HealthStream, Inc. 2022 Cash Incentive Bonus Plan

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Annual Bonus – The annual bonus paid to Management after the Committee determines the applicable financial measure has been achieved.

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Adjusted EBITDA – The Company’s Adjusted EBITDA for the 2022 fiscal year calculated as set forth in the “Reconciliation of Non-GAAP Financial Measures” in the Company’s annual report on Form 10-K and as updated under subsequent quarterly filings under Form 10-Q or the Company’s quarterly earnings releases filed under Forms 8-K; provided the following are excluded from the calculation of Adjusted EBITDA: (i) acquisition and divestiture expenses incurred within the calendar year to the extent such expenses are in excess of the amount originally allocated to such purpose in the Company’s 2022 budget; and (ii) Adjusted EBITDA (profit/loss) from acquisitions and divestitures consummated during 2022 (collectively, the “Excluded Expenses”). The Committee has the negative discretion to include the Excluded Expenses in the calculation of Adjusted EBITDA.

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Incremental Threshold Adjusted EBITDA – the amount of Adjusted EBITDA before bonuses less Threshold Adjusted EBITDA; as such Threshold Adjusted EBITDA amount is established by the Committee. Incremental Threshold Adjusted EBITDA funds the Threshold Bonus Pool as set forth in the "Payout" section below..

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Incremental Target Adjusted EBITDA – the amount of Adjusted EBITDA before bonuses less Target Adjusted EBITDA; as such Target Adjusted EBITDA amount is established by the Committee.  Incremental Target EBITDA funds the Target Bonus Pool as set forth below.

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Incremental Stretch Adjusted EBITDA – the amount of Adjusted EBITDA before bonuses that is achieved after the Target Bonus Pool is fully funded.  The Incremental Stretch Adjusted EBITDA funds the Stretch Bonus Pool as set forth below.

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Financial Measure – Adjusted EBITDA before bonuses will be the financial measure for 2022.

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Funding Principle – The Annual Bonus will be funded: (i) first from the amount of Incremental Threshold Adjusted EBITDA that exceeds Threshold Adjusted EBITDA, (ii) then from the amount of Incremental Target Adjusted EBITDA that exceeds Target Adjusted EBITDA, and (iii) finally, for Executives only from the amount of Incremental Stretch Adjusted EBITDA that exceeds Stretch Adjusted EBITDA.

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The Annual Bonus payable to any participant in this Plan will be determined as follows:

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In the event that Adjusted EBITDA before bonuses is less than or equal to Threshold Adjusted EBITDA, a participant will receive no Annual Bonus.

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To the extent Incremental Threshold Adjusted funds the Threshold Bonus Pool, a participant will receive a percentage of his or her maximum Annual Bonus payable as set forth above under “The Plan-Eligibility” (the “Maximum Annual Bonus”) in an amount between 0% and 25% of the Maximum Annual Bonus payable to such participant, based on the amount of bonus pool that is funded for that range (the “Threshold Bonus Pool”). The Threshold Bonus Pool shall be funded by every dollar of Incremental Threshold Adjusted EBITDA until the Threshold Pool is fully funded.  The Threshold Bonus Pool is fully funded at the point in which the Threshold Adjusted EBITDA is reached after bonus payments equal to 25% of the Maximum Annual Bonus for all participants is achieved.

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In the event that the Threshold Bonus Pool is fully funded, a participant will then be eligible to receive an Annual Bonus in an amount between 25% and 100% of the Maximum Annual Bonus payable to such participant, based on the amount of bonus pool that is funded for that range (the “Target Bonus Pool”).  The Target Bonus Pool shall be funded by seventy-eight cents of every dollar of Incremental Target Adjusted EBITDA until the Target Bonus Pool is fully funded.  The Target Bonus Pool is fully funded at the point in which the Target Adjusted EBITDA is reached after bonus payments equal to the remaining 75% of the Maximum Bonus Amount (at which point 100% of the Maximum Bonus in the aggregate would be earned); provided Executives shall also be eligible to receive a Stretch Bonus Amount as set forth below.

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Solely for Executives, in the event that Target Bonus Pool is fully funded, each Executive will then be eligible to receive—in addition to her or his Maximum Annual Bonus, which has already been earned—an additional payment (the “Stretch Bonus Amount”) in an amount equal to a percentage between 0% and 15% of the base salary payable to such Executive based on the amount of bonus pool that is funded for that range (the “Stretch Bonus Pool”).  The Stretch Bonus Pool shall be funded by ten cents of every dollar of Incremental Stretch Adjusted EBITDA until the Stretch Bonus Pool is fully funded.  The Stretch Bonus Pool is fully funded at the point in which the Stretch Adjusted EBITDA (as established by the Committee) is reached after bonus payments equal to 15% of each Executives base salary. For purposes of clarity, Executives shall become eligible to begin achieving the Stretch Bonus  Amount after 100% of the Maximum Annual Bonus is achieved, and payment for any Stretch Bonus Amount an executive achieves shall be in addition to the 100% Maximum Annual Bonus.

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Any Annual Bonus payouts made to the Executive Team, Leadership Team, Senior Directors, or Directors pursuant to the Plan shall be payable at such time as bonuses are paid generally to executive officers of the Company.