Exhibit 10.05





EXHIBIT 10.5




VANGUARD HEALTH SYSTEMS, INC.




NONQUALIFIED STOCK OPTION AGREEMENT

(TIME OPTION)




THIS AGREEMENT (the “Agreement”), is made effective as of the
 _____ 

day of
 _____,
201_, (hereinafter called the “Date of Grant”), between Vanguard Health Systems, Inc., a
Delaware corporation (hereinafter called the “Company”), and
 _____ 

(hereinafter called
the “Participant”).



R E C I T A L S:




WHEREAS, the Company has adopted the Vanguard Health Systems, Inc. 2011 Stock Incentive Plan
(the “Plan”), which Plan is incorporated herein by reference and made a part of this
Agreement. Capitalized terms not otherwise defined herein shall have the same meanings as in the
Plan; and



WHEREAS, the Committee has determined that it would be in the best interests of the Company
and its shareholders to grant the option provided for herein to the Participant pursuant to the
Plan and the terms set forth herein.



NOW THEREFORE, in consideration of the mutual covenants hereinafter set forth, the parties
agree as follows:



1. Grant of the Option. The Company hereby grants to the Participant the right and
option (the “Option”) to purchase, on the terms and conditions hereinafter set forth, all
or any part of an aggregate of
 _____ 

Shares, subject to adjustment as set forth in the Plan. The
purchase price of the Shares subject to the Option shall be $         per Share (the “Option Price”),
reflecting the Fair Market Value of a Share as of the Date of Grant. The Option is intended to be a
non-qualified stock option, and is not intended to be treated as an option that complies with
Section 422 of the Code.




2. Vesting.



(a) Subject to the Participant’s continued Employment with the Company, the Option shall vest
and become exercisable with respect to 331/3% of the Shares initially covered by the Option on each
of the first, second and third anniversaries of the Date of Grant.



At any time, the portion of the Option which has become vested and exercisable as described
above (or pursuant to Section 2(c) below) is hereinafter referred to as the “Vested Portion”.



(b) If the Participant’s Employment with the Company is terminated for any reason, the Option
shall, to the extent not then vested, be canceled by the Company without consideration and the
Vested Portion of the Option shall remain exercisable for the period set forth in Section 3(a).


 


 









 





(c) Notwithstanding any other provisions of this Agreement to the contrary, in the event of a
Change in Control the Option shall, to the extent not then vested and not previously canceled,
immediately become fully vested and exercisable.




3. Exercise of Option.



(a) Period of Exercise. Subject to the provisions of the Plan and this Agreement, the
Participant may exercise all or any part of the Vested Portion of the Option at any time prior to
the earliest to occur of:




(i) the tenth anniversary of the Date of Grant;




(ii) one year following the date of the Participant’s termination of Employment due to
death or “Disability”; and




(iii) 90 days following the date of the Participant’s termination of Employment for any
reason other than due to the Participant’s death or Disability.




For purposes of this Agreement:



“Disability” shall mean “disability” as defined in any employment agreement then in effect
between the Participant and the Company or if not defined therein or if there shall be no such
agreement, as defined in the Company’s long-term disability plan as in effect from time to time, or
if there shall be no plan or if not defined therein, the Participant’s becoming physically or
mentally incapacitated and consequent inability for a period of six (6) months in any twelve (12)
consecutive month period to perform his duties to the Company.




(b) Method of Exercise.




(i) Subject to Section 3(a), the Vested Portion of the Option may be exercised by
delivering to the Company at its principal office written notice of intent to so exercise;
provided that, the Option may be exercised with respect to whole Shares only. Such notice
shall specify the number of Shares for which the Option is being exercised and shall be
accompanied by payment in full of the Option Price. The payment of the Option Price may be
made at the election of the Participant (i) in cash or its equivalent (e.g., by check), (ii)
to the extent permitted by the Committee, in Shares having a Fair Market Value equal to the
aggregate Option Price for the Shares being purchased and satisfying such other requirements
as may be imposed by the Committee; provided, that such Shares have been held by the
Participant for no less than six months (or such other period as established from time to
time by the Committee in order to avoid adverse accounting treatment applying generally
accepted accounting principles), (iii) partly in cash and, to the extent permitted by the
Committee, partly in such Shares, (iv) if there is a public market for the Shares at such
time, through the delivery of irrevocable instructions to a broker to sell Shares obtained
upon the exercise of the Option and to deliver promptly to the Company an amount out of the
proceeds of such Sale equal to the aggregate Option Price for the Shares being purchased or
(v) to the extent permitted by the Committee, by “net settlement” in Shares. No Participant
shall have any rights to dividends or other rights of a stockholder with respect to Shares
subject to an Option until the Participant has given written notice of exercise of the Option, paid in full for
such Shares and, if applicable, has satisfied any other conditions imposed by the Committee
pursuant to the Plan.


 


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(ii) Notwithstanding any other provision of the Plan or this Agreement to the contrary,
the Option may not be exercised prior to the completion of any registration or qualification
of the Option or the Shares under applicable state and federal securities or other laws, or
under any ruling or regulation of any governmental body or national securities exchange that
the Committee shall in its sole discretion determine to be necessary or advisable.




(iii) Upon the Company’s determination that the Option has been validly exercised as to
any of the Shares, the Company shall issue certificates in the Participant’s name for such
Shares. However, the Company shall not be liable to the Participant for damages relating to
any delays in issuing the certificates to him, any loss of the certificates, or any mistakes
or errors in the issuance of the certificates or in the certificates themselves.
Notwithstanding the foregoing, the Company may elect to recognize the Participant’s
ownership through uncertificated book entry.




(iv) In the event of the Participant’s death, the Vested Portion of the Option shall
remain exercisable by the Participant’s executor or administrator, or the person or persons
to whom the Participant’s rights under this Agreement shall pass by will or by the laws of
descent and distribution as the case may be, to the extent set forth in Section 3(a). Any
heir or legatee of the Participant shall take rights herein granted subject to the terms and
conditions hereof.




(v) As a condition to exercising the Option, the Participant shall (if not already a
party thereto) become a party to the Company’s Stockholders Agreement, dated as of November
4, 2004, as amended (the “Stockholders Agreement”).



4. No Right to Continued Employment. The granting of the Option evidenced hereby and
this Agreement shall impose no obligation on the Company or any Affiliate to continue the
Employment of the Participant and shall not lessen or affect the Company’s or its Affiliate’s right
to terminate the Employment of such Participant.



5. Legend on Certificates. Unless the Company issues the Shares in uncertificated
form, the certificates representing the Shares purchased by exercise of the Option shall be subject
to the rules, regulations, and other requirements of the Securities and Exchange Commission, any
stock exchange upon which such Shares are listed, and any applicable Federal or state laws, and the
Committee may cause a legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.


 


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6. Transferability. The Option may not be assigned, alienated, pledged, attached, sold
or otherwise transferred or encumbered by the Participant otherwise than by will or by the laws of
descent and distribution, and any such purported assignment, alienation, pledge, attachment, sale,
transfer or encumbrance shall be void and unenforceable against the Company or any Affiliate;
provided that the designation of a beneficiary shall not constitute an assignment, alienation, pledge, attachment, sale, transfer or encumbrance. No such permitted transfer of
the Option to heirs or legatees of the Participant shall be effective to bind the Company unless
the Committee shall have been furnished with written notice thereof and a copy of such evidence as
the Committee may deem necessary to establish the validity of the transfer and the acceptance by
the transferee or transferees of the terms and conditions hereof. During the Participant’s
lifetime, the Option is exercisable only by the Participant.



7. Withholding. The Participant may be required to pay to the Company or any Affiliate
and the Company shall have the right and is hereby authorized to withhold from any payment due or
transfer made under the Option or under the Plan or from any compensation or other amount owing to
a Participant the amount (in cash, Shares, other securities, other Awards or other property) of any
applicable withholding taxes in respect of the Option, its exercise or any payment or transfer
under or with respect to the Option or the Plan and to take such other action as may be necessary
in the opinion of the Committee to satisfy all obligations for the payment of such withholding
taxes.



8. Securities Laws. Upon the acquisition of any Shares pursuant to the exercise of the
Option, the Participant will make or enter into such written representations, warranties and
agreements as the Committee may reasonably request in order to comply with applicable securities
laws or with this Agreement.



9. Notices. Any notice necessary under this Agreement shall be addressed to the
Company in care of its Secretary at the principal executive office of the Company and to the
Participant at the address appearing in the personnel records of the Company for the Participant or
to either party at such other address as either party hereto may hereafter designate in writing to
the other. Any such notice shall be deemed effective upon receipt thereof by the addressee.



10. Choice of Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF DELAWARE WITHOUT REGARD TO CONFLICTS OF LAWS.


11. Option Subject to Plan and Stockholders Agreement. By entering into this Agreement
the Participant agrees and acknowledges that the Participant has received and read a copy of the
Plan and the Stockholders Agreement. The Option is subject to the Plan and the Stockholders
Agreement. The terms and provisions of the Plan and the Stockholders Agreement as it may be amended
from time to time are hereby incorporated herein by reference. In the event of a conflict between
any term or provision contained herein and a term or provision of the Plan or the Stockholders
Agreement, the applicable terms and provisions of the Plan or the Stockholders Agreement, as
applicable will govern and prevail. In the event of a conflict between any term or provision of the
Plan and any term or provision of the Stockholders Agreement, the applicable terms and provisions
of the Stockholders Agreement will govern and prevail.



12. Signature in Counterparts. This Agreement may be signed in counterparts, each of
which shall be an original, with the same effect as if the signatures thereto and hereto were upon
the same instrument.





 


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IN WITNESS WHEREOF, the parties hereto have executed this Agreement.



	 	 	 	 	 
	 	VANGUARD HEALTH SYSTEMS, INC.

 	 
	 	By:  	
 	 



Agreed and acknowledged as

of the date first above written:




 







 


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