Exhibit 10.4

 

2014 EXECUTIVE RSU AGREEMENT

 

Dear Participant,

 

Congratulations, you have been awarded restricted stock units (“RSUs”) in recognition of your contributions to the success of HMS Holdings Corp. (the “Company”) and its Affiliates.  A restricted stock unit entitles you to receive a share of the Company’s common stock at a future date, 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 these RSUs under the Plan.  The following represents a brief description of your grant.  Additional details regarding your award are provided in the attached Restricted Stock Unit Agreement (the “Grant Agreement”) and in the Plan.

 

Restricted Stock Unit Grant Summary:

 

	
Date of Grant
    	
 
    	
March 05, 2014
    
	
RSU Shares
    	
 
    	
See summary   page for specific grant information
    
	
Vesting Schedule
    	
 
    	
Provided the Company   achieves the 2014 Performance Conditions set forth on Exhibit A   to this Grant Agreement, the RSU Shares shall vest as follows:

 

One-quarter of the   RSU Shares on the first anniversary of the Date of Grant and an additional   one-quarter on the three following anniversaries of that date. Each of those   dates is a “Vesting Date.”
    


 

·                  You have been granted RSUs for Shares of the Company’s common stock for the total number of Shares specified under “RSU Shares” in the chart above.

 

·                  The potential value of your RSUs 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 will not receive the Shares represented by the RSUs unless and until the RSUs vest.  Your RSUs vest as provided in the chart above under “Vesting,” assuming you remain an employee of the Company and subject to the terms in the Grant Agreement.

 

·                  Once you have received 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://www29.benefits.ml.com/login/login.aspx.  Please email IR@hms.com with any questions.

 











 

HMS HOLDINGS CORP.

RESTRICTED STOCK UNIT GRANT AGREEMENT FOR EXECUTIVES

 

HMS Holdings Corp. (the “Company”) has granted you restricted stock units (the “RSUs”) under the HMS Holdings Corp. Fourth Amended and Restated 2006 Stock Plan (as it may be amended from time to time) (the “Plan”).  Each RSU lets you receive a Share (an “RSU Share”) of the Company’s common stock, upon satisfaction of the conditions to receipt.

 

The individualized communication you received (the “Cover Letter”) provides the details for your RSUs.  It specifies the number of RSU Shares, the Date of Grant, and the schedule for vesting, with the related vesting dates (“Vesting Dates”).

 

The RSUs are 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 RSUs 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, vesting of the RSUs, the value of the Company’s stock or of these RSUs, or the Company’s prospects.  The Company is not providing any advice regarding tax consequences to you or regarding your decisions regarding the RSUs; you agree to rely only upon your own personal advisors.

 

NO ONE MAY SELL, TRANSFER, OR DISTRIBUTE THE RSUS OR THE SECURITIES THAT MAY BE RECEIVED UNDER THEM 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:

 

	
Vesting Schedule
    	
 
    	
Your RSUs become nonforfeitable (“Vested”) as provided in the Cover   Letter to this Grant Agreement, assuming that through each Vesting Date,   (i) if you received the RSUs in your capacity as an employee of the Company, you   continue in service as an employee or (ii) if you received the RSUs in   your capacity as a member of the Company’s Board, you continue in service as   a member of the Company’s Board. Any fractional shares will be carried forward to the following   Vesting 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.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Vesting will   accelerate fully on your disability or death, including with respect to the   Performance RSU Shares (as defined below). For this purpose, “disability”   means permanent and total disability as defined by   Section 22(e)(3) of the Code.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
If your employment   or service ends as a result of Retirement, you will be treated as continuing   in service for vesting purposes until the earlier to occur of (x) the   second anniversary of your Retirement and (y) the last of the applicable   Vesting Dates. “Retirement” for this purpose means cessation of employment or   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 RSUs   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 (i) a termination without cause (as   determined by the Committee or the Board) or (ii) Retirement.
    
	
 
    	
 
    	
 
    
	
Termination for Cause
    	
 
    	
If the Company terminates your employment or   service for cause, the RSUs will immediately terminate without regard to   whether they are then Vested in whole or in part.
    
	
 
    	
 
    	
 
    
	
Distribution Date
    	
 
    	
Subject to any   overriding provisions in the Plan, you will receive a distribution of the   Shares equivalent to your Vested RSU Shares as soon as practicable following   the date(s) on which you become Vested (with the actual date being the “Distribution Date”) and, in   any event, no later than 30   days following an applicable Vesting Date, unless the Committee determines   that you may make a timely deferral election to defer distribution to a later   date and you have made such an election (in which case the deferred date will   be the “Distribution Date”).
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Vesting that accelerates after a Change in   Control will only accelerate the Distribution Date if and to the extent   permitted under Section 409A of the Code.
    
	
 
    	
 
    	
 
    
	
Restrictions and Forfeiture
    	
 
    	
You may not sell, assign, pledge, encumber,   or otherwise transfer any interest (“Transfer”) in the RSU Shares until the RSU   Shares are distributed to you. Any attempted Transfer that precedes the   Distribution Date is invalid.
    


 











 

	
 
    	
 
    	
Unless the Committee determines otherwise or   the Grant Agreement provides otherwise, if your employment or service with   the Company terminates for any reason before your RSUs are Vested, then you   will forfeit the unvested RSUs (and the Shares to which they relate) to the   extent that the RSUs do not otherwise vest as a result of the termination,   pursuant to the rules in the Vesting Schedule   section. The forfeited RSUs will then immediately revert to the Company. You   will receive no payment for the RSUs if you forfeit them.
    
	
 
    	
 
    	
 
    
	
Taxes and Withholding
    	
 
    	
The RSUs provide   tax deferral, meaning that the RSU Shares are not taxable until you actually   receive the RSU Shares on or around the Distribution Date. You will then owe   taxes at ordinary income tax rates as of the Distribution Date at the Shares’   value. If you are an employee of the Company, you may owe FICA and HI (Social   Security and Medicare) taxes before the   Distribution Date.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Issuing the Shares under the RSUs 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 RSU Shares   to be issued to you by that number of RSU Shares (valued at their Fair Market   Value on the date of distribution) 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 sale of the RSU Shares   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
    	
 
    	
The Company will not issue the RSU Shares if   doing so would violate any applicable Federal or state securities laws or   other laws or regulations. You may not sell or otherwise dispose of the RSU   Shares in violation of applicable law.
    
	
 
    	
 
    	
 
    
	
Additional Conditions to Receipt
    	
 
    	
The Company may postpone issuing and   delivering any RSU 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 RSU 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 receive the RSU Shares 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 the vesting provisions of the RSUs are   satisfied and you are entitled to receive RSU Shares 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 RSU Shares to you. You must —
    


 











 

	
 
    	
 
    	
represent to the Company, in a manner   satisfactory to the Company’s counsel, that you are acquiring the RSU Shares   for your own account and not with a view to reselling or distributing the RSU   Shares; and
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
agree that you will not sell,   transfer, or otherwise dispose of the RSU Shares unless:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
a registration statement under the   Act is effective at the time of disposition with respect to the RSU 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.
    
	
 
    	
 
    	
 
    
	
Limited Status
    	
 
    	
You understand and agree that the Company   will not consider you a shareholder for any purpose with respect to the RSU   Shares, unless and until the RSU Shares have been issued to you on the   Distribution Date. You will not receive dividends with respect to the RSUs,   but the Company will credit additional whole or fractional RSUs to this Grant   equal to the result of dividing (i) the product of the total number of   RSUs credited to you under this Grant on the record date for such dividend   (and not yet distributed in Shares) and the per share amount of such dividend   by (ii) the Fair Market Value of one Share on the date such dividend is   paid by the Company to shareholders. The additional RSUs will be or become   Vested to the same extent as the RSUs that resulted in the crediting of such   additional Units and may be paid out in cash or Shares under the timing   rules provided in Section 8(e) of the Plan.
    
	
 
    	
 
    	
 
    
	
Voting
    	
 
    	
You may not vote the RSUs. You may not vote   the RSU Shares unless and until the Shares are distributed to you.
    
	
 
    	
 
    	
 
    
	
No Effect on Running Business
    	
 
    	
You understand and agree that the existence   of the RSUs 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.
    
	
 
    	
 
    	
 
    
	
Section 409A
    	
 
    	
The RSUs are intended to comply with the   requirements of Section 409A and must be construed consistently with   that section. Notwithstanding anything in the Plan or this Grant Agreement to   the contrary, if the RSUs Vest in connection with
    


 











 

	
 
    	
 
    	
your “separation from service” within the   meaning of Section 409A, as determined by the Company), and if (x) you are then a   “specified employee” within the meaning of Section 409A at the time of   such separation from service (as determined by the Company, by which   determination you agree you are bound) and (y) the distribution of RSU Shares   under such RSUs will result in the imposition of additional tax under   Section 409A if distributed to you within the six month period following   your separation from service, then the distribution under such accelerated   RSUs will not be made until the earlier of (i) the date six months and   one day following the date of your separation from service or (ii) the   10th day after your date of death. Neither the   Company nor you shall have the right to accelerate or defer the delivery of   any such RSU Shares or benefits except to the extent specifically permitted   or required by Section 409A. In no event may the Company or you defer   the delivery of the RSU Shares beyond the date specified in the Distribution Date section, unless such deferral complies   in all respects with Treasury Regulation   Section 1.409A-2(b) related to subsequent changes in the time or   form of payment of nonqualified deferred compensation arrangements, or any   successor regulation. In any event, the   Company makes no representations or warranty and shall have no liability to   you or any other person, if any provisions of or distributions under this   Grant Agreement are determined to constitute deferred compensation subject to   Section 409A but not to satisfy the conditions of that section.
    
	
 
    	
 
    	
 
    
	
Unsecured Creditor
    	
 
    	
The RSUs create a contractual obligation on   the part of the Company to make a distribution of the RSU Shares at the time   provided for in this Grant Agreement. Neither you nor any other party   claiming an interest in deferred compensation hereunder shall have any   interest whatsoever in any specific assets of the Company. Your right to   receive distributions hereunder is that of an unsecured general creditor of   Company.
    
	
 
    	
 
    	
 
    
	
Governing Law
    	
 
    	
The laws of the State of New York will   govern all matters relating to the RSUs, without regard to the principles of   conflict of laws.
    
	
 
    	
 
    	
 
    
	
Restrictive Covenants   Clawback
    	
 
    	
If the Board or   the Committee determines, in its sole discretion, that you violated or are   violating any of the   Restrictive Covenants set forth below under the section titled “Restrictive   Covenants,” the RSUs will immediately terminate without regard to whether   they are then Vested in whole or in part. In addition, the Board or the   Committee may, in its sole discretion, require from you payment or transfer to the Company of the   Gain from the RSUs, where the “Gain”   consists of the greatest of (i) the value of the RSU Shares on the   applicable Distribution Date on which you received them within the Recovery   Measurement Period, (ii) the value of the RSU Shares received during the   Recovery Measurement Period, as determined on the date of the request by the   Committee to pay or transfer, (iii) the gross (before tax) proceeds you   received from any sale of the RSU Shares during the Recovery Measurement   Period, and (iv) if transferred without sale during the Recovery   Measurement Period, the value of the RSU Shares when so transferred. The “Recovery Measurement Period”   means the 12 months before the date of the determination of violation. The   provisions in this section are essential economic conditions to the Company’s   grant of RSUs to you. By receiving the grant of RSUs hereunder, you agree   that the Company may deduct from any amounts it owes you from time to time   (such as any severance or other payments owed following a termination of   employment, as well as any other amounts owed to you by the Company, as   permitted by applicable law) to the extent of any amounts you owe the Company   under this Restrictive Covenants Clawback   section.
    


 











 

	
 
    	
 
    	
You acknowledge   that you would not be receiving the RSUs described herein but for your   agreement to comply with the Restrictive Covenants. Likewise, you acknowledge   that you would be unjustly enriched if you violate the Restrictive Covenants,   while being able to retain some or all of the RSUs or the gain associated   with them. Furthermore, you acknowledge and agree that the damages for your   breach of the Restrictive Covenants are not subject to calculation and that   the remedies set forth in this Restrictive   Covenants Clawback section, therefore, will only reimburse the   Company for a portion of the damage done. For this reason, the Company shall   be entitled to recover from you any and all damages Company has suffered and,   in addition, Company will be entitled to injunctive relief. The parties agree   that the forfeiture of the RSUs and payments described in this section are   expressly not Company’s exclusive or sole remedy.

 

This remedy is in   addition to any other remedies that the Company may have available in law or   equity with respect to breaches of the Restrictive Covenants below. It is   also in addition to, and not in substitution for, any other clawback policies   that may be adopted from time to time, including any required by Federal law,   such as under Section 304 of the Sarbanes-Oxley Act of 2002 or the   Dodd-Frank Wall Street Reform and Consumer Protection Act.

 

Payment is due in   cash or cash equivalents within 10 days after the Board or the Committee   provides notice to you that it is enforcing this clawback. Payment will be   calculated on a gross basis, without reduction for taxes or commissions. The   Company may, but is not required to, accept retransfer of shares in lieu of   cash payments.
    
	
 
    	
 
    	
 
    
	
Restrictive Covenants
    	
 
    	
In consideration   of the terms of this RSU award and your access to Proprietary Information (as   defined below), you agree to the Restrictive Covenants set forth below.
    


 

	
Confidential Information
    	
 
    	
You have or will   be given access to and provided with sensitive, confidential, proprietary   and/or trade secret information (collectively, “Proprietary Information”) in the course of your   employment. Examples of Proprietary Information include inventions, new   product or marketing plans, business strategies and plans, merger and   acquisition targets, financial and pricing information, software of the   Company in various stages of development, including computer programs in   source code and binary code form, software designs, specifications,   programming aids (including “library subroutines” and productivity tools),   programming languages, interfaces, visual displays, technical documentation,   user manuals, data files and databases of the Company, analytical models,   customer/client lists and information, and supplier and vendor lists and   information. You agree not to disclose or use Proprietary Information, either   during or after your employment with the Company, except as necessary to   perform your duties or as the Company may consent in writing.
    
	
 
    	
 
    	
 
    
	
Non-competition and   Non-solicitation
    	
 
    	
You   agree that while the Company employs you and for a period of 12 months after   your employment ends for any reason, you will not directly or indirectly   (whether as an owner, partner, officer, employee, director, investor, lender,   consultant, independent contractor or otherwise) do any of the following:
    


 











 

	
 
    	
 
    	
(i)                                     Compete.   In the geographical area where the Company does business or, at the   time your employment ends, plans to do business, you will not engage or   assist others in engaging in any business or enterprise that competes with   the Company’s business, including any business or enterprise that develops,   designs, produces, manufactures, markets, licenses, sells, renders, or   provides any product or service that competes with any product or service   actually or planned to be developed, designed, produced, manufactured, marketed,   licensed, sold, rendered, or provided by the Company while you are or were   employed by the Company; provided that your passive ownership of not more   than 1% of the outstanding stock of a publicly-held company will not, by   itself, violate this provision. For purposes of this Grant Agreement, you   agree that the Company does business throughout and plans to do business   throughout the United States;

 

(ii)                                  Solicit   Clients, Customers, or Accounts. You will not, either   alone or in association with others, actually or attempt to solicit, divert,   or take away the business or patronage of any of the Company’s clients,   customers, or accounts, or prospective clients, customers, or accounts, that   the Company contacted, solicited, or served while you were employed by the   Company or about which you have Proprietary Information, provided that this   provision does not prevent you from soliciting clients, customers, or   accounts (if you are not using Proprietary Information to do so) for purposes   that are not in actual or potential competition with the Company;

 

(iii)                               Solicit   or Hire Company Employees and Independent Contractors. You will   not, either alone or in association with others, actually or attempt to   (x) solicit, recruit or induce any Company employee or independent   contractor to leave the Company’s service or (y) solicit, recruit, hire,   or engage as an employee or independent contractor any individual whom the   Company employed or engaged at any time while you were employed by the   Company, except for an individual whose employment or other service   relationship with the Company ended at least six months before the date of   your action; and/or

 

(iv)                              Disclose   or Utilize Product Development. You will not, either   alone or in association with others, disclose to, or utilize for the benefit   of, any entity other than the Company, any systems or product development   ideas, concepts, or strategies that you or others in communication with you   explored, generated, initiated, or discussed for potential implementation   during your employment with the Company, even if the Company has not   implemented such ideas, concepts, or strategies by the time your employment   with the Company ends.

 

For   the purposes of subsection (ii) “Solicit Clients,   Customers, or Accounts”, the terms “customer,” “client,” or   “account” as applied to governmental agencies will mean the agency or   department for which any of the products or services of the Company are sold   or performed during the applicable period, any related program office, and   any agency, department, or office that succeeds to the functions of any   agency, department, or office to which the Company then provides or within   the preceding 12 months provided goods or
    


 











 

	
 
    	
 
    	
services   (to the extent that the successor replaces part or all of the customer or   client to which the Company provided goods or services).
    
	
 
    	
 
    	
 
    
	
General
    	
 
    	
To the extent that you and the Company agree   at any time to enter into separate agreements containing restrictive   covenants with different or inconsistent terms than those contained herein,   you and the Company acknowledge and agree that such different or inconsistent   terms shall not in any way affect or have relevance to the Restrictive   Covenants contained herein, and the terms of these Restrictive Covenants do   not supersede or amend any others currently or in the future in place.

 

By accepting this RSU award, you agree that   the provisions of this Restrictive Covenants section (and the related   Restrictive Covenants Clawback section) are reasonable and necessary to   protect the legitimate interests of the Company.
    


 

	
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 Plan participants 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 Plan participants.
    
	
 
    	
 
    	
 
    
	
Amendment
    	
 
    	
Subject to any required action by the   Committee or the shareholders of the Company, the Company may cancel the RSUs   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 RSUs to the extent   then Vested.
    
	
 
    	
 
    	
 
    
	
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 RSU Shares and   other terms of the RSUs from time to time as the Plan provides.
    


 











 

EXHIBIT A

 

Performance Conditions

 

The Company must have positive operating income before taxes for the fiscal year ending December 31, 2014.

 

Whether the operating income requirement is achieved for a particular fiscal year will be treated as determined on the date that the Company files its Annual Report on Form 10-K for that year.