-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, D3e5YAiVwzTfKzxhPoe3LxAYzzJ93bXr+wiX5szrUOoMEepEf6ldNHghkOcAwu5e 9TBvsBCBWnLJCwIZsb4heg== 0001047469-10-007718.txt : 20100826 0001047469-10-007718.hdr.sgml : 20100826 20100825204233 ACCESSION NUMBER: 0001047469-10-007718 CONFORMED SUBMISSION TYPE: SC TO-T/A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20100826 DATE AS OF CHANGE: 20100825 GROUP MEMBERS: MOUNTAIN MERGER SUB CORP GROUP MEMBERS: VESTAR CAPITAL PARTNERS V, L.P. SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: HEALTH GRADES INC CENTRAL INDEX KEY: 0001027915 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389] IRS NUMBER: 621623449 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC TO-T/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-58765 FILM NUMBER: 101038725 BUSINESS ADDRESS: STREET 1: 500 GOLDEN RIDGE RD STREET 2: SUITE 100 CITY: GOLDEN STATE: CO ZIP: 80401 BUSINESS PHONE: 3037160041 MAIL ADDRESS: STREET 1: 500 GOLDEN RIDGE RD STREET 2: SUITE 100 CITY: GOLDEN STATE: CO ZIP: 80401 FORMER COMPANY: FORMER CONFORMED NAME: HEALTHGRADES COM INC DATE OF NAME CHANGE: 20000118 FORMER COMPANY: FORMER CONFORMED NAME: SPECIALTY CARE NETWORK INC DATE OF NAME CHANGE: 19961210 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: HEALTH GRADES INC CENTRAL INDEX KEY: 0001027915 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389] IRS NUMBER: 621623449 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-58765 FILM NUMBER: 101038726 BUSINESS ADDRESS: STREET 1: 500 GOLDEN RIDGE RD STREET 2: SUITE 100 CITY: GOLDEN STATE: CO ZIP: 80401 BUSINESS PHONE: 3037160041 MAIL ADDRESS: STREET 1: 500 GOLDEN RIDGE RD STREET 2: SUITE 100 CITY: GOLDEN STATE: CO ZIP: 80401 FORMER COMPANY: FORMER CONFORMED NAME: HEALTHGRADES COM INC DATE OF NAME CHANGE: 20000118 FORMER COMPANY: FORMER CONFORMED NAME: SPECIALTY CARE NETWORK INC DATE OF NAME CHANGE: 19961210 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: Mountain Acquisition Corp. CENTRAL INDEX KEY: 0001497550 IRS NUMBER: 000000000 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC TO-T/A BUSINESS ADDRESS: STREET 1: C/O VESTAR CAPITAL PARTNERS V, L.P. STREET 2: 245 PARK AVENUE, 41ST FLOOR CITY: NEW YORK STATE: NY ZIP: 10167 BUSINESS PHONE: 212-351-1600 MAIL ADDRESS: STREET 1: C/O VESTAR CAPITAL PARTNERS V, L.P. STREET 2: 245 PARK AVENUE, 41ST FLOOR CITY: NEW YORK STATE: NY ZIP: 10167 SC TO-T/A 1 a2199998zscto-ta.htm SC TO-T/A
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

SCHEDULE TO

(Rule 14d-100)

TENDER OFFER STATEMENT UNDER SECTION 14(d)(1)
OR SECTION 13(e)(1)OF THE SECURITIES EXCHANGE ACT OF 1934

(Amendment No. 4)

Health Grades, Inc.

(Name of Subject Company (Issuer))

Mountain Acquisition Corp.

Mountain Merger Sub Corp.

Vestar Capital Partners V, L.P.
(Name of Filing Persons (Offeror))

Common Stock, Par Value $0.001 Per Share
(Title of Class Securities)

42218Q102
(CUSIP Number of Class of Securities)

Steven Della Rocca
Mountain Acquisition Corp.
c/o Vestar Capital Partners V, L.P.
245 Park Avenue, 41st Floor
New York, New York 10167
(212) 351-1600
(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications on Behalf of Filing Persons)

With a copy to:
Michael Movsovich
Kirkland & Ellis LLP
601 Lexington Avenue
New York, New York 10022
(212) 446-4800

CALCULATION OF FILING FEE

Transaction Valuation*		Amount of Filing Fee**



$294,000,586.00		$20,962.24

*: Calculated solely for purposes of determining the filing fee. The calculation assumes the purchase of 30,534,195 shares of common stock, par value $0.001 per share, at $8.20 per share. The transaction value also includes the aggregate offer price for 3,688,167 shares issuable pursuant to outstanding options with an exercise price less than $8.20 per share, which is calculated by multiplying the number of shares underlying such outstanding options at each exercise price therefor by an amount equal to $8.20 minus such exercise price. The transaction value also includes the aggregate net offer price for 125,000 shares issuable pursuant to a warrant and 1,700,000 shares issuable pursuant to a confidentiality and non-competition agreement with Mr. Kerry R. Hicks, the Chief Executive Officer of Health Grades.
**: Calculated in accordance with Exchange Act Rule 0-11 by multiplying the transaction value by 0.0000713.

ý: Check the box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.


Amount Previously Paid:	$20,962.24	Filing Party:	Mountain Acquisition Corp.
Form or Registration No.:	Schedule TO	Date Filed:	August 10, 2010

o: Check the box if the filing relates solely to preliminary communications made before the commencement of a tender offer.

Check the appropriate boxes below to designate any transactions to which the statement relates:

ý: third-party tender offer subject to Rule 14d-1.
o: issuer tender offer subject to Rule 13e-4.
o: going-private transaction subject to Rule 13e-3.
ý: amendment to Schedule 13D under Rule 13d-2.

Check the following box if the filing is a final amendment reporting the results of the tender offer: o

If applicable, check the appropriate box(es) below to designate the appropriate rule provision(s) relied upon:

o: Rule 13e-4(i) (Cross-Border Issuer Tender Offer).
o: Rule 14d-1(d) (Cross-Border Third-Party Tender Offer).

This Amendment No. 4 to the Tender Offer Statement on Schedule TO (the "Schedule TO") amends and supplements the Schedule TO relating to the tender offer by Mountain Merger Sub Corp., a Delaware corporation ("Purchaser") and a direct wholly-owned subsidiary of Mountain Acquisition Corp., a Delaware corporation ("Parent"), for all of the outstanding common stock, par value $0.001 per share (the "Shares"), of Health Grades, Inc., a Delaware corporation ("Health Grades"), at a price of $8.20 per share net to the seller in cash without interest and less any required withholding taxes, if any, upon the terms and conditions set forth in the offer to purchase dated August 10, 2010 (the "Offer to Purchase"), a copy of which is attached as Exhibit (a)(1)(A), and in the related letter of transmittal (the "Letter of Transmittal"), a copy of which is attached as Exhibit (a)(1)(B), which, together with any amendments or supplements, collectively constitute the "Offer."

Items 1 through 9 and 11

Items 1 through 9 and Item 11 of the Schedule TO, which incorporate by reference the information contained in the Offer to Purchase, are hereby revised as follows:

(1) The first bullet of the question "What are the most significant conditions to the Offer?" on page 1 of the Offer to Purchase is amended to include the following immediately prior to the semicolon:

(subject to the assumptions set forth more fully in the Introduction to this Offer to Purchase, this condition will be satisfied if approximately 12,821,364 Shares are validly tendered and not withdrawn)

(2) The subsection entitled "Determination of Validity" of Section 3—"Procedures for Accepting the Offer and Tendering Shares" on page 15 of the Offer to Purchase is amended and restated to read as follows:

All questions as to the validity, form, eligibility (including, without limitation, time of receipt) and acceptance for payment of any tender of Shares will be determined by Purchaser in its reasonable discretion. Purchaser reserves the absolute right to reject any and all tenders determined by it not to be in proper form or the acceptance for payment of which may, in the opinion of its counsel, be unlawful. Purchaser also reserves the absolute right to waive any defect or irregularity in the tender of any Shares of any particular stockholder, whether or not similar defects or irregularities are waived in the case of other stockholders. No tender of Shares will be deemed to have been validly made until all defects and irregularities have been cured or waived to the satisfaction of Purchaser. None of Purchaser, the Depositary, the Information Agent or any other person will be under any duty to give notification of any defects or irregularities in tenders or incur any liability for failure to give any such notification. Stockholders may challenge Purchaser's interpretation of the terms and conditions of the Offer (including, without limitation, the Letter of Transmittal and the instructions thereto), and only a court of competent jurisdiction can make a determination that will be final and binding on all parties.

(3) Section 8—"Certain Information Concerning Parent and Purchaser" beginning on page 22 of the Offer to Purchase is amended and restated to read as follows:

Each of Parent and Purchaser is a Delaware corporation, and Holdings is a Delaware limited liability company. The principal office for each of Holdings, Parent and Purchaser is located at c/o Vestar Capital Partners V, L.P., 245 Park Avenue, 41st Floor, New York, New York 10167.

Purchaser is a direct wholly-owned subsidiary of Parent. Parent is a direct wholly-owned subsidiary of Holdings. Holdings is a wholly-owned subsidiary of Vestar. Purchaser, Holdings and Parent were formed for the purpose of completing the Offer and the Merger and have conducted no business activities other than those related to the structuring and negotiation of the Offer and the Merger.

Vestar is a Cayman Islands exempted limited partnership. The general partner of Vestar is Vestar Associates V, L.P., a Scottish limited partnership ("Associates"). The general partner of Associates is Vestar Managers V Ltd., a Cayman Islands exempted company ("Managers" and together with Associates and Vestar, the "Vestar Entities"). The principal office for the Vestar Entities is c/o Vestar Capital Partners V, L.P., 245 Park Avenue, 41st Floor, New York, New York 10167.

The telephone number for each of the Vestar Entities, Holdings, Parent, and Purchaser is (212) 351-1600.

Vestar, Associates and Managers are affiliates of Vestar Capital Partners, a New York-based private equity firm principally engaged in the business of investing and managing their private equity investments.

The name, citizenship, business address, business phone number, principal occupation or employment and five-year employment history for each of the directors and executive officers of the Vestar Entities, Holdings, Parent and Purchaser and certain other information are set forth in Schedule I to this Offer to Purchase.

Except as described in this Offer to Purchase, (i) none of the Vestar Entities, Holdings, Parent, Purchaser nor, to the best knowledge of the Vestar Entities, Holdings, Parent or Purchaser, any of the persons listed in Schedule I to this Offer to Purchase or any associate or majority-owned subsidiary of the Vestar Entities, Holdings, Parent or Purchaser or any of the persons so listed beneficially owns or has any right to acquire, directly or indirectly, any Shares and (ii) none of the Vestar Entities, Holdings, Parent or Purchaser nor, to the best knowledge of the Vestar Entities, Holdings, Parent or Purchaser, any of the persons or entities referred to above nor any director, executive officer or subsidiary of any of the foregoing has effected any transaction in the Shares during the past 60 days.

Except as provided in the Merger Agreement and the Support Agreements or as otherwise described in this Offer to Purchase, none of the Vestar Entities, Holdings, Parent, Purchaser or their subsidiaries nor, to the best knowledge of the Vestar Entities, Holdings, Parent or Purchaser, any of the persons listed in Schedule I to this Offer to Purchase has any present or proposed material agreement, arrangement, understanding or relationship with Health Grades or any of its executive officers, directors, controlling persons or subsidiaries. Except as provided in the Merger Agreement and the Support Agreements or as otherwise described in this Offer to Purchase, none of the Vestar Entities, Holdings, Parent or Purchaser nor, to the best knowledge of the Vestar Entities, Holdings, Parent or Purchaser, any of the persons listed in Schedule I to this Offer to Purchase has any agreement, arrangement, or understanding with any other person with respect to any securities of Health Grades, including, but not limited to, any contract, arrangement, understanding or relationship concerning the transfer or voting of such securities, finder's fees, joint ventures, loan or option arrangements, puts or calls, guarantees of loans, guarantees against loss, guarantees of profits, division of profits or loss or the giving or withholding of proxies.

Except as set forth in this Offer to Purchase, none of the Vestar Entities, Holdings, Parent, Purchaser nor, to the best knowledge of the Vestar Entities, Holdings, Parent, or Purchaser, any of the persons listed on Schedule I hereto has had any business relationship or transaction with Health Grades or any of its executive officers, directors or affiliates that is required to be reported under the rules and regulations of the SEC applicable to the Offer. Except as set forth in this Offer to Purchase, there have been no material contacts, negotiations or transactions between Holdings or any of its subsidiaries or, to the best knowledge of the Vestar Entities, Holdings, Parent or Purchaser, any of the persons listed in Schedule I to this Offer to Purchase, on the one hand, and Health Grades or its affiliates, on the other hand, concerning a merger, consolidation or acquisition, tender offer or other acquisition of Health Grades' securities, an election of Health Grades' directors or a sale or other transfer of a material amount of Health Grades' assets during the past two years.

None of the persons listed in Schedule I has, during the past five years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). None of the persons listed in Schedule I to this Offer to Purchase has, during the past five years, been a party to any judicial or administrative proceeding (except for matters that were dismissed without sanction or settlement) that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of any violation of federal or state securities laws.

(4) Section 10— "Background of the Offer; Past Contacts or Negotiations with Health Grades" beginning on page 23 of the Offer to Purchase is amended as follows:

(a) The second sentence of the third paragraph of the section is amended and restated to read as follows:

These discussions continued in late January 2009 and at various times through June 2009.

(b) The following paragraph is inserted immediately following the 11th paragraph of the section:

In early 2010, Health Grades and MediMedia reinitiated discussions which culminated in the execution of an ordinary course, non-exclusive, Content and Media Placement Agreement, effective March 2010.

(5) Schedule I of the Offer to Purchase is amended and restated to read as follows:

SCHEDULE I

DIRECTORS AND EXECUTIVE OFFICERS OF PARENT, PURCHASER, HOLDINGS AND MANAGERS

1. Officers of Parent. The following table sets forth the name, present principal occupation or employment and material occupations, positions, offices or employments for the past five years of each officer of Parent. Unless otherwise indicated, the current business address of each person is c/o Vestar Capital Partners V, L.P., 245 Park Avenue, 41st Floor, New York, New York 10167.

Name and Title	Citizenship	Present Principal Occupation or Employment; Name, Material Positions Held During the past Five Years

Roger C. Holstein, Director and President	USA	Managing Director of Vestar Capital Partners ("VCP") since January 2007. From June 2006 to December 2006, Mr. Holstein served as a Senior Advisor to VCP. Mr. Holstein has served as Chairman of the board of directors of DynaVox Inc. since its formation in December 2009 and member of the management committee of DynaVox Systems Holdings LLC since October 2006. Mr. Holstein has served as a director of MediMedia USA, Inc. from 2009 to the present and Press Ganey Associates, Inc. from 2008 to the present. From May 2005 to June 2006, Mr. Holstein pursued personal endeavors.
Norman W. Alpert, Director and Vice President	USA	Managing Director of VCP since April 1988. Mr. Alpert has served as a director of Press Ganey Associates, Inc. from 2008 to the present; MediMedia USA, Inc. from 2006 to the present; and St. John Knits International, Inc. from 2007 to the present.
Garrick D. Bernstein, Treasurer	USA	Principal of VCP since January 2010. From January 2007 to December 2009, Mr. Bernstein served as a Vice President of VCP. From July 2004 to December 2006, Mr. Bernstein served as an Associate of VCP. Mr. Bernstein has served as a director of Sunrise Medical, Inc. from 2010 to the present; DeVilbiss Healthcare from 2010 to the present; and MediMedia USA, Inc. from 2007 to the present.
Steven Della Rocca, Secretary	USA	Managing Director and General Counsel of VCP since July 2010. From July 1980 to July 2010, Mr. Della Rocca served as an associate and then partner at Latham & Watkins LLP.

2. Directors and Officers of Purchaser. The following table sets forth the name, present principal occupation or employment and material occupations, positions, offices or employments for the past five

years of each officer of Parent. Unless otherwise indicated, the current business address of each person is c/o Vestar Capital Partners V, L.P., 245 Park Avenue, 41st Floor, New York, New York 10167.

Name and Title	Citizenship	Present Principal Occupation or Employment; Name, Material Positions Held During the past Five Years

Roger C. Holstein, Director and President	USA	Managing Director of VCP since January 2007. From June 2006 to December 2006, Mr. Holstein served as a Senior Advisor to VCP. Mr. Holstein has served as Chairman of the board of directors of DynaVox Inc. since its formation in December 2009 and member of the management committee of DynaVox Systems Holdings LLC since October 2006. Mr. Holstein has served as a director of MediMedia USA, Inc. from 2009 to the present and Press Ganey Associates, Inc. from 2008 to the present. From May 2005 to June 2006, Mr. Holstein pursued personal endeavors.
Norman W. Alpert, Director and Vice President	USA	Managing Director of VCP since April 1988. Mr. Alpert has served as a director of Press Ganey Associates, Inc. from 2008 to the present; MediMedia USA, Inc. from 2006 to the present; and St. John Knits International, Inc. from 2007 to the present.
Garrick D. Bernstein, Treasurer	USA	Principal of VCP since January 2010. From January 2007 to December 2009, Mr. Bernstein served as a Vice President of VCP. From July 2004 to December 2006, Mr. Bernstein served as an Associate of VCP. Mr. Bernstein has served as a director of Sunrise Medical, Inc. from 2010 to the present; DeVilbiss Healthcare from 2010 to the present; and MediMedia USA, Inc. from 2007 to the present.
Steven Della Rocca, Secretary	USA	Managing Director and General Counsel of VCP since July 2010. From July 1980 to July 2010, Mr. Della Rocca served as an associate and then partner at Latham & Watkins LLP.

3. Directors and Officers of Holdings. The following table sets forth the name, present principal occupation or employment and material occupations, positions, offices or employments for the past five

years of each officer of Holdings. Unless otherwise indicated, the current business address of each person is c/o Vestar Capital Partners V, L.P., 245 Park Avenue, 41st Floor, New York, New York 10167.

Name and Title	Citizenship	Present Principal Occupation or Employment; Name, Material Positions Held During the past Five Years

Roger C. Holstein, Director and President	USA	Managing Director of VCP since January 2007. From June 2006 to December 2006, Mr. Holstein served as a Senior Advisor to VCP. Mr. Holstein has served as Chairman of the board of directors of DynaVox Inc. since its formation in December 2009 and member of the management committee of DynaVox Systems Holdings LLC since October 2006. Mr. Holstein has served as a director of MediMedia USA, Inc. from 2009 to the present and Press Ganey Associates, Inc. from 2008 to the present. From May 2005 to June 2006, Mr. Holstein pursued personal endeavors.
Norman W. Alpert, Director and Vice President	USA	Managing Director of VCP since April 1988. Mr. Alpert has served as a director of Press Ganey Associates, Inc. from 2008 to the present; MediMedia USA, Inc. from 2006 to the present; and St. John Knits International, Inc. from 2007 to the present.
Garrick D. Bernstein, Treasurer	USA	Principal of VCP since January 2010. From January 2007 to December 2009, Mr. Bernstein served as a Vice President of VCP. From July 2004 to December 2006, Mr. Bernstein served as an Associate of VCP. Mr. Bernstein has served as a director of Sunrise Medical, Inc. from 2010 to the present; DeVilbiss Healthcare from 2010 to the present; and MediMedia USA, Inc. from 2007 to the present.
Steven Della Rocca, Secretary	USA	Managing Director and General Counsel of VCP since July 2010. From July 1980 to July 2010, Mr. Della Rocca served as an associate and then partner at Latham & Watkins LLP.

4. Director of Managers. The following table sets forth the name, present principal occupation or employment and material occupations, positions, offices or employments for the past five years of the sole director of Managers. The current business address of the sole director is c/o Vestar Capital Partners V, L.P., 245 Park Avenue, 41st Floor, New York, New York 10167.

Name and Title		Citizenship		Present Principal Occupation or Employment; Name, Material Positions Held During the past Five Years

Daniel S. O'Connell, sole director and Managing Director		USA		Managing Director and Chief Executive Officer of VCP since April 1988. Mr. O'Connell has served as a director of National Mentor from 2006 to the present; Birds Eye Foods, Inc. from 2002 to 2009; Radiation Therapy Services, Inc. from 2008 to 2009; the Solo Cup Company from 2004 to the present; Sunrise Medical, Inc. from 2000 to the present; St. John Knits International, Inc. from 1999 to the present; and the Sun Products Corp. from 2008 to the present.

Item 12. Exhibits.

Regulation M-A Item 1016

Item 12 of the Schedule TO is amended and supplemented by adding the following exhibit:

Exhibit No.

(b)(1)		Equity Financing Commitment, dated July 27, 2010.

SIGNATURES

After due inquiry and to the best of their knowledge and belief, each of the undersigned certifies that the information set forth in this statement is true, complete and correct.


Dated: August 25, 2010
	MOUNTAIN MERGER SUB CORP.
	By:	/s/ STEVEN DELLA ROCCA
	Name:	Steven Della Rocca
	Title:	Secretary
	MOUNTAIN ACQUISITION CORP.
	By:	/s/ STEVEN DELLA ROCCA
	Name:	Steven Della Rocca
	Title:	Secretary
	VESTAR CAPITAL PARTNERS V, L.P.
	By: Vestar Associates V, L.P.,
	its General Partner
	By: Vestar Managers V Ltd., its General Partner
	By:	/s/ BRIAN P. SCHWARTZ
	Name:	Brian P. Schwartz
	Title:	Authorized Signatory

EXHIBIT INDEX


(a)(1)(A)		Offer to Purchase, dated August 10, 2010.*
(a)(1)(B)		Letter of Transmittal.*
(a)(1)(C)		Notice of Guaranteed Delivery.*
(a)(1)(D)		Letter from the Information Agent to Brokers, Dealers, Commercial Banks, Trust Companies and Nominees.*
(a)(1)(E)		Letter to Clients for Use by Brokers, Dealers, Commercial Banks, Trust Companies and Nominees.*
(a)(1)(F)		Joint Press Release of Health Grades, Inc. and Vestar Capital Partners V, L.P., dated July 28, 2010 (incorporated by reference to Exhibit 99.1 to the Schedule TO-C filed by Mountain Merger Sub Corp. with the Securities and Exchange Commission on July 29, 2010).*
(a)(1)(G)		Summary Advertisement as published on August 10, 2010.*
(a)(5)		Class Action Complaint and Jury Demand dated July 30, 2010 (Reginald W. Harris v. Vestar Capital Partners V, L.P. et al.).*
(a)(6)		Class Action Complaint and Jury Demand dated August 4, 2010 (Medford Bragg v. Vestar Capital Partners V, L.P. et al.).*
(a)(7)		Press Release of Affiliates of Vestar Capital Partners V, L.P., dated August 10, 2010.*
(a)(8)		Verified Class Action Complaint dated August 12, 2010 (Tove Forgo v. Health Grades, Inc. et. al.).*
(a)(9)		Verified Class Action Complaint for Breach of Fiduciary Duty dated August 16, 2010 (Peter P. Weigard v. Kerry Hicks, et. al.).
(a)(10)		Shareholder Class Action Complaint and Jury Demand dated August 17, 2010 (Sarah E. Tomsky v. Health Grades, Inc., et. al.).*
(b)(1)		Equity Financing Commitment, dated July 27, 2010.
(d)(1)		Agreement and Plan of Merger, dated as of July 27, 2010, by and among Mountain Acquisition Corp., Mountain Merger Sub Corp., Mountain Acquisition Holdings, LLC and Health Grades, Inc. (incorporated by reference to Exhibit 2.1 to the Form 8-K filed by Health Grades, Inc. with the Securities and Exchange Commission on July 28, 2010).*
(d)(2)		Amendment to the Agreement and Plan of Merger, dated as of August 9, 2010, by and among Mountain Acquisition Corp., Mountain Merger Sub Corp., Mountain Acquisition Holdings, LLC and Health Grades, Inc. (incorporated by reference to Exhibit 2.1 to the Form 8-K filed by Health Grades, Inc. with the Securities and Exchange Commission on August 9, 2010).*

*: Previously filed.

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SCHEDULE I DIRECTORS AND EXECUTIVE OFFICERS OF PARENT, PURCHASER, HOLDINGS AND MANAGERS

Item 12. Exhibits.

SIGNATURES
EXHIBIT INDEX
EX-99.(B)(1) 2 a2199998zex-99_b1.htm EXHIBIT 99.(B)(1)

Exhibit 99.(b)(1)

EXECUTION COPY

July 27, 2010

Mountain Acquisition Corp.

c/o Vestar Capital Partners V, L.P.

245 Park Avenue, 41st Floor

New York, New York 10167

Re: Equity Financing Commitment

Ladies and Gentlemen:

This letter agreement (this “Equity Commitment Letter”) sets forth the commitment of VESTAR CAPITAL PARTNERS V, L.P. (the “Sponsor”), subject to the terms and conditions contained herein, to purchase, or cause the purchase of, certain equity and/or debt securities of MOUNTAIN ACQUISITION CORP., a Delaware corporation (“Parent”). It is contemplated that, pursuant to that certain Agreement and Plan of Merger, dated as of the date hereof (as amended, restated, supplemented or otherwise modified from time to time, the “Merger Agreement”) by and among Parent, MOUNTAIN MERGER SUB CORP., a Delaware corporation (“Merger Sub”), and HEALTH GRADES, INC. (the “Company”), Merger Sub has agreed to (i) commence a tender offer for all of the outstanding shares of Company Common Stock and (ii) if the Offer is completed on the terms and subject to the conditions set forth in the Merger Agreement, merge with and into the Company (the “Merger”), with the Company surviving the Merger as a wholly-owned subsidiary of Parent. Capitalized terms used but not defined herein shall have the meaning ascribed to them in the Merger Agreement.

1. Commitment. This Equity Commitment Letter confirms the commitment of Sponsor, subject to the terms and conditions set forth herein, that, at the Acceptance Time, it shall purchase (or cause an assignee permitted by the terms of Section 4(a) to purchase) equity and/or debt securities of Parent and/or a wholly-owned Subsidiary of Parent for an aggregate amount in cash of US$294,000,586 (the “Commitment”), solely for the purpose of allowing Parent to contribute the Commitment to Merger Sub, of which (i) an amount up to the product of the Offer Price multiplied by the number of shares of Company Common Stock validly tendered and not properly withdrawn pursuant to the Offer as provided in Section 2.1 of the Merger Agreement will be contributed at the Acceptance Time to fund the payment for such shares, (ii) an amount up to the product of the Offer Price multiplied by the number of shares of Company Common Stock validly tendered and not properly withdrawn pursuant to any subsequent offering period in accordance with Section 2.1(f) of the Merger Agreement will be contributed at the time Merger Sub accepts for payment the shares tendered during such subsequent offering period to fund the payment for such shares, and (iii) the remainder of the Commitment will be contributed at the Effective Time to fund the acquisition of shares of Company Common Stock in connection with the Merger and in connection with the payments required pursuant to Section 4.5 of the Merger Agreement, and, in each case, the payment of related fees and expenses; provided, that under no circumstance shall Sponsor be obligated to fund, in the aggregate, an amount in excess of the Commitment. Sponsor may effect the purchase of such equity and/or debt securities of Parent and/or a wholly-owned Subsidiary of Parent directly or indirectly through one or more affiliated entities. The amount of the Commitment to be funded under this Equity Commitment

Letter may be reduced in an amount specified by Parent but only to the extent that it will thereafter be possible for Parent to consummate the transactions contemplated by the Merger Agreement with Sponsor contributing less than the full amount of its Commitment.

2. Conditions. The Commitment shall be subject to (a) with respect to the obligations to accept for payment and pay for any validly tendered and not properly withdrawn shares of Company Common Stock (i) the execution and delivery of the Merger Agreement by the Company, (ii) none of the conditions to Parent’s and Merger Sub’s obligations to consummate the Offer set forth in Annex A of the Merger Agreement shall have occurred and be continuing, or waiver by Parent (with the prior written approval of Sponsor) of any and all such conditions that have occurred and are continuing, and (iii) the contemporaneous acceptance for payment by Merger Sub of the shares of Company Common Stock validly tendered and not properly withdrawn pursuant to the Offer in accordance with the terms of the Merger Agreement, and (b) with respect to the shares of Company Common Stock to be paid for at the time of the Merger, subject to the satisfaction or waiver by Parent (with the prior written approval of Sponsor) of the conditions to Parent’s and Merger Sub’s obligations to effect the Merger set forth in Section 8.1 of the Merger Agreement.

3. Termination. Sponsor’s obligation to fund the Commitment will terminate automatically and immediately upon the earliest to occur of: (a) the Effective Time (subject to Sponsor having fully funded the Commitment as required pursuant to Section 1 hereto); (b) termination of the Merger Agreement in accordance with its terms; and (c) the funding of the Commitment. Upon termination of this Equity Commitment Letter, Sponsor shall not have any further obligations or liabilities hereunder.

4. Assignment; Amendments and Waivers; Entire Agreement.

(a) The rights and obligations under this Equity Commitment Letter may not be assigned by any party hereto without the prior written consent of the other parties, and any attempted assignment shall be null and void and of no force or effect. Notwithstanding the foregoing, (i) Sponsor may assign all or a portion of its obligations to fund the Commitment to one or more of its affiliated investment funds that is advised by the investment manager of Sponsor or any Affiliate thereof and (ii) Parent may assign all or a portion of its obligations hereunder at the direction of Sponsor to a parent entity that owns, directly or indirectly, all or substantially all of the equity interests of Parent; provided that, in each case, no such assignment shall relieve the assigning party of its obligations hereunder.

(b) This Equity Commitment Letter may not be amended, and no provision hereof waived or modified, except by an instrument signed by each of the parties hereto.

(c) This Equity Commitment Letter constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, among or between any of the parties with respect to the subject matter hereof and thereof.

5. No Third Party Beneficiaries. Except to the extent as expressly set forth in Section 6(b) herein, this Equity Commitment Letter shall be binding solely on, and inure solely to the benefit of, the parties hereto and their respective successors and permitted assigns, and

nothing set forth in this Equity Commitment Letter shall be construed to confer upon or give to any Person (including the Company), other than the parties hereto and their respective successors and permitted assigns, any benefits, rights or remedies under or by reason of, or any rights to enforce or cause Parent to enforce, any provision of this Equity Commitment Letter.

6. Limited Recourse; Enforcement.

(a) Notwithstanding anything that may be expressed or implied in this Equity Commitment Letter or any document or instrument delivered contemporaneously herewith, Parent, by its acceptance of the benefits of the Commitment provided herein, covenants, agrees and acknowledges that no Person (other than Sponsor and its respective permitted assigns hereunder) shall have any obligation hereunder or in connection with the transactions contemplated hereby and that, notwithstanding that Sponsor or any of its respective permitted assigns may be a partnership or limited liability company, it has no rights of recovery against, and no recourse hereunder or under any documents or instruments delivered in connection herewith or in respect of any oral representations made or alleged to be made in connection herewith or therewith shall be had against, any former, current and future direct or indirect equityholders, controlling persons, stockholders, directors, officers, employees, agents, Affiliates, members, managers, general or limited partners, attorneys or other representatives of any party hereto, or any of their successors or assigns, or any former, current and future direct or indirect equityholders, controlling persons, stockholders, directors, officers, employees, agents, Affiliates, members, managers, general or limited partners, attorneys or other representatives or successors or assignees of any of the foregoing (but not including Sponsor or its respective permitted assigns hereunder, each, a “Related Party” and collectively, the “Related Parties”), whether by the enforcement of any assessment or by any legal or equitable proceeding, or by virtue of any applicable law, it being agreed and acknowledged that no personal liability whatsoever shall attach to, be imposed on or otherwise be incurred by any Related Party for any obligations of Sponsor or any of its successors or permitted assigns under this Equity Commitment Letter or any documents or instrument delivered in connection herewith or in respect of any oral representations made or alleged to be made in connection herewith or therewith or for any claim (whether at law or equity or in tort, contract or otherwise) based on, in respect of, or by reason of such obligations or their creation.

(b) This Equity Commitment Letter may only be enforced by Parent at the direction of Sponsor in its sole discretion or, solely to the extent expressly set forth in the following proviso, the Company; and none of Parent’s creditors shall have any right to enforce this Equity Commitment Letter or to cause Parent to enforce this Equity Commitment Letter; provided, however, that, subject to the terms and conditions of the Merger Agreement, the Company is hereby made a third party beneficiary of the rights granted to Parent hereby only for the purpose of specifically enforcing Parent’s right to cause the Commitment to be funded hereunder (solely to the extent that Parent can enforce the Commitment pursuant to the terms hereof) without any requirement that such enforcement be at the direction of Sponsor, and for no other purpose (including, without limitation, any claim for monetary damages hereunder). Except as expressly set forth in the preceding proviso, no obligation contained in, arising from or relating to this Equity Commitment Letter will be enforceable by way of specific performance.

7. Governing Law; Jurisdiction. This Equity Commitment Letter, and all claims or causes of action (whether at Law, in contract or in tort) that may be based upon, arise out of or relate to this Equity Commitment Letter or the negotiation, execution or performance hereof shall be construed, performed and enforced in accordance with the Laws of the State of Delaware without giving effect to its principles or rules of conflict of laws to the extent such principles or rules would require or permit the application of the Laws of another jurisdiction. Any Action against, arising out of or relating to this Equity Commitment Letter or the transactions contemplated hereby, including any Action against any Related Party, shall be brought solely and exclusively in the Court of Chancery of the State of Delaware; provided that if (and only after) such courts determine that they lack subject matter jurisdiction over any such legal Action, such legal Action shall be brought solely and exclusively in the federal courts of the United States located in the State of Delaware; provided, further, that if (and only after) both the Court of Chancery of the State of Delaware and the federal courts of the United States located in the State of Delaware determine that they lack subject matter jurisdiction over any such legal Action, such legal Action shall be brought in the United States District Court for the Southern District of New York. Each of the parties agrees that a final judgment (subject to any appeals therefrom) in any such Action shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by applicable Law. Each party hereby irrevocably submits to the exclusive jurisdiction of such courts, in accordance with the foregoing order of priority, in respect of any Action arising out of or relating to this Equity Commitment Letter or the transactions contemplated hereby, and hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any Action arising out of or relating to this Equity Commitment Letter or the transactions contemplated hereby in any such court in accordance with the provisions of this Section 7. Each of the parties hereby irrevocably waives, to the fullest extent permitted by applicable Law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court. Nothing in this Equity Commitment Letter will affect the right of any party to serve process in any other manner permitted by applicable Law.

8. Waiver of Jury Trial. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS EQUITY COMMITMENT LETTER IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS EQUITY COMMITMENT LETTER OR THE TRANSACTIONS CONTEMPLATED HEREBY, INCLUDING ANY CONTROVERSY INVOLVING ANY RELATED PARTY UNDER THIS EQUITY COMMITMENT LETTER. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS EQUITY COMMITMENT LETTER BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 8.

9. Counterparts. This Equity Commitment Letter may be executed by facsimile and in counterparts, and by the different parties in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.

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	Very truly yours,

	VESTAR CAPITAL PARTNERS V, L.P.


	By:	/s/ Brian P. Schwartz
		Name: Brian P. Schwartz
		Title: Managing Director & Chief Financial Officer

[Signature Page to the Equity Commitment Letter]

Accepted and acknowledged:

MOUNTAIN ACQUISITION CORP.

By:	/s/ Norman W. Alpert
	Name:	Norman W. Alpert
	Title:	President

[Signature Page to the Equity Commitment Letter]

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