Exhibit 10.20

 

Director NQSO Agreement

 

Congratulations, you have been awarded a stock option grant in recognition of
your contributions to the success of HMS Holdings Corp. (the “Company”) and its
Affiliates.  A stock option grant gives you the right to purchase a specific
number of shares of the Company’s common stock at a fixed price, assuming that
you satisfy conditions of the Company’s Fourth Amended and Restated 2006 Stock
Plan (the “Plan”) and the implementing agreement.  We would like you to have an
opportunity to share in the continued success of the Company through this stock
option grant under the Plan.  The following represents a brief description of
your grant.  Additional details regarding your award are provided in the
attached Nonqualified Stock Option Agreement (the “Grant Agreement”) and in the
Plan.

 

Stock Option Grant Summary:

 

Date of Grant

 

October 5, 2012

Option Shares

 

             

Exercise Price per Share

 

$27.79

Exercisability

 

For Directors: One-quarter of the Option Shares on December 31 of the year in
which the Grant is made and an additional one-quarter on the last day of each of
the first three quarters of the following calendar year. Each of those dates is
an “Exercisability Date.”

Term Expiration Date

 

October 4, 2019

 

You have been granted a nonqualified stock option to purchase Shares of the
Company’s common stock.  The total number of Shares under your grant is in the
chart above under “Option Shares” and the price per share is under “Exercise
Price per Share.”

 

The potential value of your stock option grant increases if the price of the
Company’s stock increases, but you also have to continue to provide services to
the Company (except as the Grant Agreement provides) to actually receive such
value.  Of course, the value of the stock may go up and down over time. You
can’t exercise the stock option (actually purchase the shares) until it becomes
exercisable.  Your stock option becomes exercisable as provided in the chart
above under Exercisability, assuming you remain an employee of or member of the
Board of Directors of the Company and subject to the terms in the Grant
Agreement.

 

Whether or not you decide to exercise your stock option and purchase the stock
is your decision, and, you have until the stock option expires (which will be no
later than the seventh anniversary of the Date of Grant, October 4, 2019 but can
end earlier in various situations) to make that decision. Once you have
purchased the Shares, you will own them and may decide whether to hold the
stock, sell the stock or give the stock to someone as a gift.

 

You can access the Merrill Lynch portal updates and information:
https://www.benefits.ml.com.  Please email IR@hms.com with any questions.

 

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HMS Holdings Corp.

Nonqualified Stock Option Grant Agreement for Directors

 

HMS Holdings Corp. (the “Company”) has granted you an option (the “Option”)
under the HMS Holdings Corp. Fourth Amended and Restated 2006 Stock Plan (as it
may be amended from time to time) (the “Plan”).  The Option lets you purchase a
specified number (the “Option Shares”) of Shares of the Company’s common stock,
at a specified price per Share (the “Exercise Price”).

 

The individualized communication you received (the “Cover Letter”) provides the
details for your Option.  It specifies the number of Option Shares, the Exercise
Price, the Date of Grant, the schedule for exercisability, and the latest date
the Option will expire (the “Term Expiration Date”).

 

The Option is subject in all respects to the applicable provisions of the Plan. 
This Grant Agreement does not cover all of the rules that apply to the Option
under the Plan; please refer to the Plan document.  Capitalized terms are
defined either further below in this grant agreement (the “Grant Agreement”) or
in the Plan.

 

The Plan document is available on the Merrill Lynch website.  The Prospectus for
the Plan, the Company’s S-8, Annual Report on Form 10-K, and other filings the
Company makes with the Securities and Exchange Commission are available for your
review under the Investor Relations tab on the Company’s web site.  You may also
obtain paper copies of these documents upon request to the Company’s Investor
Relations department (IR@HMS.com).

 

Neither the Company nor anyone else is making any representations or promises
regarding the duration of your service, exercisability of the Option, the value
of the Company’s stock or of this Option, or the Company’s prospects.  The
Company is not providing any advice regarding tax consequences to you or
regarding your decisions regarding the Option; you agree to rely only upon your
own personal advisors.

 

No one may sell, transfer, or distribute the Option or the securities that may
be purchased upon exercising the Option without an effective registration
statement relating thereto or an opinion of counsel satisfactory to HMS Holdings
Corp. or other information and representations satisfactory to it that such
registration is not required.

 

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In addition to the Plan’s terms and restrictions, the following terms and
restrictions apply:

 

Option Exercisability

 

While your Option remains in effect under the Option Expiration section, you may
exercise any exercisable portions of the Option (and buy the Option Shares)
under the timing rules of this section, provided that you may not exercise the
Option for fewer than 100 full shares at any particular time unless fewer than
100 remain unexercised.

 

The Option will become exercisable on the schedule provided in the Cover Letter
to this Grant Agreement assuming that through each Exercisability Date, (i) if
you received the Option in your capacity as an employee of the Company, you
remain an employee or (ii) if you received the Option in your capacity as a
member of the Company’s Board, you remain a member of the Company’s Board.  Any
fractional shares will be carried forward to the following Exercisability Date,
unless the Committee selects a different treatment.  For purposes of this Grant
Agreement, employment with the Company will include employment with any
Affiliate whose employees are then eligible to receive Awards under the Plan. 
Unless the Committee determines otherwise, if an entity employing you ceases to
be an Affiliate, your employment with the Company will be treated as ended even
though you continue to be employed by that entity.

 

Exercisability will accelerate fully on your disability or death, including with
respect to the Performance Option Shares (as defined below).  For this purpose,
“disability” means permanent and total disability as defined by
Section 22(e)(3) of the Code.  Exercisability will continue and increase (until
fully exercisable) over the two years following your date of Retirement. 
“Retirement” for this purpose means cessation of service on or after attaining
age 60 and completing five years of service with the Company.

 

Change in Control

 

If a Change in Control occurs, your Option will be treated as provided in
Section 11 of the Plan if, within 24 months following the Change in Control,
your employment or service ends on a termination without cause (as determined by
the Committee or the Board), provided also that the Option will remain
outstanding for 12 months following such termination but not beyond the Term
Expiration Date.

 

Option Expiration

 

The Option will expire no later than the close of business on the Term
Expiration Date.  Unexercisable portions of the Option expire immediately when
you cease to be employed (unless you are concurrently remaining or becoming a
member of the Board, or, for a Board member, concurrently remaining or becoming
an employee of the Company).  If the Company terminates your employment or
service for cause or if you violate any then applicable restrictive covenant
agreement (such as agreements pertaining to confidentiality, intellectual
property, nonsolicitation, and/or noncompetition), the Option will immediately
expire without regard to whether it is then exercisable.

 

Exercisable portions of the Option remain exercisable until the first to occur
of the following (the “Final Exercise Date”), each as defined further in the
Plan or the Grant Agreement:

 

·                  Three months (measured to the corresponding date in the
month) after your employment (or directorship) ends if you resign or if the
Company terminates your employment or service without cause (as determined under
the Plan), except as provided above under Change in Control

·                  For death or Disability, the first anniversary of the date
employment or service ends

·                  For Retirement, the end of the second year following your
date of Retirement

·                  The Term Expiration Date

 

The Committee can override the expiration provisions of this Grant Agreement.

 

Method of Exercise and Payment for Shares

 

Subject to this Grant Agreement and the Plan, you may exercise the Option only
by providing a written notice (or notice through another previously approved
method, which could include a web-based or voice- or e-mail system) to the
Secretary of the Company or to whomever the Committee designates, received

 

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on or before the date the Option expires.  Each such notice must satisfy
whatever then-current procedures apply to that Option and must contain such
representations (statements from you about your situation) as the Company
requires.  You must, at the same time, pay the Exercise Price using one or more
of the following methods:

 

·                  Cash/Check: cash or check in the amount of the Exercise Price
payable to the order of the Company;

 

·                  Cashless Exercise: an approved cashless exercise method,
including directing the Company to send the stock certificates (or other
acceptable evidence of ownership) to be issued under the Option to a licensed
broker acceptable to the Company as your agent in exchange for the broker’s
tendering to the Company cash (or acceptable cash equivalents) equal to the
Exercise Price and, if you so elect, any required tax withholdings;

 

·                  Net Exercise: by delivery of a notice of “net exercise” to or
as directed by the Company, as a result of which you will receive (i) the number
of shares underlying the portion of the Option being exercised less (ii) such
number of shares as is equal to (A) the aggregate Exercise Price for the portion
of the Option being exercised divided by (B) the Fair Market Value on the date
of exercise;

 

·                  Stock: if permitted by the Committee, by delivery of Shares
owned by you, valued at their Fair Market Value, provided (i) applicable law
then permits such method of payment, (ii) you owned such Shares, if acquired
directly from the Company, for such minimum period of time, if any, as the
Committee may establish in its discretion, and (iii) the Shares are not subject
to any repurchase, forfeiture, unfulfilled vesting, or other similar
restrictions; or any combination of the above permitted forms for payment.

 

Withholding

 

Issuing the Option Shares is contingent on satisfaction of all obligations with
respect to required tax or other required withholdings (for example, in the
U.S., Federal, state, and local taxes).  The Company may take any action
permitted under Section 14(c) of the Plan to satisfy such obligation, including
satisfying the tax obligations by (i) reducing the number of Option Shares to be
issued to you in connection with any exercise of the Option by that number of
Option Shares (valued at their Fair Market Value on the date of exercise) that
would equal all taxes required to be withheld (at their minimum withholding
levels), (ii) accepting payment of the withholdings from a broker in connection
with a Cashless Exercise of the Option or directly from you, or (iii) taking any
other action under Section 14(c) of the Plan.  If a fractional share remains
after deduction for required withholding, the Company will pay you the value of
the fraction in cash.

 

Compliance with Law

 

You may not exercise the Option if the Company’s issuing stock upon such
exercise would violate any applicable Federal or state securities laws or other
laws or regulations.  You may not sell or otherwise dispose of the Option Shares
in violation of applicable law.  As part of this prohibition, you may not use
the Cashless Exercise methods if the Company’s insider trading policy then
prohibits you from selling to the market.

 

Additional Conditions to Exercise

 

The Company may postpone issuing and delivering any Option Shares for so long as
the Company determines to be advisable to satisfy the following:

 

·                  its completing or amending any securities registration or
qualification of the Option Shares or its or your satisfying any exemption from
registration under any Federal or state law, rule, or regulation;

 

·                  its receiving proof it considers satisfactory that a person
seeking to exercise the Option after your death is entitled to do so;

 

·                  your complying with any requests for representations under
the Plan; and

 

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·                  your complying with any Federal, state, or local tax
withholding obligations.

 

Additional Representations from You

 

If you exercise the Option at a time when the Company does not have a current
registration statement (generally on Form S-8) under the Securities Act of 1933
(the “Act”) that covers issuances of shares to you, you must comply with the
following before the Company will issue the Option Shares to you.  You must —

 

·                  represent to the Company, in a manner satisfactory to the
Company’s counsel, that you are acquiring the Option Shares for your own account
and not with a view to reselling or distributing the Option Shares; and

 

·                  agree that you will not sell, transfer, or otherwise dispose
of the Option Shares unless:

 

·                  a registration statement under the Act is effective at the
time of disposition with respect to the Option Shares you propose to sell,
transfer, or otherwise dispose of; or

 

·                  the Company has received an opinion of counsel or other
information and representations it considers satisfactory to the effect that,
because of Rule 144 under the Act or otherwise, no registration under the Act is
required.

 

No Effect on Employment or Other Relationship

 

Nothing in this Grant Agreement restricts the Company’s rights or those of any
of its Affiliates to terminate your employment or other relationship at any time
and for any or no reason.  The termination of employment or other relationship,
whether by the Company or any of its Affiliates or otherwise, and regardless of
the reason for such termination, has the consequences provided for under the
Plan and any applicable employment or severance agreement or plan.

 

Not a Shareholder

 

You understand and agree that the Company will not consider you a shareholder
for any purpose with respect to any of the Option Shares until you have
exercised the Option, paid for the shares, and received evidence of ownership.

 

No Effect on Running Business

 

You understand and agree that the existence of the Option will not affect in
any, way the right or power of the Company or its shareholders to make or
authorize any adjustments, recapitalizations, reorganizations, or other changes
in the Company’s capital structure or its business, or any merger or
consolidation of the Company, or any issuance of bonds, debentures, preferred or
other stock, with preference ahead of or convertible into, or otherwise
affecting the Company’s common stock or the rights thereof, or the dissolution
or liquidation of the Company, or any sale or transfer of all or any part of its
assets or business, or any other corporate act or proceeding, whether or not of
a similar character to those described above.

 

Governing Law

 

The laws of the State of New York will govern all matters relating to the
Option, without regard to the principles of conflict of laws.

 

Notices

 

Any notice you give to the Company must follow the procedures then in effect. 
If no other procedures apply, you must send your notice in writing by hand or by
mail to the office of the Company’s Secretary (or to the Chair of the Committee
if you are then serving as the sole Secretary).  If mailed, you should address
it to the Company’s Secretary (or the Chair of the Committee) at the Company’s
then corporate headquarters, unless the Company directs optionees to send
notices to another corporate department or to a third party administrator or
specifies another method of transmitting notice.  The Company and the Committee
will address any notices to you using its standard electronic communications
methods or at

 

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your office or home address as reflected on the Company’s personnel or other
business records.  You and the Company may change the address for notice by like
notice to the other, and the Company can also change the address for notice by
general announcements to optionees.

 

Amendment

 

Subject to any required action by the Committee or the shareholders of the
Company, the Company may cancel the Option and provide a new Award in its place,
provided that the Award so replaced will satisfy all of the requirements of the
Plan as of the date such new Award is made and no such action will adversely
affect the Option to the extent then exercisable.

 

Plan Governs

 

Wherever a conflict may arise between the terms of this Grant Agreement and the
terms of the Plan, the terms of the Plan will control.  The Committee may adjust
the number of Option Shares and the Exercise Price and other terms of the Option
from time to time as the Plan provides.

 

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