Document:

Amendmen to Offer Letter and Severance Agreement

 Exhibit 10.1 
 METABASIS THERAPEUTICS, INC. 
 AMENDMENT TO OFFER
LETTER AND SEVERANCE AGREEMENT 
 This Amendment to Offer Letter and Severance Agreement (the
“Amendment”) is hereby entered into by and between Tran Nguyen (“Employee”) and Metabasis Therapeutics, Inc., a Delaware corporation (the “Company”) (each a
“Party” and together, the “Parties”) effective as of October 12, 2009 (the “Effective Date”), and amends the Offer Letter dated February 17, 2009 between the Parties (the
“Offer Letter”) and the Amended and Restated Severance Agreement between the Parties dated March 20, 2009 (the “Severance Agreement”). 
 WHEREAS, the Parties wish to amend the Offer Letter and the Severance Agreement, as set forth below.

 NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, it is hereby agreed by and between the Parties hereto as follows: 
 AGREEMENT 
 The Parties, intending to be legally bound, agree as follows
effective as of the Effective Date: 
 1. Amendment of Offer Letter. The first full paragraph on page 2 of the Offer
Letter is hereby amended and restated in its entirety to read as follows: 
 “We have budgeted $25,000 for your relocation
expenses to san Diego. You will also be eligible for reimbursement for (A) the costs of corporate housing and weekly trips between San Francisco and San Diego for either yourself or your wife (the “Reimbursements”), each
until further notice by the Compensation committee of the Company’s Board of Directors and (B) normal and customary closing costs (up to 2% of the new mortgage amount) on a new home purchase. On or after October 6, 2009, we will also
pay you an additional payment (a “Gross-Up Payment”) in an amount such that after the payment of all taxes on the Reimbursements accrued on and after October 6, 2009 and any Gross-Up Payment, you shall retain an amount
equal to such Reimbursements. 
 2. Amendment of Severance Agreement. Section 7(b) of the Severance Agreement is
hereby amended and restated in its entirety to read as follows: 
 “(b) The Employee’s target bonus
for the year in which the termination of his employment with the Company is effective.” 
 3. Miscellaneous Provisions.

 3.1 Original Agreements. The Offer Letter and the Severance Agreement, as amended by this Amendment, shall continue
in full force and effect after the date hereof. 

 3.2 Whole Agreement. No agreements, representations or understandings (whether oral
or written and whether express or implied) which are not expressly set forth in the Offer Letter or Severance Agreement, as amended by this Amendment, have been made or entered into by either party with respect to the subject matter of this
Amendment. 
 3.3 Counterparts; Facsimile. This Amendment may be executed in separate counterparts, any one of which need
not contain signatures of more than one party, but all of which taken together will constitute one and the same Amendment. Facsimile signatures shall have the same effect as original signatures. 
 3.4 Headings. The headings of the sections hereof are inserted for convenience only and shall not be deemed to constitute a part
hereof nor to affect the meaning thereof. 
 3.5 Choice of Law. All questions concerning the construction, validity and
interpretation of this Amendment will be governed by the law of the State of California. 
 IN
WITNESS WHEREOF, each of the Parties has executed this Amendment, in the case of the Company by its duly authorized representative, effective as of the Effective Date. 
  

			
	COMPANY:
	
	METABASIS THERAPEUTICS, INC.
		
	By:	 	 /s/    Mark D. Erion

		 	Mark D. Erion, Ph.D.,
		 	President, CEO, and CSO
	
	EMPLOYEE:
	
	 /s/    Tran B. Nguyen

	Tran Nguyen2009 Executive Incentive Plan

 EXHIBIT 10.1 
 FHLBank San Francisco 
 2009 EXECUTIVE INCENTIVE PLAN

 PLAN PURPOSE 
 To optimize individual and Bank performance in accomplishing Board-approved goals and objectives. 
 PLAN OBJECTIVES

 To motivate Bank executives to exceed individual and Bank goals that support the business plan and long-term strategic plan. To
attract and retain outstanding executives by providing a competitive total compensation program, including an annual incentive award opportunity. 
 ELIGIBILITY 
 Participants are Bank executives whose performance has a major impact on the Bank’s success.
The 2009 participants are the incumbents in the Bank’s executive officer positions, including: 
 Executive Vice President

 Senior Vice President (excluding the Senior Vice President, Enterprise Risk Management & Director of Internal Audit –
participates in the Audit Executive Incentive Plan) 
 Participants must be employed by the Bank through
December 31st to be eligible for an incentive award
under the 2009 plan. Participants hired, promoted, or who have a leave of absence during the plan year are eligible to participate on a pro-rata basis. Participants hired or promoted on or after October 1st will not be eligible to participate during the current plan year.

 INCENTIVE GOALS AND MEASURES 
 Incentive Goals 
 For each participant there are individual goals and Bank
goals, which are weighted for each participant. The individual goals support the Bank-wide goals and objectives. 
 The four Bank goals for 2009
are: 
  

	1.	2009 Risk Management Goal: Enhance the financial and credit risk management, internal controls, and financial reporting frameworks to better align them with an
extended period of housing and mortgage market distress that may lead to member failures and credit stress in the Bank’s MBS portfolio, and to meet the best practices operating strategy of the Bank. 

  

	2.	2009 Potential Dividend Spread Goal: Target Potential Dividend Spread of 250 basis points. 

  

	3.	2009 Community Investment Goal: Effectively execute community investment programs and initiatives. 

  

	4.	2009 Advances Volume Goal: Achieve a target advances volume of $[*] average daily balance. 

 An outline of the Bank and individual goal weights and measures is attached as Exhibit A. 
 Actual achievement of Bank goals is subject to adjustment for changes resulting from movements in interest rates, changes in financial strategies or policies, any significant change in Bank membership,
as well as other factors determined by the Board. 
 Incentive Goal Achievement Measures 
 The plan rewards levels of goal achievement, as follows: 
  

			
	Achievement Level	  	Measure Definition
		
	 200% of target
	  	The most optimistic achievement level that far exceeds levels forecasted from expected business.

  

	[*]	Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with
respect to the omitted portion. 

			
		
	150% of target	  	An optimistic achievement level that exceeds levels forecasted from expected business.
		
	Target (100%)	  	Performance that is expected under the Bank’s Plan.
		
	Threshold (75% of target)	  	Minimum level of performance that must be achieved for awards to be paid.

 The percentages above represent aggregated achievement levels, not percentages of base pay. 

 INCENTIVE AWARD POOL 
 The Board approves an incentive award pool for the Bank’s executive officers at the beginning of the plan period. Portions of the pool may be allocated to plan participants at the end of the plan period based upon their overall goal
achievement levels. The President and the Board of Directors have full discretion to modify any and all incentive payments. 
 AWARD
DETERMINATION 
 Awards will be based on success in achieving individual and Bank goals. In the case of the four Bank goals, the same
achievement levels apply to all participants. At yearend, accomplishments will be assessed and a percentage of achievement will be determined for each goal and any award determination will be at the discretion of the Board. 
  

					
	Percentage of Achievement Scale	    	Achievement Levels
	 0% - 200%
	    	200%	  	= Far Exceeds Target
		    	150%	  	= Exceeds Target
		    	100%	  	= Target
		    	75-99%	  	= Threshold

 For each goal, the percentage of achievement will be multiplied by the applicable goal weights. Each
weighted achievement will then be added to determine the total weighted achievement. The basis for award opportunity is total weighted achievement. Performance from 75-99% (threshold level) is below the target achievement level and, therefore, may
result in an award less than one granted for achieving the target level. Performance below the threshold achievement level normally will not result in an incentive award. The President and the Board of Directors have full discretion to modify any
and all incentive payments. 
 APPROVAL OF INCENTIVE AWARDS 
 All incentive awards must be approved by the President and the Board of Directors prior to payment. The Board of Directors has the discretion to approve awards for achievement below 75% total weighted
achievement. Award recommendations will be considered by the Board of Directors at the January 2010 Board meeting or as soon thereafter as reasonably practicable. 
 PLAN ADMINISTRATION AND IMPLEMENTATION 
 The President is responsible for
overseeing the administration and interpretation of the Plan. 
 Payments under this plan are subject to approval by the Board of Directors.
Any awards will be distributed as soon as administratively possible following the effective date of Board approval. All compensation and incentive plans are subject to review and revision at the Bank’s discretion. Such plans are reviewed
regularly to ensure they are competitive and equitable. Executive Officer compensation and benefit programs are subject to Federal Housing Finance Agency review and oversight, and payments made under such programs may be subject to the Agency’s
approval under applicable laws and regulations in effect from time to time. 

 EXHIBIT A 
 2009 Risk Management Goal [Segment Weight = 50%] 
 Qualitative assessment at yearend by Board of Directors. 
 2009 Potential Dividend Spread Goal 
  

														
	 Segment
 Weight
	 	 	 75% Goal
 Achievement
 Measure
	 	 	 100% Goal
 Achievement
 Measure
	 	 	 150% Goal
 Achievement
 Measure
	 	 	 200% Goal
 Achievement
 Measure
	 
	25	% 	 	2.00	% 	 	2.50	% 	 	3.00	% 	 	3.50	% 

 2009 Community Investment Goal 
  

												
	  	 	 Segment
 Weight
	 	 	 75% Goal
 Achievement
 Measure
	 	 100% Goal
 Achievement
 Measure
	 	 150% Goal
 Achievement
 Measure
	 	 200% Goal
 Achievement
 Measure

	 CIP/ACE/HPA advances and letters of credit (# of members)
	 	6	% 	 	[*]	 	[*]	 	[*]	 	[*]
	 Technical Assistance
	 	6	% 	 	[*]	 	[*]	 	[*]	 	[*]
	 Community Investment grant program participation (# of members)
	 	8	% 	 	[*]	 	[*]	 	[*]	 	[*]
	 Total Community Investment Goal
	 	20	% 	 	 	 	 	 	 	 	 

 2009 Advances Volume Goal 
  

																
	Member Segment	 	 Segment
 Weight
	 	 	 75% Goal
 Achievement
 Measure
	 	 	 100% Goal
 Achievement
 Measure
	 	 	 150% Goal
 Achievement
 Measure
	 	 	 200% Goal
 Achievement
 Measure
	 
	 Members with CQRs 1-5
	 	5	% 	 	$ [*]
 (avg. daily balance
	  
 )
	 	$ [*]
 (avg. daily balance
	  
 ) 
	 	$ [*]
 (avg. daily balance
	  
 ) 
	 	$ [*]
 (avg. daily balance
	  
 ) 

 2009 Senior Officer Goal Weights 
  

													
	 	  	Senior Vice President	 	 	Executive Vice President	 
	  	  	 Corporate
 Goal
 Weights
	 	 	Goal Weight (includes
individual goals)	 	 	 Corporate
 Goal
 Weights
	 	 	Goal Weight (includes
individual goals)	 
	 Individual
	  	N/A	  	 	30	% 	 	N/A	  	 	20	% 
	 Risk Management
	  	50	% 	 	35	% 	 	50	% 	 	40	% 
	 Potential Dividend Spread
	  	25	% 	 	17.5	% 	 	25	% 	 	20	% 
	 Community Investment
	  	20	% 	 	14	% 	 	20	% 	 	16	% 
	 Advances Volume
	  	5	% 	 	3.5	% 	 	5	% 	 	4	% 
	 Total
	  	100	% 	 	100	% 	 	100	% 	 	100	% 

  
  

	[*]	Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with
respect to the omitted portion.

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