereunder to purchase a number of
Shares that exceeds 19.9% of the outstanding Shares on the date hereof.  The
Company agrees to provide Parent and Purchaser with information regarding the
number of authorized Shares available for issuance on an ongoing basis.

 

Section 1.02.                             Exercise of Top-Up Stock Option.

 

(a)                                  Purchaser may, at its election and in its
sole discretion, exercise the Top-Up Stock Option pursuant to Section 1.02(d)
below at any time after the occurrence of a Top-Up Exercise Event (as defined
below) and prior to the Top-Up Termination Date (as defined below).

 

(b)                                 A “Top-Up Exercise Event” shall occur for
purposes of this Agreement upon Purchaser’s payment for Shares that were
purchased pursuant to the Offer constituting, together with any Shares owned
directly or indirectly by Parent and Purchaser, more than 70% but less than
80.01% of the Shares then outstanding.

 

(c)                                  The “Top-Up Termination Date” shall occur
for purposes of this Agreement upon the earlier to occur of: (i) the Effective
Time and (ii) the termination of the Merger Agreement.

 

(d)                                 In the event Purchaser wishes to exercise
the Top-Up Stock Option, Purchaser shall send to the Company a written notice (a
“Top-Up Exercise Notice,” the date of which notice is referred to herein as the
“Top-Up Notice Date”) specifying the denominations of the certificate or
certificates evidencing the Top-Up Option Shares which Purchaser wishes to
receive, the place for the closing of the purchase and sale pursuant to the
Top-Up Stock Option (the “Top-Up Closing”) and a date not earlier than one
business day nor later than ten business days after the Top-Up Notice Date for
the Top-Up Closing.  The Company shall, promptly after receipt of the Top-Up
Exercise Notice, deliver a written notice to Purchaser confirming the number of
Top-Up Option Shares and the aggregate purchase price therefor.

 

(e)                                  Parent and Purchaser each agree to use its
reasonable best efforts to cause the consummation of the Merger to occur as
promptly as practicable (and in any event no later than two (2) business days)
after the Top-Up Closing.

 

ARTICLE 2

Closing

 

Section 2.01.                             Conditions to Closing. The obligation
of the Company to deliver Top-Up Option Shares upon the exercise of the Top-Up
Stock Option is subject to the following conditions:

 

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(a)                                  no provision of any applicable law or
regulation and no judgment, injunction, order or decree shall prohibit the
exercise of the Top-Up Stock Option or the delivery of the Top-Up Option Shares
in respect of any such exercise; and

 

(b)                                 delivery of the Top-Up Option Shares would
not violate, or otherwise cause a violation of, Rule 4350(i) of the NASD Manual.

 

Section 2.02.                             Closing.

 

(a)                                  At the Top-Up Closing (i) the Company shall
deliver to Purchaser a certificate or certificates evidencing the applicable
number of Top-Up Option Shares (in the denominations designated by Purchaser in
the Top-Up Exercise Notice) and (ii) Purchaser shall purchase each Top-Up Option
Share from the Company at the Offer Price. Payment by Purchaser of the purchase
price for the Top-Up Option Shares shall be made by delivery of immediately
available funds by wire transfer to an account designated by the Company.

 

(b)                                 The Company shall pay all expenses, and any
and all federal, state and local taxes and other charges, that may be payable in
connection with the preparation, issuance and delivery of stock certificates
under this Section 2.02.

 

(c)                                  Certificates evidencing Top-Up Option
Shares delivered hereunder shall include legends legally required including the
legend in substantially the following form:

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE REOFFERED OR SOLD ONLY IF SO
REGISTERED OR IF AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.

 

It is understood and agreed that the foregoing legend shall be removed by
delivery of substitute certificate(s) without such legend upon the sale of the
Top-Up Option Shares pursuant to a registered public offering or Rule 144 under
the Securities Act, or any other sale as a result of which such legend is no
longer required by law.

 

ARTICLE 3

Additional Agreements

 

Section 3.01.                             Further Assurances. The Company shall
perform such further acts and execute such further documents and instruments as
may reasonably be required to vest in Purchaser and Parent the power to carry
out the provisions of this Agreement. If Purchaser shall exercise the Top-Up
Stock Option granted hereunder in accordance with the terms of this Agreement,
the Company shall, without additional consideration, execute and deliver all
such further documents and instruments and take all such further action as
Purchaser or Parent may reasonably request to carry out the transactions
contemplated by this Agreement.

 

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ARTICLE 4

Representations and Warranties; Acknowledgment

 

Section 4.01.                             Representations and Warranties of
Purchaser.  Purchaser hereby represents and warrants to the Company,
understanding and agreeing that the Company is entering into this Agreement in
part in reliance on such representations and warranties, as follows:

 

(a)                                  Purchaser is an “Accredited Investor” as
that term is defined in Rule 501(a) of Regulation D promulgated under the
Securities Act;

 

(b)                                 Purchaser is purchasing the Top-Up Option
Shares and being granted the Top-Up Option for investment purposes, for its own
account and not with a view to, or for sale in connection with, any distribution
thereof in violation of federal or state securities laws; and

 

(c)                                  By reason of its business or financial
experience, Purchaser has the capacity to protect its own interest in connection
with the transactions contemplated hereunder.

 

Section 4.02.                             Representations and Warranties of
Company.  The Company hereby represents and warrants to Purchaser, understanding
and agreeing that Purchaser is entering into this Agreement in part in reliance
on such representations and warranties, that, as of the date of the Top-Up
Closing, the Company’s authorized capital stock shall consist of at least that
number of Shares required for the Company to issue the Top-Up Option Shares.

 

Section 4.03.                             Acknowledgment.  Purchaser has been
advised by the Company that the Top-Up Option Shares and the Top-Up Option have
not been registered under the Securities Act, that the Top-Up Option Shares and
the Top-Up Option will be issued on the basis of the statutory exemption
provided by Section 4(2) of the Securities Act or Regulation D promulgated
thereunder, or both, relating to transactions by an issuer not involving any
public offering and under similar exemptions under certain state securities
laws, that this transaction has not been reviewed by, passed on or submitted to
any federal or state agency or self-regulatory organization where an exemption
is being relied upon, and that the Company’s reliance thereon is based in part
upon the representations made by Purchaser in this Agreement.  Purchaser
acknowledges that it has been informed by the Company of, or is otherwise
familiar with, the nature of the limitations imposed by the Securities Act and
the rules and regulations thereunder on the transfer of securities.

 

ARTICLE 5

Miscellaneous

 

Section 5.01.                             Notices. All notices, requests and
other communications to any party hereunder shall be in writing (including
facsimile transmission) and shall be given as specified in Section 9.5 of the
Merger Agreement.

 

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Section 5.02.                             Amendments; No Waivers.

 

(a)                                  Any provision of this Agreement may be
amended or waived if, but only if, such amendment or waiver is in writing and is
signed, in the case of an amendment, by each party to this Agreement or, in the
case of a waiver, by each party against whom the waiver is to be effective. 
Notwithstanding anything in this Agreement to the contrary, during the period
from and after the date hereof but prior to the Effective Time, the Independent
Directors (as defined in the Merger Agreement) are required to approve (i) any
amendment or modification of this Agreement on behalf of the Company and (ii)
any waiver of any of the Company’s rights or remedies hereunder.

 

(b)                                 No failure or delay by any party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies herein provided shall be cumulative and not exclusive of
any rights or remedies provided by law.

 

Section 5.03.                             Expenses. Except as otherwise provided
herein or in Section 8.3 of the Merger Agreement, all costs and expenses
incurred in connection with this Agreement shall be paid by the party incurring
such cost or expense.

 

Section 5.04.                             Successors and Assigns. The provisions
of this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns, provided that no party may
assign, delegate or otherwise transfer any of its rights or obligations under
this Agreement without the consent of each other party hereto, except that
Purchaser may transfer or assign, in whole or from time to time in part, to one
or more of its affiliates permitted to be substituted for Purchaser under the
Merger Agreement, the right to purchase all or a portion of the Top-Up Option
Shares pursuant to this Agreement, but no such transfer or assignment will
relieve Purchaser of its obligations under this Agreement.

 

Section 5.05.                             Governing Law. This Agreement shall be
governed and construed in accordance with the laws of the Commonwealth of
Pennsylvania without giving effect to the principles of conflicts of law thereof
or of any other jurisdiction.  All parties hereto hereby irrevocably waive a
trial by jury in any proceedings arising out of this Agreement or matters
related hereto.

 

Section 5.06.                             Counterparts; Effectiveness; Benefit.
This Agreement may be signed in any number of counterparts, each of which shall
be an original, with the same effect as if the signatures thereto and hereto
were upon the same instrument. This Agreement shall become effective when each
party hereto shall have received counterparts hereof signed by all of the other
parties hereto. No provision of this Agreement is intended to confer any rights,
benefits, remedies, obligations, or liabilities hereunder upon any person other
than the parties hereto and their respective successors and assigns.

 

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Section 5.07.                             Entire Agreement. This Agreement and
the Merger Agreement (including the documents and instruments referred therein)
constitute the entire agreement between the parties with respect to the subject
matter of this Agreement and supersede all prior agreements and understandings,
both oral and written, between the parties with respect to the subject matter of
this Agreement.

 

Section 5.08.                             Captions. The captions herein are
included for convenience of reference only and shall be ignored in the
construction or interpretation hereof.

 

Section 5.09.                             Severability. If any term, provision,
covenant or restriction of this Agreement is held by a court of competent
jurisdiction or other authority to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party. Upon such a determination, the parties shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties as
closely as possible in an acceptable manner in order that the transactions
contemplated hereby be consummated as originally contemplated to the fullest
extent possible.

 

Section 5.10.                             Enforcement. The parties agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached.  It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions of this Agreement in the United
States District Court for the Eastern District of Pennsylvania and, in the
absence of Federal jurisdiction, in the state courts located in Philadelphia
County in the event any dispute arises out of this Agreement or any of the
transactions contemplated by this Agreement, and each party will not attempt to
deny or defeat personal jurisdiction or venue in any such court by motion or
other request for leave from any such court.

 

Section 5.11.                             Submission to Jurisdiction; Waivers. 
Each of the Company, Parent and Purchaser irrevocably agrees that any legal
action or proceeding with respect to this Agreement or for recognition and
enforcement of any judgment in respect hereof brought by any other party hereto
or its successors or assigns shall be brought and determined in the in the
United States District Court for the Eastern District of Pennsylvania and, in
the absence of Federal jurisdiction, in the state courts located in Philadelphia
County, and each of the Company, Parent and Purchaser hereby irrevocably submits
with regard to any such action or proceeding for itself and in respect to its
property, generally and unconditionally, to the exclusive jurisdiction of the
aforesaid courts.  Each of the Company, Parent and Purchaser hereby irrevocably
waives, and agrees not to assert, by way of motion, as a defense, counterclaim
or otherwise, in any action or proceeding with respect to this Agreement, (a)
any claim that it is not personally subject to the jurisdiction of the
above-named courts for any reason other than the failure to lawfully serve
process, (b) that it or its property is exempt or immune from jurisdiction of
any such court or from any legal process commenced in such courts (whether
through service of notice, attachment

 

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prior to judgment, attachment in aid of execution of judgment, execution of
judgment or otherwise), and (c) to the fullest extent permitted by applicable
law, that (i) the suit, action, or proceeding in any such court is brought in an
inconvenient forum, (ii) the venue of such suit, action or proceeding is
improper and (iii) this Agreement, or the subject matter hereof, may not be
enforced in or by such courts.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.

 

 

BERGER HOLDINGS, LTD.

 

 

 

 

 

By:

/s/ Joseph F. Weiderman

 

 

 

Name: Joseph F. Weiderman

 

 

Title: President and Chief Executive Officer

 

 

 

 

 

 

 

AMERIMAX PENNSYLVANIA, INC.

 

 

 

 

 

 

 

By:

/s/ J. David Smith

 

 

 

Name: J. David Smith

 

 

Title: President

 

 

 

 

 

 

 

EURAMAX INTERNATIONAL, INC.

 

 

 

 

 

 

 

By:

/s/ J. David Smith

 

 

 

Name: J. David Smith

 

 

Title: President

 

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