Document:

hstm-ex1019_64.htm

 

EXHIBIT 10.19 

HealthStream, Inc. 

Board of Directors 

Compensation Committee

Amended 2019 Provider Solutions Cash Incentive Bonus Plan 

For the Business Segment President

Overview:

 

Pursuant to the HealthStream, Inc. 2016 Omnibus Incentive Plan, the Compensation Committee (the “Committee”) of the Board of Directors of HealthStream, Inc. (the “Company”) hereby establishes this Amended 2019 Provider Solutions Cash Incentive Bonus Plan for the Business Segment President (the “Plan”).  The Plan is a cash-based, short-term incentive portion of the Company’s Provider Solutions segment (the “Business Unit”) incentive compensation structure for the president (“President”) of the Business Unit.  The purpose of the Plan is to specify appropriate opportunities to earn a cash bonus with respect to the (i) Business Unit’s 2019 fiscal year performance and/or (ii) the Company’s overall 2019 fiscal year performance, each in order to reward the President for the Business Unit’s and/or the Company’s financial performance during fiscal year 2019 and to further align his interest with those of the shareholders of the Company.

 

Definitions:

 

 

	
 
	
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Provider Solutions Actual Operating Income before bonuses – The Business Unit’s Operating Income achieved in fiscal 2019, excluding bonuses.

 

	
 
	
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Enterprise Actual Operating Income before bonuses – The Company’s Operating Income achieved in fiscal 2019, excluding bonuses.

 

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

 

	
 
	
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Provider Solutions Incremental Operating Income – Provider Solutions Actual Operating Income before bonuses less Provider Solutions Target Operating Income.

 

	
 
	
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Enterprise Incremental Operating Income – Enterprise Actual Operating Income before bonuses less Enterprise Target Operating Income.

 

	
 
	
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Provider Solutions Operating Income – The Business Unit’s Operating Income for the 2019 fiscal year calculated in accordance with generally accepted accounting principles under ASC 606  and consistent with the Company’s past practice and presented in the Company’s audited financial statements, provided the following expenses are excluded from the calculation of Provider Solutions Operating Income: for acquisitions and divestitures within or directly impacting the Business Unit, acquisition and divestiture expenses for transactions within the calendar year and operating income (loss) from acquisitions and divestitures consummated during the calendar year (the “Excluded Expenses”).  The Committee has the negative discretion to include the Excluded Expenses in the calculation of Provider Solutions Operating Income. 

 

	
 
	
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Enterprise Operating Income - The Company’s Operating Income for the 2019 fiscal year calculated in accordance with generally accepted accounting principles under ASC 606 and consistent with the Company’s past practice and presented in the Company’s audited financial statements, provided the following  are excluded from the calculation of Operating Income: (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 2019 budget; (ii) operating income (loss) from acquisitions and divestitures consummated during the calendar year; and (iii) expenses in connection with the stock contribution from Robert A. Frist, Jr. to the Company on or about June 26, 2019 and the associated stock issuance from the Company to non-executive officers of the Company on or about July 25, 2019  

 

 

	
 
		
(collectively, the “Excluded Expenses”).  The Committee has the negative discretion to include the Excluded Expenses in the calculation of Enterprise Operating Income.

 

	
 
	
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Provider Solutions Target Operating Income – Provider Solutions Operating Income for the 2019 fiscal year in an amount established by the Committee by resolution within the first 90 days of the Company’s 2019 fiscal year.

 

	
 
	
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Enterprise Target Operating Income – Enterprise Operating Income for the 2019 fiscal year in an amount established by the Committee by resolution within the first 90 days of the Company’s 2019 fiscal year.

 

 

2019 Financial Measure and Plan Principles:

 

	
 
	
1.
	
The financial measures for 2019 are Provider Solutions and/or Enterprise Operating Income – Provider Solutions and/or Enterprise Operating Income will be the financial measure for 2019.

 

	
 
	
2.
	
The Annual Bonus is funded by Provider Solutions and/or Enterprise Incremental Operating Income – The Annual Bonus will be earned from an amount of Provider Solutions and/or Enterprise Incremental Operating Income. 

 

 

The Plan

 

Eligibility

 

Two groups are eligible for participation in the Plan:

 

	
 
	
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President – The maximum Annual Bonus the President shall be eligible to receive under the Plan shall be an amount equal to 40 percent of the President’s base salary, with that 40% being comprised as follows:  32% from Provider Solutions Incremental Operating Income and 8% from Enterprise Incremental Income..  Therefore, 80% of the President’s Annual Bonus is based on achieving and exceeding Provider Solutions Target Operating Income and the other 20% is based on achieving and exceeding Enterprise Target Operating Income.

 

	
 
	
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Employment Requirements – Participants in the Plan who were employed with   

the Company through December 31, 2019 shall be eligible to receive bonus payments, if any, under the Plan regardless of whether such employees are employed on the date such payments are actually made.  Notwithstanding the foregoing, in the case of death or disability, the participant’s pro rata share from January 1, 2019 through the date of participant’s death or disability shall be awarded.

 

 

Payout 

 

Payouts under the Plan shall be determined as follows:

 

	
 
	
1.
	
Provider Solutions Incremental Operating Income will be determined by subtracting the Provider Solutions Target Operating Income from Actual Operating Income before bonuses.  The Provider Solutions Incremental Operating Income will then be multiplied by 32% for the President.

 

	
 
	
2.
	
Enterprise Incremental Operating Income will be determined by subtracting the Enterprise Target Operating Income from Enterprise Actual Operating Income before bonuses.  The Enterprise Incremental Operating Income will then be multiplied by 8% for the President.

 

	
 
	
3.
	
Any such Annual Bonus made to the President pursuant to the Plan shall be payable at such time as bonuses are paid generally to executive officers of the Company.hstm-ex1020_381.htm

EXHIBIT 10.20

CONTRIBUTION AGREEMENT

 

This Contribution Agreement (the “Agreement”), made and entered into as of June 26, 2019 (the “Effective Date”), is by and between HealthStream, Inc., a Tennessee corporation (“HealthStream”), and Robert A. Frist, Jr., an individual resident of the State of Tennessee (“Frist”). 

 

WHEREAS, Frist desires to contribute to HealthStream, and HealthStream desires to accept from Frist (the “Contribution”), 86,372 shares of common stock, no par value (“Common Stock”), of HealthStream (collectively, the “Contributed Shares”);

 

WHEREAS, pursuant to the terms and conditions of this Agreement and the HealthStream, Inc. 2016 Omnibus Incentive Plan (the “Plan”), HealthStream desires to grant 78,520 shares of Common Stock (the “Grant Shares”) to the individuals and in the amounts set forth on the attached spreadsheet as Exhibit A (such individuals, the “Recipients”); and

 

WHEREAS, HealthStream and Frist desire to memorialize in writing the terms, provisions and conditions of the Contribution and the share grant.

NOW, THEREFORE, in consideration of the foregoing, and the representations, warranties, covenants and conditions set forth below, the parties hereto, intending to be legally bound, hereby agree as follows:

Section 1.Contribution; Share Grant. 

 

(a)Contribution.  Subject to the terms and conditions of this Agreement and without any compensation paid by HealthStream to Frist, at the Closing (as defined below), Frist hereby contributes the Contributed Shares to HealthStream, and HealthStream hereby accepts such contribution.  Frist shall execute stock powers or other evidence of transfer evidencing such contribution and transfer as may reasonably be requested by HealthStream, and shall deliver to HealthStream stock certificates (as applicable) representing all of the Contributed Shares.

 

(b)Closing.  The closing of the Contribution (the “Closing”) will take place concurrently with the execution and delivery hereof at the offices of HealthStream at 500 11th Avenue North, Suite 1000, Nashville, Tennessee 37203 effective as of 3:01 p.m. (local time) on the Effective Date. 

 

(c) Share Grant.  HealthStream hereby agrees to grant the Grant Shares to the Recipients pursuant to the Plan in the amounts set forth on Exhibit A hereto as Other Stock-Based Awards (as defined in the Plan), which grants have been approved by the Compensation Committee of HealthStream.  It is anticipated that the Grant Shares will be issued to the Recipients on or about July 25, 2019, and such Grant Shares will not be subject to any vesting conditions.

 

Section 2.Representations and Warranties of Frist.  Frist represents and warrants as of the Closing to HealthStream as follows:

 

(a)Authority.  This Agreement constitutes the valid and binding obligation of Frist, enforceable against Frist in accordance with its terms.  Frist has all requisite power, authority and capacity to execute and deliver this Agreement and to consummate the transactions contemplated hereby.  

 

 

 

(b)No Conflict.  Neither the execution and delivery of this Agreement by Frist nor the consummation of the transactions contemplated hereby will, directly or indirectly (with or without notice or lapse of time): (i) conflict with any legal requirement or order of any court or governmental authority to which Frist is subject, or (ii) breach any provision of any material contract to which Frist is a party.

 

(c)No Consent.  Frist is not required to give any notice to or obtain any consent or approval from any person in connection with the execution and delivery of this Agreement by Frist or the consummation of the transactions contemplated hereby.

 

(d)Legal Proceedings; Orders.  There are no legal proceedings or actions pending or, to the knowledge of Frist, threatened, against Frist that challenge, or that may have the effect of preventing, delaying, making illegal or otherwise interfering with, any of the transactions contemplated hereby. 

 

(e)Ownership of Contributed Shares.  Frist has good and valid title to the Contributed Shares, free and clear of all liens and encumbrances.  

 

Section 3.Representations and Warranties of HealthStream.  HealthStream represents and warrants as of the Closing to Frist as follows: 

 

(a)Authority.  This Agreement constitutes the valid and binding obligation of HealthStream, enforceable against HealthStream in accordance with its terms.  HealthStream has all requisite corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby.  The execution and delivery of this Agreement by HealthStream and the consummation of the transactions contemplated hereby have been duly and validly authorized and approved by HealthStream.

 

(b)No Conflict.  Neither the execution and delivery of this Agreement by HealthStream nor the consummation of the transactions contemplated hereby will, directly or indirectly (with or without notice or lapse of time): (i) conflict with any legal requirement or order of any court or governmental authority to which HealthStream is subject, or (ii) breach any provision of any material contract to which HealthStream is a party.

 

(c)No Consent.  HealthStream is not required to give any notice to or obtain any consent or approval from any person in connection with the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby.

 

(d)Legal Proceedings; Orders.  There are no legal proceedings or actions pending or, to the knowledge of HealthStream, threatened, against HealthStream that challenge, or that may have the effect of preventing, delaying, making illegal or otherwise interfering with, any of the transactions contemplated hereby.    

 

Section 4.Miscellaneous.

 

(a)Waiver.  No failure to exercise, and no delay in exercising, on the part of either party, any privilege, any power or any right hereunder will operate as a waiver thereof, nor will any single or partial exercise of any privilege, right or power hereunder preclude further exercise of 

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any other privilege, right or power hereunder.

 

(b)Entire Agreement and Modification.  This Agreement constitutes the entire agreement between the parties with respect to the subject matter of this agreement and supersedes all prior agreements between the parties with respect to its subject matter.  This Agreement may not be amended except by a written agreement signed by the party to be charged with the amendment.

 

(c)Assignment; Binding Effect.  This Agreement may not be assigned by either party without the prior written consent of the other party.  Subject to the foregoing, this Agreement will be binding upon and shall inure to the benefit of the parties hereto and their permitted successors and assigns. 

 

(d)Severability.  If any provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Agreement will remain in full force and effect.  Any invalid or unenforceable provision shall be replaced by HealthStream and Frist with a valid provision which most closely approximates the intent and economic effect of the invalid or unenforceable provision.

 

(e)Governing Law.  This Agreement will be governed by and construed in accordance with the laws of the State of Tennessee, without regard to the conflict of law provisions thereof.  

 

(f)Construction.  The language used in the Agreement will be construed, in all cases, according to its fair meaning, and not for or against any party hereto.  The parties acknowledge that each party has reviewed this Agreement and that rules of construction to the effect that any ambiguities are to be resolved against the drafting party will not be available in the interpretation of this Agreement.

 

(g)Execution of Agreement; Counterparts.  This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement.  

 

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IN WITNESS WHEREOF, Frist and HealthStream have executed this Agreement as of the Effective Date.

 

	
 
	
 
	
 
	
Robert A. Frist, Jr.

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
Sign Name:
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
ACCEPTED AND AGREED:
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
HealthStream, Inc.
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
By:
	
 
	
 
	
 
	
 

	
Name:
	
Michael M. Collier
	
 
	
 
	
 

	
Its:
	
General Counsel & Senior Vice President
	
 
	
 

 

 

[Signature Page to Contribution Agreement]

 

Exhibit A

 

[See Attached.]

26673792.2

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