**Exhibit10.507**

 

**CHIRON CORPORATION**

**EXECUTIVE OFFICER SEVERANCE PLAN**

(As Amended Effective December 1, 2005)

 

Thepurpose of this Chiron Corporation Executive Officer Severance Plan is toassist full-time executive employees who are in Salary Grades E3 and above, asmay be adjusted from time to time (excluding the President and Chief ExecutiveOfficer) (the “Executive Employees”), who as a result of workforce reduction orjob elimination, lose their positions with the Corporation or any of itssubsidiaries (each referred to as a “Chiron Company”) which is at the time oftermination designated as a Participating Company in Exhibit A, asattached hereto from time to time (each referred to as a “Participating Company”).This plan applies only to U.S.-based Executive Employees.

 

Theplan is effective for terminations of employment that occur on or afterDecember 1, 2003. The plan was amended effective December 1, 2005 to complywith the provisions of Section 409A of the Internal Revenue Code (the “Code”). Theplan is intended to comply with the provisions of Code Section 409A and shallbe administered and operated in conformity with those provisions and applicableTreasury Regulations.

 

ELIGIBILITY

 

If youare an Executive Employee of a Participating Company, you will be eligible forexecutive severance pay if your active employment is involuntarily terminatedby your employer because of a workforce reduction or a job elimination on orafter December 1, 2003 and before this plan is terminated. Except to the extentthat severance is required by statute, this voluntary executive severance payplan is in consideration of your signing a separation agreement and releasewhich releases Chiron from any legal claims you may have against ChironCompanies, and their employees and agents.

 

Youare not eligible for Executive Employee severance pay under the plan if:

 

1.                                       Youvoluntarily terminate employment, unless you already received notice of aqualifying involuntary termination and Chiron determines in its sole discretionthat earlier voluntary termination is in the best interests of Chiron;

 

2.                                       Youare discharged for reason other than workforce reduction or job elimination(including, but not limited to, poor performance, gross negligence or cause(including, but not limited to, any act of dishonesty, willful misconduct,fraud or embezzlement or any unauthorized disclosure of confidentialinformation or trade secrets or violation of company policy or rules), whetheror not you had already received notice of a qualifying termination;

 

3.                                       Youeither continue employment or are offered and decline employment with a ChironCompany or any employer that acquires all or any portion of the assets oroperations of a Chiron Company or ceases to be a Chiron Company;

 

1

----

 

4.                                       Youare covered by any other severance pay plan or arrangement or by an employmentagreement, unless and to the extent that Chiron agrees in writing; providedthat in no event will benefits be payable under this plan to the extent thatthey would duplicate benefits payable under such other plan, arrangement oragreement.

 

5.                                       Youare on a leave of absence (including disability leave), except to the extentpermitted by Chiron in its sole discretion, or you die before you receive aseverance payment under the plan;

 

6.                                       Youare not classified by a Participating Company as an Executive Employee (whetheror not such classification is subsequently deemed proper by a government agencyor court); or

 

7.                                       Youare employed by a Chiron Company or a work unit that the Plan Administratordetermines is not covered by the Plan.

 

HOW THE PLAN WORKS

 

ExecutiveEmployees covered under the plan will receive eight (8) weeks of paid advancenotice of a qualifying termination. The notice may be working or non-working,at the discretion of the supervisor; however, at least 6 weeks must benon-working. Termination of employment occurs at the end of this advance noticeperiod. Following termination, a qualifying participant who properly executes arelease of claims against Chiron Companies and their employees and agents inthe form provided by Chiron will receive the following benefits:

 

1.                                       CashSeverance Amount. Cash severance will be paid equal to 6 weeks base salaryand bonus per year of service. However, the total period of advance notice andseverance will not be less than 26 weeks and cannot be longer than 2 years. Therate of severance pay will be determined by dividing annual base salary by 52to determine the amount of weekly salary and adding target bonus divided by 52.

 

Basesalary is calculated at the annualized rate paid for thepayroll period immediately before the Executive Employee’s notice oftermination, including any pre-tax amount the Executive Employee elected tohave contributed to a 401(k) plan or to a Section 125 plan.

 

Bonusis the Executive Employee’s target Annual Incentive Plan (‘AIP”) bonusapplicable for the period immediately before the Executive Employee’s notice oftermination.

 

A yearof service means each 12 month period of employment with a ParticipatingCompany, beginning with the Executive Employee’s most recent hire date. Yearsof service will not include service with a company before it becomes aParticipating Company unless otherwise specified by Chiron.

 

2.                                       ElectionBetween Lump Sum and Continuation of Salary and Benefits. An ExecutiveEmployee who qualifies for severance benefits may elect (in accordance with theprovisions of 

 

2

----

 

Paragraph 3 below) toreceive those benefits either in a lump sum following termination of employmentor in the form of salary continuation pursuant to the Participating Company’snormal payroll practice, beginning after termination of employment. If anExecutive Employee elects to receive severance in the form of salarycontinuation then those Executive Employee benefits listed in Exhibit Bwill continue during the period of salary continuation, provided that theExecutive Employee maintains his or her Executive Employee contributions andthe Participating Company from which the Executive Employee terminates offerssuch benefits to its active Executive Employees. The period of continuation ofhealth benefits will count towards the period for which health care coverage isrequired to be provided by statute under the Consolidated OmnibusReconciliation Act. If an Executive Employee elects (or, in accordance withparagraph 3, is otherwise paid) a lump sum severance payment, no benefitscontinue after termination of employment, except as may otherwise be providedunder the relevant benefit plans for terminations of employment generally.

 

3.                                       Timingof Election. The election to receive severance benefits in the form of alump sum payment or salary continuation must be made on or prior to December30, 2005. Such election shall be made on the forms provided by the Company andthe election shall be irrevocable once made. If no election is made by anExecutive Employee on or prior to December 30, 2005, any severance paymentspayable to such Executive Employee under the plan shall be paid in a lump sum.

 

4.                                       DeferredCommencement Date for Key Employees. Notwithstanding any provision to thecontrary in the plan, to the extent required to avoid a prohibited distributionunder Code Section 409(A)(2), no severance payments or other benefits to whichthe Executive Employee becomes entitled under the plan shall be made prior tothe earlier of (i) the expiration of the six (6)-month period measured from thedate of the Executive Employee’s “separation from service” (as defined underCode section 409(A) and regulations thereunder) or (ii) the death of theExecutive Employee if the Executive Employee is at the time a “key employee”within the meaning of that term under Code Section 409A. Upon the expiration ofthe applicable Code Section 409(A)(2) deferral period, all payments otherwisepayable in a lump sum and deferred pursuant to this paragraph shall be paid ina lump sum. All payments and benefits deferred under this paragraph otherwisepayable in the form of a salary continuation, shall be paid by the end of thefirst month following the expiration of the Code Section 409(A)(2) deferralperiod. In the event of the Executive Employee’s death, any amounts deferredunder this paragraph shall be paid to the personal representative of theExecutive Employee’s estate as soon as practicable but in all events withinsixty (60) days after the date of the Executive Employee’s death.

 

Forpurposes of determining the individuals who will be key employees under theplan, the identification date shall be December 31 of each calendar year.

 

5.                                       ReemploymentOutside of Chiron. Should an Executive Employee find other work outside ofthe Chiron Companies before any severance benefit has been paid under the planthen, in lieu of any other benefits under the plan, the Executive Employee willbe paid a lump sum cash payment equal to one-half of the cash severance paythat would have been paid had the Executive Employee not begun such work. Ifthe Executive Employee had elected and already started to receive salarycontinuation payments, then the Executive Employee’s salary continuation andbenefits will stop at the point this new work begins and the lump sum cashpayment will equal one-half of the remaining

 

3

----

 

salary continuation thatwould have been paid thereafter had the Executive Employee not begun such work.An Executive Employee who is re-employed with a non-Chiron company will not berequired to return any amount already received under the plan.

 

6.                                       ReemploymentWith a Chiron Company. Should an Executive Employee find work with a ChironCompany before any severance benefit has been paid under the plan, then nobenefit will be payable under the plan. If salary continuation had alreadybegun under the plan, then salary continuation and benefits will stop and nolump sum severance will be paid, but the Executive Employee will again beeligible for benefits under this plan in the event of any subsequent qualifyingtermination of employment while the plan is in effect. If an Executive Employeeis reemployed by a Chiron Company after receiving a lump sum severance paymentbut before the end of the period for which the Executive Employee would havereceived salary continuation had he or she not elected a lump sum, Chiron willrequire repayment of that portion of the lump sum attributable to the remainderof that period as a condition of reemployment.

 

7.                                       TuitionReimbursement. All Executive Employees who have classes in progress forwhich Chiron tuition reimbursement would normally apply will be provided thebenefit in accordance with Chiron policy.

 

8.                                       StockOptions. The effect of termination of employment on an Executive Employee’sstock option will be determined by the terms of the option agreement relatingto that option. The following describes the effect of termination of employmentunder most Chiron stock options for most types of qualifying terminations:  An Executive Employee who has unvested stockoptions when notice of termination is given will continue to vest in thoseoptions during the period of advance notice, but not during any subsequentsalary continuation period. A stock option that is unvested at the end of theadvance notice period will be cancelled. Executive Employees with vested stockoptions at the end of the advance notice period must exercise those optionswithin three months after the end of the notice period or the options will becancelled. Executive Employees with option grants that contain the retirementfeature and who qualify for the retirement feature under the terms of thosegrants will have extended vesting and exerciseability according to the terms ofeach grant. Continued employment with a company that ceases to be a ChironCompany is not considered continued employment for purposes of stock optionvesting or exercisability.

 

9.                                       Bonusesand Commissions. This plan will not affect any Executive Employee’s rightto bonuses or commissions fully earned before the end of the notice period inaccordance with the terms of the applicable bonus or commission plan.

 

10.                                 JobSearch Assistance. Executive Employees will be provided with the additionalbenefit of job search assistance. The job search assistance will be provided asfollows:

 

Fulloutplacement service including office space and clerical support for a periodof six months.

 

11.                                 409ACompliance. Notwithstanding any other provisions to the contrary, anExecutive Employee will not receive any payments or any benefits under the planearlier than permitted by

 

4

----

 

Code Section 409A, orlater than the latest day permitted by Code Section 409A in order to avoidtaxation under Code Section 409A.

 

FAILURE TO EXECUTE A RELEASE

 

Allbenefits provided under the plan after the end of the notice period (includingany lump sum severance payment, continuation of salary and\or benefits) are inconsideration of your execution of a release of claims against all Chironcompanies and their employees and agents in the form provided by Chiron. If youdo not properly execute such a release within forty-five (45) days from thenotice of your termination of employment or if you revoke it, you will not beentitled to any of the benefits of this plan, other than the period of advancenotice.

 

OTHER IMPORTANT INFORMATION

 

1.                                       PlanAdministrator’s Discretion. As the Plan Administrator, Chiron will havefull discretionary authority to administer and interpret this plan, including,but not limited to discretionary authority to determine eligibility forbenefits under the plan and the amount of benefit under the plan. Chiron maydelegate administrative duties to Chiron personnel. Any such delegation willcarry with it the full discretionary authority of the Administrator to carryout these duties. Any determination by the Administrator or its delegate willbe final and conclusive upon all persons.

 

2.                                       Non-Assignability.Benefits under the plan are not assignable and will be paid when due from thegeneral assets of Chiron or the Participating Company that employed theeligible Executive Employee.

 

3.                                       ConfidentialityAgreements. Benefits under the plan are conditioned upon your compliancewith any confidentiality agreement you have entered into with a Chiron Company.

 

4.                                       CoordinationWith Mandated Benefits. Any advance notice or benefits provided under thisplan shall, to the fullest extent permitted by law, be considered to be insatisfaction of, rather than in addition to, any federal, state or localrequirement to provide advance notice or severance-type benefits. To the extentthat notice or benefits provided under this plan cannot be considered insatisfaction of any such requirement, the amount of notice and benefitsotherwise payable under this plan shall be reduced by the amount of notice andbenefits that are required to be given by federal, state or local law.

 

5.                                       ClaimsDisputes. If you believe you are entitled to a greater benefit under theplan, you may submit a signed, written application to the Plan Administratorwithin 90 days of your termination. You will generally be notified of theapproval or denial of this application within 90 days of the date that the PlanAdministrator receives the application. If your claim is denied, thenotification will state specific reasons for the denial and you will have 60days to file a signed, written request for a review of the denial with the PlanAdministrator. This request should include the reasons you are requesting areview, facts supporting your request and any

 

5

----

 

other relevant comments. ThePlan Administrator will generally make a final, written determination of youreligibility for benefits within 60 days of receipt of your request for review.

 

6.                                       Amendmentand Termination. Chiron reserves the right, in its sole and unlimiteddiscretion, to amend or terminate the plan at any time and in any manner.

 

7.                                       WithholdingTaxes. Chiron will withhold taxes and other payroll deductions from anyseverance payment.

 

8.                                       NoRight to Employment. This plan does not provide you with any right tocontinue employment with any Chiron Company or affect the right of you or yourChiron Company employer to terminate your employment at any time, with orwithout cause; provided that nothing herein shall adversely affect any rightsunder a written employment agreement executed by the parties thereto.

 

9.                                       ERISAGoverns. This plan is governed by the Employee Retirement Income SecurityAct of 1974, as amended (“ERISA”) and, to the extent applicable, the laws ofthe State of California. This Plan is not intended to be funded for purposes ofERISA.

 

10.                                 PlanYear. The Plan Year is the calendar year.

 

11.                                 Agentfor Service of Process. The Agent for service of legal process for thisplan is the General Counsel of Chiron Corporation. Process may also be servedon Chiron. Chiron’s employer identification number is 94-2754624. ChironCorporation’s address and telephone number are 4560 Horton Street, Emeryville,CA 94608, (510) 655-8729.

 

STATEMENT OF ERISA RIGHTS

 

If youare eligible for benefits under the plan, you are entitled to certain rightsand protections under ERISA. You may examine (without charge) all plandocuments, including documents filed with the U.S. Department of Labor, at theHuman Resources Department, Chiron Corporation, 4560 Horton Street, Emeryville,CA. You may obtain copies of all plan documents and other plan information uponwritten request to the Plan Administrator. (The document containing thisstatement constitutes both the plan document and the summary plandescription.)  A reasonable charge may bemade for such copies.

 

Inaddition to creating rights for certain employees under the plan, ERISA imposesduties upon the people who are responsible for the operation of the plan. Thepeople who operate the plan (called “fiduciaries”) have a duty to do soprudently and in the interest of Chiron Executive Employees who are covered bythe plan. No one, including Chiron or any other person, may fire you orotherwise discriminate against you in any way to prevent you from obtaining abenefit to which you are entitled under the plan or from exercising your rightsunder ERISA. If your claim for a severance benefit is denied, in whole or inpart, you must receive a written explanation of the reason for the denial andyou have the right to a review of the denial.

 

6

----

 

UnderERISA, there are steps you can take to enforce the above rights. For instance,if you request materials and do not receive them within 30 days, you may filesuit in a federal court. In such a case, the court may require theAdministrator to provide the materials and to pay you up to $100 a day untilyou receive the materials, unless the materials were not sent because ofreasons beyond the control of the Administrator. If you have a claim that isdenied or ignored, in whole or in part, you may file suit in a state or federalcourt. If it should happen that plan fiduciaries misuse the plan’s assets (ifany), or if you are discriminated against for asserting your rights, you mayseek assistance from the U.S. Department of Labor, or you may file suit in afederal court.

 

Thecourt will decide who will pay court costs and legal fees. If you aresuccessful, the court may order the person you have sued to pay these costs andfees. If you lose, the court may order you to pay these costs and fees, forexample, if it finds that your claim is frivolous.

 

Youare entitled to receive, upon request and free of charge, reasonable access to,and copies of, all documents, records and other information relevant to yourclaim for benefits.

 

If youhave any questions about the plan you may contact the Plan Administrator. Ifyou have any questions about this statement or about your rights under ERISA,you may contact the nearest area office of the U.S. Labor-Management ServicesAdministration, Department of Labor.

 

7

----

 

**EXHIBIT A**

 

**PARTICIPATING COMPANIES**

 

Commencing December 1,2003 (or as otherwise noted) and continuing thereafter until the PlanAdministrator determines otherwise or the plan terminates, the following ChironCompanies shall be Participating Companies in the plan:

 

AllChiron Companies with U.S.-based Executive Employees, except:

 

PowderJect Pharaceuticals

 

8

----

 

**EXHIBIT B**

 

**ExecutiveEmployee Benefits Which Continue During Salary Continuation**

 

•                                          Medical/Dental/VisionCoverage

•                                          Reimbursementaccounts (i.e., medical care account, dependent care account)

•                                          GroupLife Insurance Plans (i.e., life insurance, AD&D, dependent life insurance)

•                                          PrepaidLegal

 

**ExecutiveEmployee Benefits Which Do Not Continue During Salary Continuation**

 

•                                          BusinessTravel Accident

•                                          WorkersCompensation

•                                          Vacationand Sick Leave Accruals

•                                          401(k)Plan

•                                          EmployeeStock Purchase Plan

•                                          StockOptions

•                                          Short andLong Term Disability (including Supplemental Long Term Disability Insurance)

•                                          OtherBenefits Not Listed Above

 

9

----