Time-Based Option

Exhibit 10.3

OPTION AGREEMENT

This AGREEMENT (this “Agreement”) is made as of May 4, 2009 (the “Grant Date”)
and effective as of May 5, 2009 by and between Graham Packaging Holdings
Company, a Delaware limited partnership (the “Company”), and David Bullock
(“Optionee”).

1. Certain Definitions. Capitalized terms used, but not otherwise defined, in
this Agreement will have the meanings given to such terms in the Company’s 2008
Management Option Plan (the “Plan”). As used in this Agreement:

(a) “Blackstone” means collectively, Blackstone Capital Partners III Merchant
Banking Fund L.P., Blackstone Offshore Capital Partners III L.P. and their
Affiliates (other than the Company and its Subsidiaries).

(b) “Change in Control” shall have the same meaning as in the Credit Agreement
as of the date hereof.

(c) “Credit Agreement” shall mean the Credit Agreement dated as of October 7,
2004 among Graham Packaging Holdings Company, Graham Packaging Company, L.P.,
GPC Capital Corp. I, the Lenders Named Therein, Deutsche Bank AG Cayman Islands
Branch, Citigroup Global Markets Inc., Goldman Sachs Credit Partners, L.P.,
General Electric Capital Corporation and Lehman Commercial Paper Inc., and any
extensions, renewals, refinancings or refundings thereof in whole or in part.

(d) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

(e) “Financing Default” shall mean an event which would constitute (or with
notice or lapse of time or both would constitute) an event of default (which
event of default has not been cured or waived) under any of the following as
they may be amended from time to time: (i) the Credit Agreement; (ii) the
Indentures and any extensions, renewals, refinancings or refundings thereof in
whole or in part; and (iii) any other agreement under which an amount of
indebtedness of the Company or any of its Subsidiaries is outstanding as of the
time of the aforementioned event, and any extensions, renewals, refinancings or
refundings thereof in whole or in part, (iv) any amendment of, supplement to or
other modification of any of the instruments referred to in clauses (i) through
(iii) above; and (v) any of the securities issued pursuant to or whose terms are
governed by the terms of any of the agreements set forth in clauses (i) through
(iii) above, and any extensions, renewals, refinancings or refundings thereof in
whole or in part.

(f) “Indentures” shall mean the indentures dated as of October 7, 2004 among
Graham Packaging Company, L.P., GPC Capital Corp. I, Graham Packaging Holdings
Company, and The Bank of New York.

2. Grant of Option. Subject to and upon the terms, conditions, and restrictions
set forth in this Agreement and in the Plan, the Company hereby grants to
Optionee an option (the “Option”) to purchase 40 Units (the “Units”) at an
Exercise Price of $25,122.00 per Unit, which is not less than the Fair Market
Value per Unit on the Grant Date, subject to adjustment. The Option may be
exercised from time to time in accordance with the terms of this Agreement.

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3. Term of Option. The term of the Option shall commence at the Grant Date and,
unless earlier terminated in accordance with Section 7 hereof, shall expire ten
(10) years from the Effective Time.

4. Right to Exercise. Unless terminated as hereinafter provided, the Option
shall become exercisable only as follows:

(a) The Option shall become exercisable with respect to 25% of the Units on the
first anniversary of the Effective Time, an additional 25% of the Units on the
second anniversary of the Grant Date, an additional 25% of the Units on the
third anniversary of the Grant Date and an additional 25% of the Units on the
fourth anniversary of the Grant Date if Optionee remains in the continuous
employ of the Company as of each such date. Notwithstanding the foregoing, the
Units shall become immediately exercisable upon the Optionee’s termination of
employment without Cause or for Good Reason during the Employment Period, as
such terms are defined in Optionee’s Employment Agreement with the Company and
Graham Packaging Company, L.P., effective as of May 5, 2009 (the “Employment
Agreement”).

(b) Notwithstanding the foregoing, the Options granted hereby shall become
immediately exercisable in full upon the occurrence of a Change in Control if
Optionee remains in the continuous employ of the Company until the date of the
consummation of such Change in Control.

(c) Optionee shall be entitled to the privileges of ownership with respect to
the Units purchased and delivered to Optionee upon the exercise of all or part
of this Option, subject to Section 8 hereof. No election to exercise any Option
granted hereunder shall become effective unless and until the Optionee executes
a counterpart of the Company’s Agreement of Limited Partnership in order to
become bound thereby.

5. Option Nontransferable. Optionee may not transfer or assign all or any part
of the Option other than by will or by the laws of descent and distribution.
This Option may be exercised, during the lifetime of Optionee, only by Optionee,
or in the event of Optionee’s legal incapacity, by Optionee’s guardian or legal
representative acting on behalf of Optionee in a fiduciary capacity under state
law and court supervision.

6. Notice of Exercise; Payment.

(a) To the extent then exercisable, the Option may be exercised in whole or in
part by written notice to the Company stating the number of Units for which the
Option is being exercised and the intended manner of payment. The date of such
notice shall be the exercise date. Payment equal to the aggregate Exercise Price
of the Units being purchased pursuant to an exercise of the Option must be
tendered in full with the notice of exercise to the Company as provided in the
Plan.

 

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(b) As soon as practicable upon the Company’s receipt of Optionee’s notice of
exercise and payment, the Company shall direct the due issuance of the Units so
purchased.

(c) As a further condition precedent to the exercise of this Option in whole or
in part, Optionee shall comply with all regulations and the requirements of any
regulatory authority having control of, or supervision over, the issuance of the
Units and in connection therewith shall execute any documents which the Board
shall in its sole discretion deem necessary or advisable.

7. Termination of Agreement. The Agreement and the Option granted hereby shall
terminate automatically and without further notice on the earliest of the
following dates:

(a) Subject to Sections 4(a) and 4(b) hereof, after Optionee’s termination of
employment for any reason, all unvested Options will be forfeited immediately,
and all vested Options shall remain exercisable until the lesser of (i) ninety
(90) days following the Optionee’s date of termination or (ii) the remaining
term of the Option; provided, however, if the Optionee is terminated for Cause,
as defined in the Employment Agreement, all vested and unvested Options will be
forfeited immediately and terminate; or

(b) Ten (10) years from the Effective Time.

In the event that Optionee’s employment is terminated for Cause as described in
Section 7(a) hereof, this Agreement shall terminate at the time of such
termination notwithstanding any other provision of this Agreement and Optionee’s
Option will cease to be exercisable to the extent exercisable as of such
termination and will not be or become exercisable after such termination.

8. Call. The provisions of this Section 8 shall cease to apply subsequent to the
later of (i) one hundred (100) days following a Public Offering, or (ii) the
fifth anniversary of the date hereof.

(a) On or after the date the Optionee exercises all or a portion of an Option
granted hereunder, the Company shall have the right and option to purchase for a
period of 90 days from the date of the Optionee’s termination of employment for
any reason (or, if later, for a period of 200 days from the last date the
Optionee exercised an Option), and if the Company exercises such right each
Optionee shall be required to sell to the Company, any or all of his Units at a
price per Unit equal to the Fair Market Value (as of the date the Company
exercises such right); provided, however, that in the event of a Optionee’s
termination of employment by the Company for Cause, then the purchase price per
Unit shall be the lesser of (A) Cost or (B) Fair Market Value.

(b) If and to the extent the Options remain exercisable following the Optionee’s
termination of employment, as provided in Section 7, the Company shall, after an
Optionee’s employment has terminated for any reason, have the right and option
to purchase and if the Company exercises such right each Optionee shall be
required to sell to the Company, any or all of his or her then outstanding
Options at a price per Option equal to the product of the (i) the excess of Fair
Market Value over the Exercise Price, and (ii) the number of Units for which
such Option was exercisable.

 

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(c) If the Company desires to exercise its right to purchase any Options or
Units pursuant to this Section 8, the Company shall, not later than 60 days
after the date of the Optionee’s termination of employment (or, with respect to
Section 8(a), if later, 170 days from the last date an Option, or a portion of
an Option, was exercised), send written notice of its intention to purchase such
Units. The closing of the purchase shall take place at the principal office of
the Company on the 30th day after the giving of notice by the Company of its
exercise of its option to purchase.

(d) The Company shall have the right to assign any or all of its rights to
purchase Options and/or Units pursuant to this Section 8; provided, however,
that the assignee of such rights may purchase Options and/or Option Units only
by delivery of a cashier’s check or a certified check.

If at any time the Company elects to purchase any Units pursuant to Section 8
hereof, the Company shall pay the purchase price for such Units, by the
Company’s delivery of a bank cashier’s check or certified check; provided that
if a Financing Default exists or, after giving effect to such payment (including
any distribution or loan from an affiliate of the Company to the Company in
connection therewith) would exist, which prohibits such cash payment, the
portion of the cash payment so prohibited (which may not exceed 55% of the
excess of the purchase price over the Exercise Price (such excess being the
“Spread”)) shall be made, to the extent such payment is not prohibited by a
Financing Default or would not result (after giving effect to any distributions
or loans from an affiliate of the Company to the Company in connection
therewith) in a Financing Default, by the Company’s delivery of a junior
subordinated promissory note (which shall be subordinated and subject in right
of payment to the prior payment of all indebtedness of the Company) of the
Company (a “Junior Subordinated Note”) in a principal amount equal to the amount
of the purchase price which cannot be paid in cash (which may not exceed 55% of
the Spread), payable in up to five equal annual installments commencing on the
first anniversary of the issuance thereof and bearing interest payable annually
at the prime rate listed in the Wall Street Journal (“WSJ”) on the date of
issuance. If the Company will pay any portion of the purchase price for Units
with a Junior Subordinated Note, the Company shall give the Optionee notice of
the amount of such note (which may not exceed 55% of the Spread) at least 20
days prior to such purchase.

9. No Employment Contract. Nothing contained in this Agreement shall (a) confer
upon Optionee any right to be employed by or remain employed by the Company or
any affiliate, or (b) limit or affect in any manner the right of the Company or
any affiliate to terminate the employment or adjust the compensation of
Optionee.

10. Taxes and Withholding. The Company may withhold, or require Optionee to
remit to the Company, an amount sufficient to satisfy federal, state, local or
foreign taxes (including the Optionee’s FICA obligation) in connection with any
payment made or benefit realized by Optionee or other person under this
Agreement or otherwise, and if the amounts available to the Company for such
withholding are insufficient, it shall be a condition to the receipt of such
payment or the realization of such benefit that Optionee or such other person
make arrangements satisfactory to the Company for payment of the balance of such
taxes required to be withheld.

 

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11. Compliance with Law. The Company shall make reasonable efforts to comply
with all applicable federal and state securities laws; provided, however, that
notwithstanding any other provision of this Agreement, the Option shall not be
exercisable if the exercise thereof would result in a violation of any such law.

12. Adjustments. The Units shall be subject to adjustment as provided in the
Plan.

13. Relation to Other Benefits. Any economic or other benefit to Optionee under
this Agreement shall not be taken into account in determining any benefits to
which Optionee may be entitled under any profit-sharing, retirement or other
benefit or compensation plan maintained by the Company.

14. Amendments. Any amendment to the Plan shall be deemed to be an amendment to
this Agreement to the extent that the amendment is applicable hereto; provided,
however, that no amendment shall adversely affect the rights of Optionee under
this Agreement without Optionee’s prior written consent.

15. Severability. If one or more of the provisions of this Agreement is
invalidated for any reason by a court of competent jurisdiction, any provision
so invalidated shall be deemed to be separable from the other provisions hereof,
and the remaining provisions hereof shall continue to be valid and fully
enforceable.

16. Relation to Plan. This Agreement is subject to the terms and conditions of
the Plan. In the event of any inconsistent provisions between this Agreement and
the Plan, the Plan shall govern. The Board acting pursuant to the Plan, as
constituted from time to time, shall, except as expressly provided otherwise
herein, have the right to determine any questions which arise in connection with
the Option or its exercise.

17. Successors and Assigns. The provisions of this Agreement shall inure to the
benefit of, and be binding upon, the successors, administrators, heirs, legal
representatives and assigns of Optionee, and the successors and assigns of the
Company.

18. Governing Law. The interpretation, performance, and enforcement of this
Agreement shall be governed by the laws of the State of Delaware, without giving
effect to the principles of conflict of laws thereof and all parties, including
their successors and assigns, consent to the jurisdiction of the state and
federal courts of Delaware.

19. Prior Agreement. As of the Effective Time, this Agreement supersedes any and
all prior and/or contemporaneous agreements, either oral or in writing, between
the parties hereto, or between either or both of the parties hereto and the
Company, with respect to the subject matter hereof. Each party to this Agreement
acknowledges that no representations, inducements, promises, or other
agreements, orally or otherwise, have been made by any party, or anyone acting
on behalf of any party, pertaining to the subject matter hereof, which are not
embodied herein, and that no prior and/or contemporaneous agreement, statement
or promise pertaining to the subject matter hereof that is not contained in this
Agreement shall be valid or binding on either party.

 

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20. Notices. For all purposes of this Agreement, all communications, including
without limitation notices, consents, requests or approvals, required or
permitted to be given hereunder will be in writing and will be deemed to have
been duly given when hand delivered or dispatched by electronic facsimile
transmission (with receipt thereof confirmed), or five business days after
having been mailed by United States registered or certified mail, return receipt
requested, postage prepaid, or three business days after having been sent by a
nationally recognized overnight courier service such as Federal Express, UPS, or
Purolator, addressed to the Company (to the attention of the Secretary of the
Company) at its principal executive offices and to Optionee at his principal
residence, or to such other address as any party may have furnished to the other
in writing and in accordance herewith, except that notices of changes of address
shall be effective only upon receipt.

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

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on its
behalf by its duly authorized officer and Optionee has executed this Agreement,
as of the day and year first above written.

Graham Packaging Holdings Company By:   /s/ Mark S. Burgess

Name & Title: Mark S. Burgess

Chief Executive Officer

/s/ David Bullock

OPTIONEE

Name: David Bullock

 

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