exv10w1



 





* Represents information that has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request.




Exhibit 10.1




Development and Services Agreement



This Services Agreement (“Agreement”) dated as of June 30, 2005 (“Effective Date”), between
Health Grades, Inc.(“Health Grades”) having its principal place of business at 500 Golden Ridge
Road, Ste 100, Golden, Colorado 80401, and Hewitt Associates LLC (“Hewitt”), having its principal
place of business at 100 Half Day Road, Lincolnshire, Illinois, 60069. Hewitt and Health Grades
are each a “Party” and collectively the Parties to this Agreement.

The parties agree to the following:





	1.	 	Definitions.






The following terms shall have the meanings ascribed to them below. Additional terms may be
defined in this Agreement.



	 	 	 	 	 
	 

	 	CHANGE OF CONTROL:
	 	(A) the direct or indirect acquisition of either (i) the majority of the voting
stock of Health Grades or (ii) all or substantially all of the assets of Health
Grades, by another entity in a single transaction or series of related
transactions; or (B) the merger, consolidation or reorganization of Health
Grades with or into another entity.
	 
	 	 	 	 
	 

	 	DIRECTORY SEARCH:
	 	Functionality of the Sites that enables participants to retrieve only basic
provider information (name, address, phone number, network status (by location,
if applicable, as mutually agreed upon by Health Grades and Hewitt), hospital
affiliation, network specific provider ID, status of accepting new patients (by
location, if applicable, as mutually agreed upon by Health Grades and Hewitt)
and participation level (e.g., tiered network, high performance network, etc.))
and no quality information (board certification, disciplinary actions, Leapfrog
ratings, etc.).
	 
	 	 	 	 
	 

	 	EVALUATION PERIOD:
	 	The period beginning on the Effective Date and ending on December 31, 2005,
during which Hewitt will evaluate Health Grades’ performance of Pilot Services
and Health Grades’ adequacy to provide Network Tag Services, as set forth in
more detail in Section 5.






 





					
	Hewitt Associates
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	 	HEALTH GRADES MATERIALS:
	 	All data, information and materials (in whatever form or media) and software
that are owned by, or licensed by third parties to, Health Grades, including the
underlying code for the web site through which Health Grades provides its
Services, the data and content displayed thereon (except with regard to data and
content supplied by or on behalf of Hewitt), and other Proprietary Rights of
Health Grades, and that Health Grades supplies to or makes accessible to Hewitt
or a Hewitt Client in connection with the Services contracted for or provided
under this Agreement.
	 
	 	 	 	 
	 

	 	HEWITT CLIENT:
	 	Any entity to which Hewitt provides Provider Search Services, whether or not
Hewitt provides other services to such entity. This includes clients for whom
Hewitt may not provide Outsourcing services. Hewitt Clients are not Parties to
this Agreement.
	 
	 	 	 	 
	 

	 	HEWITT MATERIALS:
	 	All data, information and materials (in whatever form or media) and software
that are owned by, or licensed by third parties to, Hewitt, including the web
site through which Hewitt provides its services, the data and other content
displayed thereon, and Hewitt’s other Proprietary Rights, and that Hewitt
supplies to or makes accessible to Health Grades in connection with the Services
contracted for or provided under this Agreement.
	 
	 	 	 	 
	 

	 	HEWITT CLIENT MATERIALS:
	 	All data or information (in whatever form or media) that is owned by, or
licensed by third parties to, a Hewitt Client, including its participants’ data,
content and other Proprietary Rights and that Hewitt or the Hewitt Client
supplies to or makes accessible to Health Grades in connection with the Services
contracted for or provided under this Agreement.
	 
	 	 	 	 
	 

	 	NETWORK TAGS:
	 	Provider-specific data received
from health plans (including * ).
	 
	 	 	 	 
	 

	 	NETWORK TAG SERVICES:
	 	The collection, processing, integration, deployment, maintenance and
updating of Network Tags on an ongoing basis in connection with the Tool and the Sites.








 




			
	*	 	Represents information that has been omitted and
filed separately with the Securities and Exchange Commission pursuant to a
confidential treatment request.





 





					
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	 	PILOT CLIENT:
	 	*
	 
	 	 	 	 
	 

	 	PILOT SERVICES:
	 	The Services to be performed by Health Grades on behalf of the Pilot Client, as
set forth in more detail in Section 3.
	 
	 	 	 	 
	 

	 	PROPRIETARY RIGHTS:	 	All patent rights, copyright rights, trademark rights, trade secret rights,
rights of publicity, rights of privacy, moral rights or other intellectual
property or proprietary rights any where in the world.
	 
	 	 	 	 
	 

	 	PROVIDER SEARCH SERVICES:
	 	The Provider Search Services, which include the Services, includes * , all
as set forth in the Specification.
	 
	 	 	 	 
	 

	 	QUALITY-

CENTRIC APPLICATION
	 	Application incorporating the Tool and Sites as specified in Schedule B to be
used solely for Hewitt and Hewitt Clients and to be integrated into the Sites in
accordance with Hewitt’s requirements as set forth in the Specification.
	 
	 	 	 	 
	 

	 	QUALITY SEARCH:
	 	Functionality of the Sites that enables participants to retrieve providers
ranked in order of Health Grades’ provider quality data as well as proximity to
the participant’s location.
	 
	 	 	 	 
	 

	 	SEARCH LEVEL:
	 	For a given Hewitt Client, the type of search (Directory Search or Quality
Search) to which such Hewitt Client’s participants will have access through the
Sites.
	 
	 	 	 	 
	 

	 	SERVICES:
	 	The services described in Schedule A, including but not limited to Pilot
Services and Network Tag Services.
	 
	 	 	 	 
	 

	 	SITES:
	 	The web sites (as identified in Schedule A) to be developed and implemented by
Health Grades for the Transition Application or the Quality-Centric Application,
as applicable, in accordance with Hewitt’s requirements as set forth in the
Specification and to be hosted by Health Grades as a subcontractor to Hewitt.
	 
	 	 	 	 
	 

	 	SPECIFICATION:
	 	The detailed functional requirements and specifications for the Tool and the
Sites, as set forth in Schedule B.








 




			
	*	 	Represents information that has been omitted and filed separately
with the Securities and Exchange Commission pursuant to a
confidential treatment request.





 





					
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	 	TOOL:
	 	The web-based health care provider search tool to be developed and implemented
by Health Grades and to be integrated into the Sites in accordance with Hewitt’s
requirements as set forth in the Specification.
	 
	 	 	 	 
	 

	 	TRANSITION APPLICATION:
	 	The Site * to be implemented by Health Grades in accordance with Hewitt’s
requirements as set forth in the Specification and to be hosted by Health Grades
as a subcontractor to Hewitt, as elected by Hewitt Clients during the
transition * to the Quality-Centric Application.
	 
	 	 	 	 
	 

	 	TRANSITION PERIOD:
	 	Period beginning on January 1, 2006 and ending on December 31, 2006, during
which the Parties anticipate the transfer of all Hewitt Clients * to the
Transition Application or the Quality-Centric Application.
	 
	 	 	 	 
	 

	 	LIST OF SCHEDULES:
	 	Schedule A: Services

Schedule B: Specification

Schedule C: Service Levels

Schedule D: Fees

Schedule E: Health Grades Disaster Recovery Plan







	2.	 	Term of Agreement.






This Agreement will begin on the Effective Date hereof and continue until December 31, 2009
(the “Initial Term”), unless terminated earlier under the provisions of Section 17.
Notwithstanding the above, this Agreement shall automatically renew for up to two
consecutive one-year terms (each a “Renewal Term”) unless either party provides written
notice to the other party of their intent not renew at least 90 days prior to the applicable
renewal date.




	3.	 	Services Provided — Summary.






	 	a.	 	Development of Search Tools and Sites. Health Grades shall develop, in
accordance with Hewitt’s requirements as set forth in Schedule B, the Tool and the
Sites, as described in Schedule A. As set forth in more detail in the Specification,
the Sites shall be configured to allow each Hewitt Client to select whether its
participants will have access to a Quality Search and/or a Directory Search through the
Quality-Centric application (or the Transition Application)







 




			
	*	 	Represents information that has been omitted and
filed separately with the Securities and Exchange Commission pursuant to a
confidential treatment request.





 





					
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	 	b.	 	Site Hosting. Health Grades will host the Sites and provide access to
the Sites for Hewitt Clients and their participants. The Sites will initially be made
available to the Pilot Client, and upon Hewitt’s written determination that the Pilot
Services have been successful, the Sites will be made available to other Hewitt Clients
on a schedule to be determined jointly by Hewitt and Health Grades. With respect to
each Hewitt Client, Hewitt shall instruct Health Grades as to which Search Level and
application type (Transition Application or Quality-Centric Application) such Hewitt
Client requires, and Health Grades shall configure the Sites so that Hewitt Clients
have access to the appropriate Sites to accommodate such Search Level and application
type.
	 
	 	c.	 	Network Tag Services . As set forth in the Specification, the Tool
shall display, to each Hewitt Client’s participants, information regarding whether or
not the providers retrieved by a search participate in the health plans that are
applicable to such Hewitt Client. Hewitt and Health Grades shall work together during
the Evaluation Period to collect Network Tags from health plans selected by Hewitt.
While performing the Pilot Services, Health Grades will be responsible for integrating
the Network Tags received from Hewitt’s current provider into the Tool and the Sites as
appropriate. Upon Hewitt’s written determination that Health Grades is capable of
adequately performing all the Network Tag Services, Health Grades shall commence
performance of all Network Tag Services in connection with the Provider Search
Services. Hewitt and Health Grades will jointly determine the schedule for moving
Hewitt Clients during the Transition Period * to the Transition Application or the
Quality-Centric Application, as applicable, with respect to the Network Tags.
	 
	 	d.	 	Party Responsibilities. The responsibilities of the Parties with
regard to the Services are set forth in greater detail in Schedule A and the
Specification. The Parties acknowledge and agree that the Services and the
responsibilities set forth in Schedule A may change from time to time at Hewitt’s
request, subject to Health Grades’ approval (not to be unreasonably withheld), based on
Hewitt’s evaluation of the Pilot Services, feedback from the Pilot Client or other
Hewitt Clients and input and feedback from Health Grades.






	4.	 	Pilot Evaluation.






At the end of the Evaluation Period, Hewitt will review Health Grades’ performance of
Pilot Services, and no later than December 31, 2005, will make a determination in writing
as to whether or not Health Grades was successful in providing such Pilot Services.
Hewitt’s assessment shall be based on the criteria set forth in Schedule C. If Hewitt
determines that the Pilot Services were not successful or otherwise do not warrant
continuation of this Agreement, then Hewitt may terminate this Agreement as set forth in
Section 17.




	5.	 	Network Tag Evaluation.







 




			
	*	 	Represents information that has been omitted and
filed separately with the Securities and Exchange Commission pursuant to a
confidential treatment request.





 





					
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Concurrent with the Evaluation Period, Hewitt will evaluate the capacity of Health Grades
to perform all Network Tag Services on an ongoing basis, based on the party
responsibilities and the criteria set forth in Schedule C. If Hewitt determines that
Health Grades is not suitable to provide Network Tag Services on an ongoing basis, then
Hewitt may terminate this Agreement.




	6.	 	Exclusivity.






Beginning on the Effective Date and continuing through August 31, 2007, or any earlier
termination of this Agreement (a) by Health Grades as a result of Hewitt’s uncured
material breach or (b) by Hewitt prior to December 31, 2005 without cause, Health Grades
shall not: (i) develop, market, sell or license to any third party a service or search
tool that contains substantially the same functionality as the Tool or the Site; or (ii)
enter into an agreement with any third party to develop or host a service or search tool
that contains substantially the same functionality as the Tool or the Site.
Notwithstanding the foregoing sentence, Health Grades shall at all times have the right
to provide to third parties the services and products that it provides to its general
customer base as of the Effective Date, including enhancements and upgrades of such
services and products developed after the Effective Date that are not reasonable
by-products of the Parties’ relationship under this Agreement, so long as no Hewitt
Materials (including but not limited to Hewitt’s contributions to the Tool and the Site)
or Hewitt or Hewitt Client Confidential Information is incorporated into or used in
connection with such services or products.




	7.	 	Independent Contractors.






This Agreement does not create a joint venture, partnership or agency between the
Parties, and the Parties acknowledge that no other facts or relations exist that would
create any such relationship. Neither Party is the agent of the other Party, and each is
an independent contractor while performing its duties hereunder. Neither Party is
granted any right or authority to assume or to create any obligation or responsibility,
express or implied, on behalf of or in the name of the other Party or to bind the other
Party in any manner whatsoever, other than Hewitt’s ability to commit Health Grades to
provide the Services, including * , to Hewitt Clients pursuant to the terms of this
Agreement.




	8.	 	Representations and Warranties.






	 	a.	 	Performance of Services. Health Grades represents and warrants to
Hewitt that the Services will be performed in a professional manner and in such a
manner as to meet or exceed the service levels contained in Schedule C.
	 
	 	b.	 	Adequate Resources. Health Grades represents and warrants to Hewitt
that it shall provide adequate staffing and have an adequate system infrastructure to
perform the Services under this Agreement.







 




			
	*	 	Represents information that has been omitted and
filed separately with the Securities and Exchange Commission pursuant to a
confidential treatment request.





 





					
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	 	c.	 	Intellectual Property. Each Party represents and warrants that its
contributions to the Tool and the Sites, and any other intellectual property used or
provided in connection with this Agreement or the Provider Search Services, will not
infringe on any copyright, patent, trademark, service mark or any other third party
intellectual property or other right.
	 
	 	d.	 	General. Each Party represents and warrants to the other Party that:
(i) such Party has the full corporate right, power and authority to enter into this
Agreement, to grant any licenses granted hereunder and to perform the acts required of
it hereunder; (ii) the execution of this Agreement by such Party, and the performance
by such Party of its obligations and duties hereunder, do not and will not violate any
agreement to which such Party is a Party or by which it is otherwise bound; and (iii)
when executed and delivered by such Party, this Agreement will constitute the legal,
valid and binding obligation of such Party, enforceable against such Party in
accordance with its terms.






	9.	 	Additional Responsibilities.






	 	a.	 	Authorized Representatives. Each Party shall designate an appropriate
person or persons (or designated alternates) as their respective Authorized
Representatives (“Authorized Representatives”). Each Party may supplement or otherwise
modify its Authorized Representatives from time to time by written notice to the other
Party. Each Party’s Authorized Representatives shall have authority to issue, execute,
grant or provide any approvals, requests, change requests, change orders, notices or
other communications required hereunder or requested by the other Party hereto. The
following is the initial list of Authorized Representatives:





	 	 	 
	Hewitt:

	 	Health Grades:
	 
	 	 
	*

	 	Kerry Hicks
	 
	 	 
	*

	 	Dave Hicks
	 
	 	 
	 

	 	Allen Dodge







At Hewitt’s request and within a reasonable timeframe Health Grades will replace its
Authorized Representative or any other member of its team assigned to Hewitt. In the
event this Agreement is terminated for any reason, Health Grades will designate an
Authorized Representative who will be the control person for all issues related to the
termination of this Agreement and any transition services.




	 	b.	 	Periodic Meetings. The Parties’ Authorized Representatives will meet
quarterly at Hewitt’s facilities in Lincolnshire, Illinois, during the Term of this
Agreement and assess the Parties’ performance hereunder. Such meetings may be
scheduled more frequently at Hewitt’s







 




			
	*	 	Represents information that has been omitted and
filed separately with the Securities and Exchange Commission pursuant to a
confidential treatment request.





 





					
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	 	 	 	request subject to Health Grades approval, not to be unreasonably withheld. Each party
will bear its own costs with respect to such meetings.
	 
	 	c.	 	Audit. Hewitt (acting on its behalf or on behalf of a Hewitt
Client)shall have the right during the Term of this Agreement with reasonable advance
notice to Health Grades and during normal business hours to review and audit Health
Grades relating to the performance by Health Grades of the Services for Hewitt. Such
review and audit may be conducted by counsel, internal staff or by independent third
parties. Any such review or audit shall be conducted in a manner reasonably designed to
protect the confidentiality of participant data and of Confidential Information of
Health Grades and to avoid interfering with Health Grades business operations. As
between Health Grades and Hewitt, any such audit shall be at the sole cost of Hewitt,
provided that: (i) if the audit reveals that Health Grades has overcharged Hewitt by 5%
or more during the period audited (for example by failing to accurately calculate
credits due to service level failures, failing to calculate fees properly based on
accurate Headcount, etc.), then Health Grades shall reimburse Hewitt for (a) the amount
of the overcharge and (b) the costs of such audit; and (ii) if the audit reveals any
material defect in Health Grades’ performance or processes, then (a) Health Grades
shall promptly implement corrective measures to remedy such defects and (b) Health
Grades shall reimburse Hewitt for the costs of such audit. Health Grades further
acknowledges that governmental authorities may have the right to review and audit
records of Health Grades pursuant to applicable law. Hewitt agrees that any third
party conducting such audit shall be subject to the confidentiality provisions of this
Agreement.
	 
	 	d.	 	Notice of Non-Compliance with Law. The Parties will use reasonable
efforts to notify each other in writing if either Party learns that the Services do not
comply with any applicable law, rule, regulation, or ordinance relating to the
Services, including but not limited to provisions of the Employee Retirement Income
Security Act of 1974, as amended from time to time (“ERISA”), the Internal Revenue Code
or the Health Insurance Portability and Accountability Act of 1996 as amended from time
to time (“HIPAA”).
	 
	 	e.	 	Notice of Change in Law. To the extent that any change in applicable
laws, rules, regulations, or ordinances requires a change to the Services or the terms
of this Agreement, the Parties will notify each other thereof if and to the extent
either party becomes aware of such matter. All reasonable and practicable systems and
administrative changes resulting from the enactment of legislation will be considered
within the scope of Services to be provided by Health Grades hereunder.
	 
	 	f.	 	Compliance with Law. Health Grades will comply with the laws,
ordinances, regulations and codes (including identification and procurement of required
permits, certificates, approvals and inspections) which are applicable to its
performance of the Services, and if working on a Hewitt Client’s or Hewitt’s premises
will comply with the Hewitt Client’s/Hewitt’s work rules, safety and security rules and
regulations, which are applicable at the location where such Services are performed to
the extent Health Grades has been provided a copy of such rules and regulations.





 





					
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	 	g.	 	Reports. Health Grades will provide Hewitt and Hewitt Clients with such
reports in the format and at the times as are required by Schedule A.
	 
	 	h.	 	Insurance. During the Term of this Agreement, Health Grades will
maintain in force the following minimum insurance coverage and limits:






	 	1)	 	Workers’ Compensation and related insurance as prescribed by the law of
the state in which the services are to be performed;
	 
	 	2)	 	General liability in the amount of $ * per occurrence and $ * in
the aggregate; and
	 
	 	3)	 	Professional liability in the amount of $ * in the aggregate.
	 
	 	4)	 	Umbrella/Excess Liability insurance to follow-form the terms and
conditions set forth in item 2 above with a limit of liability not less than $ *
each occurrence and annual aggregate (increases general liability limits to $ *
per occurrence and $ * in the aggregate).






The policy shall include the following provisions:




	 	a)	 	Hewitt, including any of its subsidiaries and affiliates, and
their respective directors, officers, employees, and agents shall be included as
additional insured (except for professional liability).
	 
	 	b)	 	Insurance shall be primary and non-contributory to any insurance
maintained by Hewitt, which shall apply explicitly on an excess basis.
	 
	 	c)	 	Health Grades and its insurance companies waive their rights to
subrogation against the above named additional insureds.






Health Grades or its insurers shall provide Hewitt thirty (30) days’ prior written notice
of any cancellation or material change in the foregoing insurance.




Insurance companies affording coverage hereunder must have a A- or better rating, as
rated in the A.M. Best Key Rating Guide for Property and Casualty Insurance Companies.




	 	i.	 	Cooperation. Health Grades will use commercially reasonable efforts to
cooperate with Hewitt in Hewitt’s performance of Hewitt’s obligations under its
contracts with Hewitt Clients, to the extent those obligations involve the Services,
including but not limited to complying with pass-through obligations that Hewitt
Client’s require Hewitt to impose on subcontractors and vendors.
	 
	 	j.	 	Use of Subcontractors. Health Grades shall not employ the services of
any subcontractor to perform all or a portion of the Services without the express
written consent of Hewitt







 




			
	*	 	Represents information that has been omitted and
filed separately with the Securities and Exchange Commission pursuant to a
confidential treatment request.





 





					
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	 	 	 	(which consent may be withheld at Hewitt’s sole discretion);
provided that Health Grades may engage individual independent contractors to perform
specified tasks within the Services, such as coding, project management, etc. Any
approved subcontractor or permitted independent contractor must be bound by terms and
conditions consistent with those contained in this Agreement. Upon Hewitt’s request,
with respect to any individual performing the Services that is identified by Hewitt,
Health Grades shall have a background check performed and will confirm for Hewitt that
there were no adverse results to any background checks performed by or on behalf of
Health Grades (but Health Grades will not provide a copy of any such checks to Hewitt).
	 
	 	k.	 	Material Change to Health Grades Business. Health Grades shall give
reasonable notice to Hewitt of any material change in its business which would be
relevant to Hewitt, including a Change of Control, a change in its relationship with
any approved subcontractor, or other change which may materially affect the Services.
In the event of a Change of Control, (i) Health Grades shall give Hewitt not less than
ninety (90) days’ prior written notice, subject to regulatory and confidentiality
obligations, of such Change of Control; (ii) Hewitt shall have the right to terminate
this Agreement in its reasonable discretion within ninety (90) days following such
Change of Control; and (iii) if Hewitt elects to terminate this Agreement in its
entirety, then Health Grades will provide Transition Services at no cost to Hewitt.
	 
	 	l.	 	Upgrades and Enhancements. Health Grades will supply reasonable
functionality enhancements, including but not limited to enhancements suggested by
Hewitt subject to Health Grades’ consent (not to be unreasonably withheld), and annual
ratings updates free of charge.






	10.	 	Confidentiality.






	 	a.	 	Each Party will use its reasonable efforts to cause its respective agents,
employees and representatives to minimize distribution and duplication, and prevent
unauthorized disclosure, of the Confidential Information of the other Party or a Hewitt
Client. Each Party agrees that only the agents, employees and representatives who have
a need to know the Confidential Information of the other Party will receive such
Confidential Information. Neither Party will disclose the other Party’s (and in the
case of Health Grades, a Hewitt Client’s) Confidential Information to a third party
without the prior written consent of the other party (except Hewitt may disclose
Confidential Information of Health Grades that relates to a Hewitt Client to such
Hewitt Client and may also disclose Confidential Information of Health Grades to a
Hewitt subcontractor as reasonably required for Hewitt or such subcontractor to
provide services to such Hewitt Client), which consent may be conditioned upon the
execution of a confidentiality agreement reasonably acceptable to the owner of the
Confidential Information.
	 
	 	b.	 	For the purposes of this Agreement, “Confidential Information” includes (i) for
both Parties, the terms of this Agreement (including the Schedules), (ii) for Hewitt,
all Hewitt Client Materials and Hewitt Materials, (iii) for Health Grades, all Health Grades
Materials, (iv) for each Party, oral and written information designated by such Party as
confidential 





 





					
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	 	 	 	prior to the other Party obtaining access thereto, and (v) for both Parties,
oral and written information which should reasonably be deemed confidential by the
recipient whether or not such material is designated as confidential. As between the
Parties, each Party’s respective Confidential Information will remain its sole and
exclusive property and the Parties agree that a Hewitt Client’s Confidential Information
shall remain the Hewitt Client’s sole and exclusive property.
	 
	 	c.	 	The confidentiality restrictions set forth in Section 10.a above shall not
apply to information if and to the extent: (i) such information is or becomes generally
available or known to the public through no fault of the receiving Party; (ii) such
information was already known by or available to the receiving Party prior to the
disclosure by the other party; (iii) such information is subsequently disclosed to the
receiving Party by a third party (other than the corresponding Hewitt Client) who is
not under any obligation of confidentiality to the Party who disclosed the information;
(iv) the information is required to be disclosed as part of a judicial process,
government investigation, legal proceeding or other similar process; (v) the
information is required by applicable law or regulation to be disclosed; or (vi) the
information has already been or is hereafter independently acquired or developed by the
receiving Party without violating any confidentiality agreement with or other
obligation to the Party who disclosed the information.
	 
	 	d.	 	If a Party is required to disclose the Confidential Information of the other
Party (including in the case of Health Grades, a Hewitt Client’s Confidential
Information) as part of a judicial process, government investigation, legal proceeding
or other similar process, such Party will give prior written notice of such requirement
to the other Party. Reasonable efforts will be made to provide this notice in
sufficient time to allow the other Party to seek an appropriate confidentiality
agreement, protective order or modification of any disclosure and the Party required to
make such disclosure will cooperate in such efforts.
	 
	 	e.	 	Each Party acknowledges that any breach of any provision of this Section 8 by
either Party, or its personnel or subcontractors, will cause immediate and irreparable
injury to the other Party, and in the event of such breach, the injured Party shall be
entitled to injunctive relief, without bond or other security, and to any and all other
remedies available at law or in equity.
	 
	 	f.	 	For purposes of this Agreement, Health Grades will address and resolve with
Hewitt issues relating to the Services provided to or for the benefit of a Hewitt
Client and each Hewitt Client’s Confidential Information.






	11.	 	Data Security.






	 	a.	 	Health Grades will maintain an effective information security program (a
“Security Program”) to protect Hewitt Client Materials, which Security Program will (i)
include appropriate administrative, technical and physical safeguards, (ii) ensure the
security, availability and confidentiality of Hewitt Client Materials, (iii) protect
against any threats or hazards to the integrity, security or confidentiality of such Hewitt Client Materials,
and (iv) protect against unauthorized access to or use of Hewitt Client Materials that
could





 





					
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	 	 	 	result in harm or inconvenience to Hewitt or its clients. Health Grades will not
make any material changes to the Security Program without notifying Hewitt at least 90
days in advance (unless such material change has been mutually agreed by the Parties) and
will not implement any changes that could reasonably be expected to have a material
adverse impact on the Provider Search Services and/or level of protection provided to
Hewitt or Hewitt Clients without Hewitt’s prior written consent.
	 
	 	b.	 	Hewitt may request that Health Grades contract with a third party reasonably
satisfactory to Hewitt to perform an industry standard vulnerability test on the Sites
(a “Penetration Test”) and/or an application vulnerability test of the Tool (an
“Application Audit”). Health Grades will pay for all costs of such tests and will
share the results of such tests with Hewitt. Hewitt may, at its option and expense,
conduct additional testing. Health Grades will make prompt and reasonable corrections
and improvements to the Sites or the Tool, as applicable, in response to any defects
identified that could reasonably be expected to have a material adverse impact on the
Provider Search Services and/or level of protection provided to Hewitt. Hewitt may
request one Penetration Test and one Application Audit per 12-month period, provided
that if any such test reveals material vulnerabilities, Hewitt may request a follow-up
test to ensure that the vulnerabilities revealed have been remedied.
	 
	 	c.	 	Health Grades shall provide to Hewitt on a regular basis the results of its SAS
70 or such other similar audits as the parties may agree, and will promptly take action
to remediate issues uncovered.
	 
	 	d.	 	Health Grades will indemnify and hold Hewitt harmless from and against any and
all liability, cost, loss, damage or expense Hewitt may suffer as a result of any
failure by Health Grades to comply with the provisions of this Section 11 or any
unauthorized access or use of Hewitt Client Materials resulting from a failure of the
Security Program.






	12.	 	HIPAA.






In order to protect the privacy of individually identifiable health information of Hewitt
Client participants who receive Provider Search Services, Hewitt and Health Grades will
execute the HIPAA Addendum and the Data Privacy Addendum attached hereto as Attachment 1
and Attachment 2, respectively.




	13.	 	Business Continuity.






	 	a.	 	Health Grades will maintain an effective business continuity program (a “BC
Program”) to protect against business interruptions, loss of data or other problems
resulting from unforeseen events, and shall provide a copy of such BC Program to
Hewitt. Health Grades will not implement any changes in the BC Program that could
reasonably be expected to have a material adverse impact on the services and/or level
of protection provided to Hewitt without Hewitt’s prior written consent and will
provide Hewitt with notice of material changes to the BC Program.





 





					
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	 	b.	 	Health Grades will conduct an annual internal business continuity test, share
the results of such testing with Hewitt and make prompt and reasonable corrections and
improvements to its BC Program in response to any defects identified that could
reasonably be expected to have a material adverse impact on the Services being provided
by Health Grades under this Agreement.






	14.	 	Ownership of Materials/ Proprietary Rights.






	 	a.	 	Health Grades Materials. Health Grades Materials will remain the
property of Health Grades. Health Grades represents that the uses of the Health Grades
Materials, the Services and the access to any Health Grades web sites and data
displayed thereon contemplated in this Agreement will not infringe the Proprietary
Rights of any third party and that Health Grades has obtained all required consents of
any such third party. Health Grades will have and retain all right, title and interest,
including ownership of any Proprietary Rights in and to all tools, methodologies or
other intellectual property that is supplied by Health Grades in the performance of the
Services, including any enhancements, improvements or other derivative works thereof
developed in the course of Health Grades’ performance under this Agreement. Subject to
Sections 6 and10, Health Grades retains the right to use its knowledge, experience, and
know-how in any manner, including processes, ideas, concepts and techniques developed
in the course of performing the Services hereunder, in the course of providing services
to other clients; provided that, under no circumstances shall Health Grades use
for or disclose to third parties any Hewitt Materials or Hewitt-owned Proprietary
Rights that Health Grades may learn under this Agreement without Hewitt’s prior express
written permission.
	 
	 	b.	 	Hewitt Materials. All Hewitt Materials will remain the property of
Hewitt. Hewitt and Hewitt Clients will have and retain all right, title and interest,
including ownership of any Proprietary Rights in and to all tools, methodologies or
other intellectual property (including participant information) that is supplied by
Hewitt or Hewitt’s Clients in connection with Health Grades’ performance of the
Services, including any enhancements, improvements or other derivative works thereof
developed in the course of Hewitt’s or Hewitt’s Clients’ performance under this
Agreement. Subject to Section 10, Hewitt retains the right to use its knowledge,
experience, and know-how in any manner, including processes, ideas, concepts and
techniques developed in the course of this Agreement, in the course of providing
services to its clients, provided that, except in connection with the license
granted in Section 14(e) below, under no circumstances shall Hewitt use for or disclose
to third parties any Health Grades Materials or Health Grades-owned Proprietary Rights
that Hewitt may learn under this Agreement without Health Grades’ prior express written
permission.
	 
	 	c.	 	Hewitt Client Materials. All Hewitt Client Materials will remain the
property of the Hewitt Client.
	 
	 	d.	 	Health Grades Marketing Materials. Health Grades will provide Hewitt,
and at no charge, with reasonable quantities of Health Grades product/services
literature and company/product presentation materials (which constitute a portion of
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	 	 	 	Materials) to assist Hewitt sales and marketing personnel in offerings of the Provider
Search Services.
	 
	 	e.	 	License of Health Grades Materials. Health Grades hereby grants to
Hewitt a royalty-free, non-exclusive, non-sublicensable, non-transferable license
during the term of this Agreement to use and publicly display, and to reproduce only to
the extent necessary to use and publicly display, the Health Grades Materials solely
for the purposes set forth in this Agreement, including but not limited to marketing
and demonstrating the Transition Application and the Quality-Centric Application to
Hewitt Clients and prospective clients.
	 
	 	f.	 	License of Hewitt Materials. Hewitt hereby grants to Health Grades a
royalty-free, non-exclusive, non-sublicensable, non-transferable license during the
term of this Agreement to use and publicly display, and to reproduce only to the extent
necessary to use and publicly display, the Hewitt Materials solely in connection with
Health Grades’ performance of Services for Hewitt and Hewitt Clients under this
Agreement.
	 
	 	g.	 	Commercialization of Tool and Sites. Without limiting the generality
of Sections 14(a) and 14(b) above, each Party shall be the sole owner of its respective
contributions to the Tool, the Sites and the Transition Application, including but not
limited to such Party’s contribution of: software; HTML, XML or other code embedded in
the foregoing; know-how and methodologies; and web site design and page layouts. Upon
Health Grades’ request and upon the Parties’ agreement as to royalties and other
appropriate terms, and subject to the exclusivity provisions of Section 6 above, Hewitt
will grant to Health Grades a non-exclusive license to reuse Hewitt’s contributions to
the Tool and the Sites to create functionally similar web sites for third parties.
	 
	 	h.	 	Commercialization of Network Tags. If Health Grades is performing the
Network Tag Services, then in the event that Health Grades resells, distributes,
licenses, or otherwise makes Network Tags available in any form or medium to third
parties, then Health Grades shall pay Hewitt an amount equal to * of all revenues
received by Health Grades for such Network Tags. Within ten (10) days after the end of
each calendar quarter, Health Grades shall submit a report to Hewitt detailing the
total amount of such revenues for such quarter, along with payment of Hewitt’s
calculated share of such revenues. If Health Grades is not performing the Network Tag
Services, then Health Grades may not resell, distribute, license or otherwise make
available the Network Tags to any third party without Hewitt’s prior written consent.
This Section 14(h) shall survive for a period of * following any termination of
this Agreement other than a termination by Health Grades due to Hewitt’s uncured
material breach, subject to Hewitt’s continued performance of such Network Tag related
responsibilities as the parties may mutually agree.
	 
	 	i.	 	Health Grades Links. Health Grades shall not provide hypertext links
from the Health Grades web site to any Hewitt web site without the prior written
consent of Hewitt.







 




			
	*	 	Represents information that has been omitted and
filed separately with the Securities and Exchange Commission pursuant to a
confidential treatment request.





 





					
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	 	j.	 	General. Except as expressly provided herein, no other right or license
is granted under this Agreement. All Proprietary Rights not expressly granted
hereunder by a Party are expressly reserved to such Party and its licensors and
information and content providers.






	15.	 	Fees.






	 	a.	 	Fees. In consideration for the Services provided by this Agreement,
Hewitt agrees to pay Health Grades the fees specified in Schedule D.
	 
	 	b.	 	Payment of Fees. The following process shall govern Health Grades’
submission of invoices and Hewitt’s payment of fees under this Agreement.






	 	1.	 	Beginning February 20, 2006, no later than the 20th day of
each calendar month during the term of this Agreement, Hewitt shall report to Health
Grades the aggregate total headcount for all Hewitt Clients with access to the Sites
as of the last day of the preceding month (“Total Headcount”), and the headcount for
that subset of Hewitt Clients who have elected to use only the Directory Search
functionality of the Sites (the “Directory Headcount”); provided a Hewitt Client’s
headcount will not be counted until the calendar month following the month in which
such Hewitt Client transitions to or is otherwise given access to the Sites . By
way of illustration, if Client X is given access to the Sites on July 15, then
Client X’s headcount shall not be included in the August 20 report of Total
Headcount as of July 31, but shall be included in the September 20 report of Total
Headcount as of August 31.
	 
	 	2.	 	When reporting Total Headcount, Hewitt shall distinguish between those
Hewitt Clients included in the Total Headcount that do not use the Quality Search
features of the Sites, and those Hewitt Clients that do use the Quality Search
features.
	 
	 	3.	 	Upon receipt of the Total Headcount for a given month, Health Grades
shall issue an invoice to Hewitt in an amount equal to the appropriate fee
calculated in accordance with Schedule D.
	 
	 	4.	 	Payment shall be due within thirty(30) days after Hewitt’s receipt of a
correct invoice.






	 	c.	 	Most Favored Customer. Health Grades’ fees to Hewitt for the Services
shall be competitive with, or more customer-favorable than, Health Grades’ charges for
similar services to Health Grades’ most favored customers (i.e., those customers to
whom Health Grades charges its lowest prices). If Health Grades offers to any such
customer similar services at a price materially lower or a discount materially greater
than the applicable fees charged to Hewitt hereunder, then such fees shall
simultaneously be lowered by Health Grades to the extent necessary to match such lower
price or greater discount (or, to the extent such fees have already been paid, Health
Grades shall promptly refund to Hewitt the difference between the fees already paid and
the lower price for the time period during which such lower price has been in effect).
Health Grades shall notify Hewitt of the occurrence of such a lower price or greater
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	 	 	 	within thirty (30) days after Health Grades offers or provides such lower price or
greater discount to another such customer.
	 
	 	d.	 	Network Tag Costs. In the event that one or more health plans proposes
a fee for access to, provision of or use of Network Tags, then Hewitt acting on behalf
of and in conjunction with its Clients will aggressively seek a waiver of such fees.
In the event that Hewitt is unsuccessful in obtaining such a waiver, then the Parties
shall meet and confer in good faith to agree on a suitable approach to such fee-bearing
Network Tags (e.g., removing the affected health plan(s) from the Provider Directory
Services, paying the fee and allocation of the expense between Health Grades and
Hewitt, etc.). If the Parties cannot agree on an appropriate split of the fees, then
such fees will be split evenly (50% by each Party).






	16.	 	Benchmarking.






	 	a.	 	From time to time during the Initial Term or any Renewal Term, Hewitt may,
subject to this Section 16, engage the services of an independent third party (a
“Benchmarker”) to compare the quality and cost of the Services against the quality and
cost of service providers performing services similar to the Services to ensure that
Hewitt is obtaining pricing and levels of service that are competitive with market
rates, prices and service levels, given the nature, volume and type of Services
provided by Health Grades hereunder (“Benchmarking”).
	 
	 	b.	 	Any Benchmarker engaged by Customer shall agree in writing to be bound by the
confidentiality and security provisions specified in this Agreement. Health Grades
shall cooperate fully with Hewitt and the Benchmarker and will provide reasonable
access to the Benchmarker during such effort. The Benchmarking shall be conducted so
as not to unreasonably disrupt Health Grades’ operations under this Agreement.
	 
	 	c.	 	If the Benchmarker finds * , the Benchmarker shall submit a written report
setting forth such findings and conclusions. The parties shall then meet and negotiate
in good faith as to reductions in the fees to eliminate any unfavorable variance. If
the parties are unable to agree upon such reductions, Hewitt may, at its option and
notwithstanding other provisions contained in this Agreement to the contrary, terminate
the Services in whole or in part, without payment of any termination fee. If the
Services are terminated in part, Health Grades’ fees shall be equitably adjusted to
reflect the Services no longer performed by Health Grades.
	 
	 	d.	 	Hewitt shall provide Health Grades with a copy of the Benchmarker’s reports,
including any preliminary reports, and Health Grades shall have a reasonable
opportunity to review such reports and contest the Benchmarker’s findings. If the
parties are unable to agree upon the validity of such findings, the matter shall be
resolved pursuant to the dispute resolution procedures set forth in Section 21.
Reductions in Health Grades’ fees shall be







 




			
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filed separately with the Securities and Exchange Commission pursuant to a
confidential treatment request.





 





					
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	 	 	 	implemented effective as of the date the
Benchmarker’s report was first provided to Health Grades.






	17.	 	Termination.






	 	a.	 	Termination. This Agreement will become effective on the Effective
Date and unless and until terminated as hereinafter provided, will terminate at the
conclusion of the Initial Term and all Renewal Terms as set forth in Section 2.
	 
	 	b.	 	Termination by Hewitt. Hewitt may unilaterally terminate this
Agreement: (i) upon notice sent to Health Grades if the Schedules are not agreed and
completed by August 15, 2005, provided such notice is given within thirty (30) days
after August 15, 2005; (ii) upon notice sent to Health Grades no later than December
31, 2005 of its determination after the Evaluation Period not to continue this
Agreement as set forth in Section 4 as a result of its review of Health Grades’
performance of the Pilot Services or the Network Tag Services; (iii) upon thirty (30)
days prior written notice to Health Grades at any time in the event that Health Grades
materially breaches this Agreement if such breach is not cured (or, if the breach is
not capable of being cured, discontinued with appropriate changes to ensure that it is
not repeated) within such thirty (30) day period, or as otherwise set forth in Schedule
C; (iv) upon notice to Health Grades in the event of a Change of Control, as set forth
in Section 9(k) above; or (v) after December 31, 2009, for convenience, upon sixty (60)
days’ prior written notice and subject to payment to Health Grades of a termination fee
in the amount of $200,000 pro-rated monthly over calendar year 2010 (e.g., if such
termination is effective June 30, 2010, then Hewitt shall pay Health Grades a
termination fee of $100,000 in addition to the applicable per member per month fees as
set forth in Schedule D incurred through the effective date of such termination as set
forth in Section 17(e)(2) below).
	 
	 	c.	 	Termination by Health Grades. Health Grades may unilaterally terminate
this Agreement upon thirty (30) days prior written notice to Hewitt at any time in the
event that Hewitt materially breaches this Agreement if such breach is not cured (or,
if the breach is not capable of being cured, discontinued with appropriate changes to
ensure that it is not repeated) within such (30) day period,
	 
	 	d.	 	Termination by Either Party. Either Party may terminate this Agreement
immediately following written notice to the other Party if the other Party (i) ceases
to do business in the normal course, (ii) becomes or is declared insolvent or bankrupt,
(iii) is the subject of any proceeding related to its liquidation or insolvency
(whether voluntary or involuntary) which is not dismissed within sixty (60) calendar
days or (iv) makes an assignment for the benefit of creditors.
	 
	 	e.	 	Rights Upon Termination. Upon termination of this Agreement:






	 	1)	 	Health Grades will have no further responsibility to provide the
Services, other than as required pursuant to Section 15(e) below and those terms of
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	 	2)	 	Hewitt will remain responsible for the payment of all fees and expenses
payable under this Agreement prior to such termination, less any amounts Health
Grades owes Hewitt pursuant to the terms of this Agreement.






	 	f.	 	Transition Services. Upon termination, all Hewitt Client Materials and
all Hewitt Materials, including Confidential Information, together with any copies
thereof will be returned to Hewitt. A copy of all data provided by Hewitt and
pertaining to Hewitt (as it pertains to the Agreement) and each Hewitt Client’s
employees and plan participants maintained on Health Grades’ computers will be returned
to Hewitt in a format specified by Hewitt at no additional charge upon termination of
this Agreement. In the event this Agreement is terminated and it is desired by either
Party or Hewitt, acting on behalf of a Hewitt Client, to provide for an orderly
transition, the Parties will use reasonable efforts to cooperate with each other and
such Hewitt Client to formulate and execute a transition plan as soon as termination or
expiration of this Agreement is certain. At the request of Hewitt or Hewitt, acting on
behalf of a Hewitt Client, Health Grades will provide transition services subject to
the Parties agreeing on the scope of such transition services and the other terms under
which they will be provided, including compensation payable for such transition
services.






	18.	 	Liability and Indemnity.






	 	a.	 	Correction of Errors. Notwithstanding any limitation of liability
contained in this Agreement to the contrary, Health Grades will furnish services at no
charge to identify and correct any error or omission in its performance of the Services
or its other obligations under this Agreement.
	 
	 	b.	 	Accuracy and Quality of Data. To the extent that Health Grades’
provision of Services requires submission of data from a Hewitt Client, other Client
related sources or health plans, Health Grades is not liable under any circumstances,
for the accuracy or quality of the data submitted to Health Grades, except to the
extent an error or omission by Health Grades caused such inaccuracy or quality problem.
	 
	 	c.	 	Limitation of Liability. Except with regard to indemnification
obligations set forth in this Agreement, in no event will Health Grades or Hewitt be
liable to each other for any, indirect, incidental, consequential, special or exemplary
damages arising from the use of the Services, including without limitation,
interruption or loss of business, loss of data, loss of profits or loss of income. In
addition, in no event shall the total liability for any damages of Health Grades or
Hewitt, individually or in the aggregate, exceed $7,000,000 during any calendar year
during the term of this Agreement, whether such claims are brought in contract or tort
and including claims that are brought against the Parties or their respective officers,
directors and agents.
	 
	 	d.	 	Exclusions to Limitations of Liability. The limitations on the
liability and indemnification obligations of the Parties contained in this Agreement
shall not apply to damages, expenses, costs and other losses arising from (1) gross
negligence or willful, fraudulent or criminal misconduct by either Party, (2) breach of
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	 	 	 	Agreement by either Party, including, to the
extent applicable, violations of HIPAA, (3) bodily injury and property damage claims
caused by either Party or (4) intellectual property infringement claims resulting from
Health Grades’ provision of the Services to the extent
they involve the application of Health Grades Materials or the unauthorized use of Hewitt
Materials or Hewitt Client Materials by Health Grades.
	 
	 	e.	 	Indemnification. Each Party will defend, indemnify and hold harmless
the other Party and the agents, partners, principals, shareholders, officers,
directors, and employees of the other Party from any and all claims, demands,
liabilities, costs or expenses, including reasonable outside and in-house attorneys’
fees (“Liabilities”), resulting from any acts or omissions of the indemnifying Party,
including infringement and/or misappropriation of intellectual property rights.
Without limiting the generality of the foregoing, Health Grades shall indemnify, defend
and hold harmless Hewitt and its agents, partners, principals, shareholders, officers,
directors and employees from: (i) all Liabilities arising out of the use of any data
collected, processed, stored or displayed to Hewitt Client participants, including
without limitation provider quality data and Network Tags (except to the extent such
Network Tags are provided to Health Grades by Hewitt); and (ii) any costs (including
but not limited to internal costs) Hewitt may incur in connection with errors or
inaccuracies in the provider quality data or Network Tags (except, if Hewitt or any
third party provides the Network Tags, to the extent such errors are caused by Hewitt
or such third party).
	 
	 	 	 	Each Party agrees to (i) promptly notify the other Party in writing of any indemnifiable
claim and give the other Party the opportunity to defend or negotiate a settlement of any
such claim at such other Party’s expense and (ii) cooperate fully with the other Party,
at that other Party’s expense, in defending or settling such claim.
	 
	 	f.	 	Acknowledgement. HEWITT AND HEALTH GRADES EACH ACKNOWLEDGES THAT THE
PROVISIONS OF THIS AGREEMENT WERE NEGOTIATED TO REFLECT AN INFORMED, VOLUNTARY
ALLOCATION BETWEEN THEM OF ALL RISKS (BOTH KNOWN AND UNKNOWN) ASSOCIATED WITH THE
TRANSACTIONS CONTEMPLATED HEREUNDER.






	19.	 	Non-Solicitation.






Health Grades may not use information obtained as a result of its relationship with
Hewitt or a Hewitt Client for any purpose other than that specified in this Agreement.
Nor may Health Grades solicit in any way, without the prior written consent of an
authorized representative of Hewitt, any employees, retirees, former employees, agents or
other affiliated individuals of a Hewitt Client to purchase any Health Grades product or
service during the term of this Agreement and for one (1) year following termination or
expiration of this Agreement where the identity and personal information of such Hewitt
Client or individual was first obtained by Health Grades through its relationship with
Hewitt or a Hewitt Client under this Agreement.




	20.	 	Use of Name.





 





					
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The Parties shall not include each other’s name or a Hewitt Client’s name or other
references to each other or Hewitt Clients in the other’s advertising, written sales
promotion, press releases, and other publicity matters relating to this Agreement without
the prior written approval of the other party and, if necessary (as determined by Hewitt),
the Hewitt Client. Notwithstanding the foregoing to the contrary, Hewitt may include
Health Grades’ name in connection with the advertising and marketing of Hewitt’s human
resources and business process outsourcing business and/or the Provider Search Services
and Health Grades may include Hewitt’s name in connection with disclosures in financial
statements or other filings with the Securities and Exchange Commission or as otherwise
required by law or regulation.




	21.	 	Dispute Resolution.






	 	a.	 	Overview. The following procedures shall be used to resolve any
dispute or claim arising out of or relating to this Agreement. If any of these
provisions are determined to be invalid or unenforceable, the remaining provisions
shall remain in effect and binding on the Parties to the fullest extent permitted by
law.
	 
	 	b.	 	Internal Escalation. The Parties shall attempt in good faith to
resolve any dispute arising out of or relating to the Agreement promptly by negotiation
between executives who have authority to settle the controversy and who are at a higher
level of management than the persons with direct responsibility for administration of
this Agreement. Either Party may give the other Party written notice of any dispute not
resolved in the ordinary course of business. Within fifteen (15) days after delivery of
the notice the Party receiving the notice shall submit to the other a written response.
	 
	 	 	 	The notice and the response shall include: (1) a statement of each Party’s position(s)
regarding the matter(s) in dispute and a summary of arguments in support thereof, and
(ii) the name and title of the executive who will represent that Party and any other
person who will accompany that executive. Within thirty (30) days after delivery of the
notice, the designated executives shall meet at a mutually acceptable time and place, and
thereafter as often as they reasonably deem necessary, to attempt to resolve the dispute.
All reasonable requests for information made by one Party to the other shall be honored
in a timely fashion.
	 
	 	 	 	If the matter in dispute has not been resolved within sixty (60) days after delivery of
the notice, or if the Parties fail to meet within thirty (30) days, the dispute shall be
referred to more senior executives who have authority to settle the dispute and who shall
likewise meet in an attempt to resolve the matter in dispute. If the matter has not been
resolved within thirty (30) days after it has been referred to the more senior
executives, or if no meeting of such senior executives has taken place within fifteen
(15) days after such referral, either Party may initiate subsequent proceedings as
contemplated herein.
	 
	 	 	 	All negotiations and discussions between the Parties conducted pursuant to the dispute
resolution process described herein (and any of the Parties’ submissions in contemplation
hereof) shall be kept confidential by the parties and shall be treated by the Parties and
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	 	 	 	respective representatives as compromise and settlement negotiations for purposes
of the applicable court rules of evidence.
	 
	 	c.	 	Arbitration Procedures. In the event the Parties are unable to resolve
a dispute or Claim under the internal escalation process described above, then either
Party may give written notice to the other party of its intention to arbitrate. The
American Arbitration Association (“AAA”) Commercial Arbitration Rules (“AAA Rules”), as
modified or revised by the provisions herein, shall govern the arbitration proceedings.
In the event of a conflict, the provisions of this document will control.
	 
	 	 	 	The arbitration will be conducted in Chicago, Illinois, unless the Parties
mutually agree to another location, before a panel of three (3) arbitrators, regardless
of the size of the dispute, to be selected as provided in the AAA Rules. Any issue
concerning the extent to which any dispute is subject to arbitration, or concerning the
applicability, interpretation, or enforceability of these procedures, including any
contention that all or part of these procedures are invalid or unenforceable, shall be
governed by the Federal Arbitration Act and resolved by the arbitrators. No potential
arbitrator may serve on the panel unless he or she has agreed in writing to abide and be
bound by these procedures. Unless otherwise provided for in the Agreement, the
arbitrators may not award non-monetary or equitable relief of any sort. The arbitrators
shall have no power to award (a) damages inconsistent with the Agreement, or (b) punitive
or exemplary damages or penalties or any other damages not measured by the prevailing
Party’s actual damages. The Parties expressly waive their right to obtain such damages
described in (a) or (b) in arbitration or in any other forum. In no event, even if any
other portion of these provisions is held to be invalid or unenforceable, shall the
arbitrators have power to make an award or impose a remedy that could not be made or
imposed by a court deciding the matter in the same jurisdiction.
	 
	 	 	 	The notice concerning the intention to arbitrate shall set forth the nature of the
dispute, the amount involved, if any, and the remedy sought. Three (3) copies of such
notice and three (3) copies of the arbitration provisions of the Agreement shall be filed
with the Chicago, Illinois office of the AAA, together with the appropriate filing fee as
provided in the then current AAA Rules.
	 
	 	 	 	The respondent which may file an answering statement in duplicate with the AAA
within ten (10) days after notice from the AAA, in which event the respondent shall at
the same time send a copy of the answering statement to the claimant. If a counterclaim
is asserted, it shall contain a statement setting forth the nature of the counterclaim,
the amount involved, if any, and the remedy sought. If a counterclaim is made, the
appropriate fee provided in the AAA Rules shall be forwarded to the AAA with the
answering statement. If no answering statement if filed with the stated time, it will be
treated as a denial of the claim. Failure to file an answering statement shall not
operate to delay the arbitration.
	 
	 	 	 	It is the intent of the Parties that the arbitration be held in an efficient, economical
and expeditious manner. Accordingly, the Parties shall meet in a pre-hearing conference
as promptly as practicable after selection of the arbitrators to establish the scope and
extent of all discovery and the schedule of the arbitration. The Party seeking discovery
may take discovery only upon a showing of substantial need. If any Party wishes to take
discovery, including document productions, interrogatories or depositions, a request to
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submitted to the arbitrator in accordance with the procedures determined at the pre-hearing
conference. The arbitrator in his sole discretion may allow limited discovery, all of
which must be completed within twenty (20) business days of the arbitrator’s directive
unless extended for good cause by the arbitrator. Discovery shall be limited to that
necessary to resolve the disputed issues, in the judgment of the arbitrator.




No arbitration may be commenced by either Party hereto for any controversy or claim
arising out of or relating to this Agreement unless notice of a Party’s election to
require arbitration is given within one (1) year from the date the Party knows or should
have known of the occurrence allegedly giving rise to the arbitration. The preceding
sentence shall survive the expiration or termination of this Agreement by either Party
for any reason.




All aspects of the arbitration shall be treated as confidential. Neither the Parties nor
the arbitrators may disclose the existence, content or results of the arbitration, except
as necessary to comply with legal or regulatory requirements. Before making any such
disclosure, a Party shall give written notice to the other Party and shall afford such
other Party a reasonable opportunity to protect its interests.




Any award by the arbitrators will be accompanied by a written opinion setting forth the
findings of fact and conclusions of law relied upon in reaching the decision. The award
rendered by the arbitrators will be final, binding and non-appealable; and judgment upon
such award may be entered by any court of competent jurisdiction.




In the event of an arbitration, the prevailing Party shall be entitled to recover, in
addition to any charges fixed by the arbitrators, its costs and expenses incurred in
connection with the arbitration of the matter, including reasonable attorney fees and
costs.




Nothing in this Section shall prohibit or otherwise limit a Party’s right to initiate
litigation to enforce the arbitration award as described above, to obtain injunctive or
equitable relief permitted by the terms of this Agreement, or to preserve a superior
position with respect to other creditors.




	22.	 	General Provisions.






	 	a.	 	Waiver. No failure or delay by either Party in enforcing any right or
remedy under this Agreement shall be construed as a waiver of any existing or future
right or remedy.
	 
	 	b.	 	Notices. Any notice required by this Agreement shall be given in
writing at the address of each Party shown at the beginning of this Agreement.
	 
	 	c.	 	Force Majeure. Neither Party will be responsible for any delay nor
failure of performance resulting from causes beyond its control and without its fault
or negligence.
	 
	 	d.	 	Headings and Captions. The headings and captions used in this Agreement
are inserted for reference purposes only and do not constitute a part of this
Agreement.





 





					
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	 	e.	 	Assignment. Neither Party may assign this Agreement in whole or in part
without the prior written consent of the other Party, except that Hewitt may assign
this Agreement, in whole or in part, to an affiliate without consent of Health Grades.
Any attempted assignment without such consent (other than a permitted Hewitt
assignment) will be null and void. Neither Party will unreasonably withhold its
consent.
	 
	 	f.	 	Governing Law. This Agreement shall be governed by the laws of the
State of Illinois without reference to conflicts of law principles. Should any
provision of this Agreement be held by a tribunal of competent jurisdiction to be
contrary to law, the remaining provisions shall remain in full force and effect.
	 
	 	g.	 	Amendment. This Agreement may not be altered, amended or modified
without the express written consent of both Parties.
	 
	 	h.	 	Schedules. Should any provision in any Schedule attached hereto
conflict with a provision in the Agreement, the provision in such Schedule shall
prevail.
	 
	 	i.	 	Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, and each of which
together shall constitute a single instrument.
	 
	 	j.	 	Entire Agreement. This Agreement, including all Schedules and Exhibits
attached hereto, constitute the entire agreement between Hewitt and Health Grades with
respect to the subject matter. It supersedes all previous agreements and understandings
on this subject. Both Parties agree that there are no oral or written collateral
representations or agreements except as provided by this Agreement.
	 
	 	k.	 	Third Party Beneficiaries. This Agreement has been entered into for the
sole benefit of the Parties, the Hewitt Clients, and their respective permitted
successors and assigns. Except for the Hewitt Clients, the Parties do not intend the
benefits of this Agreement to inure to any third party, and nothing contained herein
shall be construed as creating any right, claim or cause of action in favor of any such
third party against any party hereto.
	 
	 	l.	 	Survival. The terms of the following sections survive the termination
of this Agreement: Sections 10, 14a-c, 14h, 17f, 18e, 19, 21, 22 and any other
provision that by its nature is intended to survive such termination.
	 
	 	m.	 	Further Assurances. Each Party will, at the reasonable request of the
other Party, execute and deliver to such other Party all such further instruments,
assignments, assurances and other documents and information, and take all such actions
as such other Party may reasonably request in connection with the carrying out of this
Agreement and the consummation of the transactions contemplated
hereby.





     IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed by their duly
authorized corporate officers and said parties shall consider this Agreement to be effective as of
the date and year set forth below.



 





					
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	Accepted by	 	Accepted by
	Hewitt Associates LLC	 	Health Grades, Inc.
	 
	 	 	 	 	 	 
	By:

	 	/s/ C. Lawrence Connolly, III
	 	By:
	 	/s/ David G. Hicks
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	Name:

	 	C. Lawrence Connolly, III
	 	Name:
	 	David G. Hicks
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	Title:

	 	Authorized Representative
	 	Title:
	 	Authorized Representative
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	Date:

	 	July 1, 2005
	 	Date:
	 	July 1, 2005
	 

	 	 
	 	 	 	 





 





					
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SCHEDULE A




Services




*






 




			
	*	 	Represents information that has been omitted and
filed separately with the Securities and Exchange Commission pursuant to a
confidential treatment request.





 





					
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SCHEDULE B




Specification




*






 




			
	*	 	Represents information that has been omitted and
filed separately with the Securities and Exchange Commission pursuant to a
confidential treatment request.





 





					
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SCHEDULE C




Service Levels




*






 




			
	*	 	Represents information that has been omitted and
filed separately with the Securities and Exchange Commission pursuant to a
confidential treatment request.





 





					
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SCHEDULE D




Fees




	 	 	 
	I.

	 	Standard Pricing
	 
	 	 
	 

	 	*
	 
	 	 
	II.

	 	Minimum Annual Commitment
	 
	 	 
	 

	 	Hewitt agrees to pay Health Grades a total of not less than $3,000,000 on an annual,
calendar year basis during calendar years 2007, 2008 and 2009 (the “Minimum Annual
Commitment”). In the event that aggregate calculated fees paid during the each of the
foregoing calendar years do not reach or exceed the Minimum Annual Commitment, then Hewitt
shall, promptly after January 1 of the next following calendar year, pay Health Grades the
amount of any shortfall. For the avoidance of doubt, Pilot Services fees, as set forth in
Section III below, shall not be credited toward the Minimum Commitment.
	 
	 	 
	 

	 	Hewitt shall have no obligation to pay Health Grades the Minimum Annual Commitment (or any
shortfall) for any year following either of the following:: (i) the date Hewitt gives notice
of termination of this Agreement for any reason, including but not limited to as a result of
the evaluation of Pilot Services or Network Tag Services, or as a result of benchmarking; or
(ii) Hewitt gives notice of its election to continue this Agreement despite Health Grades’
inability to perform Network Tag Services, as described in Section 5(b). If Hewitt is
excused from the Minimum Annual Commitment as set forth herein, then Hewitt shall be
obligated only for a pro-rata Minimum Annual Commitment during the year in which Hewitt
becomes excused, from January 1 of such year through the date on which Hewitt gives notice.
(For example, if Hewitt gives notice of termination of the agreement on September 30, 2008,
the Minimum Annual Commitment for the year ending December 31, 2008, would be $2,250,000
($3,000,000/12x9). This pro-rata Minimum Annual Commitment would then be compared to the
fees paid by Hewitt to Health Grades for the Services provided during the nine months ended
September 30, 2006 to determine the amount of any shortfall.) Such shortfall shall be paid,
as applicable: (i) within thirty (30) days after the date of termination; or (ii) within
ninety (90) days after Hewitt’s notice of its election under Section 5(b).
	 
	 	 
	III.

	 	Pilot Fee
	 
	 	 
	 

	 	In consideration of the Pilot Services, including but not limited to the development and
implementation of the Tool and the Sites and the provision of * Services to the Pilot
Client, Hewitt shall pay Health Grades the sum of $315,000. Health Grades shall invoice the
foregoing amount in three equal installments on the following schedule:
	 
	 	 
	 

	 	          Upon execution of this Agreement:                     $105,000








 




			
	*	 	Represents information that has been omitted and
filed separately with the Securities and Exchange Commission pursuant to a
confidential treatment request.





 





					
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	 	     When Pilot Services go live for Pilot Client:$105,000
	 
	 	 
	 

	 	     Thirty (30) days following prior invoice:      $105,000
	 
	 	 
	 

	 	The Pilot Client’s participants shall not be included in the Total Headcount until January
1, 2006 (i.e., counted in the Total Headcount as of January 31, 2006), notwithstanding that
other Hewitt Clients may be given access to the Sites and Hewitt may pay fees as set forth
in Part I above with respect to such Hewitt Clients during such time.
	 
	 	 
	 

	 	If, after the Evaluation Period, Hewitt determines that Health Grades has successfully
performed the Pilot Services, then upon Hewitt’s notification that it will continue the
Agreement, Health Grades will issue an invoice to Hewitt for an additional payment of
$85,000.
	 
	 	 
	IV.

	 	Network Tag Services
	 
	 	 
	 

	 	If Hewitt determines that Health Grades is not capable of
providing the Network Tag Services and elects to continue this Agreement and provide such
Network Tag Services itself or through a third party, as set forth in Section 5(b) of the
Agreement, * .








 




			
	*	 	Represents information that has been omitted and
filed separately with the Securities and Exchange Commission pursuant to a
confidential treatment request.





 





					
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SCHEDULE E




Health Grades Disaster Recovery Plan




Health Grades will develop an effective Disaster Recovery Plan (the “Plan”) and deliver such Plan
to Hewitt by October 31, 2005. Hewitt will review the Plan during the Evaluation Period and
notify Health Grades in writing no later than the end of the Evaluation Period whether the Plan is
acceptable or not. If the Plan is not acceptable, Health Grades shall revise the Plan within
thirty (30) days to make it acceptable, and shall submit the revised Plan to Hewitt. Hewitt shall
have thirty (30) days from the submission of any revised Plan to notify Health Grades if the
revised Plan is acceptable. If Hewitt does not notify Health Grades that the original Plan or
revised Plan is unacceptable within the time periods set forth above, then the Plan (or revised
Plan, as applicable) shall be deemed accepted. When the Plan (or revised Plan, as applicable) has
been accepted, Health Grades shall implement such Plan promptly, and the Plan shall be attached to
this Schedule E and made a part of this Agreement.



 





					
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