EXHIBIT 10.16

 

FORM OF 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 1, 2011
    
	
 
    	
Option Shares
    	
 
    	
2,554
    
	
 
    	
Exercise Price per   Share
    	
 
    	
$22.95
    
	
 
    	
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.
    
	
 
    	
Term Expiration Date
    	
 
    	
September 30, 2018
    


 

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, September 30, 2018, 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.

 











 

HMS HOLDINGS CORP.

FORM OF NONQUALIFIED STOCK OPTION GRANT AGREEMENT FOR EMPLOYEES AND 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.

 











 

                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 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
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
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 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.