Exhibit 10.4





Exhibit 10.4




Option No. XXXX




HMS HOLDINGS CORP.




Non-Qualified Stock Option Agreement




THIS AGREEMENT, made as of the October 1, 2010 between HMS HOLDINGS CORP., a New York
corporation (the “Corporation”), and First Name Last Name (the “Optionee”), is pursuant to the
Amended and Restated 2006 Stock Plan of the Corporation (the “Plan”). The Plan, as adopted by the
Board of Directors (the “Board”), was approved by the shareholders (the “Shareholders”) of the
Corporation on June 12, 2009. Said Plan, as it may hereafter be amended and continued by the Board
and the Shareholders, is incorporated herein by reference and made a part of this Agreement.



The Plan is administered by the Compensation Committee (the “Committee”) of the Board, as
defined in the Plan. The Board has determined that it would be to the advantage and interest of the
Corporation and its shareholders to grant the option provided for herein to the Optionee as an
inducement to remain in the service of the Corporation, or a Parent or a Subsidiary thereof, and as
incentive for increased efforts during such service.



NOW, THEREFORE, pursuant to the Plan, the Corporation, with the approval of the Committee,
hereby grants to the Optionee as of the date hereof an option (the “Option”) to purchase all or any
part of an aggregate of XXXX shares of the Corporation’s common shares, $.01 par value per share
(the “Common Stock”), at $XX.XX per share upon the following terms and conditions:



1. The Option and all rights of the Optionee to purchase shares of Common Stock hereunder
shall terminate on September 30, 2017 (hereinafter referred to as the “Expiration Date”).



 


 









 







2. The Optionee’s right and option to purchase one-half of the shares of Common Stock pursuant to
the Option shall vest as follows:



	 	 	 	 	 
	December 31, 2011

	 	 	 	XXX shares
	December 31, 2012

	 	an additional
	 	XXX shares
	December 31, 2013

	 	an additional
	 	XXX shares






The Optionee’s right and option to purchase the other one-half of the shares of Common Stock
pursuant to the Option shall vest in accordance with the requirements set forth on Exhibit A.



3. Once the Option has vested in accordance with the preceding Section 2, it shall continue to
be exercisable until the earlier of the termination of the Optionee’s rights hereunder pursuant to
Section 5, or the Expiration Date. A partial exercise of the Option shall not affect the
Optionee’s right to exercise the Option with respect to the remaining shares subject thereto,
subject to the conditions of the Plan and this Agreement. Full payment for shares acquired shall
be made in cash at or prior to the time that an Option, or any part thereof, is exercised.



4. (a) Except as provided in Section 5, the Option may not be exercised unless the Optionee
is, at the time of exercise, an employee, as defined in the Plan, of the Corporation or of a Parent
or Subsidiary, as defined in the Plan, thereof (collectively hereinafter referred to as the
“Corporation”). The Option shall not be affected by any change of duties or position so long as the
Optionee continues to be an employee of the Corporation. A leave of absence or an interruption in
service (including an interruption during military service) authorized or approved by the
Corporation shall not be deemed an interruption of employment for the purposes of Section 5.



(b) No partial exercise of the Option may be for less than 100 full shares (or less than all
the shares as to which the Option is exercisable, if less than 100 shares), and in no event shall
the Corporation be required to issue any fractional shares.


 


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5. (a) In the event the Optionee shall cease to be employed by the Corporation by reason of
the Optionee’s death, disability (as defined below) or involuntarily by the Company other than for
cause (as defined in paragraph (b) below) within 24 months following a Change in Control (as
defined in the Plan), all Options held by the Optionee shall become fully vested and exercisable. In the event the Optionee shall cease
to be employed by the Corporation for any other reason, all unexercised Options held by the
Optionee which are not then exercisable by the Optionee shall lapse effective the date of
termination of employment. For purposes of this Agreement “disability” shall mean permanent and
total disability as defined by Section 22(e)(3) of the Internal Revenue Code of 1986, as amended
(the “Code”) as it now exists or may hereafter be amended



(b) To the extent not theretofore exercised, any Options held by the Optionee which are then
exercisable shall terminate as follows: If the employment is terminated for any reason other than
for cause (as defined below), disability, death or involuntarily by the Corporation other than for
cause within 24 months following a Change in Control, any then exercisable Options shall terminate
upon the expiration of three months after the termination of employment. If the employment
terminates because of disability (as defined in paragraph (a) above) or because of death, any then
exercisable Options shall terminate upon the expiration of one year after the termination of
employment. If the termination is “for cause” as determined by the Board, which shall be deemed to
mean the deliberate gross misconduct of the Optionee or the violation by the Optionee, after any
such termination, of the terms of a Restrictive covenant and Confidentiality/Non-Disclosure
Agreement with the Corporation, any then exercisable Options shall terminate upon the termination
of employment. If the employment is terminated by the Corporation other than for cause (as defined
above) within 24 months following a Change in Control, any then exercisable Options shall terminate
upon the expiration of one year after the termination of employment.



6. Nothing in this Agreement shall confer upon the Optionee any right to continue in the
employ or service of the Corporation or affect the right of the Corporation to terminate the
Optionee’s employment or service at any time.



7. (a) The Optionee may exercise the Option with respect to all or any part of the shares then
exercisable by giving the Corporation written notice at 401 Park Avenue South, New York, New York
10016. Such notice shall specify the number of shares as to which the Option is being exercised
and shall be preceded or accompanied by payment in full in accordance with Section 3 hereof.


 


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(b) Prior to or concurrently with delivery by the Corporation to the Optionee of a
certificate(s) representing such shares, the Optionee shall:




(i) upon notification of the amount due, pay promptly any
amount necessary to satisfy applicable federal, state or local tax
requirements; and




(ii) if such shares are not currently or effectively
registered under the Securities Act of 1933, as amended (the
“Act”) and applicable state securities laws, give satisfactory
assurance in writing signed by the Optionee or his legal
representative, as the case may be, that such shares are being
purchased for investment and not with a view to the distribution
thereof.



(c) As soon as practicable after receipt of the notice and payment referred to in subparagraph
(a) of this Section 7, the Corporation shall cause to be delivered to the Optionee at the office of
the Corporation at 401 Park Avenue South, New York, New York 10016 or such other place as may be
mutually acceptable to the Corporation and the Optionee, a certificate or certificates for such
shares; provided however, that the time of such delivery may be postponed by the Corporation for
such period of time as may be required for the Corporation, with reasonable diligence, to comply
with applicable registration requirements under the Act, the Securities Exchange Act of 1934, as
amended, and any requirements under any other law or regulation applicable to the issuance or
transfer of shares. If the Optionee fails for any reason to accept delivery of all or any part of
the number of shares specified in such notice upon tender of delivery thereof, his right to
purchase such undelivered shares may be terminated.



8. In the event of any merger, reorganization, consolidation, recapitalization, stock
dividend, stock split, reverse stock split, spin-off, extraordinary cash dividend or similar
transaction or other change on corporate structure affecting the Common Stock, the Committee shall
make such adjustments and substitutions to the number, class and kind of shares (to the nearest
possible full share) and to the price per share subject to the unexercised portion of this Option
as the Committee determines to be appropriate in its sole discretion.


 


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9. This Option shall not be transferable other than by will or by the laws of descent and
distribution, or pursuant to a qualified domestic relations order as defined by the Code or Title I of the Employee Retirement Income Security Act, or the rules thereunder. During
the lifetime of the Optionee, this Option shall be exercisable only by the Optionee. In the event
of any attempt by the Optionee to transfer, assign, pledge, hypothecate or otherwise dispose of the
Option or of any right hereunder, except as provided for herein or in the Amended and Restated 2006
Stock Plan, or in the event of the levy of any attachment, execution or similar process upon the
rights or interest hereby conferred, the Corporation may terminate this Option by notice to the
Optionee and it shall thereupon become null and void.



IN WITNESS WHEREOF, the Corporation has caused this Agreement to be signed by a duly
authorized officer, and the Optionee has affixed his signature hereto.



	 	 	 	 	 	 	 
	 	 	By: HMS HOLDINGS CORP.	 	 
	 
	 	 	 	 	 	 
	 

	 	Signature:
	 	
 

	 	 
	 

	 	 	 	
William C. Lucia

Chief Executive Officer
	 	 
	 
	 	 	 	 	 	 
	 

	 	Date:
	 	October 1, 2010	 	 
	 
	 	 	 	 	 	 
	 

	 	Optionee:	 	 	 	 
	 

	 	 	 	 

First Name Last Name
	 	 
	 
	 	 	 	 	 	 
	 

	 	Date:	 	 	 	 
	 

	 	 	 	 

	 	 





 


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EXHIBIT A



The vesting of 50% of the shares of Common Stock pursuant to the Option (the “Performance
Option Shares”) shall occur to the extent that the performance and service conditions set forth
below are satisfied:




Performance Conditions



1. The Corporation’s earnings per share (“EPS”) for the fiscal year ending December 31, 2011
are at least 15% higher than the Corporation’s EPS for fiscal year ending December 31, 2010.



2. Based on the percentage increase in EPS for the fiscal year ending December 31, 2012
compared to EPS for fiscal year ending December 31, 2010 the percentage of Performance Option
Shares that shall be deemed to be vested, subject to satisfaction of the service condition, shall
be determined in accordance with the following table:



	 	 	 
	Increase in EPS
	 	Deemed Vested Percentage
	 
	 	 
	 	 	 
	40% or greater
	 	100%






EPS shall be determined in accordance with generally accepted accounting principles (“GAAP”),
excluding the effects of any transaction during the Performance Period in which the Corporation or
a subsidiary acquires or combines with another company that was not then a subsidiary.



The Committee in its sole discretion following the end of the Performance Period may determine
that, notwithstanding whether the EPS requirement above has been achieved, a larger or smaller
percentage of the Performance Option Shares shall be deemed to be vested (but in no event more than
100%), subject to satisfaction of the service condition.




Service Condition



The Optionee must remain employed by the Corporation until December 31, 2013.




 


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