Document:

Amendment3toCreditAgreement-ExecutionVersionFor8-K

EXHIBIT 10.1

EXECUTION

AGREEMENT AND AMENDMENT NO. 3 TO
SECOND AMENDED AND RESTATED CREDIT AGREEMENT AND 
AMENDMENT NO. 1 TO
SECOND AMENDED AND RESTATED SECURITY AGREEMENT
This Agreement and Amendment No. 3 to Second Amended and Restated Credit Agreement and Amendment No. 1 to Second Amended and Restated Security Agreement (this "Amendment") dated as of November 22, 2013 is among Holly Energy Partners – Operating, L.P., a Delaware limited partnership (the "Borrower"), the Guarantors party hereto, the Lenders party hereto, and Wells Fargo Bank, National Association, as administrative agent for such Lenders (in such capacity, the "Administrative Agent") and as an Issuing Bank.
RECITALS
A.    The Borrower, the Lenders, and the Administrative Agent are parties to that certain Second Amended and Restated Credit Agreement dated as of February 14, 2011, as amended by that certain Agreement and Amendment No. 1 to Second Amended and Restated Credit Agreement dated as of February 3, 2012 and as amended by that certain Agreement and Amendment No. 2 to Second Amended and Restated Credit Agreement dated as of June 29, 2012 (as amended and as the same may be further amended, modified or supplemented from time to time, the "Credit Agreement").
B.    In connection with such Credit Agreement, certain Subsidiaries of the Borrower executed and delivered that certain Second Amended and Restated Guaranty dated as of February 14, 2011 and certain other Subsidiaries joined as guarantors pursuant to that certain Second Amended and Restated Guaranty Agreement Supplement No. 1 dated as of December 15, 2011 and certain other Subsidiaries joined as guarantors pursuant to that certain Second Amended and Restated Guaranty Agreement Supplement No. 2 dated as of August 10, 2012 (as the same may be further amended, modified or supplemented from time to time, the "Guaranty") in favor of the Administrative Agent for the benefit of the Beneficiaries (as defined in the Guaranty) pursuant to which they each became a Guarantor.
C.    The Borrower has requested an increase in the aggregate Commitments under, and as defined in, the Credit Agreement.
D.    To effect the increase to the Commitments and subject to the terms set forth herein, certain Lenders have agreed to increase their respective Commitments.
E.    The Borrower has also requested that the Lenders amend the Credit Agreement to make certain other changes to the Credit Agreement. 
THEREFORE, the parties hereto hereby agree as follows:

Amendment No.3
Holly Energy Partners - Operating, L.P. 
Credit Agreement

ARTICLE I
DEFINITIONS
Section 1.01    Terms Defined Above.  As used in this Amendment, each of the terms defined in the opening paragraph and the Recitals above shall have the meanings assigned to such terms therein.  
Section 1.02    Terms Defined in the Credit Agreement.  Each capitalized term defined in the Credit Agreement and used herein without definition shall have the meaning assigned to such term in the Credit Agreement, unless expressly provided to the contrary.
Section 1.03    Other Definitional Provisions.  The words "hereby", "herein", "hereinafter", "hereof", "hereto" and "hereunder" when used in this Amendment shall refer to this Amendment as a whole and not to any particular Article, Section, subsection or provision of this Amendment.  Section, subsection and Schedule references herein are to such Sections, subsections and Schedules to this Amendment unless otherwise specified.  All titles or headings to Articles, Sections, subsections or other divisions of this Amendment or the schedules hereto, if any, are only for the convenience of the parties and shall not be construed to have any effect or meaning with respect to the other content of such Articles, Sections, subsections, other divisions or schedules, such other content being controlling as the agreement among the parties hereto.  Whenever the context requires, reference herein made to the single number shall be understood to include the plural; and likewise, the plural shall be understood to include the singular.  Words denoting gender shall be construed to include the masculine, feminine and neuter, when such construction is appropriate; and specific enumeration shall not exclude the general but shall be construed as cumulative.  Definitions of terms defined in the singular or plural shall be equally applicable to the plural or singular, as the case may be, unless otherwise indicated.
ARTICLE II
AMENDMENTS
Section 2.01    Amendments to Credit Agreement.  Effective as of the Amendment No. 3 Effective Date (as herein defined), the Credit Agreement shall hereby be amended as follows:
(a)    The Table of Contents in the Credit Agreement is amended to change (i) the Heading for Section 4.20 to "Intentionally Deleted" and (ii) the Heading for Section 6.16 to "UNEV Parent/ Holdco".
(b)    The following definitions found in Section 1.01 (Certain Defined Terms) of the Credit Agreement are hereby amended and restated to read in their entirety as follows:
"Agreement" means this Second Amended and Restated Credit Agreement dated as of February 14, 2011 among the Borrower, the Lenders, the Issuing Banks and the Administrative Agent, as amended by Amendment No. 1, Amendment No. 2, Amendment No. 3 and as it may be further amended, modified, restated, renewed, extended, increased or supplemented from time‐to‐time.

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Amendment No. 3
Holly Energy Partners - Operating, L.P. 
Credit Agreement

"Applicable Margin" means, as of any date of determination, the following percentages determined as a function of the Borrower's Total Leverage Ratio:
	
					
	Total Leverage Ratio
	Eurodollar Rate Advances
	Alternate Base Rate Advances
	Commitment Fees
	Letter of Credit Fees

	> 4.75
	2.50%
	1.50%
	0.45%
	2.50%

	≤ 4.75 but > 4.25
	2.25%
	1.25%
	0.375%
	2.25%

	≤ 4.25 but > 3.75
	2.00%
	1.00%
	0.325%
	2.00%

	≤ 3.75 but > 3.25
	1.75%
	0.75%
	0.300%
	1.75%

	≤ 3.25
	1.625%
	0.625%
	0.300%
	1.625%

For purposes of determining the Applicable Margin, the Total Leverage Ratio shall be determined from the financial statements of the Limited Partner and its Subsidiaries most recently delivered pursuant to Section 5.06(b) or Section 5.06(c), as the case may be, and certified to by a Responsible Officer in accordance with such Sections.  Any change in the Applicable Margin shall be effective the day after the date of delivery of the financial statements pursuant to Section 5.06(b) or Section 5.06(c), as the case may be, and receipt by the Administrative Agent of the Compliance Certificate required by such Sections.  If the Borrower fails to deliver any financial statements within the times specified in Section 5.06(b) or 5.06(c), as the case may be, such ratio shall be deemed to be greater than 4.75 to 1.00 from the day after the date such financial statements should have been delivered until the Borrower delivers such financial statements and the accompanying Compliance Certificate to the Administrative Agent.
"Change of Control" means any of the following events or conditions: (a) the General Partner is no longer the sole general partner of the Borrower, (b) the Parent ceases to have, directly or indirectly, sole control (as such term is defined in the definition of Affiliates) of the Limited Partner and the General Partner, (c) the Limited Partner is no longer the sole limited partner of the Borrower, (d) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) other than the Permitted Holders, shall become, or obtain rights (whether by means of warrants, options or otherwise) to become, the "beneficial owner" (as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act), directly or indirectly, of more than 35% of the outstanding common stock of the Parent, or (e) the board of directors of the Parent shall cease to consist of a majority of Continuing Directors.
"Credit Documents" means, collectively, this Agreement, Amendment No. 1, Amendment No. 2, Amendment No. 3, the Notes, the Security Documents, the Guaranties, the Letter of Credit Documents, the Fee Letters, the Amendment No. 1 Fee Letter, the Amendment No. 2 Fee Letter, the Amendment No. 3 Fee Letter and each other agreement, instrument or document executed at any time in connection with the foregoing documents, as each such Credit Document may be amended, 

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Amendment No. 3
Holly Energy Partners - Operating, L.P. 
Credit Agreement

modified or supplemented from time-to-time; provided, however, that in no event shall any agreement in respect of Banking Services Obligations or any Lender Hedging Agreement constitute a Credit Document hereunder.
"Final Maturity Date" means November 22, 2018.
"Liquid Investments" means (a) securities issued or fully guaranteed or insured by the United States Government or any agency thereof and backed by the full faith and credit of the United States having maturities of not more than twenty-four (24) months from the date of acquisition; (b) corporate and bank debt of an issuer rated at least A- (or then equivalent grade) by S&P or A3 (or then equivalent grade) by Moody's at the time of acquisition and having maturities of not more than twenty-four (24) months from the date of acquisition; (c) interest bearing deposit and money market accounts, certificates of deposit, time deposits, Eurodollar time deposits, or bankers' acceptances, having in each case a tenor of not more than twenty-four (24) months from the date of acquisition, issued by any U.S. commercial bank or any branch or agency of a non-U.S. commercial bank licensed to conduct business in the United States having combined capital and surplus of not less than $500,000,000; (d) taxable or tax-exempt commercial paper of an issuer rated at least A-2 (or then equivalent grade) by S&P or P-2 (or then equivalent grade) by Moody's at the time of acquisition, or guaranteed by a letter of credit issued by a financial institution meeting the requirements in clause (c) above and in either case having a tenor of not more than 270 days; (e) taxable and tax-exempt municipal securities rated at least A- (or then equivalent grade) by S&P or A3 (or then equivalent grade) by Moody’s, having maturities of not more than twenty-four (24) months from the date of acquisition; (f) repurchase agreements relating to any of the investments listed in clauses (a) through (e) above with a market value at least equal to the consideration paid in connection therewith, with any Person who regularly engages in the business of entering into repurchase agreements and has a combined capital and surplus of not less than $500,000,000 whose long term securities are rated at least A- (or then equivalent grade) by S&P or A3 (or then equivalent grade) by Moody's at the time of acquisition; (g) asset-backed securities having as the underlying asset securities issued or guaranteed by the Federal Home Loan Mortgage Corporation or the Federal National Mortgage Association rated at least A- (or then equivalent grade) by S&P or A3 (or then equivalent grade) by Moody's  at the time of acquisition and having maturities of not more than twenty-four (24) months from the date of acquisition; and (h) money market mutual or similar funds substantially all of whose assets are invested in the types of assets described in clauses (a) through (g) above.
"Refined Products" means gasoline, diesel fuel, jet fuel, liquid petroleum gases, asphalt and asphalt products, and other products refined, separated, fractionated, settled and dehydrated from any Hydrocarbon or other petroleum products.
(c)    The following new definitions are added to Section 1.01 (Certain Defined Terms) of the Credit Agreement to appear therein in alphabetical order:
"Amendment No. 3" means that certain Agreement and Amendment No. 3 to Second Amended and Restated Credit Agreement and Amendment No. 1 to 

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Amendment No. 3
Holly Energy Partners - Operating, L.P. 
Credit Agreement

Second Amended and Restated Security Agreement dated as of November 22, 2013, among the Borrower, the Guarantors, Wells Fargo Bank, National Association, as Administrative Agent, a Lender and an Issuing Bank and all of the Lenders.
"Amendment No. 3 Effective Date" means November 22, 2013.
"Amendment No. 3 Fee Letter" means the letter agreement, dated November 6, 2013, between the Borrower, Wells Fargo Securities, LLC and Wells Fargo.
 (d)    The following definitions in Section 1.01 (Certain Defined Terms) of the Credit Agreement are amended as follows:
(i)    The defined term "Capital Expansion Project" is amended by deleting the figure "$30,000,000" and substituting therefor the figure "$10,000,000".
(ii)     The defined term "Debt" is amended by deleting clause (f) thereof in its entirety and substituting therefor the following:
"(f)    obligations of such Person under any Swap Contract;"
(iii)     The defined term "EBITDA" is amended by deleting the phrase "fifteen percent (15%)" in clause (A) of the proviso in the third sentence and substituting therefor the phrase "twenty percent (20%)" and by deleting the first sentence of such defined term and substituting therefor the following:
"EBITDA" means, for the Limited Partner and its Subsidiaries on a Consolidated basis for any period, without duplication (a) Net Income for such period plus (b) to the extent deducted in determining Net Income, Interest Expense, taxes, depreciation, amortization and other noncash items for such period plus (c) any net increase (or minus any net decrease) in deferred revenue related to the satisfaction of any minimum revenue commitments by any contract counterparties plus (d) amounts received by the Limited Partner or any of its Subsidiaries (including Borrower and the Holdco Entities but excluding any Excluded Subsidiary) as distributions from the Excluded Subsidiaries and any joint venture (including, without limitation, UNEV JV, Plains JV, the Joint Venture and any Future JV) directly or indirectly owned by the Limited Partner; provided that such distributed amounts included in the calculation of EBITDA for any period shall not exceed thirty-five percent (35%) of EBITDA for the Limited Partner and its Subsidiaries on a Consolidated basis before including such distributed amounts for such period.
(iv)    The defined term "Material Subsidiary" is amended by deleting the phrase "five percent (5%)" wherever it appears and substituting therefor the phrase "ten percent (10%)".

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Amendment No. 3
Holly Energy Partners - Operating, L.P. 
Credit Agreement

(e)    The following definition is deleted from Section 1.01 (Certain Defined Terms) of the Credit Agreement in its entirety:
"UNEV Holdco"
(f)    Section 1.03 (Accounting Terms: Changes in GAAP) of the Credit Agreement is hereby amended by deleting subsection (b) thereof in its entirety and substituting therefor the following:
"(b)    Unless otherwise indicated, all financial statements of the Limited Partner and its Subsidiaries (including Borrower and the Holdco Entities), all calculations for compliance with covenants in this Agreement and all calculations of any amounts to be calculated under the definitions in Section 1.01 shall be based upon the consolidated accounts of the Limited Partner and its Subsidiaries (including Borrower and the Holdco Entities) in accordance with GAAP and consistent with the principles applied in the preparation of the latest financial statements furnished to the Lenders hereunder which, prior to the delivery of the first financial statements under Section 5.06 hereof, shall mean the Financial Statements (it being understood that the Excluded Subsidiaries shall not be consolidated with the Limited Partner and its Subsidiaries (including Borrower and the Holdco Entities) for purposes of calculating compliance with any financial covenants set forth in this Agreement but any amounts distributed by the Excluded Subsidiaries and any joint venture (including, without limitation, the Joint Venture, Plains JV, UNEV JV and any Future JV) directly or indirectly owned by the Limited Partner, the Borrower, any of their respective Subsidiaries or any Holdco Entity to the Limited Partner or any of its Subsidiaries (including Borrower and the Holdco Entities but excluding any other Excluded Subsidiary) may be included in any such calculation to the extent such distributed amounts are so received by the Limited Partner and its Subsidiaries (including Borrower and the Holdco Entities but excluding any other Excluded Subsidiary))."
(g)    Section 1.03 (Accounting Terms: Changes in GAAP) of the Credit Agreement is hereby amended by deleting subsection (c) thereof in its entirety and substituting therefor the following:
"(c)    If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Credit Document, and either the Borrower or the Majority Lenders shall so request, the Administrative Agent, the Lenders and the Borrower shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Majority Lenders); provided that, until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) the Borrower shall provide to the Administrative Agent and, as applicable, the Lenders financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and 

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Amendment No. 3
Holly Energy Partners - Operating, L.P. 
Credit Agreement

after giving effect to such change in GAAP; and provided further that if at any time any change in GAAP would require that operating leases entered into in the ordinary course of business be treated in a manner similar to capital leases under GAAP, all financial covenants, requirements and terms in this Agreement shall continue to be calculated or construed as if such change in GAAP had not occurred and no operating lease shall be treated as a Capital Lease for any purpose hereunder."
(h)    Section 2.02 (Method of Borrowing) of the Credit Agreement is hereby amended as follows: 
(i) by deleting the first parenthetical in the first sentence of subsection (a) thereof in its entirety and substituting therefor the following:
"(or by telephone notice promptly confirmed in writing by a Notice of Borrowing or, at the discretion of the Administrative Agent, by any other acceptable means)."
(ii) by deleting subsection (b) thereof in its entirety and substituting therefor the following:
"(b) Conversions and Continuations. The Borrower may elect to Convert or continue any Borrowing under this Section 2.02 by delivering an irrevocable Notice of Conversion or Continuation to the Administrative Agent at the Administrative Agent's office, no later than 11:00 a.m. (Dallas, Texas time) (i) on the date which is at least three Business Days in advance of the proposed Conversion or continuation date in the case of a Conversion to or a continuation of a Borrowing comprised of Eurodollar Rate Advances and (ii) on the Business Day of the proposed conversion date in the case of a Conversion to a Borrowing comprised of Alternate Base Rate Advances.  Each such Notice of Conversion or Continuation shall be in writing (or by telephone notice promptly confirmed in writing by a Notice of Conversion or Continuation or, at the discretion of the Administrative Agent, by any other acceptable means), and shall be given by hand delivery, telecopier, telex, e-mail, or other electronic transmission, confirmed in writing to the extent requested, or other notice acceptable to the Administrative Agent specifying the information required therein.  Promptly after receipt of a Notice of Conversion or Continuation under this Section, the Administrative Agent shall provide each Lender with a copy thereof and, in the case of a Conversion to or a continuation of a Borrowing comprised of Eurodollar Rate Advances, notify each Lender of the applicable interest rate under Section 2.07(b)."
(i)     Section 2.06 (Fees) of the Credit Agreement is hereby amended by deleting the second sentence of subsection (a) thereof in its entirety and substituting therefor the following:
"All commitment fees required hereunder shall be due and payable quarterly in arrears (i) in the case of quarterly periods ending prior to the Amendment No. 3 

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Amendment No. 3
Holly Energy Partners - Operating, L.P. 
Credit Agreement

Effective Date, on the last day of each March, June, September and December for the previous calendar quarter, commencing on March 31, 2011 and continuing thereafter through September 30, 2013 and (ii) in the case of quarterly periods ending after the Amendment No. 3 Effective Date, on the fifth (5th) Business Day following the last day of each March, June, September and December for the previous calendar quarter, commencing on January 8, 2014 and continuing thereafter through the Revolver Termination Date and on the Revolver Termination Date."
(j)    Section 2.06 (Fees) of the Credit Agreement is hereby amended by deleting the second sentence of subsection (c) thereof in its entirety and substituting therefor the following:
"Each such fee shall be payable quarterly in arrears (A) in the case of quarterly periods ending prior to the Amendment No. 3 Effective Date, on the last day of each March, June, September and December for the previous calendar quarter, commencing on March 31, 2011 and continuing thereafter through September 30, 2013 and (B) in the case of quarterly periods ending after the Amendment No. 3 Effective Date, on the fifth (5th) Business Day following the last day of each March, June, September and December for the previous calendar quarter, commencing on January 8, 2014 and on the Final Maturity Date."
(k)    Section 2.14 (Commitment Increase) of the Credit Agreement is hereby amended by deleting the figure "$750,000,000" found in clause (a) thereof and substituting therefor the figure "$850,000,000."
(l)     Section 4.08 (Use of Proceeds) of the Credit Agreement is amended by deleting the phrase "and Section 6.18 " in its entirety from clause (vii) thereof.
 (m)     Section 4.20 (Title to Refined Products) of the Credit Agreement is hereby deleted and the Section heading for Section 4.20 is amended to read "Intentionally Deleted."
(n)     Section 4.21 (Employee Matters) of the Credit Agreement is hereby deleted in its entirety and substituting therefor the following:
"Section 4.21 Employee Matters.  There are no strikes, slowdowns, work stoppages, or controversies pending or, to the knowledge of the Borrower, threatened against the Borrower or any of its Subsidiaries which could have, either individually or in the aggregate, a Material Adverse Effect."

(o)    Section 5.11 (Agreement to Pledge) of the Credit Agreement is hereby amended by deleting the introductory clause of the first sentence thereof preceding the first proviso and substituting therefor the following:

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Amendment No. 3
Holly Energy Partners - Operating, L.P. 
Credit Agreement

"If, as of the last day of any March, June, September or December during the term of this Agreement, the Borrower or any Material Subsidiary or any Holdco Entity now owned or hereafter acquired becomes the owner of Property which is not subject to a Lien securing the Obligations and the value of such Property, when aggregated with the value of all other Property of the Borrower or any Material Subsidiary or any Holdco Entity not subject to a Lien securing the Obligations, exceeds the Material Collateral Threshold, then before the expiration of 30 days after such last day of the applicable March, June, September or December, the Borrower will, and will cause its Material Subsidiaries and the Holdco Entities to, grant to the Administrative Agent an Acceptable Security Interest in certain Property of the Borrower or any Material Subsidiary or any Holdco Entity such that the value of any Property which is not subject to a Lien securing the Obligations no longer exceeds the Material Collateral Threshold;"
(p)     Section 6.01 (Liens, Etc.) of the Credit Agreement is hereby amended as follows:
(i) by deleting the figure "$30,000,000" found in sub-clause (A) of the proviso in clause (h) thereof and substituting therefor the figure "$40,000,000";
(ii) by deleting the figure "$30,000,000" found in sub-clause (ii) of clause (i) thereof and substituting therefor the figure "$40,000,000"; and
(iii) by deleting the word "and" at the end of Section 6.01(j), deleting the period at the end of Section 6.01(k) and inserting in substitution therefor "; and", and inserting a new Section 6.01(l)  to read as follows:
"(l)    on cash and Liquid Investments securing Swap Contracts between the Borrower, any Guarantor or any of their Subsidiaries and any non-Lender or any non-Lender Affiliate party to such Swap Contract; provided the aggregate amount of cash and/or Liquid Investments subject to such Liens may at no time exceed $10,000,000."
(q)     Section 6.02 (Debts, Guaranties and Other Obligations) of the Credit Agreement is hereby amended as follows:
(i) by deleting subsection (c) thereof and substituting therefor the following:
"(c)    Debt of the Borrower or any of its Subsidiaries or any Holdco Entity under any Swap Contract; provided that (i) such Debt was incurred by the Borrower or any of its Subsidiaries or any Holdco Entity for general partnership, limited liability company or corporate purposes, as applicable, including for the purposes of directly mitigating risks associated with liabilities, commitments, investments, assets, or property held or reasonably anticipated by such Person, or changes in the value of securities issued by such Person, and not for speculative purposes, (ii) such Swap Contract is permitted under any risk management policy approved by such Person’s 

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Amendment No. 3
Holly Energy Partners - Operating, L.P. 
Credit Agreement

governing body from time to time, and (iii) such Swap Contract does not contain any provision exonerating the non-defaulting party from its obligation to make payments on outstanding transactions to the defaulting party;"
(ii) by deleting the figure "$30,000,000" found in clause (e) thereof and substituting therefor the figure "$40,000,000"; 
(iii) by deleting the figure "$30,000,000" found in clause (i) thereof and substituting therefor the figure "$40,000,000"; 
(iv) by deleting the figure "$10,000,000" found in clause (k) thereof and substituting therefor the figure "$20,000,000"; and
(v) by deleting the figure "$20,000,000" found in clause (n) thereof and substituting therefor the figure "$30,000,000".
(r)     Section 6.04 (Merger or Consolidation; Asset Sales; Acquisitions) of the Credit Agreement is hereby amended as follows:
(i)  by deleting clause (b)(iv) thereof in its entirety and substituting therefor the following:
"(iv)    sales of its Investments made pursuant to clauses (a), (d), (e), (f) or (g) of Section 6.06 so long as (A) such sales are to a third party and are conducted in an arm's length transaction, and (B) in the case of sales of Investments made pursuant to Section 6.06(e), at least 75% of the consideration for such sales shall be in the form of cash and Liquid Investments; provided that concurrent with the consummation of each sale of Investments made pursuant to Section 6.06(e), all cash proceeds are distributed to, or otherwise received by, the Borrower or a Guarantor; and"
(ii) by deleting the figure "$30,000,000" found in clause (b)(v) thereof and substituting therefor the figure "$40,000,000".
 (s)    Section 6.05 (Restricted Payments) of the Credit Agreement is hereby amended by deleting the proviso at the end of subsection (a) thereof and substituting therefor the following:
"provided that, no Default or Event of Default shall occur both before and after giving effect to such Restricted Payment, and the Borrower and its Subsidiaries shall be in compliance (after giving pro forma effect to the making of such Restricted Payment) with all of the covenants contained in this Agreement, including, without limitation, Sections 6.10 through 6.12."
(t)     Section 6.06 (Investments) of the Credit Agreement is hereby amended by deleting subsection (c) thereof in its entirety and substituting therefor the following:

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Amendment No. 3
Holly Energy Partners - Operating, L.P. 
Credit Agreement

"(c)    Acquisitions (other than Acquisitions or Investments made with respect to Plains JV, UNEV JV, the Joint Venture or any other joint venture or other similar arrangement that is not a Subsidiary) to the extent made in compliance with Section 6.04 including, in the case of a Person that is acquired, all Investments in joint ventures made by such Person prior to such Person's Acquisition by the Borrower, any of its Subsidiaries or any Holdco Entity; provided that such Person's Investments in joint ventures was not made in contemplation of such Person being acquired by the Borrower or any of its Subsidiaries or any Holdco Entity;" 
(u)     Section 6.06 (Investments) of the Credit Agreement is hereby amended by deleting subsection (d) thereof in its entirety and substituting therefor the following:
"(d)    the Acquisition by the Borrower, any of its Subsidiaries or any Holdco Entity of, or Investments in, Plains JV in an aggregate amount not to exceed $30,000,000 outstanding at any time; provided that (i) such Acquisitions or other Investments are made using cash and/or other Property of the Borrower, any of its Subsidiaries or any Holdco Entity and otherwise comply with Section 6.04 and (ii) any Equity Interests in the Limited Partner that are given as consideration for such Acquisition or Investment shall not be included in the aggregate amount of such Acquisition or Investment by the Borrower, any of its Subsidiaries or any Holdco Entity for purpose of this clause (d);"
(v)     Section 6.06 (Investments) of the Credit Agreement is hereby amended by deleting the proviso in the first sentence of subsection (e) and substituting therefor the following:
"provided that (1) the UNEV Acquisition or other Investments are made using cash and/or other Property of the Borrower, any of its Subsidiaries or any Holdco Entity and otherwise comply with Section 6.04 and (2) any Equity Interests in the Limited Partner that are given as consideration for the UNEV Acquisition or such Investment shall not be included in the aggregate amount of the UNEV  Acquisition or such Investment by the Borrower, any of its Subsidiaries or any Holdco Entity for purpose of this clause (e)."
 (w)    Section 6.06 (Investments) of the Credit Agreement is hereby amended by deleting subsection (g) thereof in its entirety and substituting therefor the following:
"(g)    Investments by the Borrower, a Subsidiary of the Borrower or any Holdco Entity in any other Person that is not a Guarantor (including, without limitation, Plains JV, UNEV JV, the Joint Venture and any Future JV) in an aggregate amount for all such Investments not to exceed $50,000,000 outstanding at any time; provided that (i) such Investments (including Acquisitions) are made in cash and/or other Property of the Borrower, any of its Subsidiaries or any Holdco Entity and otherwise comply with Section 6.04 and Sections 6.15, 6.16 or 6.17, as applicable and (ii) any Equity Interests in the Limited Partner that are given as consideration for such Acquisition or Investment shall not be included in the aggregate amount of such Acquisition or Investment by the Borrower, any of its Subsidiaries or any 

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Amendment No. 3
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Credit Agreement

Holdco Entity for purpose of this clause (g).  Additionally, the Borrower, its Subsidiaries and any Holdco Entity may make additional Investments in any other Person that is not a Guarantor (including, without limitation, Plains JV, UNEV JV, the Joint Venture and any Future JV) in an aggregate amount for all such Investments not to exceed $100,000,000 outstanding at any time;  provided that (1) the Borrower has cash, Liquid Investments and availability under this Agreement of at least $25,000,000 and (2) after giving effect to such Investment on a pro forma basis, (x) the Limited Partner and its Subsidiaries would have been in compliance with the covenants contained in Sections 6.10 through 6.12 of this Agreement as of the end of the most recently completed fiscal quarter for which financial statements have been delivered pursuant to Section 5.06, and (y) the Senior Leverage Ratio shall not be greater than 3.00 to 1.00; and"
(x)    Section 6.06 (Investments) of the Credit Agreement is hereby amended by deleting subsection (i) thereof in its entirety and substituting therefor the following:
"(i)    Investments outstanding on the Amendment No. 3 Effective Date and identified on Schedule 6.06 attached hereto;"
(y)     Section 6.06 (Investments) of the Credit Agreement is hereby amended by inserting the following phrase immediately prior to the period at the end of subsection (l):
", in each case, to the extent required by Section 5.11"
(z)    Section 6.16 (UNEV Holdco) of the Credit Agreement is hereby amended by deleting it in its entirety and substituting therefor the following:
Section 6.16  UNEV Parent/ Holdco.  So long as the Administrative Agent and the Lenders shall not have an Acceptable Security Interest in the Equity Interests of UNEV JV owned by the Limited Partner through UNEV Parent/Holdco: (a) UNEV Parent/Holdco shall not own any material assets other than such Equity Interests in UNEV JV, (b) UNEV Parent/Holdco shall not engage in any business other than the ownership of such Equity Interests, and (c) UNEV Parent/ Holdco shall not sell, dispose of or otherwise transfer such Equity Interests except as permitted by Section 6.04.
(aa) Section 7.01 (Events of Default) of the Credit Agreement is hereby amended as follows:
(i) by deleting the figure "$25,000,000" found in clause (d)(i) thereof and substituting therefor the figure "$35,000,000"; 
(ii) by deleting the figure "$25,000,000" found in clause (d)(ii) thereof and substituting therefor the figure "$35,000,000";
(iii) by deleting the figure "$25,000,000" found in subsection (f) thereof and substituting therefor the figure "$35,000,000";

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Amendment No. 3
Holly Energy Partners - Operating, L.P. 
Credit Agreement

(iv) by deleting the figure "$25,000,000" found in subsection (j) thereof and substituting therefor the figure "$35,000,000"; and
(v) by deleting the figure "$25,000,000" found in subsection (k) thereof and substituting therefor the figure "$35,000,000".
(bb)   Section 8.03 (Default; Collateral) of the Credit Agreement is hereby amended by deleting subsection (f) thereof in its entirety and substituting therefor the following:
(f) The Lenders hereby irrevocably authorize the Administrative Agent, at its option and in its discretion, to (i) deliver instruments of assurance confirming the non-existence of any Lien under the Credit Documents with respect to assets of a Person described in Section 5.11 that are excluded from the Collateral and (ii) release any Lien granted to or held by the Administrative Agent upon any Collateral: (A) constituting Property in which neither Borrower nor any Guarantor owned an interest at the time the Lien was granted or at any time thereafter; (B) constituting Property leased to the Borrower or a Guarantor under a lease which has expired or been terminated in a transaction permitted under the Credit Documents or is about to expire and which has not been, and is not intended by the Borrower or such Guarantor to be, renewed; (C) consisting of an instrument or other possessory collateral evidencing Debt or other obligations pledged to the Administrative Agent (for the benefit of the Lenders), if the Debt or obligations evidenced thereby has been paid in full or otherwise superseded; (D) Property permitted to be sold pursuant to Section 6.04; or (E) Property permitted to be invested pursuant to Section 6.06.  In addition, the Lenders irrevocably authorize the Administrative Agent to release Liens upon Collateral as contemplated herein, or if approved, authorized, or ratified in writing by the requisite Lenders.  Upon request by the Administrative Agent at any time, the Lenders will confirm in writing the Administrative Agent’s authority to release particular types or items of Collateral pursuant to this Section 8.03.
(cc)    Schedule 1.01(a) – Commitments - which is attached to the Credit Agreement is hereby replaced in its entirety with Schedule 1.01(a) that is attached hereto.
(dd)    Schedule 6.06 – Existing Investments - which is attached to the Credit Agreement is hereby replaced in its entirety with Schedule 6.06 that is attached hereto.

Section 2.02    Amendment to Security Agreement.  Effective as of the Amendment No. 3 Effective Date (as herein defined), the Security Agreement shall hereby be amended by replacing the reference to "UNEV Holdco" in Section 2(a)(vi) of the Security Agreement with a reference to "UNEV Parent/ Holdco".

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Amendment No. 3
Holly Energy Partners - Operating, L.P. 
Credit Agreement

ARTICLE III
AGREEMENTS
Section 3.01    Commitments. Each Lender hereby acknowledges and confirms that, as of the date hereof and after giving effect to this Amendment its respective Commitment is as set forth next to its name on Schedule 1.01(a) attached hereto.  
Section 3.02    Breakage Costs.  If, as a result of an increase in the aggregate Commitments effected hereby, any Lender incurs any losses, out-of-pocket costs or expenses as a result of any payment of Eurodollar Rate Advances prior to the last day of the Interest Period applicable thereto (whether by the Borrower or as a result of the reallocation of the outstandings of the Eurodollar Rate Advances under the Credit Agreement due to the changes in the Lenders' Pro Rata Share resulting from the non-pro rata increases in the Commitments) and such Lender makes a request for compensation pursuant to Section 2.10 of the Credit Agreement, the Borrower shall, within ten (10) days of any written demand sent by such Lender to the Borrower through the Administrative Agent, pay to the Administrative Agent for the account of such Lender any amounts required under Section 2.10 of the Credit Agreement to compensate such Lender for such losses, out-of-pocket costs or expenses which it may reasonably incur as a result of such payment or reallocation, including, without limitation, any loss (including loss of anticipated profits), cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by any Lender to fund or maintain such Advances.
Section 3.03    Fees.  
(a)    On the Amendment No. 3 Effective Date, the Borrower shall pay to the Administrative Agent for the account of each Lender consenting to this Amendment, an amendment fee in an aggregate amount for each such consenting Lender equal to ten (10) basis points (0.10%) of the amount that is the lesser of (i) such Lender's and its Affiliates' Commitments under the Credit Agreement immediately prior to the Amendment No. 3 Effective Date and (ii) such Lender's and its Affiliates' Commitments under the Credit Agreement after giving effect to this Amendment.  On the Amendment No. 3 Effective Date, such fees shall be non-refundable and deemed to be fully earned when paid. 
(b)    On the Amendment No. 3 Effective Date, the Borrower shall pay to the Administrative Agent for the account of each of the Lenders increasing its Commitments pursuant to this Amendment, upfront fees (the "Upfront Fees") in an aggregate amount for each such Lender equal to forty (40) basis points (0.40%) of the amount by which such Lender's Commitments as set forth on Schedule 1.01(a) hereto exceeds its Commitments immediately prior to the Amendment No. 3 Effective Date.

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Holly Energy Partners - Operating, L.P. 
Credit Agreement

ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01    Borrower Representations and Warranties.  The Borrower represents and warrants that: (a) the representations and warranties contained in the Credit Agreement and the representations and warranties contained in the other Credit Documents are true and correct in all material respects on and as of the Amendment No. 3 Effective Date as if made on and as of such date, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct in all material respects as of such earlier date; (b) no Default has occurred and is continuing; (c) the execution, delivery and performance of this Amendment are within the partnership power and authority of the Borrower and have been duly authorized by appropriate partnership action and proceedings; (d) this Amendment constitutes the legal, valid, and binding obligation of the Borrower enforceable in accordance with its terms, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting the rights of creditors generally and general principles of equity; (e) there are no governmental or other third party consents, licenses and approvals required to be obtained by the Borrower in connection with the execution, delivery and performance of this Amendment by the Borrower or the validity and enforceability of this Amendment against the Borrower; and (f) the Liens under the Security Documents are valid and subsisting and secure Borrower's obligations under the Credit Documents.
Section 4.02    Guarantors' Representations and Warranties.  Each Guarantor represents and warrants that: (a) the representations and warranties of such Guarantor contained in the Guaranty and the representations and warranties contained in the other Credit Documents to which such Guarantor is a party are true and correct in all material respects on and as of the Amendment No. 3 Effective Date as if made on and as of such date, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct as of such earlier date; (b) no Default has occurred which is continuing; (c) the execution, delivery and performance of this Amendment are within the corporate or other organizational power and authority of such Guarantor and have been duly authorized by appropriate action and proceedings; (d) this Amendment constitutes the legal, valid, and binding obligation of such Guarantor enforceable in accordance with its terms, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting the rights of creditors generally and general principles of equity; (e) there are no governmental or other third party consents, licenses and approvals required to be obtained by such Guarantor in connection with the execution, delivery or performance of this Amendment by such Guarantor or the validity and enforceability of this Amendment against such Guarantor; (f) to its knowledge, it has no defenses to the enforcement of its Guaranty (other than the indefeasible payment in full of the Obligations); and (g) the Liens under the Security Documents to which such Guarantor is a party are valid and subsisting and secure such Guarantor's obligations under the Credit Documents.

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Amendment No. 3
Holly Energy Partners - Operating, L.P. 
Credit Agreement

ARTICLE V
CONDITIONS
The Credit Agreement shall be amended as provided herein, upon the date all of the following conditions precedent have been met (the "Amendment No. 3 Effective Date"):
Section 5.01    Documents.  The Administrative Agent shall have received each of the following:
(a)    this Amendment duly and validly executed and delivered by the Borrower, the Guarantors, the Administrative Agent and the Lenders;
(b)    the Amendment No. 3 Fee Letter;
(c)    a replacement Note for each Lender in the amount of their respective Commitments after giving effect to this Amendment;
(d)    amendments to the Mortgages;
(e)    favorable opinions of the Borrower's and the Guarantors' counsel dated as of the date of this Amendment in form and substance satisfactory to the Administrative Agent and covering such matters as the Administrative Agent may reasonably request;
(f)    a secretary's or a Responsible Officer's certificate for the Borrower dated the date hereof and certifying (i) copies of the resolutions of the board of directors of the General Partner authorizing this Amendment and the increase in the aggregate Commitments effected hereby, (ii) the Borrower Partnership Agreement and the other organizational documents of the Borrower (or a statement that there has been no changes since delivery of the secretary's or Responsible Officer's certificate for Borrower in connection with Amendment No. 2), (iii) the General Partner's Certificate of Organization and Regulations (or a statement that there has been no changes since delivery of the secretary's or Responsible Officer's certificate for General Partner in connection with Amendment No. 2), and (iv) the names and true signatures of the officers of the General Partner authorized to sign this Amendment, the  replacement Notes, and the other Credit Documents to which the Borrower is a party;
(g)    a secretary's or a Responsible Officer's certificate for each Guarantor dated the date hereof and covering the matters set forth in clause (f) above as to such Guarantor (or a statement that there has been no changes since delivery of the secretary's or Responsible Officer's certificate for such Guarantor in connection with Amendment No. 2); and
(h)    certificates of good standing and existence for the Borrower and each Guarantor in each state in which each such Person is organized, which certificate shall be dated a date not earlier than 30 days prior to the Amendment No. 3 Effective Date.  
Section 5.02    No Default.  No Default shall have occurred which is continuing as of the Amendment No. 3 Effective Date.

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Amendment No. 3
Holly Energy Partners - Operating, L.P. 
Credit Agreement

Section 5.03    Fees and Expenses. The Borrower shall have paid or reimbursed the Administrative Agent for (a) all of its reasonable out-of-pocket costs and expenses incurred in connection with this Amendment and the increase in the aggregate Commitments effected hereby, any other documents prepared in connection herewith and the transactions contemplated hereby, including, without limitation, the fees and disbursements of the Administrative Agent's outside legal counsel, in each case, pursuant to all invoices of the Administrative Agent and/or such counsel presented to the Borrower for payment not less than two (2) Business Days prior to the Amendment No. 3 Effective Date, (b) all fees required to be paid under the fee letter referenced in Section 5.01(b) above, and (c) all amendment and upfront fees required to be paid under Section 3.03 above.
ARTICLE VI
MISCELLANEOUS
Section 6.01    Effect on Credit Documents; Acknowledgements.  
(a)     Each of the Borrower, the Guarantors, Administrative Agent, the Issuing Banks, and the Lenders does hereby adopt, ratify, and confirm the Credit Agreement and each other Credit Document, as amended hereby, and acknowledges and agrees that the Credit Agreement and each other Credit Document, as amended hereby, is and remains in full force and effect, and the Borrower and the Guarantors acknowledge and agree that their respective liabilities and obligations under the Credit Agreement and the other Credit Documents are not impaired in any respect by this Amendment.
(b)    From and after the Amendment No. 3 Effective Date, all references to the Credit Agreement and the Credit Documents shall mean such Credit Agreement and such Credit Documents as amended by this Amendment.
(c)    This Amendment is a Credit Document for the purposes of the provisions of the other Credit Documents.  Without limiting the foregoing, any breach of representations, warranties, and covenants under this Amendment shall be a Default or Event of Default, as applicable, under the Credit Agreement, subject to all applicable cure or grace periods provided for under the Credit Agreement.
Section 6.02    Reaffirmation of the Guaranty.  Each Guarantor hereby ratifies, confirms, acknowledges and agrees that its obligations under the Guaranty are in full force and effect and that such Guarantor continues to unconditionally and irrevocably guarantee the full and punctual payment, when due, whether at stated maturity or earlier by acceleration or otherwise, of all of the Guaranteed Obligations (as defined in the Guaranty), as such Guaranteed Obligations may have been amended by this Amendment, and its execution and delivery of this Amendment does not indicate or establish an approval or consent requirement by such Guarantor under the Guaranty in connection with the execution and delivery of amendments to the Credit Agreement, the Notes or any of the other Credit Documents (other than the Guaranty or any other Credit Document to which such Guarantor is a party).
Section 6.03    Counterparts.  This Amendment may be signed in any number of counterparts, each of which shall be an original and all of which, taken together, constitute a single 

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Amendment No. 3
Holly Energy Partners - Operating, L.P. 
Credit Agreement

instrument.  This Amendment may be executed by facsimile signature or other electronic transmission and all such signatures shall be effective as originals.
Section 6.04    Successors and Assigns.  This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted pursuant to the Credit Agreement.
Section 6.05    Invalidity.  In the event that any one or more of the provisions contained in this Amendment shall for any reason be held invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Amendment.
Section 6.06    Governing Law.  This Amendment shall be deemed to be a contract made under and shall be governed by, construed and enforced in accordance with the laws of the State of Texas.  Without limiting the intent of the parties set forth above, (a) Chapter 346 of the Texas Finance Code, as amended (relating to revolving loans and revolving tri-party accounts), shall not apply to this Amendment or the transactions contemplated hereby and (b) to the extent that any Lender may be subject to Texas law limiting the amount of interest payable for its account, such Lender shall utilize the indicated (weekly) rate ceiling from time to time in effect as provided in Chapter 303 of the Texas Finance Code, as amended.  
Section 6.07    Entire Agreement. THIS AMENDMENT, THE CREDIT AGREEMENT AS AMENDED BY THIS AMENDMENT, THE NOTES, AND THE OTHER CREDIT DOCUMENTS CONSTITUTE THE ENTIRE UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT THERETO.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
[The remainder of this page has been left blank intentionally.]

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Amendment No. 3
Holly Energy Partners - Operating, L.P. 
Credit Agreement

EXECUTED to be effective as of the date first above written.
	
								
	 
	 
	BORROWER:
HOLLY ENERGY PARTNERS - OPERATING, L.P., a Delaware limited partnership

	 
	 
	 
	By: HEP Logistics GP, L.L.C., a Delaware limited liability company, its General Partner
By: Holly Energy Partners, L.P., a Delaware limited partnership, its Sole Member
By: HEP Logistics Holdings, L.P., a Delaware limited partnership, its General Partner
By: Holly Logistic Services, L.L.C., a Delaware limited liability company, its General Partner

	 
	 
	 
	By:   /s/ Stephen D. Wise         
Stephen D. Wise
Vice President and Treasurer

	 
	 
	 
	 
	 
	 

Signature Page 1    
Amendment No. 3
Holly Energy Partners
Operating, L.P. Credit Agreement

	
						
	 
	 
	GUARANTORS:

	 

	 
	 
	HEP PIPELINE GP, L.L.C., a Delaware limited liability company
HEP REFINING GP, L.L.C., a Delaware limited liability company
HEP MOUNTAIN HOME, L.L.C., a Delaware 
limited liability company
HEP PIPELINE, L.L.C., a Delaware limited liability company
HEP REFINING, L.L.C., a Delaware limited liability company
HEP WOODS CROSS, L.L.C., a Delaware limited liability company
HEP TULSA LLC, a Delaware limited liability company
LOVINGTON-ARTESIA, L.L.C., a Delaware limited liability company
HEP SLC, LLC, a Delaware limited liability company
ROADRUNNER PIPELINE, L.L.C., a Delaware 
limited liability company
CHEYENNE LOGISTICS LLC, a Delaware limited liability company
EL DORADO LOGISTICS LLC, a Delaware limited liability company

	 
	 
	Each by:
	Holly Energy Partners - Operating, L.P., a 
Delaware limited partnership and its Sole Member

	 
	 
	 
	By: HEP Logistics GP, L.L.C., a Delaware limited liability company,  its General Partner

By: Holly Energy Partners, L.P., a Delaware limited partnership,  its Sole Member

By: HEP Logistics Holdings, L.P., a Delaware limited partnership, its General Partner
 
By: Holly Logistic Services, L.L.C., a Delaware limited liability company, its General Partner

	 
	 
	 
	By:    /s/ Stephen D. Wise   
Stephen D. Wise
Vice President and Treasurer

Signature Page 2    
Amendment No. 3
Holly Energy Partners
Operating, L.P. Credit Agreement

	
						
	 
	 
	HEP NAVAJO SOUTHERN, L.P., a Delaware limited partnership

HEP PIPELINE ASSETS, LIMITED PARTNERSHIP, a Delaware limited partnership

HEP FIN-TEX/TRUST-RIVER, L.P., a Texas limited partnership

	 
	 
	 
	 

	 
	 
	Each by:
	HEP Pipeline GP, L.L.C., a Delaware limited    liability company and its General Partner

	 
	 
	 
	By: Holly Energy Partners - Operating, L.P., a 
Delaware limited partnership and its Sole Member

	 
	 
	 
	By: HEP Logistics GP, L.L.C., a Delaware limited liability company, its General Partner

By: Holly Energy Partners, L.P., a Delaware limited partnership, its Sole Member

By: HEP Logistics Holdings, L.P., a Delaware limited partnership, its General Partner
 
By: Holly Logistic Services, L.L.C., a Delaware limited liability company, its General Partner

	 
	 
	 
	By:    /s/ Stephen D. Wise         
Stephen D. Wise
Vice President and Treasurer

Signature Page 3    
Amendment No. 3
Holly Energy Partners
Operating, L.P. Credit Agreement

	
								
	 
	 
	 
	 
	 

	 
	 
	 
	HEP REFINING ASSETS, L.P., a Delaware limited partnership

	 
	 
	 
	 
	By:  HEP Refining GP, L.L.C., a Delaware limited liability company and its General Partner

By: Holly Energy Partners - Operating, L.P., a Delaware limited partnership and its Sole Member
 
By: HEP Logistics GP, L.L.C., a Delaware limited liability company, its General Partner

By: Holly Energy Partners, L.P., a Delaware limited partnership, its Sole Member

By: HEP Logistics Holdings, L.P., a Delaware limited partnership, its General Partner
 
By: Holly Logistic Services, L.L.C., a Delaware limited liability company, its General Partner

	 
	 
	 
	 
	By:    /s/ Stephen D. Wise         
Stephen D. Wise
Vice President and Treasurer

	 
	 
	 
	 
	 

	 
	 
	 
	HEP LOGISTICS GP, L.L.C., a Delaware limited liability company

	 
	 
	 
	 
	By: Holly Energy Partners, L.P., a Delaware limited partnership, its Sole Member

By: HEP Logistics Holdings, L.P., a Delaware limited partnership, its General Partner
 
By: Holly Logistic Services, L.L.C., a Delaware limited liability company, its General Partner

	 
	 
	 
	 
	By:    /s/ Stephen D. Wise         
Stephen D. Wise
Vice President and Treasurer

	 
	 
	 
	 
	 

	 
	 
	 
	 

Signature Page 4    
Amendment No. 3
Holly Energy Partners
Operating, L.P. Credit Agreement

	
								
	 
	 
	 
	HOLLY ENERGY PARTNERS, L.P., a Delaware limited partnership

	 
	 
	 
	By: HEP Logistics Holdings, L.P., a Delaware limited partnership, its General Partner
 
By: Holly Logistic Services, L.L.C., a Delaware limited liability company, its General Partner

	 

	 
	 
	 
	By:    /s/ Stephen D. Wise         
Stephen D. Wise
Vice President and Treasurer

	 

	 
	 
	HOLLY ENERGY FINANCE CORP., a Delaware corporation

	 

	 
	 
	 
	By:    /s/ Stephen D. Wise      
Stephen D. Wise
Vice President and Treasurer

	 

	 
	 
	 
	 
	 

	 
	 
	HOLLY ENERGY STORAGE - LOVINGTON LLC, a Delaware limited liability company

	 

	 
	 
	 
	By:  HEP Refining, L.L.C., a Delaware limited liability and its Sole Member

By: Holly Energy Partners - Operating, L.P., a Delaware limited partnership and its Sole Member 

By: HEP Logistics GP, L.L.C., a Delaware limited liability company, its General Partner

By: Holly Energy Partners, L.P., a Delaware limited partnership, its Sole Member

By: HEP Logistics Holdings, L.P., a Delaware limited partnership, its General Partner
 
By: Holly Logistic Services, L.L.C.,  a Delaware limited liability company, its General Partner

	 

	 
	 
	 
	By:    /s/ Stephen D. Wise         
Stephen D. Wise
Vice President and Treasurer

	 

	 
	 
	 
	 
	 

Signature Page 5    
Amendment No. 3
Holly Energy Partners
Operating, L.P. Credit Agreement

	
								
	 
	 
	HEP UNEV HOLDINGS LLC, a Delaware limited liability company

	 

	 
	 
	 
	By: /s/ Stephen D. Wise      
Stephen D. Wise
Vice President and Treasurer

	 

	 
	 
	 
	 
	 

	 
	 
	HEP UNEV PIPELINE LLC, a Delaware limited liability company

	 

	 
	 
	 
	By: /s/ Stephen D. Wise         
Stephen D. Wise
Vice President and Treasurer

	 

Signature Page 6    
Amendment No. 3
Holly Energy Partners
Operating, L.P. Credit Agreement

	
				
	 
	 
	ADMINISTRATIVE AGENT:

	 
	 
	 
	WELLS FARGO BANK, NATIONAL ASSOCIATION, as Administrative Agent 

By: /s/ Betsy Jocher               
Name:   Betsy Jocher
Title:   Director

LENDERS:

WELLS FARGO BANK, NATIONAL ASSOCIATION, as a Lender and an Issuing Bank

By: /s/ Betsy Jocher               
Name:   Betsy Jocher
Title:   Director

UNION BANK, N.A., as a Lender and Syndication Agent

By: /s/ Joshua Patterson            
Name: Joshua Patterson
Title:   Vice President

COMPASS BANK, as a Lender and a Co-Documentation Agent

By: /s/ Umar Hassan               
Name: Umar Hassan
Title:   Vice President

U.S. BANK NATIONAL ASSOCIATION, as a Lender and a Co-Documentation Agent

By: /s/ Daniel K. Hansen            
Name:  Daniel K. Hansen
Title:   Vice President

BANK OF AMERICA, N.A., as a Lender

By: /s/ Alia Qaddumi               
Name: Alia Qaddumi
Title:   Vice President

CAPITAL ONE, N.A., as a Lender

By: /s/ Nancy Mak               
Name: Nancy Mak
Title:   Senior Vice President
 
COMERICA BANK, as a Lender

By: /s/ Vontoba Terry               
Name: Vontoba Terry
Title:   Vice President

Signature Page 7    
Amendment No. 3
Holly Energy Partners
Operating, L.P. Credit Agreement

	
				
	 
	 
	 
	

SUNTRUST BANK, as a Lender

By: /s/ Carmen Malizia            
Name: Carmen Malizia
Title:   Director

UBS AG, STAMFORD BRANCH, as a Lender

By: /s/ Lana Gifas               
Name: Lana Gifas
Title:   Director

By: /s/ Jennifer Anderson            
Name: Jennifer Anderson
Title:  Associate Director

PNC BANK, NATIONAL ASSOCIATION, as a Lender

By: /s/ Michael Scholten            
Name: Michael Scholten
Title:   Officer

CITIBANK, N.A., as a Lender and a Co-Documentation Agent

By: /s/ Todd Mogil               
Name: Todd Mogil
Title:   Vice-President

ONEWEST BANK, FSB, as a Lender

By: /s/ Whitney Randolph            
Name: Whitney Randolph
Title:   Senior Vice President

CIT BANK, as a Lender

By: /s/ Stewart McLeod            
Name: Stewart McLeod
Title:   Director

CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH, as a Lender

By: /s/ Mikhail Faybusovich            
Name: Mikhail Faybusovich
Title:   Authorized Signatory

By: /s/ Tyler R. Smith               
Name: Tyler R. Smith
Title:  Authorized Signatory

DEUTSCHE BANK TRUST COMPANY AMERICAS, as a Lender

By: /s/ Marcus M. Tarkington            
Name: Marcus M. Tarkington
Title:   Director

By: /s/ Michael Getz               
Name: Michael Getz
Title:  Vice Present

Signature Page 8    
Amendment No. 3
Holly Energy Partners
Operating, L.P. Credit Agreement

	
				
	 
	 
	 
	FROST BANK, as a Lender

By: /s/ Lane Dodds               
Name: Lane Dodds
Title:   Sr. Vice Present

JPMORGAN CHASE BANK, N.A., as a Lender

By: /s/ Debra Hrelja               
Name: Debra Hrelja
Title:   Vice President

MORGAN STANLEY BANK, N.A., as a Lender

By: /s/ Kelly Chin               
Name: Kelly Chin
Title:   Authorized Signatory

SANTANDER BANK, N.A., f/k/a Sovereign Bank, N.A., as a Lender

By: /s/ Aidan Lanigan               
Name: Aidan Lanigan
Title:   Senior Vice President

By: /s/ Puiki Lok               
Name: Puiki Lok
Title:   Vice President

SUMITOMO MITSUI BANKING CORPORATION, NY BRANCH, as a Lender

By: /s/ James D. Weinstein            
Name: James D. Weinstein
Title:   Managing Director

THE BANK OF NOVA SCOTIA, as a Lender

By: /s/ Mark Sparrow               
Name: Mark Sparrow
Title:   Director

Signature Page 9    
Amendment No. 3
Holly Energy Partners
Operating, L.P. Credit Agreement

SCHEDULE 1.01(a)

COMMITMENTS
	
							
	 
	 
	 
	Lender
	 
	Commitment
	 

	 
	 
	 
	Wells Fargo Bank, National Association
	 
	$52,500,000.00
	 

	 
	 
	 
	Union Bank, N.A.
	 
	$47,500,000.00
	 

	 
	 
	 
	Compass Bank
	 
	$45,000,000.00
	 

	 
	 
	 
	U.S. Bank National Association
	 
	$42,500,000.00
	 

	 
	 
	 
	Citibank, N.A.
	 
	$42,500,000.00
	 

	 
	 
	 
	Bank of America, N.A..
	 
	$37,500,000.00
	 

	 
	 
	 
	Capital One, N.A.
	 
	$37,500,000.00
	 

	 
	 
	 
	SunTrust Bank
	 
	$37,500,000.00
	 

	 
	 
	 
	UBS AG, Stamford Branch
	 
	$37,500,000.00
	 

	 
	 
	 
	Comerica Bank
	 
	$35,000,000.00
	 

	 
	 
	 
	CIT Bank
	 
	$25,000,000.00
	 

	 
	 
	 
	OneWest Bank, FSB
	 
	$25,000,000.00
	 

	 
	 
	 
	Sumitomo Mitsui Banking Corporation
	 
	$25,000,000.00
	 

	 
	 
	 
	Credit Suisse AG, Cayman Islands Branch
	 
	$20,000,000.00
	 

	 
	 
	 
	Deutsche Bank Trust Company Americas
	 
	$20,000,000.00
	 

	 
	 
	 
	Frost Bank
	 
	$20,000,000.00
	 

	 
	 
	 
	JPMorgan Chase Bank, N.A.
	 
	$20,000,000.00
	 

	 
	 
	 
	Morgan Stanley Bank, N.A.
	 
	$20,000,000.00
	 

	 
	 
	 
	PNC Bank, National Association
	 
	$20,000,000.00
	 

	 
	 
	 
	Santander Bank, N.A., f/k/a Sovereign Bank, N.A.
	 
	$20,000,000.00
	 

	 
	 
	 
	The Bank of Nova Scotia
	 
	$20,000,000.00
	 

	 
	 
	 
	Total
	 
	$650,000,000.00
	 

Amendment No.3
Holly Energy Partners - Operating, L.P. 
Credit Agreement

    

SCHEDULE 6.06
EXISTING INVESTMENTS
Investments in SLC Pipeline LLC.
Investments in UNEV JV and the UNEV Project.
Investments in Plains Holdco, Plains JV and the Plains Project.
Investments in the Joint Venture.

Amendment No.3
Holly Energy Partners - Operating, L.P. 
Credit Agreementexh 11 13 incentive plan

                                        
	
		
	 
	Board Approved 12/1/11

	 
	(Technical Amendments

	 
	Adopted 3/19/12;

	 
	Additional Amendments Adopted

	 
	5/18/2012

	 
	Updated 11/15/12;

	 
	Amended 5/29/13;

	 
	Amended 9/13/13;

	 
	Effective as of 12/1/11;

	 
	Updated 11/22/13)

                                        

Federal Home Loan Bank of Indianapolis
Incentive Plan

(Effective as of January 1, 2012)
(As Amended March 19, 2012)
(As Further Amended May 18, 2012)
(As Updated November 15, 2012 to Reflect 2013 Performance Goals)
(Amended May 29, 2013)
(Amended September 13, 2013, Effective as of December 1, 2011)
(As Updated November 22, 2013, to Reflect 2014 Performance Goals)

ESTABLISHMENT OF ANNUAL AND LONG-TERM 2014-2017 
INCENTIVE PLAN GOALS FOR THE 
FEDERAL HOME LOAN BANK OF INDIANAPOLIS
INCENTIVE PLAN
Pursuant to resolutions adopted by the Board of Directors of the Federal Home Loan Bank of Indianapolis (the “Bank"), the undersigned hereby execute the Federal Home Loan Bank of Indianapolis Incentive Plan, effective as of January 1, 2012, and setting forth goals effective as of January 1, 2014, on behalf of the Bank, in the form attached hereto.
Dated this 22nd day of November, 2013.
FEDERAL HOME LOAN BANK OF INDIANAPOLIS
By: /s/ PAUL CLABUESCH
Paul Clabuesch, Chairman
By: /s/ JEFFREY A. POXON
Jeffrey A. Poxon, Vice Chairman
ATTEST:
By: /s/ KANIA D.WARBINGTON
Kania D. Warbington, Corporate Secretary

FEDERAL HOME LOAN BANK OF INDIANAPOLIS
INCENTIVE PLAN
TABLE OF CONTENTS    	
				
	 
	 
	PAGE

	Article I
	INTRODUCTION
	1
	

	 
	 
	 

	Section 1.1
	Purpose
	1
	

	Section 1.2
	Effective Date
	1
	

	Section 1.3
	Administration
	1
	

	Section 1.4
	Supplements
	1
	

	Section 1.5
	Definitions
	1
	

	 
	 
	 

	Article II
	ELIGIBILITY AND PARTICIPATION
	2
	

	 
	 
	 

	Section 2.1
	Eligibility
	2
	

	Section 2.2
	Participation
	2
	

	 
	 
	 

	Article III
	AWARDS AND EXTRAORDINARY OCCURENCE
ADDITIONS/REDUCTIONS
	3
	

	 
	 
	 

	Section 3.1
	Awards
	3
	

	Section 3.2
	Performance Goals
	4
	

	Section 3.3
	Earning and Vesting of Awards for Level I Participants
	5
	

	Section 3.4
	Earning and Vesting of Awards for Level II Participants
	6
	

	Section 3.5
	Special Gap Year Awards for Level I Participants
	6
	

	Section 3.6
	Effect of Termination of Service and Amendment of
Prior Long-Term Plans
	7
	

	Section 3.7
	Effect of Reorganization
	10
	

	Section 3.8
	Payment of Awards
	11
	

	Section 3.9
	Reduction or Forfeiture of Awards
	11
	

	 
	 
	 

	Article IV
	ADMINISTRATION
	12
	

	 
	 
	 

	Section 4.1
	Appointment of the Committee
	12
	

	Section 4.2
	Powers and Responsibilities of the Committee
	12
	

	Section 4.3
	Income and Employment Tax Withholding
	13
	

	Section 4.4
	Plan Expenses
	13
	

	 
	 
	 

	Article V
	BENEFIT CLAIMS
	13
	

	 
	 
	 

	Article VI
	AMENDMENT AND TERMINATION OF THE PLAN
	13
	

	 
	 
	 

	Section 6.1
	Amendment of the Plan
	13
	

	Section 6.2
	Termination of the Plan
	13
	

	 
	 
	 

	
				
	 
	 
	PAGE

	Article VII
	MISCELLANEOUS
	14
	

	 
	 
	 

	Section 7.1
	Governing Law
	14
	

	Section 7.2
	Headings and Gender
	14
	

	Section 7.3
	Spendthrift Clause
	14
	

	Section 7.4
	Counterparts
	14
	

	Section 7.5
	No Enlargement of Employment Rights
	14
	

	Section 7.6
	Limitations on Liability
	14
	

	Section 7.7
	Incapacity of Participant
	15
	

	Section 7.8
	Evidence
	14
	

	Section 7.9
	Action by Bank
	15
	

	Section 7.10
	Severability
	15
	

	Section 7.11
	Information to be Furnished by a Participant
	15
	

	Section 7.12
	Attorneys' Fees
	15
	

	Section 7.13
	Binding on Successors
	15
	

	Section 7.14
	Retention of Former Plans
	15
	

	 
	 
	 

	APPENDIX I - 2014 PERFORMANCE PERIOD AWARDS FOR 
LEVEL II PARTICIPANTS
	17
	

	APPENDIX II - 2014 PERFORMANCE PERIOD AWARDS FOR
LEVEL I PARTICIPANTS
	21
	

	APPENDIX III - ANNUAL AWARD TARGETS FOR 2010 AND 2011
LONG TERM INCENTIVE PLANS
	25
	

	APPENDIX IV - AWARDS ADDRESSING 2015 GAP YEAR FOR 
LEVEL I PARTICIPANTS
	27
	

	APPENDIX V - FORM OF NON-SOLICITATION AND
NON-DISCLOSURE AGREEMENT
	28
	

ARTICLE I
INTRODUCTION
Section 1.1    Purpose. The purpose of the Federal Home Loan Bank of Indianapolis Incentive Plan (the "Plan") is to attract, retain and motivate employees of the Federal Home Loan Bank of Indianapolis (the "Bank") and to focus their efforts on continued improvement in the profitability of the Bank while maintaining the Bank's safety and soundness. The Plan is a cash-based incentive plan that provides award opportunities based on achievement of performance goals.

Section 1.2    Effective Date. The "Effective Date" of the Plan is January 1, 2012.

Section 1.3    Administration. The Plan will be administered by an administrative committee (the "Committee") appointed by the Bank's Board of Directors (the "Board"), which initially will be the Human Resources Committee of the Board. Notwithstanding the foregoing, the term Committee shall also refer to the Executive Governance Committee of the Board who will administer the Plan with respect to the Bank's Chief Executive Officer. The Committee, from time to time, may adopt any rules and procedures it deems necessary or desirable for the proper and efficient administration of the Plan that are consistent with the terms of the Plan. Any notice or document required to be given or filed with the Committee will be properly given or filed if delivered to or mailed by registered mail, postage paid, to the General Counsel, Federal Home Loan Bank of Indianapolis, 8250 Woodfield Crossing Blvd., Suite 400, Indianapolis, Indiana 46240.

Section 1.4    Supplements. The provisions of the Plan may be modified by supplements to the Plan with Board approval. The terms and provisions of each supplement are a part of the Plan and supersede any other provisions of the Plan to the extent necessary to update or eliminate any inconsistencies between the supplement and any other Plan provisions. Any substantive supplement to the Plan shall be submitted to the FHFA for non-objection after full review prior to implementation.

Section 1.5    Definitions. The following terms are defined in the Plan in the following Sections:	
		
	Term
	Plan Sections

	2009 LTIP
	3.6(d)(v)

	2010 LTIP
	3.6(d)(v)

	2011 LTIP
	3.6(d)(v)

	Annual Award
	3.3(a), 3.4(a)

	Award
	3.1

	Bank
	1.1

	Board
	1.3

	Cause
	3.6(d)(i)

	Committee
	1.3

	Compensation
	3.1

	Deferral Performance Period
	3.1(a)

	Deferred Award
	3.3(b)

	Disability
	3.6(d)(ii)

	Discretionary Award
	3.1(d)

	Effective Date
	1.2

1

	
		
	Extraordinary Occurrences
	3.1(e)

	FHFA
	3.6(d)(i)

	Final Award
	3.1(e)

	Fully Meets Expectations
	3.3(a)(ii)

	Gap Year Award
	3.5(a)

	Gap Year Performance Period
	3.5(b)

	Good Reason
	3.6(d)(iii)

	Level I Participant
	3.1(c)

	Level II Participant
	3.1(c)

	Maximum
	3.2(b)(iii)

	Non-Solicitation Agreement
	2.1

	Participant
	2.1

	Performance Goals
	3.2

	Performance Period
	3.1(a)

	Plan
	1.1

	Position
	3.6(d)(iii)(A)

	Reduction in Force
	3.6(d)(iv)

	Reorganization
	3.7(b)

	Retirement
	3.6(d)(v)

	Satisfactory
	3.3(a)(ii)

	Termination of Service
	3.6(d)(vi)

	Target
	3.2(b)(ii)

	Threshold
	3.2(b)(i)

ARTICLE II

ELIGIBILITY AND PARTICIPATION

Section 2.1    Eligibility. Any employee of the Bank, hired before October 1st of the calendar year, will become a "Participant" in the Plan for that calendar year, provided the employee is not classified as a "temporary," an "intern," "contract" or "temporary agency" employee, and does not participate in the Federal Home Loan Bank of Indianapolis Internal Audit Incentive Plan. Level I Participants, as defined in subsection 3.1(c), must have an executed agreement on file with the Bank containing non-solicitation and non-disclosure provisions in a form similar to the form provided in Appendix V to the Plan ("Non-Solicitation Agreement").

Section 2.2    Participation. A designated employee or otherwise eligible employee will become a Participant as of the later of the Effective Date, the employee's date of hire, or the date on or after the Effective Date the employee satisfies the automatic eligibility provisions described in Section 2.1. Any Participant may be removed as an active Participant by the Board effective as of any date.

2

ARTICLE III

AWARDS AND EXTRAORDINARY OCCURRENCE ADDITIONS/REDUCTIONS

Section 3.1    Awards. At the beginning of each Performance Period, the Board will make an "Award" to eligible Participants. As described in this Article, Awards may be Annual Awards (as defined in subsection 3.3(a)), Deferred Awards (as defined in subsection 3.3(b)), Gap Year Awards (as defined in subsection 3.5(a)) or Discretionary Awards (as defined in subsection 3.1(d)). Each Award will be equal to a percentage of the Participant's annual Compensation, as described in the applicable Appendices for Level I Participants and Level II Participants. "Compensation" means the Participant's annual earned base salary or wages for hours worked, including overtime and hours paid under the Bank's paid-time-off policies, as applicable, but in any case excluding any bonus, incentive compensation, or long-term disability insurance payments paid for the current or a prior year. In the event a Participant receives a raise during a calendar year, the Participant's Compensation for the year will reflect the actual wages paid to the Participant for the year.

		
	(a)
	Performance Periods. A "Performance Period" is the one-calendar year period over which an Annual Award can be earned and vested pursuant to subsections 3.3(a) and 3.4(a). A "Deferral Performance Period" is the three-calendar year period over which a Deferred Award can be earned and vested pursuant to subsection 3.3(b). A Deferral Performance Period begins on the January 1st immediately following the Performance Period to which such Deferred Award applies.

		
	(b)
	Award Notification. Participants will be notified of an Annual Award, a Deferred Award or Discretionary Award by the Bank by posting the Performance Goals and other necessary terms and conditions applicable to the Annual Award, Deferred Award or Discretionary Award on SharePoint on the Bank's intranet.

		
	(c)
	Award Levels. Participants will receive varying Awards for each Performance Period based on their position with the Bank. A "Level I Participant" is the Bank's President and Chief Executive Officer, Executive Vice President or Senior Vice President of the Bank or any other individual designated as a Level I Participant by the Board. A "Level II Participant" is any participating employee who is not a Level I Participant. If a Participant receives a new position within the Bank which position changes the Participant's Award eligibility, level, or opportunity, each of the Awards for which Participant is or was eligible during the calendar year will be prorated to reflect the portion of the calendar year during which the Participant was eligible for each such Award, level, or opportunity.

		
	(d)
	Discretionary Award. The President may recommend to the Board that an additional discretionary Award (the "Discretionary Award") be made to a Level II Participant to address external market considerations, recruiting needs, special projects and extraordinary individual or team efforts. The aggregate pool of funds available for Discretionary Awards to Level II Participants will not exceed 20 percent of the annual aggregate Awards for still eligible Level I Participants.

3

		
	(e)
	Final Award and Extraordinary Occurrences. The "Final Award" is the amount of an earned and vested Annual Award, Deferred Award, Gap Year Award or Discretionary Award, as adjusted based upon the level at which the Performance Goals have been achieved, that is ultimately paid to a Participant under the Plan. The amount of a Final Award may be increased or decreased at the Board's discretion to account for performance that is not captured in the Performance Goals. The Board, in its discretion, may also consider Extraordinary Occurrences when assessing performance results and determining Final Awards. "Extraordinary Occurrences" mean those events that, in the opinion and discretion of the Board, are outside the significant influence of the Participant or the Bank and are likely to have a significant unanticipated effect, whether positive or negative, on the Bank's operating and/or financial results. Examples of Extraordinary Occurrences include, but are not limited to, change in law, regulation, or regulatory policy, or systemic macroeconomic events outside of management's control.

		
	(f)
	Transition Goals for Replaced Long-Term Incentive Programs. Upon adoption of this Plan, the "Performance Goals" required by the 2010 LTIP and 2011 LTIP for calendar years 2012 and 2013 shall be as set forth in Appendix III.

Section 3.2    Performance Goals. "Performance Goals" are the performance factors established by the Board for each Performance Period, Deferral Performance Period and Gap Year Performance Period, as set forth in the applicable Appendices to the Plan, which are taken into consideration in determining the value of an Annual Award, Deferred Award or Gap Year Award. The Board may, for any reason or for an Extraordinary Occurrence, adjust the Performance Goals for a Performance Period, Deferral Performance Period or Gap Year Performance Period to ensure the purposes of the Plan are served. Any such adjustment to Performance Goals shall be submitted to the FHFA for review prior to implementation.

		
	(a)
	Establishment of Performance Goals. Performance Goals for Performance Periods, Deferral Performance Periods or the Gap Year Performance Period commencing on and after January 1, 2012, will be communicated to Participants via SharePoint on the Bank's intranet after they have been established by the Board.

		
	(b)
	Achievement Level. Three achievement levels will be defined for each Performance Goal in determining how much of an Award is earned.

		
	i.
	Threshold. The "Threshold" achievement level is the minimum achievement level accepted for a Performance Goal.

		
	ii.
	Target. The "Target" achievement level is the planned achievement level for a Performance Goal.

		
	iii.
	Maximum. The "Maximum" achievement level is achievement that substantially exceeds the Target achievement level.

		
	(c)
	Interpolation. Achievement levels that discreetly fall in between Threshold-, Target-, and Maximum, will be interpolated, unless otherwise described in a Performance Goal. 

4

		
	(d)
	Considerations in Establishing Performance Goals. In determining appropriate Performance Goals and the relative weight accorded each Performance Goal, the Committee must:

		
	i.
	Balance risk and financial results in a manner that does not encourage Participants to expose the Bank to imprudent risks;

		
	ii.
	Make such determination in a manner designed to ensure that Participants' overall compensation is balanced and not excessive in amount and that the Annual Awards, Deferred Awards and Gap Year Awards are consistent with the Bank's policies and procedures regarding such compensation arrangements; and

		
	iii.
	Monitor the success of the Performance Goals and weighting established in prior years, alone and in combination with other incentive compensation awarded to the same Participants, and make appropriate adjustments in future calendar years as needed so that payments appropriately incentivize Participants and appropriately reflect risk.

Section 3.3    Earning and Vesting of Awards for Level I Participants.

		
	(a)
	Earning and Vesting of Annual Awards. Fifty percent of an Award to a Level I Participant will become earned and vested on the last day of the Performance Period, provided the following requirements are met (an "Annual Award"):

		
	i.
	The applicable Performance Goals for the Performance Period are satisfied;

		
	ii.
	The Participant received (or, in the case of a Termination of Service described in Section 3.6(b) or Section 3.6(c) or a Reorganization described in Section 3.7, the President-CEO determines that the Participant would have received) a performance rating for the Performance Period of at least Fully Meets Expectations or Satisfactory; and

		
	iii.
	The Participant is actively employed on the last day of the Performance Period, unless otherwise provided in Section 3.6 or Section 3.7.

		
	(b)
	Earning and Vesting of Deferred Awards. The remaining 50 percent of an Award to a Level I Participant will become earned and vested on the last day of the Deferral Performance Period, provided the following requirements are met (a "Deferred Award"):

		
	i.
	The applicable Performance Goals for the Deferral Performance Period are satisfied;

		
	ii.
	The Participant received (or, in the case of a Termination of Service described in Section 3.6(b) or Section 3.6(c) or a Reorganization described in Section 3.7, the President-CEO determines that the Participant would have received) an average performance rating for the Deferral Performance Period of at least Fully Meets Expectations or Satisfactory; and

		
	iii.
	The Participant is actively employed on the last day of the Deferral Performance Period, unless otherwise provided in Section 3.6 or Section 3.7.

5

		
	(c)
	Calculation of Awards. The value of Awards to Level I Participants will be calculated in accordance with the applicable Appendix to the Plan.

Section 3.4    Earning and Vesting of Awards for Level II Participants.

		
	(a)
	Earning and Vesting of Awards. An Award to a Level II Participant will become earned and vested on the last day of the Performance Period provided the following requirements are met (also an "Annual Award"):

		
	i.
	The applicable Performance Goals for the Performance Period are satisfied;

		
	ii.
	The Participant received (or, in the case of a Termination of Service described in Section 3.6(b) or Section 3.6(c), the President-CEO determines that the Participant would have received) a performance rating for the Performance Period of at least Fully Meets Expectations or Satisfactory; and

		
	iii.
	The Participant is actively employed on the last day of the Performance Period, unless otherwise provided in Section 3.6.

		
	(b)
	Calculation of Awards. The value of Awards to Level II Participants will be calculated in accordance with the applicable Appendix to the Plan.

Section 3.5    Special Gap Year Awards for Level I Participants.

		
	(a)
	Background. The Board has determined it is appropriate to make a special Award to Level I Participants solely for calendar year 2012 (a "Gap Year Award") to address a gap in payment of incentive compensation during calendar year 2015 which arises as a result of the planned discontinuation of the 2011 LTIP and the implementation of this Plan. 

		
	(b)
	Earning and Vesting of Awards. Notwithstanding Sections 3.3 and 3.4, a Gap Year Award will become earned and vested over a three-year period beginning on January 1, 2012 and ending on December 31, 2014 (the "Gap Year Performance Period") to the extent:

		
	i.
	The Performance Goals for the Gap Year Performance Period, as set forth in the applicable Appendix to the Plan, are satisfied;

		
	ii.
	The Level I Participant received (or, in the case of a Termination of Service described in Section 3.6(b) or Section 3.6(c) or a Reorganization described in Section 3.7, the President-CEO determines that the Participant would have received) an average performance rating for the Gap Year Performance Period of at least Fully Meets Expectations or Satisfactory; and

		
	iii.
	The Level I Participant is actively employed on the last day of the Gap Year Performance Period, unless otherwise provided in Section 3.6 or Section 3.7.

		
	(c)
	Calculation of Awards. The value of Gap Year Awards will be calculated in accordance with the applicable Appendix to the Plan.

    

6

Section 3.6    Effect of Termination of Service and Amendment of Prior Long-Term Plans.

		
	(a)
	In General. If a Level I Participant incurs a Termination of Service for any reason other than a reason set forth in subsection 3.6(b), 3.6(c), or Section 3.7, the Level I Participant's Award will be forfeited, effective as of the date of such Termination of Service. 

If a Level II Participant incurs a Termination of Service for any reason other than a reason set forth in subsection 3.6(b) or 3.6(c), the Level II Participant's Award will be forfeited effective as of the date of such Termination of Service.  

		
	(b)
	Termination Due to Death, Disability, or by the Bank without Cause due to a Reduction in Force.  

		
	i.
	Notwithstanding the provisions of Sections 3.3 and 3.5 and subsection 3.6(a), if a Level I Participant incurs a Termination of Service due to death or Disability or by the Bank without Cause due to a Reduction in Force, then the Participant's Deferred Awards (including, without limitation, the Deferred Award attributable to the calendar year in which the Termination of Service occurs) or Gap Year Award will be treated as earned and vested based on the assumption the Bank would have achieved the applicable Performance Goals at the Target achievement level for the Deferral Performance Period(s) and/or Gap Year Performance Period.

		
	ii.
	Notwithstanding the provisions of Sections 3.3 and 3.5 and subsection 3.6(a), if a Level I Participant incurs a Termination of Service due to death or Disability or by the Bank without Cause due to a Reduction in Force, any Annual Award which has not been earned and vested will be treated as earned and vested based on the assumption the Bank would have achieved the Performance Goals at the Target achievement level for the Performance Period.

		
	iii.
	Notwithstanding the provisions of Section 3.4 and subsection 3.6(a), if a Level II Participant incurs a Termination of Service during a Performance Period due to death, Disability, or by the Bank without Cause due to a Reduction in Force, an Annual Award will be treated as earned and vested based on the assumption the Bank would have achieved the Performance Goals at the Target achievement level for the Performance Period.

		
	(c)
	Termination Due to Other Events.

		
	i.
	Termination of Service for Good Reason. Notwithstanding the provisions of Sections 3.3 and 3.5 and subsection 3.6(a), if a Level I Participant incurs a Termination of Service due to Good Reason, an Annual Award, Deferred Award (including, without limitation, the Deferred Award attributable to the calendar year in which the Termination of Service occurs) or Gap Year Award, as the case may be, will be treated as earned and vested to the extent the Performance Goals for the Performance Period, Deferral Performance Period(s) and/or Gap Year Performance Period are satisfied.

7

		
	ii.
	Termination of Service due to Retirement.

		
	(A)
	Notwithstanding the provisions of Sections 3.3 and 3.5 and subsection 3.6(a), if a Level I Participant incurs a Termination of Service due to Retirement, any Annual Award which has not been earned and vested will be treated as earned and vested to the extent the Performance Goals for the Performance Period are satisfied.  

		
	(B)
	Notwithstanding the provisions of Sections 3.3 and 3.5 and subsection 3.6(a), if a Level I Participant incurs a Termination of Service due to Retirement, any Deferred Award (including, without limitation, the Deferred Award attributable to the calendar year in which the Termination of Service occurs) will be treated as earned and vested to the extent the Performance Goals for each applicable Deferral Performance Period are satisfied.  

		
	(C)
	Notwithstanding the provisions of Sections 3.3 and 3.5 and subsection 3.6(a), if a Level I Participant incurs a Termination of Service due to Retirement, any Gap Year Award which has not been earned and vested, will be treated as earned and vested to the extent the Performance Goals for the Gap Year Performance Period are satisfied. 

		
	iii.
	Notwithstanding the provisions of Section 3.4 and subsection 3.6(a), if a Level II Participant incurs a Termination of Service during a Performance Period due to Retirement, an Annual Award will be treated as earned and vested to the extent the Performance Goals for the Performance Period are satisfied.

		
	(d)
	Definitions.

		
	i.
	"Cause" means (A) continued failure of a Participant to perform his or her duties with the Bank (other than any such failure resulting from Disability), after a written demand for performance is delivered to the Participant, which specifically identifies the manner in which the Participant has not performed his or her duties, (B) personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, intentional failure or omission to perform stated duties, or willful violation of any law, rule or regulation (other than routine traffic violations or similar offenses), or (C) removal of the Participant for cause by the Federal Housing Finance Agency ("FHFA") or at the direction of the FHFA pursuant to 12 U.S.C. 1422b(a)(2), or by any successor agency to the FHFA pursuant to a similar statute.

		
	ii.
	"Disability" means, as a result of the Participant's incapacity due to physical or mental illness, the Participant has been absent from his or her duties with the Bank for an aggregate of 12 out of 15 consecutive months and, within 30 days after a written notice of termination is thereafter given by the Bank to the Participant, the Participant does not return to the full-time performance of the Participant's duties.

8

		
	iii.
	"Good Reason" means a Termination of Service by a Level I Participant under any of the following circumstances:

		
	(A)
	a material change in the Participant's status, position, job title or principal duties and responsibilities as a key employee of the Bank which does not represent a promotion from the Participant's status and position as in effect as of the date hereof ("Position");

		
	(B)
	the assignment to the Participant of any duties or responsibilities (or removal of any duties or responsibilities), which assignment or removal is materially inconsistent with such Position;

		
	(C)
	any removal of the Participant from such Position (including, without limitation, all demotions and harassing assignments), except in connection with the termination of the Participant's employment for Cause or Disability, or as a result of the Participant's death;

		
	(D)
	any material breach by the Bank of any provisions of this Plan or any other agreement with the Participant; or

		
	(E)
	any failure by the Bank or its successors and assigns to obtain the assumption of this Plan by any successor or assign of the Bank.

		
	iv.
	"Reduction in Force" means an involuntary Termination of Service of a Participant by the Bank in connection with a financial decision by the Board to reduce the number of Bank employees, not due to the Participant's performance, and not due to a Reorganization.

		
	v.
	"Retirement" means the Participant's planned and voluntary termination of employment after the Participant has delivered timely advance written notice of intent to retire to the Bank and has either: (A) attained age 60 with five "Years of Service," or (B) attained the "Rule of 85," which means the Participant has attained a combined age and Years of Service that mathematically is equal to or exceeds the number 85. A "Year of Service" will be calculated in the same manner as under the Financial Institutions Thrift Plan. Advance written notice will be deemed timely given if it is given at least four weeks in advance, as to Vice Presidents, First Vice Presidents, Senior Vice Presidents, Executive Vice Presidents, and the Chief Executive Officer, and at least two weeks in advance, as to all other employees.

Effective as of the effective date of the Federal Home Loan Bank of Indianapolis 2009 Incentive Plan (the "2009 LTIP"), the Federal Home Loan Bank of Indianapolis 2010 Incentive Plan (the "2010 LTIP"), and the Federal Home Loan Bank of Indianapolis Long Term Incentive Plan (the "2011 LTIP"), this subsection hereby amends the definition of "Retirement" under the 2009 LTIP, 2010 LTIP and the 2011 LTIP to conform to the definition of Retirement as set forth above, with respect to determining if an employee retired beginning on and after January 1, 2012.

9

		
	vi.
	"Termination of Service" means the occurrence of any act or event or any failure to act, that actually or effectively causes or results in a Participant ceasing, for whatever reason, to be an employee of the Bank, including, but not limited to, death, Disability, Retirement, termination of the Participant's employment by the Bank (whether for Cause or otherwise), termination by the Participant of his or her employment with the Bank for Good Reason and voluntary resignation or termination by the Participant of his or her employment.

Section 3.7    Effect of Reorganization. The following provision applies to Level I Participants only. 

		
	(a)
	Notwithstanding the provisions of Sections 3.3 and 3.6, if a Reorganization of the Bank occurs, then any portion of an Annual Award, Deferred Award (including, without limitation, the Deferred Award attributable to the calendar year in which the Termination of Service occurs), or Gap Year Award which has not otherwise become earned and vested as of the date of the Reorganization will be treated as 100 percent earned and vested effective as of the date of the Reorganization based on the assumption the Bank would have achieved the Performance Goals at the Target achievement level for the Performance Period, the Deferral Performance Period, and/or Gap Year Performance Period.

		
	(b)
	"Reorganization" of the Bank will mean the occurrence at any time of any of the following events:

		
	i.
	The Bank is merged or consolidated with or reorganized into or with another bank or other entity, or another bank or other entity is merged or consolidated into the Bank;

		
	ii.
	The Bank sells or transfers all, or substantially all of its business and/or assets to another bank or other entity;

		
	iii.
	More than 50 percent of the total market value or total voting power of all ownership interests in the Bank is acquired, within any 12-month period, by one person or entity or by more than one person or entity acting as a group; or

		
	iv.
	The liquidation or dissolution of the Bank.

The term "Reorganization" shall not include any Reorganization that is mandated by federal statute, rule, regulation, or directive, including 12 U.S.C. § 1421, et seq., as amended, and 12 U.S.C. § 4501 et seq., as amended, and which the Director of the FHFA (or successor agency) has determined should not be a basis for accelerating vesting under this Plan, by reason of the capital condition of the Bank or because of unsafe or unsound acts, practices, or condition ascertained in the course of the Agency's supervision of the Bank or because any of the conditions identified in 12 U.S.C. § 4617(a)(3) are met with respect to the Bank (which conditions do not result solely from the mandated reorganization itself, or from action that the Agency has required the Bank to take under 12 U.S.C. § 1431(d)).

10

Section 3.8    Payment of Awards.
		
	(a)
	Payments Related to Termination of Service. The following provisions apply to Final Awards payable as a result of a Termination of Service.

		
	i.
	In the event of a Termination of Service due to a termination by the Bank without Cause due to a Reduction in Force, death, or Disability, 100 percent of a Final Award will be paid in a single sum within 75 days of the date of Termination of Service. Notwithstanding the foregoing, in the event of a Reduction in Force, a Participant must execute the severance agreement offered by the Bank in order to be eligible to receive payment.

		
	ii.
	In the event of a Termination of Service due to Retirement or a termination by a Level I Participant for Good Reason, payment of a Final Award will be made in a single sum within 75 days following the end of the Performance Period, Deferral Performance Period or Gap Year Performance Period, as applicable.  

		
	(b)
	Payments Not Related to a Termination of Service. Final Awards which become vested for reasons other than a Termination of Service will be paid in a single sum within 75 days following the end of the Performance Period, Deferral Performance Period or Gap Year Performance Period, as applicable.

		
	(c)
	Notwithstanding the foregoing provisions of this Section, Final Awards will be paid upon approval by the Board and after review of the calculations by the Bank's external auditor. However, in the event of a Reorganization, payment of a Final Award will be made in a single sum on the date on which the Reorganization occurs.

Section 3.9    Reduction or Forfeiture of Awards.

		
	(a)
	If during the Deferral Performance Period actual losses or other measures or aspects of performance related to the Performance Period or Deferral Performance Period are realized which would have caused a reduction in amount of the Final Award calculated for the Performance Period or Deferral Performance Period, then the remaining amount of the Final Award to be paid at the end of the Deferral Performance Period will be reduced to reflect this additional information.

		
	(b)
	Notwithstanding any other provision of the Plan, if a Participant violates a Non-Solicitation Agreement, all of his unpaid vested and unvested Awards will be forfeited effective as of the date the Board determines such violation has occurred and gives written notice to the Participant of such determination. Any future payments for a vested Award will cease and the Bank will have no further obligation to make such payments.

11

		
	(c)
	Notwithstanding any other provision of the Plan, if during the most recent examination of the Bank by the FHFA, the FHFA identified an unsafe or unsound practice or condition that is material to the financial operation of the Bank within the Participant's area(s) of responsibility and such unsafe or unsound practice or condition is not subsequently remediated to the satisfaction of the Board as determined by the Board after reviewing the findings or input from the FHFA, then all (or a portion) of a Participant's vested and unvested Awards will be forfeited as determined by the Board and directed to the participant in writing. Any future payments for a vested Award will, if directed by the Board, cease and the Bank will have no further obligation to make such payments.

		
	(d)
	By resolution, the Board may reduce or eliminate an Award that is otherwise earned under this Plan but not yet paid, if the Board finds that a serious, material safety-soundness problem, or a serious, material risk-management deficiency exists at the Bank, or if: (i) operational errors or omissions result in material revisions to: (A) the financial results, (B) information submitted to the FHFA, or (C) data used to determine incentive payouts; (ii) submission of material information to the SEC, Office of Finance, and/or FHFA is significantly past due, or (iii) the Bank fails to make sufficient progress, as determined by the Board, in the timely remediation of significant examination, monitoring and other supervisory findings.

ARTICLE IV

ADMINISTRATION

Section 4.1    Appointment of the Committee. The Committee, or a duly authorized officer or officers of the Bank empowered by the Committee to act on its behalf under sub-section 4.2(d), will be responsible for administering the Plan, and the Committee will be charged with the full power and the responsibility for administering the Plan in all its details; provided that the power to determine eligibility pursuant to Article II is reserved to the Board.

Section 4.2    Powers and Responsibilities of the Committee. The Committee will have all powers necessary to administer the Plan, including the power to construe and interpret the Plan document; to decide all questions relating to an individual's eligibility to participate in the Plan; to determine the amount, manner and timing of any distribution of benefits under the Plan; to resolve any claim for benefits in accordance with Article V, and to appoint or employ advisors, including legal counsel, to render advice with respect to any of the Committee's responsibilities under the Plan. Any construction, interpretation, or application of the Plan by the Committee will be final, conclusive and binding.

		
	(a)
	Records and Reports. The Committee will be responsible for maintaining sufficient records to determine each Participant's eligibility to participate in the Plan.

		
	(b)
	Rules and Decisions. The Committee may adopt such rules as it deems necessary, desirable, or appropriate in the administration of the Plan. All rules and decisions of the Committee will be applied uniformly and consistently to all Participants in similar circumstances. When making a determination or calculation, the Committee will be entitled to rely upon information furnished by a Participant, the Bank or the legal counsel of the Bank.

12

		
	(c)
	Application for Benefits. The Committee may require a Participant to complete and file with it an application for a benefit, and to furnish all pertinent information requested by it. The Committee may rely upon all such information so furnished to it, including the Participant's current mailing address.

		
	(d)
	Delegation. The Committee may authorize one or more officers or employees of the Bank to perform administrative responsibilities on its behalf under the Plan. Any such duly authorized officer will have all powers necessary to carry out the administrative duties delegated to such officer by the Committee.

Section 4.3    Income and Employment Tax Withholding. The Bank will withhold from payments to Participants of their Awards, to the extent required by law, all applicable federal, state, city and local taxes.

Section 4.4    Plan Expenses. The expenses incurred for the administration and maintenance of the Plan will be paid by the Bank.

ARTICLE V

BENEFIT CLAIMS

If the Committee requires a Participant to file a claim to receive his or her benefit under the Plan, or if he or she wishes to apply for a benefit, the claim must be made in writing and filed with the Committee. If a claim is denied, the Committee will furnish the claimant with written notice of its decision. A claimant may request a full and fair review of the denial of a claim for benefits by filing a written request with the Committee.
ARTICLE VI

AMENDMENT AND TERMINATION OF THE PLAN

Section 6.1    Amendment of the Plan. The Bank, acting through the Board, may amend the Plan at any time in its sole discretion. Notwithstanding the foregoing, the Bank may not amend the Plan to reduce a Participant's Award as determined on the day preceding the effective date of the amendment or to otherwise retroactively impair or adversely affect the rights of a Participant. Any substantive amendment to the Plan shall be submitted to the FHFA for review prior to implementation.

Section 6.2    Termination of the Plan. The Bank, acting through the Board, may terminate the Plan at any time in its sole discretion. Absent an amendment to the contrary, Plan benefits that were earned and vested prior to the termination will be paid at the times and in the manner provided for by the Plan at the time of the termination.

13

ARTICLE VII

MISCELLANEOUS

Section 7.1    Governing Law. Except to the extent superseded by laws of the United States, the laws of Indiana will be controlling in all matters relating to the Plan without regard to the choice of law principles therein. The Plan and all Awards are intended to comply, and will be construed by the Bank in a manner in which they are exempt from or comply with the applicable provisions of Section 409A of the Internal Revenue Code of 1986, as amended (the "Code"). To the extent there is any conflict between a provision of the Plan or an Award and a provision of Code Section 409A, the applicable provision of Code Section 409A will control.

Section 7.2    Headings and Gender. The headings and subheadings in the Plan have been inserted for convenience of reference only and will not affect the construction of the Plan provisions. In any necessary construction, the masculine will include the feminine and the singular the plural, and vice versa. All calculations of events that last a portion of a calendar year or are to be determined pro rata as to a calendar year will be determined by the actual number of days the condition or event existed and assuming a 365-day year.

Section 7.3    Spendthrift Clause. No benefit or interest available under the Plan will be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or attachment by creditors of a Participant, either voluntarily or involuntarily.

Section 7.4    Counterparts. This Plan may be executed in any number of counterparts, each one constituting but one and the same instrument, and may be sufficiently evidenced by any one counterpart.

Section 7.5    No Enlargement of Employment Rights. Nothing contained in the Plan may be construed as a contract of employment between the Bank and any person, nor may the Plan be deemed to give any person the right to be retained in the employ of the Bank or limit the right of the Bank to employ or discharge any person with or without cause.

Section 7.6    Limitations on Liability. The individual members of the Board will, in accordance with the Bank's by-laws, be indemnified and held harmless by the Bank with respect to any alleged breach of responsibilities performed or to be performed hereunder. In addition, notwithstanding any other provision of the Plan, neither the Bank nor any individual acting as an employee or agent of the Bank will be liable to a Participant for any claim, loss, liability or expense incurred in connection with the Plan, except when the same has been affirmatively determined by a court order or by the affirmative and binding determination of an arbitrator, to be due to the gross negligence or willful misconduct of that person.

Section 7.7    Incapacity of Participant. If any person entitled to receive a distribution under the Plan is physically or mentally incapable of personally receiving and giving a valid receipt for any payment due (unless a prior claim for the distribution has been made by a duly qualified guardian or other legal representative), then, unless and until a claim for the distribution has been made by a duly appointed guardian or other legal representative of the person, the Committee may provide for the distribution to be made to any other individual or institution then contributing toward or providing for the care and maintenance of the person. Any payment made for the benefit of the person under this Section will be a payment for the account of such person and a complete discharge of any liability of the Bank and the Plan.

14

Section 7.8    Evidence. Evidence required of anyone under the Plan may be by certificate, affidavit, document or other information which the person relying on the evidence considers pertinent and reliable, and signed, made or presented by the proper party or parties.

Section 7.9    Action by Bank. Any action required of or permitted by the Bank under the Plan will be by resolution of the Board or by a person or persons authorized by resolution of the Board.

Section 7.10    Severability. In the event any provisions of the Plan are held to be illegal or invalid for any reason, the illegality or invalidity will not affect the remaining parts of the Plan, and the Plan will be construed and endorsed as if the illegal or invalid provisions had never been contained in the Plan.

Section 7.11    Information to be Furnished by a Participant. A Participant, or any other person entitled to benefits under the Plan, must furnish the Committee with any and all documents, evidence, data or other information the Committee considers necessary or desirable for the purpose of administering the Plan. Benefit payments under the Plan are conditioned on a Participant (or other person who is entitled to benefits) furnishing full, true and complete data, evidence or other information to the Committee, and on the prompt execution of any document reasonably related to the administration of the Plan requested by the Committee.

Section 7.12    Attorneys' Fees. If any action is commenced to enforce the provisions of the Plan, payment of attorneys' fees will be governed by the terms set forth in the mandatory "Agreement to Arbitrate" entered into between the Bank and the Participant.

Section 7.13    Binding on Successors. The Plan will be binding upon and inure to the benefit of the Bank and its successors and assigns, and the successors, assigns, designees and estates of a Participant. The Plan will also be binding upon and inure to the benefit of any successor organization succeeding to substantially all of the assets and business of the Bank, but nothing in the Plan will preclude the Bank from merging or consolidating into or with, or transferring all or substantially all of its assets to, another organization which assumes the Plan and all obligations of the Bank hereunder. The Bank agrees that it will make appropriate provision for the preservation of a Participant's rights under the Plan in any agreement or plan which it may enter into to effect any merger, consolidation, reorganization or transfer of assets. Upon such a merger, consolidation, reorganization or transfer of assets and assumption of Plan obligations of the Bank, the term "Bank" will refer to such other organization and the Plan will continue in full force and effect.

Section 7.14    Retention of Former Plans. Each of the 2009 LTIP, 2010 LTIP, and 2011 LTIP, as amended herein, are incorporated herein by reference. Each of the 2009 LTIP, 2010 LTIP, and 2011 LTIP, as so amended, shall survive adoption of this Plan according to its respective terms. In addition, Subsection 3.1(c) of the 2011 LTIP is hereby amended, retroactive to January 1, 2011, by adding the following sentence at the end of such subsection:

"If a Participant receives a new position within the Bank which position changes the Participant's Award eligibility, level, or opportunity, each of the Awards for which such Participant is or was eligible during or relating to a calendar year will be prorated to reflect the portion of the calendar year during which the Participant was eligible for each such Award, level, or opportunity based on such new position."

15

2014 PERFORMANCE GOALS AS APPROVED BY THE BOARD OF DIRECTORS:

Pursuant to Section 3.2 of the Federal Home Loan Bank of Indianapolis ("Bank") Incentive Plan, effective as of January 1, 2012, and as amended (the "Plan"), the following Appendices were adopted by the Board of Directors (the "Board") of the Bank on November 22, 2013, after consideration and review by the Human Resources Committee of the Board. These Appendices to the Plan are effective as of January 1, 2014. All capitalized terms not otherwise defined herein shall have the meaning ascribed to them in the Plan.

16

APPENDIX I

2014 PERFORMANCE PERIOD AWARDS FOR LEVEL II PARTICIPANTS
Federal Home Loan Bank of Indianapolis

A.    Incentive Opportunities
	
					
	 
	INCENTIVE DELIVERED IN CASH
AS % OF COMPENSATION (1)

	Position
	Threshold
	Target
	Maximum

	1ST VP
	20%
	25%
	30%

	Calling Officers
	20%
	30%
	40%

	VP
	15%
	20%
	25%

	AVP
	5%
	10%
	15%

	OTHER Employees
	2.5%
	7.5%
	10%

		
	(1) 
	Compensation is defined in Section 3.1 of the Federal Home Loan Bank of Indianapolis Incentive Plan

17

B.    2014 Performance Goals	
							
	MISSION GOALS
	WEIGHTED VALUE
	MINIMUM
 THRESHOLD
	TARGET
	MAXIMUM

	

Bank (12)
	CRM
	

Sales (13)

	1. PROFITABILITY (1)
	25%
	25%
	20%
	250 bp
	485 bp
	600 bp

	 
	 
	 
	 
	 
	 
	 

	2. MEMBER PRODUCTS
	 
	 
	 
	 
	 
	 

	Member Advance Growth (2)
	15%
	15%
	20%
	1%
	2.5%
	7%

	 
	 
	 
	 
	 
	 
	 

	Advance Special Activity (3) 
	10%
	5%
	15%
	4 points
	7 points
	9 points

	 
	 
	 
	 
	 
	 
	 

	MPP Production (4)
	10%
	10%
	10%
	$550 MM
	$780 MM
	$1,500 MM

	 
	 
	 
	 
	 
	 
	 

	MPP Participation Rate (5)
	10%
	10%
	15%
	60%
	75%
	90%

	 
	 
	 
	 
	 
	 
	 

	Community Investment Program Advances
Originated (6)
	5%
	5%
	5%
	$50 MM
	$75 MM
	$100 MM

	 
	 
	 
	 
	 
	 
	 

	3. INFORMATION TECHNOLOGY (7)
	 
	 
	 
	 
	 
	 

	Enhanced MPP Capabilities (8)
	5%
	5%
	5%
	Create MPP Technology Strategy White Paper and hire budgeted MPP technical and business resources.
	Identify roster of potential MPP technology projects and prepare detailed phased implementation plans, to include plans for at least two production deliveries against the detailed phases.
	Achieve Target and release to production at least one of the two planned production deliveries.

	 
	 
	 
	 
	 
	 
	 

	Governance and Implementation (9)
	5%
	5%
	5%
	Update the Project Lifecycle methodology and documentation.
	Achieve Minimum and Executive Management Committee will review assigned priorities for IT projects at least quarterly and provide input to the President-CEO and CIO.
	Achieve Target and a Core Banking Solution module or component is operational and its expenses begin to be amortized under accounting principles generally accepted in the United States.

	4. RISK MANAGEMENT AND REPORTING
	 
	 
	 
	 
	 
	 

	Retained Earnings (10)
	10%
	10%
	3%
	4.8%
	5.0%
	5.2%

	 
	 
	 
	 
	 
	 
	 

	Prudential Management Self-Assessment, Corporate Risk Management Memo, and Operations Risk Management Reports (11)
	5%
	10%
	2%
	2 Prudential Management Self-Assessments, 1 CRM Memo, and 1 ORM Report
	2 Prudential Management Self-Assessments, 2 CRM Memos, and 2 ORM Reports
	2 Prudential Management Self-Assessments with no new deficiencies, 4 CRM Memos, and 3 ORM Reports

18

		
	(1) 
	For purposes of this goal, profitability is defined as the Bank’s profitability rate in excess of the Bank’s cost of funds rate. Profitability is the Bank’s adjusted net income reduced by the portion of net income to be added to restricted retained earnings under the Joint Capital Enhancement Agreement dated August 5, 2011, as amended, by and among the twelve Federal Home Loan Banks and increased by the Bank’s accruals for incentive compensation. Adjusted net income represents GAAP Net Income adjusted: (i) for the net impact of certain current and prior period Advance prepayments and debt extinguishments, net of the AHP assessment, (ii) to exclude mark-to-market adjustments on derivatives and certain other effects from derivatives and hedging activities, net of the AHP assessment, and (iii) to exclude the effects from interest expense on mandatorily redeemable capital stock. The Bank’s profitability rate is profitability, as defined above, as a percentage of average total regulatory capital stock (B1 weighted at 100% and B2 weighted at 80% to reflect the relative weights of the Bank’s dividend). Assumes no material change in investment authority under FHFA’s regulation, policy, directive, guidance, or law. 

		
	(2) 
	Member advances are calculated as the growth in the average daily balance of advances outstanding to members at par. Average daily balances are used instead of point-in-time balances to eliminate point-in-time activity that may occur and to reward for the benefit of the income earned on advances balances while outstanding. Members that become non-members during 2014 will be excluded from the calculation.     

		
	(3) 
	For each Advance Special offering (i.e., each advance offering communicated to members on special terms), one (1) point is earned for an Advance Special offering if at least ten (10) members participate in the offering or an aggregate total of $50 million or more is originated pursuant to the offering.  

		
	(4) 
	Mortgage Purchase Program production, including FHA and conventional, will be the amount of all MDCs traded in 2014. Assumes no capital requirement for MPP. Excludes MPF. It also assumes no material change in MPP authority under FHFA’s regulation, policy, directive, guidance, or law. When calculating achievement between the minimum threshold and the performance maximum, no single member can account for more than 25% of conventional production.  

		
	(5) 
	Mortgage Purchase Program Participation Rate is the measurement of the proportion of approved MPP PFIs that trade mortgage loans each quarter, divided by the total number of approved MPP PFIs at the beginning of that quarter. The number of approved MPP PFIs is determined at the beginning of the quarter. MPP PFIs are automatically dropped from the approved MPP PFI list if the PFI: (a) has not traded with the Bank within 12 months of the later of their approval date or their last trade date; (b) has ceased to be a member; (c) has discontinued participation in MPP in accordance with applicable MPP contracts; or (d) has defaulted under one or more agreements with the Bank. This rate is measured quarterly, with the 4 quarters’ results averaged. 

		
	(6) 
	Newly-originated Community Investment Cash Advances, including CIP and other qualifying Advances and CIP qualified letters of credit, provided in support of targeted projects as defined in 12 C.F.R. Part 1291 and the Federal Home Loan Bank Act. 

		
	(7) 
	Status and reporting on these technology Goals and their attainment will be provided in writing by the Chief Information Officer ("CIO"), Chief Accounting Officer ("CAO"), and Chief Financial Officer ("CFO"), and will be confirmed by the President-CEO. The CIO, CAO, CFO, and the President-CEO will advise the Committee designated in Section 1.3 of the Plan of unanticipated developments that could be anticipated to materially change the Bank’s ability to achieve these Goals. If one or more of these designated positions are open at the time any of the foregoing approvals are required, the Executive Vice President-Chief Operating Officer, Business Operations ("COO") will be substituted.

		
	(8) 
	Production delivery is defined as the implementation in production of software that is identified in the MPP Technology Strategy White Paper and either supports new business capabilities or extends existing business capabilities. This Goal excludes 2012 LRA software initiative which is in testing in November 2013.   

		
	(9) 
	Achievement of these goals will be documented in the Executive Management Committee minutes. This process is intended to give Management the needed discretion and business judgment to reasonably manage the Bank and its IT department. With respect to the Maximum achievement level, the Executive Management Committee will determine whether a module or component of the Core Banking Solution is ready for its intended use, which means all substantial testing has been completed, regardless of whether it will be placed in service in planned stages that may extend beyond a reporting period. At that time, in accordance with accounting principles generally accepted in the United States, amortization of that module or component of the Core Banking Solution shall begin.

		
	(10) 
	Total Retained Earnings divided by mortgage assets, measured at the end of each month. Calculated each month as Total Retained Earnings divided by the sum of the carrying value of the MBS and Acquired Member Asset ("AMA") portfolios. The year-end calculation will be the simple average of 12 month-end calculations.  

19

		
	(11) 
	As per the Board meeting schedule, provide the Board the Corporate Risk Management ("CRM") memo. Operations risk management ("ORM") reports to be provided according to CRM schedule. Prudential Management Self-Assessments are performed twice annually to assess compliance with the FHFA Prudential Management & Operations Standards. "New deficiencies" are Prudential Management & Operations Standards compliance gaps that relate to federal law and regulation as in effect on December 31, 2013, and that were not previously identified through the Bank’s self-assessment process, the operations of its Internal Audit department, or FHFA examinations. The Bank’s General Counsel, with the concurrence of the COO, will determine whether any "new deficiencies" have been found.

		
	(12) 
	For all Level II Participants, excluding those addressed in the CRM and Sales columns, and excluding those in the Internal Audit department.

		
	(13) 
	For VP-Business Development Director, VP Account Managers, AVP Account Managers, other Account Managers, and Market Research officers and Staff, excluding their administrative support staff, who fall under the Bank column for the weighted value determination.

 

20

APPENDIX II

2014 PERFORMANCE PERIOD AWARDS FOR LEVEL I PARTICIPANTS
Federal Home Loan Bank of Indianapolis

A.    Incentive Opportunities
	
										
	 
	 
	 
	 
	50% of Total Incentive Earned & Vested At Year-End
	50% of Total Incentive Deferred for 3-Years

	 
	TOTAL INCENTIVE AS % OF COMPENSATION (1)
	YEAR-END INCENTIVE AS % OF COMPENSATION (1)
	DEFERRED INCENTIVE
AS % OF COMPENSATION (2)

	Position
	Threshold
	Target
	Maximum
	Threshold
	Target
	Maximum
	Threshold
	Target
	Maximum

	CEO
	50%
	75%
	100%
	25%
	37.5%
	50%
	25%
	37.5%
	50%

	EVP/SVP
	30%
	50%
	70%
	15%
	25%
	35%
	15%
	25%
	35%

		
	(1) 
	Compensation is defined in Section 3.1 of the Federal Home Loan Bank of Indianapolis Incentive Plan.

		
	(2) 
	Deferred Awards are subject to additional Performance Goals during the Deferral Performance Period. Depending on the Bank's performance during the Deferral Performance Period, the Final Award will be worth 75 percent at Threshold, 100 percent at Target or 125 percent at Maximum of the original amount of the Deferred Award.

21

B.    2014 Performance Goals
	
						
	MISSION GOALS
	WEIGHTED VALUE
	MINIMUM THRESHOLD
	TARGET
	MAXIMUM

	Bank (12)
	CRM

	1. PROFITABILITY (1)
	25%
	25%
	250 bp
	485 bp
	600 bp

	 
	 
	 
	 
	 
	 

	2. MEMBER PRODUCTS
	 
	 
	 
	 
	 

	Member Advance Growth (2)
	15%
	15%
	1%
	2.5%
	7%

	 
	 
	 
	 
	 
	 

	Advance Special Activity (3)
	10%
	5%
	4 points
	7 points
	9 points

	 
	 
	 
	 
	 
	 

	MPP Production (4)
	10%
	10%
	$550 MM
	$780 MM
	$1,500 MM

	 
	 
	 
	 
	 
	 

	MPP Participation Rate (5)
	10%
	10%
	60%
	75%
	90%

	 
	 
	 
	 
	 
	 

	Community Investment Program Advances Originated (6)
	5%
	5%
	$50 MM
	$75 MM
	$100 MM

	 
	 
	 
	 
	 
	 

	3. INFORMATION TECHNOLOGY (7)
	 
	 
	 
	 
	 

	Enhanced MPP Capabilities (8)
	5%
	5%
	Create MPP Technology Strategy White Paper and hire budgeted MPP technical and business resources.
	Identify roster of potential MPP technology projects and prepare detailed phased implementation plans, to include plans for at least two production deliveries against the detailed phases.
	Achieve Target and release to production at least one of the two planned production deliveries.

	 
	 
	 
	 
	 
	 

	Governance and Implementation (9)
	5%
	5%
	Update the Project Lifecycle methodology and documentation.
	Achieve Minimum and Executive Management Committee will review assigned priorities for IT projects at least quarterly and provide input to the President-CEO and CIO.
	Achieve Target and a Core Banking Solution module or component is operational and its expenses begin to be amortized under accounting principles generally accepted in the United States.

	4. RISK MANAGEMENT AND REPORTING
	 
	 
	 
	 
	 

	Retained Earnings (10)
	10%
	10%
	4.8%
	5.0%
	5.2%

	Prudential Management Self-Assessment, Corporate Risk Management Memo, and Operations Risk Management Reports (11)
	5%
	10%
	2 Prudential Management Self-Assessments, 1 CRM Memo, and 1 ORM Report
	2 Prudential Management Self-Assessments, 2 CRM Memos, and 2 ORM Reports
	2 Prudential Management Self-Assessments with no new deficiencies, 4 CRM Memos, and 3 ORM Reports

22

		
	(1) 
	For purposes of this goal, profitability is defined as the Bank’s profitability rate in excess of the Bank’s cost of funds rate. Profitability is the Bank’s adjusted net income reduced by the portion of net income to be added to restricted retained earnings under the Joint Capital Enhancement Agreement dated August 5, 2011, as amended, by and among the twelve Federal Home Loan Banks and increased by the Bank’s accruals for incentive compensation. Adjusted net income represents GAAP Net Income adjusted: (i) for the net impact of certain current and prior period Advance prepayments and debt extinguishments, net of the AHP assessment, (ii) to exclude mark-to-market adjustments on derivatives and certain other effects from derivatives and hedging activities, net of the AHP assessment, and (iii) to exclude the effects from interest expense on mandatorily redeemable capital stock. The Bank’s profitability rate is profitability, as defined above, as a percentage of average total regulatory capital stock (B1 weighted at 100% and B2 weighted at 80% to reflect the relative weights of the Bank’s dividend). Assumes no material change in investment authority under FHFA’s regulation, policy, directive, guidance, or law.   

		
	(2) 
	Member advances are calculated as the growth in the average daily balance of advances outstanding to members at par. Average daily balances are used instead of point-in-time balances to eliminate point-in-time activity that may occur and to reward for the benefit of the income earned on advances balances while outstanding. Members that become non-members during 2014 will be excluded from the calculation.     

		
	(3) 
	For each Advance Special offering (i.e., each advance offering communicated to members on special terms), one (1) point is earned for an Advance Special offering if at least ten (10) members participate in the offering or an aggregate total of $50 million or more is originated pursuant to the offering.  

		
	(4) 
	Mortgage Purchase Program production, including FHA and conventional, will be the amount of all MDCs traded in 2014. Assumes no capital requirement for MPP. Excludes MPF. It also assumes no material change in MPP authority under FHFA’s regulation, policy, directive, guidance, or law. When calculating achievement between the minimum threshold and the performance maximum, no single member can account for more than 25% of conventional production.  

		
	(5) 
	Mortgage Purchase Program Participation Rate is the measurement of the proportion of approved MPP PFIs that trade mortgage loans each quarter, divided by the total number of approved MPP PFIs at the beginning of that quarter. The number of approved MPP PFIs is determined at the beginning of the quarter. MPP PFIs are automatically dropped from the approved MPP PFI list if the PFI: (a) has not traded with the Bank within 12 months of the later of their approval date or their last trade date; (b) has ceased to be a member; (c) has discontinued participation in MPP in accordance with applicable MPP contracts; or (d) has defaulted under one or more agreements with the Bank. This rate is measured quarterly, with the 4 quarters’ results averaged.  

		
	(6) 
	Newly-originated Community Investment Cash Advances, including CIP and other qualifying Advances and CIP qualified letters of credit, provided in support of targeted projects as defined in 12 C.F.R. Part 1291 and the Federal Home Loan Bank Act.  

		
	(7) 
	Status and reporting on these technology Goals and their attainment will be provided in writing by the CIO, CAO, and CFO, and will be confirmed by the President-CEO. The CIO, CAO, CFO, and the President-CEO will advise the Committee designated in Section 1.3 of the Plan of unanticipated developments that could be anticipated to materially change the Bank’s ability to achieve these Goals. If one or more of these designated positions are open at the time any of the foregoing approvals are required, the COO will be substituted.

		
	(8) 
	Production delivery is defined as the implementation in production of software that is identified in the MPP Technology Strategy White Paper and either supports new business capabilities or extends existing business capabilities. This Goal excludes 2012 LRA software initiative which is in testing in November 2013.   

		
	(9) 
	Achievement of these goals will be documented in the Executive Management Committee minutes. This process is intended to give Management the needed discretion and business judgment to reasonably manage the Bank and its IT department. With respect to the Maximum achievement level, the Executive Management Committee will determine whether a module or component of the Core Banking Solution is ready for its intended use, which means all substantial testing has been completed, regardless of whether it will be placed in service in planned stages that may extend beyond a reporting period. At that time, in accordance with accounting principles generally accepted in the United States, amortization of that module or component of the Core Banking Solution shall begin.

		
	(10) 
	Total Retained Earnings divided by mortgage assets, measured at the end of each month. Calculated each month as Total Retained Earnings divided by the sum of the carrying value of the MBS and Acquired Member Asset ("AMA") portfolios. The year-end calculation will be the simple average of 12 month-end calculations.  

		
	(11) 
	As per the Board meeting schedule, provide the Board the CRM memo. ORM reports to be provided according to CRM schedule. Prudential Management Self-Assessments are performed twice annually to assess compliance with the FHFA Prudential Management & Operations Standards. "New deficiencies" are Prudential Management & Operations Standards compliance gaps that relate to federal law and regulation as in effect on December 31, 2013, and that were not previously identified through the Bank’s self-assessment process, the operations of its Internal Audit department, or FHFA examinations. The Bank’s General Counsel, with the concurrence of the COO, will determine whether any "new deficiencies" have been found.

		
	(12) 
	For Level I Participants other than those in CRM and Internal Audit.

23

C.    2015-2017 Performance Goals
	
						
	MISSION GOALS
	WEIGHTED VALUE
	MINIMUM THRESHOLD (4)
	TARGET (4)
	MAXIMUM (4)

	Bank (3)
	CRM

	1. PROFITABILITY (1)
	35%
	35%
	25 bp
	50 bp
	150 bp

	 
	 
	 
	 
	 
	 

	2. RETAINED EARNINGS (2)
	35%
	35%
	3.5%
	3.9%
	4.3%

	 
	 
	 
	 
	 
	 

	3. PRUDENTIAL
	30%
	30%
	Achieve 2 Prudential Standards
	—
	Achieve all 3 Prudential Standards

	Maintain a regulatory capital-to-assets ratio of at least 4.16% as measured on each quarter-end in 2015 through 2017.
	 
	 
	 
	 
	 

	Without Board pre-approval, do not purchase more than $2.5 billion of conventional AMA assets per plan year.
	 
	 
	 
	 
	 

	Award to FHLBI members the annual AHP funding requirement in each plan year.
	 
	 
	 
	 
	 

		
	(1) 
	For purposes of this goal, profitability is defined as the Bank’s profitability rate in excess of the Bank’s cost of funds rate. Profitability is the Bank’s adjusted net income reduced by the portion of net income to be added to restricted retained earnings under the Joint Capital Enhancement Agreement dated August 5, 2011, as amended, by and among the twelve Federal Home Loan Banks and increased by the Bank’s accruals for incentive compensation. Adjusted net income represents GAAP Net Income adjusted: (i) for the net impact of certain current and prior period Advance prepayments and debt extinguishments, net of the AHP assessment, (ii) to exclude mark-to-market adjustments on derivatives and certain other effects from derivatives and hedging activities, net of the AHP assessment, and (iii) to exclude the effects from interest expense on mandatorily redeemable capital stock. The Bank’s profitability rate is profitability, as defined above, as a percentage of average total regulatory capital stock (B1 weighted at 100% and B2 weighted at 80% to reflect the relative weights of the Bank’s dividend). Assumes no material change in investment authority under FHFA’s regulation, policy, directive, guidance, or law.  

		
	(2) 
	Total Retained Earnings divided by mortgage assets, measured at the end of each month. Calculated each month as Total Retained Earnings divided by the sum of the carrying value of the MBS and AMA assets portfolios. The calculation will be the simple average of 36 month-end calculations.  

		
	(3) 
	For Level I Participants other than those in CRM and Internal Audit.

		
	(4) 
	Deferred Awards are subject to additional Performance Goals for the Deferral Performance Period. Depending on the Bank’s performance during the Deferral Performance Period, the Final Award will be worth 75 percent at Threshold, 100 percent at Target or 125 percent at Maximum of the original amount. 

24

APPENDIX III

ANNUAL AWARD TARGETS FOR 2010 AND 2011 LONG TERM INCENTIVE PLANS
Federal Home Loan Bank of Indianapolis 

A.    Calendar Year 2012 for the 2010 LTIP and 2011 LTIP
For purposes of calculating Final Awards(1) for the 2010 LTIP and 2011 LTIP for eligible Participants(1), with respect to the portion of the Performance Period(1) measured as to calendar year 2012, the following table shall be used to determine the annual achievement average, which shall in turn be multiplied by the Participant's 2010 base salary for the 2010 LTIP benefit calculation, and by the Participant's 2011 base salary for the 2011 LTIP benefit calculation. These calculations are used for purposes of determining the three-year achievement average percentage pursuant to the terms of the 2010 LTIP and the 2011 LTIP.

		
	(1) 
	As such terms are defined in the 2010 LTIP and 2011 LTIP, respectively.

	
						
	2012 MISSION GOALS
	WEIGHTED VALUE
	MINIMUM THRESHOLD
(60%)
	

TARGET
(80%)
	

MAXIMUM
(100%)

	Bank (3)
	CRM

	1. PROFITABILITY (1)
	50%
	50%
	100 bp
	266 bp
	300 bp

	 
	 
	 
	 
	 
	 

	2. RETAINED EARNINGS (2)
	50%
	50%
	3.5%
	3.75%
	3.9%

		
	(1) 
	Profitability, for purposes of this goal, is defined as the potential dividend rate in excess of the Bank's cost of funds rate. The potential dividend rate is the Bank's adjusted net income rate. Adjusted net income is defined as GAAP net income: (i) adjusted for the effects of current and prior period Advance prepayments and debt extinguishments, (ii) adjusted for the effects of any mark-to-market adjustments and certain other effects from derivatives and hedging activities under SFAS 133, (iii) increased by the interest expense under SFAS 150, and (iv) reduced by the portion of net income to be added to restricted retained earnings under the Joint Capital Enhancement Agreement, as amended, dated August 5, 2011, by and among the twelve Federal Home Loan Banks (the "JCEA"). The Bank's adjusted net income rate is the adjusted net income, as defined above, as a percentage of average total regulatory capital stock. Assumes no material change in investment authority under FHFA's regulation, policy or law.

		
	(2) 
	Total Retained Earnings divided by mortgage assets. Calculated each month as Total Retained Earnings divided by the sum of the carrying value of the MBS and AMA portfolios. The year-end calculation will be the simple average of 12 month-end calculations.

		
	(3) 
	For Level I Participants other than those in CRM and Internal Audit.

25

B.    Calendar Year 2013 for the 2011 LTIP
For purposes of calculating Final Awards under the 2011 LTIP for eligible Participants, with respect to the portion of the Performance Period measured as to calendar year 2013, the following preliminary table shall be used to determine the annual achievement average, which shall in turn be multiplied by the Participant's 2011 base salary for the 2011 LTIP benefit calculation. These preliminary calculations are used for purposes of determining the three-year achievement average percentage pursuant to the 2011 LTIP. The Board may review and revise this table at any time. If the Board does not revise this table, the preliminary figures shall be deemed to be final.

	
						
	2013 MISSION GOALS
	WEIGHTED VALUE
	MINIMUM THRESHOLD
(60%)
	

TARGET
(80%)
	

MAXIMUM
(100%)

	Bank (3)
	CRM

	1. PROFITABILITY (1)
	50%
	50%
	100 bp
	266 bp
	300 bp

	 
	 
	 
	 
	 
	 

	2. RETAINED EARNINGS (2)
	50%
	50%
	3.5%
	3.75%
	3.9%

		
	(1) 
	For purposes of this goal, profitability is defined as the Bank’s profitability rate in excess of the Bank’s cost of funds rate. Profitability is the Bank’s adjusted net income reduced by the portion of net income to be added to restricted retained earnings under the Joint Capital Enhancement Agreement dated August 5, 2011, as amended, by and among the twelve Federal Home Loan Banks and increased by the Bank’s accruals for incentive compensation. Adjusted net income represents GAAP Net Income adjusted: (i) for the net impact of certain current and prior period Advance prepayments and debt extinguishments, net of the AHP assessment, (ii) to exclude mark-to-market adjustments on derivatives and certain other effects from derivatives and hedging activities, net of the AHP assessment, and (iii) to exclude the effects from interest expense on mandatorily redeemable capital stock. The Bank’s profitability rate is profitability, as defined above, as a percentage of average total regulatory capital stock (B1 weighted at 100% and B2 weighted at 80% to reflect the relative weights of the Bank’s dividend). Assumes no material change in investment authority under FHFA’s regulation, policy, directive, guidance, or law.  

		
	(2) 
	Total Retained Earnings divided by mortgage assets, measured at the end of each month. Calculated each month as Total Retained Earnings divided by the sum of the carrying value of the MBS and AMA asset portfolios. The year-end calculation will be the simple average of the 12 month-end calculations.

		
	(3) 
	For Level I Participants other than those in CRM and Internal Audit. 

26

APPENDIX IV

AWARDS ADDRESSING 2015 GAP YEAR FOR LEVEL I PARTICIPANTS
Federal Home Loan Bank of Indianapolis 

A.    Incentive Opportunities
	
		
	 
	LONG-TERM INCENTIVE % OF ACTUAL 2011 SHORT-TERM YEAR-END INCENTIVE PAID IN 2012

	Position
	Award Factor

	CEO
	60%

	EVP/SVP
	67%

B.    2012-2014 Performance Plan Goals for Gap Calculation

	
						
	MISSION GOALS
	WEIGHTED VALUE
	MINIMUM THRESHOLD (4)
	TARGET (4)
	MAXIMUM (4)

	Bank (3)
	CRM

	1. PROFITABILITY (1)
	35%
	35%
	25 bp
	50 bp
	150 bp

	 
	 
	 
	 
	 
	 

	2. Retained Earnings (2)
	35%
	35%
	3.5%
	3.9%
	4.3%

	 
	 
	 
	 
	 
	 

	3. PRUDENTIAL
	30%
	30%
	Achieve 2 Prudential Standards
	—
	Achieve all 3 Prudential Standards

	Maintain a regulatory capital-to-assets ratio of at least 4.16% as measured on each quarter-end in 2012 through 2014. 
	 
	 
	 
	 
	 

	Without Board pre-approval, do not purchase more than $2.5 billion of conventional AMA assets per plan year.
	 
	 
	 
	 
	 

	Award to FHLBI members the annual AHP funding requirement in each plan year.
	 
	 
	 
	 
	 

		
	(1) 
	For purposes of this goal, profitability is defined as the Bank’s profitability rate in excess of the Bank’s cost of funds rate. Profitability is the Bank’s adjusted net income reduced by the portion of net income to be added to restricted retained earnings under the Joint Capital Enhancement Agreement dated August 5, 2011, as amended, by and among the twelve Federal Home Loan Banks and increased by the Bank’s accruals for incentive compensation. Adjusted net income represents GAAP Net Income adjusted: (i) for the net impact of certain current and prior period Advance prepayments and debt extinguishments, net of the AHP assessment, (ii) to exclude mark-to-market adjustments on derivatives and certain other effects from derivatives and hedging activities, net of the AHP assessment, and (iii) to exclude the effects from interest expense on mandatorily redeemable capital stock. The Bank’s profitability rate is profitability, as defined above, as a percentage of average total regulatory capital stock (B1 weighted at 100% and B2 weighted at 80% to reflect the relative weights of the Bank’s dividend). Assumes no material change in investment authority under FHFA’s regulation, policy, directive, guidance, or law.  

		
	(2) 
	Total Retained Earnings divided by mortgage assets, measured at the end of each month. Calculated each month as Total Retained Earnings divided by the sum of the carrying value of the MBS and AMA asset portfolios. The calculation will be the simple average of 36 month-end calculations.

		
	(3) 
	For Level I Participants other than those in CRM and Internal Audit.

		
	(4) 
	Gap Year Awards are subject to additional Performance Goals for the Gap Year Performance Period. Depending on the Bank’s performance during the Gap Year Performance Period, the Final Award will be worth 75 percent at Threshold, 100 percent at Target or 125 percent at Maximum of the original amount.

27

APPENDIX V

FORM OF NON-SOLICITATION AND NON-DISCLOSURE AGREEMENT

This Agreement is entered into as of the ____ day of _____________, 201_, by and between the FEDERAL HOME LOAN BANK OF INDIANAPOLIS, a corporation organized under the laws of the United States (the "Bank") and ____________________ (the "Executive").
WHEREAS, the Bank sponsors the Federal Home Loan Bank of Indianapolis Incentive Plan (the "Plan"); and
WHEREAS, as a condition of participation in the Plan, the Bank requires that the Executive agree to the terms and conditions found within this Agreement;
NOW, THEREFORE, in consideration of the premises and of the mutual promises and agreements contained herein and other good and valuable consideration, the receipt, legal adequacy and sufficiency of which are hereby acknowledged, the parties agree as follows:

1.    Non-Disclosure; Return of Confidential Information and Other Property.

		
	(a)
	Access to Confidential Information. The Executive understands, acknowledges and agrees that during the course of his or her employment with the Bank he or she has gained or will gain information regarding, knowledge of, and familiarity with, the Confidential Information of the Bank (as defined in subsection (c)) that would cause irreparable damage and harm to the Bank if it was disclosed. The Executive understands, acknowledges and agrees that the Confidential Information has substantial economic value because it is not known or readily ascertainable by proper means by others who could obtain economic value from it. The Executive also acknowledges and agrees that the Bank uses reasonable means to maintain the secrecy and confidentiality of the Confidential Information.

		
	(b)
	Non-Disclosure. At all times while the Executive is employed by the Bank, and at all times thereafter, the Executive will not (i) directly or indirectly disclose, provide or discuss any Confidential Information with or to any Person (as defined in subsection (d)) other than those directors, officers, employees, representatives and agents of the Bank who need to know such Confidential Information for a proper corporate purpose, and (ii) directly or indirectly use any Confidential Information (A) to compete against the Bank, or (B) for the Executive's own benefit, or for the benefit of any Person other than the Bank.

28

		
	(c)
	Confidential Information Defined. For purposes of this Agreement, the term "Confidential Information" means any and all:

		
	(i)
	materials, records, data, documents, lists, writings and information (in each case, whether in writing, printed, verbal, electronic, computerized or otherwise) (A) relating or referring in any manner to the business, operations, affairs, financial condition, results of operation, cash flow, assets, liabilities, sales, revenues, income, estimates, projections, policies, strategies, techniques, methods, products, developments, suppliers, regulators, members, relationships and/or customers of the Bank that are confidential, proprietary or not otherwise publicly available, in any event not without a breach of this Agreement, or (B) that the Bank has deemed confidential, proprietary, nonpublic or not otherwise publicly available without breaching this Agreement;

		
	(ii)
	trade secrets of the Bank, as defined in Indiana Code Section 24-2-3-2, as amended, or any successor statute; and

		
	(iii)
	any and all copies, summaries, analyses and extracts which relate or refer to or reflect any of the items set forth in (i) or (ii) above. The Executive agrees that all Confidential Information is confidential and is and at all times will remain the property of the Bank.

		
	(d)
	Person Defined. For purposes of this Agreement, the term "Person" will mean any natural person, proprietorship, partnership, corporation, limited liability company, bank, organization, firm, business, joint venture, association, trust or other entity and any government agency, body or authority.

		
	(e)
	Return of Confidential Information and Other Property. The Executive covenants and agrees:

		
	(i)
	to keep all Confidential Information subject to the Bank's custody and control and to promptly return to the Bank all Confidential Information that is still in the Executive's possession or control at the termination of the Executive's employment with the Bank; and

		
	(ii)
	promptly upon termination of the Executive's employment with the Bank, to return to the Bank, at the Bank's principal office, all vehicles, equipment, computers, credit cards and other property of the Bank and to cease using any of the foregoing.

		
	(f)
	Exceptions from Confidentiality Obligations. Section 1 shall not be deemed to prevent the Executive from making disclosures required by applicable regulation, law, agency order, or court order, to the extent the Executive provides reasonable written notice of such disclosure requirement to the Bank prior to such disclosure, to the extent such prior notice is not prohibited, to permit the Bank to contest the disclosure of such information.

    

29

2.    Non-Disparagement. The Executive agrees to not communicate disparaging remarks to third parties about the Bank, its directors, officers or employees. Likewise, the Bank agrees not to disparage the Executive or his or her skills or job performance to third parties. However, nothing in this paragraph shall prohibit the Bank or the Executive from testifying truthfully under oath.

3.    Non-Solicitation and No-Hire. The Executive hereby understands, acknowledges and agrees that, by virtue of his or her position with the Bank, the Executive has and will have advantageous familiarity and personal contacts with the employees of the Bank and has and will have advantageous familiarity with the business, operations and affairs of the Bank. In addition, the Executive understands, acknowledges and agrees that the business of the Bank is highly competitive. Accordingly, at all times while the Executive is employed by the Bank and for a twelve-month period following Termination of Service, the Executive will not, directly or indirectly, or individually or together with any other Person, as owner, shareholder, investor, member, partner, proprietor, principal, director, officer, Executive, manager, agent, representative, independent contractor, consultant or otherwise induce, request or attempt to influence any Bank employee who was employed by the Bank during the twelve-month period prior to Termination of Service, to terminate his or her employment with the Bank. In addition, the Executive agrees that for a period of twelve months following the Executive's Termination of Service, Executive will not hire any Bank employee who was employed by the Bank during the twelve-month period prior to the Executive's Termination of Service.

4.    Periods of Noncompliance and Reasonableness of Periods. The restrictions and covenants contained in Section 3 will not run during all periods of noncompliance and will apply during the Term of this Agreement and for the full periods specified in Section 3. The Bank and the Executive understand, acknowledge and agree that the restrictions and covenants contained in Section 3 are reasonable in view of the nature of the business in which the Bank is engaged, the Executive's position with the Bank and the Executive's advantageous knowledge and familiarity with, the Bank's employees, business, operations, affairs and customers.
The Bank's obligation to pay an award to the Executive pursuant to the Federal Home Loan Bank of Indianapolis Incentive Plan will immediately terminate in the event the Executive breaches any of the provisions of Section 1 or 3 and all outstanding awards will be forfeited. Notwithstanding the foregoing:
		
	(a)
	the Executive's covenants set forth in Sections 1 or 3 will continue in full force and effect and be binding upon the Executive;

		
	(b)
	the Bank will be entitled to the remedies specified in Section 6; and

		
	(c)
	the Bank will be entitled to its damages, costs and expenses (including, without limitation, reasonable attorneys' fees and expenses) resulting from or relating to the successful prosecution of the Executive's breach of any of the provisions of Section 1 or 3.

5.    Survival of Certain Provisions. Upon any termination of the Executive's employment with the Bank, the Executive and the Bank hereby expressly agree that the provisions of Sections 1, 3, 4 and 6 will continue to be in full force and effect and binding upon the Executive and the Bank in accordance with the applicable respective provisions of such Sections.

    

30

6.    Remedies. The Executive agrees that the Bank will suffer irreparable damage and injury and will not have an adequate remedy at law in the event of any actual, threatened or attempted breach by the Executive of any provision of Section 1 or 3. Accordingly, in the event of a threatened, attempted or actual breach by the Executive of any provision of Section 1 or 3, in addition to all other remedies to which the Bank is entitled at law, in equity or otherwise, the Bank may be entitled to a temporary restraining order and a permanent injunction or a decree of specific performance of any provision of Section 1 or 3. The foregoing remedies will not be deemed to be the exclusive rights or remedies of the Bank for any breach of or noncompliance with this Agreement by the Executive but will be in addition to all other rights and remedies available to the Bank at law, in equity or otherwise.

7.    Severability. In case any one or more of the provisions (or any portion thereof) contained herein will, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability will not affect any other provision of this Agreement, but this Agreement will be construed as if such invalid, illegal or unenforceable provision or provisions (or portion thereof) had never been contained herein. If any provision of this Agreement will be determined by a court of competent jurisdiction to be unenforceable because of the provision's scope, duration or other factor, then such provision will be considered divisible and the court making such determination will have the power to reduce or limit (but not increase or make greater) such scope, duration or other factor or to reform (but not increase or make greater) such provision to make it enforceable to the maximum extent permitted by law, and such provision will then be enforceable against the appropriate party hereto in its reformed, reduced or limited form; provided, however, that a provision will be enforceable in its reformed, reduced or limited form only in the particular jurisdiction in which a court of competent jurisdiction makes such determination.

8.    Entire Agreement. This Agreement sets forth the entire understanding of the parties hereto with respect to its subject matter, merges and supersedes all prior and contemporaneous understandings with respect to its subject matter, and may not be waived or modified, in whole or in part, except in writing signed by each of the parties hereto. No waiver of any provision of this Agreement in any instance will be deemed to be a waiver of the same or any other provision in any other instance. The recitals set forth above are incorporated herein by this reference.

9.    Effect and Modification. No statement or promise, except as set forth herein, has been made with respect to the subject matter of this Agreement. No modification or amendment will be effective unless in writing and signed by the Executive and an officer of the Bank (other than the Executive).

10.    Non-Waiver. The Bank's or the Executive's failure or refusal to enforce all or any part of, or the Bank's or the Executive's waiver of any breach of this Agreement, will not be a waiver of the Bank's or the Executive's continuing or subsequent rights under this Agreement, nor will such failure or refusal or waiver have any effect on the subsequent enforceability of this Agreement.

11.    Non-Assignability. This Agreement contemplates that the Executive will personally provide the services described herein, and accordingly, the Executive may not assign the Executive's rights or obligations hereunder, whether by operation of law or otherwise, in whole or in part, without the prior written consent of the Bank.

    

31

12.    Notice. Any notice, request, instruction or other document to be given hereunder to any party will be in writing and delivered by hand, telegram, registered or certified United States mail return receipt requested, or other form of receipted delivery, with all expenses of delivery prepaid, as follows:

If to the Executive:        _________________________
_________________________
_________________________
_________________________
If to the Bank:         Federal Home Loan Bank of Indianapolis
c/o General Counsel
8250 Woodfield Crossing Blvd.
Suite 400
Indianapolis, IN 46240
13.    Governing Law. This Agreement is being delivered in and will be governed by the laws of the State of Indiana without regard to the choice of law principles thereof. Any dispute regarding this Agreement will be brought in any Indiana state or federal court having jurisdiction in the matter and located in Marion County, Indiana, and the Executive expressly consents to the jurisdiction of such courts.

14.    Prior Agreements. The Executive represents and warrants to the Bank that the Executive is not a party to or otherwise bound by any agreement that would restrict in any way the performance by the Executive of the Executive's duties, services and obligations under this Agreement, that the Executive has disclosed to the Bank all employment type agreements to which the Executive has been bound, including without limitation employment agreements, consulting agreements, non-compete agreements or covenants, confidentiality or non-disclosure agreements or covenants, and intellectual property assignment agreements, and that the Bank will not have any liability to any third party arising out of the Executive entering into this Agreement or performing hereunder.

15.    Effect of Headings. The descriptive headings of the Sections and, where applicable, subsections, of this Agreement are inserted for convenience and identification only and do not constitute a part of this Agreement for purposes of interpretation.

16.    Counterparts. This Agreement may be executed in two or more counterparts, each of which will be deemed an original, but all of which collectively will constitute one and the same instrument.

17.    Miscellaneous. Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Plan.

32

IN WITNESS WHEREOF, the Bank, by its officer thereunder duly authorized, and the Executive, have caused this Non-Competition, Non-Solicitation and Non-Disclosure Agreement to be executed as of the day and year first above written.
FEDERAL HOME LOAN BANK
OF INDIANAPOLIS                EXECUTIVE
By: __________________________        _____________________________________            
Its:  __________________________    

By:  __________________________        
Its:  __________________________        

33

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