Document:

Document

EXHIBIT 10.26

November 20, 2019
Effective upon FHFA Non-Objection to 2020 EICP Targets

Federal Home Loan Bank of Topeka
 Non-NEO Executive Incentive Compensation Plan Targets
Goal Metrics, Metric Performance Ranges, Participant Eligibility and Metric Weights

This document specifies goal metrics, metric performance ranges/objectives, and metric weights for the participants (Participants) in the Non-NEO Executive Incentive Compensation Plan (Plan).
The Plan targets contained in this document specifically cover the 2020 Base Performance Period (January 1, 2020 through December 31, 2020) and the 2021 - 2023 Deferral Performance Period (January 1, 2021 through December 31, 2023).
A.2020 Base Performance Period Metrics. The following goal metrics are assigned to the Participants under the Plan. All calculations including interest rates will be rounded to two decimal places.
1.Adjusted Return Spread on Total Regulatory Capital
Definition: The spread between (a) adjusted net income divided by the daily average total regulatory capital and (b) the average daily Overnight Federal funds effective rate (Fed Effective).
Measure:
Adjusted net income is defined as follows:
◦Net income calculated under generally accepted accounting principles (GAAP)
◦Plus the recorded AHP assessments
◦Excluding the impact or adjustment required because of the Accounting Standards Codification 815 (ASC 815)
◦Plus the dividends on redeemable Class A and Class B Common Stock treated as interest expense under ASC 450
◦Minus the prepayment fees
◦Minus/plus the realized or unrealized gains/losses on securities 
◦Minus/plus the gains/losses on mortgage loans held for sale
◦Minus/plus the gains/losses on early retirement of debt and related derivatives
◦Minus/plus any amortization/accretion of premium/discount on unswapped securities in the FHLBank’s trading portfolio and any investment that is tied to an economic swap where an upfront fee was not received (not amortized/accreted under GAAP)
◦Less a calculated 10% AHP assessment
Performance Range:
						
		Annual Performance Range
	Threshold	3.69%

	Target	4.41%

	Optimum	5.13%

2.GAAP Return Spread on Total Regulatory Capital
Definition: The spread between: (a) GAAP net income divided by the daily average total regulatory capital; and (b) the Fed Effective rate. 
Measure:
◦Net income calculated under GAAP.
◦Daily average total regulatory capital. 
◦Divide GAAP net income by daily average total regulatory capital to calculate a return.
◦Subtract the average daily Overnight Federal funds effective rate (Fed Effective) from the GAAP return.

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Performance Range:
						
		Annual Performance Range
	Threshold	3.55%

	Target	4.72%

	Optimum	5.90%

3.Adjusted Net Income after Capital Charge
Definition: The dollar amount of adjusted net income as defined in the above metric that exceeds the cost of the required return on capital.

Measure: Adjusted income as defined in the Net Income after Capital Charge Definition above, less required return on capital. The required return on capital is the sum of the outstanding regulatory Class B Common Stock times the average of three-month LIBOR plus 1.00 percent for each day during the year plus the sum of regulatory Class A Common Stock and retained earnings times the average of three-month LIBOR for each day during the year.

Performance Range:
						
		Annual Performance Range
	Threshold	$79,433,000

	Target	$99,291,000

	Optimum	$119,149,000

4.GAAP Net Income after Capital Charge
Definition: The dollar amount of GAAP net income that exceeds the cost of the required return on capital. 

Measure: GAAP net income, less required return on capital. The required return on capital is the sum of the outstanding regulatory Class B Common Stock times the average of three-month LIBOR plus 1.00 percent for each day during the year plus the sum of regulatory Class A Common Stock and retained earnings times the average of three-month LIBOR for each day during the year.

Performance Range:
						
		Annual Performance Range
	Threshold	$72,086,000

	Target	$102,980,000

	Optimum	$133,875,000

5.Member Product Utilization
Definition: Member product utilization is defined as the weighted average 2020 attainment in member utilization in each of three product categories: (1) Line of Credit or advances; (2) MPF Program; and (3) Letters of Credit.  

Measure: Product utilization is calculated by dividing the number of members that qualify as a user of one of the three products (as defined below) at any time during the current year (2020) by the number of members at the end of the current year (2020). The individual product utilization is compared to the target level to arrive at the level of attainment for each of the three products. The 

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percentage attainment to target for each product is then multiplied by the weight assigned to each product to arrive at the overall weighted product utilization goal attainment.

Products and Weighting:
MPF Program – Weight 25%
A participating financial institution (PFI) that delivers at least one loan during the year into any one or more of the MPF products will qualify as using the MPF program.

Letters of Credit – Weight 25%
A member that applies for and we issue to them at least one new Letter of Credit during the year will qualify as using the Letter of Credit product.   

Line of Credit or Regular Advance – Weight 50%
A member that uses the line of credit and has an outstanding balance for a total of 5 days during the year or who takes one (or more) new advance for a term of 3 or more days (short-term fixed rate, regular fixed rate, symmetrical fixed rate, callable, member option, amortizing fixed rate, adjustable, convertible, structured advance or forward settle advance that settles during the year) during the year will quality as a using an advance related product.

Performance Range:
												
	               	Product Utilization %
	Product	Threshold	Target	Optimum
	MPF Program	24.00%	25.50%	27.00%
	Letters of Credit	30.00%	32.00%	34.00%
	Line of Credit or Regular Advance	61.00%	67.00%	73.00%

6.Diversity and Inclusion
Definition: FHLBank’s Diversity and Inclusion (D&I) initiative is defined as the advancement of D&I, to the maximum extent possible in balance with financially safe and sound business practices, through inclusion and utilization of diverse-owned business and individuals within its workforce, as defined in the D&I Policy, in all business activities of FHLBank. 

Measure: Points are awarded by achievement of the following. One point is awarded for each:
•Attain a workforce ratio of at least 11.0% business partners of color as of 12/31/2020.
•Increase the number of viable and certified diverse suppliers in SupplierGATEWAY by 12. 
•80% of business partners attend one D&I Awareness Activity. 
•80% of business partners complete one D&I Training event.
•Participate in 15 outreach opportunities with diverse potential directors and/or in Workforce, Vendors, Capital Markets and/or with members. 

Performance Range:
						
		Points
	Threshold	3 out of 5 points
	Target	4 out of 5 points
	Optimum	5 out of 5 points

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Viable diverse suppliers are those that provide a good or service on the Commodities List found on the Supplier Gateway website, are registered to do business with FHLBank in Supplier Gateway and can be located/headquartered anywhere in the United States. 

D&I Awareness Opportunities are FHLBank-wide events approved in advance by the Director of Human Resources and Inclusion (HRI) that educates employees on D&I or encourages it among them. These opportunities are typically lunch and learn events hosted by FHLBank’s Inclusion, Diversity, and Equality Advisory Council and range in topics from various cultures, religions, and holidays to education on marginalized communities.

D&I Training Opportunities are FHLBank-wide training approved in advance by the Director of HRI with the purpose of increasing knowledge of and competencies in content and principles regarding D&I. These opportunities can include, for example, workshops on the business case for D&I, recognizing and managing various biases, and bridging generational gaps within the workplace.

Outreach opportunities can be conducted by any member of FHLBank staff and must approved in advance by the Director of HRI. More than one member of FHLBank’s staff can participate in a single outreach opportunity. Outreach opportunities include, for example, an in-person meeting with a diverse individual who might be a good candidate for FHLBank’s board of directors and/or a meeting with a trade association to provide education on FHLBank’s desire for a diverse board; an in-person meeting with a diverse-owned supplier or having a booth at a diverse-owned supplier fair; participating in in-person meetings with a diverse-owned broker dealer or participating in the diverse-owned broker-dealer meeting; or participating in a career fair at a college or university that serves a predominantly diverse population or providing a presentation to a classroom at such a college or university. 

7.Risk Management – Market, Credit and Liquidity Risks
Definition: Management of FHLBank risks as determined by the weighted average rating by the board of directors in an annual evaluation of the Risk Appetite metrics in this area using a 1 (lowest) to 5 (highest) point scale. General risk categories are market, credit and liquidity risks. 

Performance Range:
						
	

	Score

	Threshold
	4.0

	Target
	4.5

	Optimum 
	5.0

Risk Management Metric Weights: The following metric weight for each goal metric is assigned to the Participants:
						
	Risk Management Category
	Weighting

	Liquidity Risk 
	30%

	Market Risk 
	40%

	Credit Risk 
	30%

	Total
	100%

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8.Risk Management – Compliance, Business and Operations Risks
Definition: Management of FHLBank risks as determined by the weighted average rating by the board of directors in an annual evaluation of the Risk Appetite metrics in this area using a 1 (lowest) to 5 (highest) point scale. General risk categories are compliance, business and operations risks. 

Performance Range:
						
	

	Score

	Threshold
	3.0

	Target
	4.0

	Optimum 
	5.0

Risk Management Metric Weights: The following metric weight for each goal metric is assigned to the Participants:
						
	Risk Management Category
	Weighting

	Compliance Risk 
	30%

	Business Risk 
	35%

	Operations Risk 
	35%

	Total
	100%

B.2021-2023 Deferral Performance Period.
In order for Participants to be eligible to receive a Final Deferred Incentive Award for the 2021-2023 Deferral Performance Period, FHLBank must have a Market Value of Equity (MVE) of not less than 100 percent of FHLBank’s Total Regulatory Capital Stock (TRCS) outstanding (as defined in FHLBank’s Risk Management Policy), as of the last day of the Deferral Performance Period. Upon determining FHLBank has achieved this minimum requirement, the calculation of the Final Deferred Incentive Award shall be calculated by applying a six percent interest credit, compounded annually, to the Deferred Incentive. 

C.Total Base Opportunity Metric Weights.
Total Base Opportunity Matrix
(As a percent of base)
												
	Participant	Total Base Opportunity 1

		Threshold	Target	Optimum
	Dan Hess (CBO)	25	50	75
	Martin Schlossman (CRO)	25	50	75
	Denise Cauthon (CAO)	25	50	75

1 In the event FHLBank’s performance during the Base Performance Period results in the achievement of a Total Base Opportunity that exceeds 100% of a Participant’s base salary at the start of the Base Performance Period, the Total Base Opportunity shall be capped at 100% of the Participant’s base salary.

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D.    Base Opportunity Metric Weights. The following metric weight for each goal metric is assigned to the Participants:
						
	Objective	Weight
	1.  Adjusted Return Spread on Total Regulatory Capital
	15%
	2.  GAAP Return Spread on Total Regulatory Capital
	5%
	3.  Adjusted Net Income after Capital Charge
	15%
	4.  GAAP Net Income after Capital Charge
	5%
	5.  Member Product Utilization
	10%
	6.  Diversity and Inclusion
	10%
	7.  Risk Management - Market, Credit, Liquidity
	20%
	8.  Risk Management - Compliance, Business, Operations 
	20%
	Total	100%EX-4.1

 Exhibit 4.1 

Execution Version 

SECOND AMENDMENT TO RIGHTS AGREEMENT 

THIS SECOND AMENDMENT TO RIGHTS AGREEMENT (this “Amendment”) is made and entered into as of March 20,
2022, by and between Huttig Building Products, Inc., a Delaware corporation (the “Company”), and Computershare Trust Company, N.A., a federally chartered trust company, as Rights Agent (the “Rights
Agent”). 
 WHEREAS, the Company and the Rights Agent previously entered into a Rights Agreement, dated as of
May 18, 2016 (as amended, the “Agreement”) (capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Agreement); 

WHEREAS, on March 20, 2022, the Company, Woodgrain Inc., an Oregon corporation (“Woodgrain”), and HBP
Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of Woodgrain (“Merger Sub”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) pursuant to which Merger Sub
will commence a tender offer (the “Offer”) to purchase all of the outstanding shares of the Company’s Common Stock, par value $0.01 per share (“Common Stock”), and, as soon as practicable
following consummation of the Offer, Merger Sub will be merged with and into the Company (the “Merger”), with the Company continuing as the surviving corporation in the Merger and a wholly-owned subsidiary of Woodgrain; 

WHEREAS, concurrently with the execution of the Merger Agreement, Woodgrain and Merger Sub entered into tender and support agreements
dated March 20, 2022 (collectively, the “Tender and Support Agreements”) with certain stockholders of the Company (collectively, the “Tendering Stockholders”) pursuant to which the Tendering
Stockholders have agreed, subject to the terms thereof, to tender their shares of Common Stock in the Offer and not to tender their shares in connection with, and to vote their shares of Common Stock against, any competing acquisition proposals
relating to the Company; 
 WHEREAS, Section 28 of the Agreement provides, among other things, that prior to such time as any
Person becomes an Acquiring Person, the Company and the Rights Agent may from time to time supplement or amend the Agreement in any respect without the approval of any holders of certificates representing Common Shares; 

WHEREAS, no Person has become an Acquiring Person on or prior to the date of this Amendment; 

WHEREAS, the Board of Directors of the Company (the “Board”) has determined, in connection with its
consideration of the Merger Agreement and the transactions completed thereby, that it is in the best interests of the Company and its stockholders to amend the Agreement as set forth herein; and 

WHEREAS, the Board has authorized and approved this Amendment. 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company hereby
agrees to amend the Agreement as follows and directs the Rights Agent to execute this Amendment: 

 1. Amendment to Section 1. Section 1 of the Rights
Agreement is hereby amended by adding the following subsections at the end thereof: 
 (x) “Merger Agreement” means the
Agreement and Plan of Merger dated as of March 19, 2022 among the Company, Woodgrain, Inc., an Oregon corporation (“Woodgrain”), and HBP Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of Woodgrain
(“Merger Sub”), as amended from time to time. 
 (y) “Tender and Support Agreements” means the separate
Tender and Support Agreements dated as of March 19, 2022 among Woodgrain, Merger Sub and certain stockholders of the Company. 

2. Amendment to Section 7. Section 7 of the Rights Agreement is hereby amended by adding a new
subsection 7(f) which shall read as follows: 
 “Notwithstanding anything in this Agreement to the contrary, immediately prior to the
Acceptance Time (as defined in the Merger Agreement), this Agreement shall automatically terminate (without any further action of the parties hereto), all Rights established hereunder shall automatically expire and such time shall be deemed the
Expiration Date for all purposes of this Agreement.” 
 3. Addition of New Section 38. The Rights
Agreement is hereby amended by adding a new Section 38 which shall read as follows: 
 “Section 38.
Exception for Merger Agreement and Tender and Support Agreements. 
 Notwithstanding anything in this Agreement to the contrary,
(a) none of Woodgrain, Merger Sub, any of their respective Affiliates or Associates or any of their respective permitted assignees or transferees will be deemed an Acquiring Person, (b) none of a Distribution Date, a Shares Acquisition
Date, a Section 11(a)(ii) Event or a Flip-over Event will be deemed to occur or to have occurred and (c) the Rights will not become separable, distributable, unredeemable, triggered or exercisable, in each such case, by reason or as a
result of any of the following events, whether or not such events have already occurred: (i) the approval, adoption, execution, delivery or performance or, if approved in advance by the Board of Directors of the Company, amendment, modification
or waiver of the Merger Agreement, (ii) the approval, execution, delivery or performance or, if approved in advance by the Board of Directors of the Company, amendment, modification or waiver of the Tender and Support Agreements, (iii) the
consummation of the Offer or the Merger (each as defined in the Merger Agreement) or any other transaction contemplated by the Merger Agreement or the Tender and Support Agreements or (iv) the announcement of any of the foregoing.” 

4. Amendment to Exhibit C. Exhibit C to the Rights Agreement is hereby deemed amended and restated in a manner consistent with
this Amendment. 
 5. Effectiveness. This Amendment is effective as of the date first set forth above. 

6. Counterparts. This Amendment may be executed in any number of counterparts; each such counterpart shall for all purposes be
deemed to be an original; and all such counterparts shall together constitute but one and the same instrument. A signature to this Amendment executed and/or transmitted electronically shall have the same authority, effect and enforceability as an
original signature. 
 7. Certification. The undersigned representative of the Company hereby certifies in such capacity to
the Rights Agent that he is the duly elected and qualified Vice President and Chief Financial Officer of the Company and that this Amendment is in compliance with the terms of Section 28 of the Agreement. 

  
 2 

 8. Reaffirmation. Except as modified hereby, the Agreement is reaffirmed in
all respects, and all references therein to “the Agreement” shall mean the Agreement, as modified hereby. 
 [Signature page
follows] 
 * * * * * 

  
 3 

 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed
as of the date first written above. 
  

			
	HUTTIG BUILDING PRODUCTS, INC.
		
	 By:
	 	 /s/ Philip W. Keipp

	 Name: Philip W. Keipp

	 Title: Vice President and Chief Financial Officer

	
	COMPUTERSHARE TRUST COMPANY, N.A
		
	 By:
	 	 /s/ Patrick Hayes

	 Name: Patrick Hayes

	 Title: Manager, Client Management

 [Rights Plan Second Amendment]

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