EX-10.1:



 





Exhibit 10.1




Option No. «grantnumber»




HMS HOLDINGS CORP.




Incentive Stock Option Agreement




     THIS AGREEMENT, made as of the «grantdate» between HMS HOLDINGS CORP., a
New York corporation (the “Corporation”), and «first» «last» (the “Optionee”),
is pursuant to the 1999 Long-Term Incentive 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 March
9, 1999. Said Plan, as it may hereafter be amended and continued by the Board
of Directors 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 «granted_» shares
of the Corporation’s common shares, $.01 par value per share (the “Common
Stock”), at «exerciseprice» 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 «expiration» (hereinafter referred to as the
“Expiration Date”).



Page 1









 





HMS Holdings Corp. Stock Option Number «grantnumber»




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



	 	 	 	 	 
	«v1date»

	 	 	 	«v1shares» shares
	«v2date»

	 	an additional
	 	«v2shares» shares
	«v3date»

	 	an additional
	 	«v3shares» shares







     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.



     5. In the event the Optionee shall cease to be employed by the Corporation
for any reason, including but not limited to by reason of the Optionee’s death
or disability, all unexercised Options held by the Optionee which are not then
exercisable by the Optionee shall lapse effective the date of termination of
employment. 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



Page 2









 





HMS Holdings Corp. Stock Option Number «grantnumber»




cause”, disability, as defined below, or death, any then
exercisable Options shall terminate upon the expiration of one month after the
termination of employment. If the employment terminates because of a 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 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.



     6. Nothing in this Agreement shall confer upon the Optionee any right to
continue in the employ of the Corporation or affect the right of the
Corporation to terminate his employment 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.



          (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



Page 3









 





HMS Holdings Corp. Stock Option Number «grantnumber»





     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. If the total outstanding shares of Common Stock of the Corporation
shall be increased or decreased or changed into or exchanged for a different
number or kind of shares of stock or other securities of the Corporation or of
another corporation through reorganization, merger or consolidation,
recapitalization, stock split, split-up, combination or exchange of shares or
declaration of any dividends payable in stock, then the Board shall
proportionally adjust the number of shares (and price per share) subject to the
unexercised portion of this Option (to the nearest possible full share) subject
in all cases to the limitations of Section 425 of the Code.



     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 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.



Page 4









 




HMS Holdings Corp. Stock Option Number «grantnumber»

     10. The Option granted hereby is designated an Incentive Stock Option
under Section 422A(b) of the Code, to the extent permitted and subject to the
time provisions set forth within Section 5 of this Agreement.



     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 F. Miller III
	

	 	 	 	Chairman and Chief Executive Officer
	 
	 	 	 	 
	

	 	Date:
	 	«grantdate»







     The undersigned reaffirms his (her) obligations under a previously
executed Restrictive Covenant/Non-Compete Agreement with the Corporation and
agrees that his (her) reaffirmation of such obligations is an inducement to the
Corporation to grant the Option covered by this Agreement.



	 	 	 	 	 
	

	 	Optionee:
	 	
	

	 	 
	 	

	

	 	 	 	«first» «last»
	

	 	Date:
	 	
	

	 	 
	 	









Page 5