AMENDED AND RESTATED EMPLOYMENT AGREEMENT

Exhibit 10.3.1

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”), dated August 6, 2008 and made effective as of July 1, 2008 (the “Effective Date”), by and between HEALTH GRADES, INC., a Delaware corporation (the “Company”), and KERRY R. HICKS (the “Executive”) amends, restates and supersedes the Employment Agreement originally entered into by and between Specialty Care Network, Inc., the predecessor to the Company, and the Executive, effective as of April 1, 1996 as amended and restated effective December 31, 2007 (the “Prior Agreement”).

WHEREAS, the Executive and the Company desire to amend, restate and supersede the Prior Agreement in its entirety to, among other things, (i) modify the term of the Executive’s employment by the Company; (ii) revise the base salary payments to the Executive, (iii) revise the method under which the Executive’s base salary and incentive payments will be reviewed, and (iv) coordinate and reconcile the confidentiality and noncompetition provisions of this Agreement with those of a Confidentiality and Non-Competition Agreement between the Company and the Executive dated as of the date hereof (the “New Noncompete Agreement”), a copy of which is attached to this Agreement.

WHEREAS, the Company desires to continue to employ the Executive to devote full time to the business of the Company (including, without limitation, executive management of the Company) and to serve as the President and Chief Executive Officer of the Company; and

WHEREAS, the Executive desires to be so employed on the terms and subject to the conditions hereinafter stated.

NOW, THEREFORE, in consideration of the mutual covenants contained in this Agreement, the parties hereby agree as follows:

SECTION 1
POSITION AND RESPONSIBILITIES

During the Term of this Agreement, the Executive agrees to serve as President and Chief Executive Officer of the Company, performing such duties during the Term of this Agreement for such compensation and subject to such terms and conditions as are hereinafter set forth.

SECTION 2
TERM AND DUTIES

2.1 Term; Extension. The term of this Agreement (the “Term”) will commence as of the Effective Date and shall continue through June 30, 2011. On the third and each successive anniversary of the Effective Date, the Term shall be extended for an additional one (1) year period, unless either party gives the other party 90 days prior written notice of such party’s intent not to extend the Term. Termination of the Executive’s employment pursuant to this Agreement shall be governed by Section 5 of this Agreement.

2.2 Duties. The Executive shall devote substantially all of his time and attention and best efforts during normal business hours to the Company’s affairs. Specifically, the Executive shall have complete senior management authority and responsibility, commensurate with and customary for the person holding the office and position to which the Executive has contracted in this Agreement, with respect to the day to day operations and long term management of the Company, as well as implementation of the long range growth strategy of the Company, consistent with directions from the Board of Directors. He shall have full authority and responsibility, subject to the general direction, approval and control of the Board of Directors, for formulating policies and administering the Company in all respects. He shall have the authority to hire and fire Company personnel, to retain consultants when he deems necessary to implement the Company policies, to execute contracts on behalf of the Company in the ordinary course of business and to effect the growth strategy of the Company at the direction of the Board of Directors.

2.3 Location. The duties of Executive shall be performed at such locations and places as may be directed by the Board.

SECTION 3
COMPENSATION AND BENEFITS

3.1 Base Compensation. The Company shall pay or cause to be paid to the Executive, commencing as of the Effective Date and during the Term of the Executive’s employment, an annual base salary (“Base Salary”) in respect of each calendar year at the rate of not less than $366,000 per annum. The Company may increase, but not decrease, such annual salary at any time and from time to time during the Term of the Executive’s employment. Base Salary shall be payable according to the customary payroll practices of the Company, subject to normal withholding, but in no event less frequently than once each month.

3.2 Annual Incentive Awards. In addition to Base Salary, the Executive may be entitled to receive annual cash incentive compensation in respect of each calendar year based on performance targets established by the Board (the “Annual Incentive Compensation”).

3.3 Determination and Payment of Compensation. The Board shall determine, in its sole discretion, the amount of any Base Salary increase annually, the amount of any Annual Incentive Compensation and the performance targets applicable to the Executive. The Executive acknowledges that his actual Annual Incentive Compensation may vary depending on actual performance of the Company and the Executive. The payment of Base Salary and Annual Incentive Compensation shall be made in accordance with the Company’s then current practices and policies, including without limitation, required payroll deductions and withholding; provided that Annual Incentive Compensation shall be paid in a single lump sum no later than March 15 of the calendar year following the calendar year in which such compensation is earned.

3.4 Additional Benefits. The Executive will be entitled to participate in all compensation or employee benefit plans or programs and receive all benefits and perquisites to which any salaried employees are eligible under any existing or future plan or program established by the Company for salaried employees. The Executive will participate to the extent permissible under the terms and provisions of such plans or programs in accordance with program provisions. These may include group hospitalization, health, dental care, life or other insurance, tax qualified pension, car allowance, savings, thrift and profit sharing plans, termination pay programs, sick leave plans, travel or accident insurance, disability insurance, and contingent compensation plans including capital accumulation programs, restricted stock programs, stock purchase programs and stock option plans. Nothing in this Agreement will preclude the Company from amending or terminating any of the plans or programs applicable to salaried or senior executives as long as such amendment or termination is applicable to all salaried employees or senior executives. The Executive will be entitled to an annual paid vacation as established by the Board. In addition, the Board or a committee thereof in their discretion may establish benefits or perquisites applicable to the Executive that are not applicable to, or are more favorable than those available to, salaried employees or senior executives of the Company generally.

3.5 Business Expenses. The Company will reimburse the Executive for all reasonable travel and other expenses incurred by the Executive in connection with the performance of his duties and obligations under this Agreement. In order to receive reimbursement for business expenses, Executive must submit documentation to the Company in accordance with the Company’s expense reimbursement policy no later than February 15 of the calendar year following the calendar year in which the business expenses were incurred. Company shall reimburse properly documented and timely submitted business expenses no later than March 15 of the calendar year following the calendar year in which the business expenses were incurred.

3.6 Withholding. The Company may directly or indirectly withhold from any payments under this Agreement all federal, state, city or other taxes that shall be required pursuant to any law or governmental regulation.

SECTION 4
DEATH BENEFIT; DISABILITY COMPENSATION; KEY MAN INSURANCE

4.1 Payment in Event of Death. In the event of the death of the Executive during the Term of this Agreement, the Company’s obligation to make payments under this Agreement shall cease as of the date of death, except for earned but unpaid Base Salary and Annual Incentive Compensation which will be paid on a pro-rated basis for that year. Pro-rated Annual Incentive Compensation shall be paid in a single lump sum no later than March 15 of the calendar year following the calendar year in which the Executive’s death occurs. The Executive’s designated beneficiary will be entitled to receive the proceeds of any life or other insurance or other death benefit programs provided in this Agreement, other than “key man” life insurance benefits.

4.2 Disability Compensation. In the event of disability of the Executive during the Term of this Agreement, the Company will continue to pay the Executive according to the Compensation provisions of this Agreement for a period of three (3) months provided the Executive continues to be disabled. In the event the disability continues for a period of three (3) months, the Company may terminate the employment of the Executive. If the Executive continues to be disabled after three (3) months, the Company will pay in a single lump sum payment six (6) months of the Executive’s Base Salary on the 1^st day of the calendar month following the 3^rd month anniversary of the Executive’s date of disability, or as soon as administratively practicable thereafter, but in event later than December 31^st of the calendar year in which the 3^rd month anniversary of the Executive’s date of disability occurs. All other compensation will cease except for earned but unpaid Annual Incentive Compensation awards which would be payable on a pro-rated basis for the year in which the disability occurred, through the date of termination. Pro-rated Annual Incentive Compensation shall be paid in a single lump sum no later than March 15 of the calendar year following the calendar year of the Executive’s date of disability.

4.3 Responsibilities in the Event of Disability. During the period the Executive is receiving the payments described in this Agreement and as long as he is physically and mentally able to do so, the Executive will furnish information and assistance to the Company and from time to time will make himself avaiable to the Company to undertake assignments consistent with his prior position with the Company and his physical and mental health. If the Company fails to make a payment or provide a benefit required as part of the Agreement, the Executive’s obligation to provide information and assistance will end.

4.4 Definition of Disability. The term “disability” means the Executive is: