**Exhibit10.510**

 

PERSONAL AND CONFIDENTIAL

 

                       , 200   

 

«First_Name» «Last_Name»«JOB_TITLE»Chiron Corporation«ADDRESS», M/S «MS»«CITY_STATE_ZIP»

 

Re: DeferredShare Units Grant

 

Dear: «First_Name»

 

As you are aware,Novartis AG is in the process of acquiring Chiron Corporation ( the “Company”)pursuant to a merger agreement dated October 30, 2005 (the “NovartisAcquisition”). I am pleased to inform you that you have been granted a deferredshare units award (the “Award”) with respect to                    «Shrs_Grntd» («Shrs_Grntd_Wrds») of Company common stock (“Common Stock”)payable in shares of Common Stock or in cash as described below. The Award wasgranted on                         ,200    (the “Grant Date”) pursuant to the Chiron Corporation2004 Stock Compensation Plan (the “Plan”) in accordance with the restrictions,terms, and conditions hereinafter set forth and is in all respects limited andconditioned by the provisions of the Plan.

 

1.             TheAward will vest in four (4) equal, successive annual installments uponcompletion of each year of employment with the Company over the four (4)-yearperiod measured from the Grant Date, subject to accelerated vesting as setforth below.  Each date on which theAward vests is referred to as a “Vesting Date”.

 

2.             TheAward will entitle you to receive, upon each Vesting Date (provided your Awardhas not been terminated or canceled before such date in accordance with theprovisions below), a payment in shares of Common Stock or cash depending onwhether the Vesting Date occurs prior to, or on or after the consummation ofthe Novartis Acquisition (the “Novartis Closing”). To the extent the VestingDate occurs prior to the Novartis Closing, you will receive the number ofshares of Common Stock with respect to which your Award vests on such date. Uponthe Novartis Closing, your Award will be assumed by Novartis and willautomatically convert into a right to receive a cash payment on each VestingDate (to the extent the Award has not been terminated or canceled before suchdate). The amount of the cash

 

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payment for each shareunder the Award that vests on such date will be equal to the consideration paidin the Novartis Acquisition for each share of Common Stock. Accordingly, to theextent the Vesting Date occurs on or after the Novartis Closing, you willreceive a cash payment equal to the product of (i) the consideration paid inthe Novartis Acquisition for each share of Common Stock and (ii) the number ofshares with respect to which the Award vests on such date. In no event will yoube entitled to receive any shares of Common Stock or any other securities underthis Award on or after the Novartis Closing.

 

3.             Ifyou voluntarily terminate employment with the Company for any reason or if theCompany terminates your employment before a Vesting Date, subject to paragraphs8 and 9 below, your Award will be canceled automatically and no shares ofCommon Stock or cash will be issued thereunder.

 

4.             Theissuance of shares of Common Stock or cash under the Award is subject tosatisfaction of all tax withholding obligations with respect to such shares orcash and you agree to make appropriate arrangements with the Company to satisfyall such obligations. Unless you elect in writing to satisfy such obligationsby payment in cash before issuance of any shares under your vested Award, thenumber of shares of Common Stock which you would otherwise be entitled toreceive on any Vesting Date will be reduced by that number of whole shareswhich, as of that date, has an aggregate Fair Market Value (as defined in thePlan) equal to the total amount of tax withholding obligations applicable tothe shares issuable on that date. To the extent that the payment on any VestingDate is payable in cash, the amount of your payment will be reduced by thetotal amount of tax withholding obligations applicable to such payment.

 

5.             YourAward hereunder may not be sold, assigned, transferred, alienated, subject togarnishment or otherwise encumbered in any manner other than by transfer, tothe extent provided below, by will or the laws of descent and distribution. Inthe event of your death prior to the issuance of shares of Common Stock or cashunder your Award, any shares or cash issuable thereunder by reason of yourdeath will pass pursuant to your will or by the laws of descent anddistribution.

 

6.             Theissuance of shares of Common Stock hereunder shall be subject to compliance bythe Company and you or your beneficiary with all applicable requirements of lawrelating thereto and with all regulations of any stock exchange on which theCommon Stock may be listed at the time of such issuance.

 

7.             Exceptas otherwise provided with respect to a Novartis Acquisition in paragraph 2, ifthe Company or its stockholders enter into an agreement to dispose of all orsubstantially all of the assets of the Company, enter into an agreement tomerge or consolidate with another entity, or enter into a plan ofreorganization or liquidation, while your Award is unvested, then the Awardwill become vested and paid in full, immediately before the consummation ofsuch transaction. However, no such acceleration of the vesting or payment

 

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date will occur if theagreement requires as a prerequisite to the consummation of any suchtransaction that each such outstanding Award will be either assumed by thesuccessor corporation or parent thereof or be replaced with a comparable awardin the successor corporation or parent thereof.

 

8.             Ifthere is a Qualifying Termination of your employment following the NovartisClosing, then the Award, to the extent unvested at the time of such QualifyingTermination, will vest and will be paid out in full in cash.

 

9.             Ifthere is a Change in Control of the Company (other than the NovartisAcquisition) pursuant to which the Award continues and within twenty-four (24)calendar months thereafter there is a Qualifying Termination of youremployment, then the Award to the extent unvested at the time of suchQualifying Termination, will vest and will be paid out in full.

 

10.           Forthis letter agreement, the following definitions apply:

 

a.             “Changein Control” of the Company shall be deemed to have occurred as of the first daythat any one or more of the following conditions is satisfied and regulatoryapproval has been granted if necessary:

 

(i)            The“beneficial ownership” (as defined in Rule 13d-3 under the Securities ExchangeAct of 1934) of securities representing more than thirty percent (30%) of thecombined voting power of all securities of the Company is acquired, directly orindirectly, by a Person (other than the Company, any trustee or other fiduciaryholding securities under an employee benefit plan of the Company or anaffiliate thereof, or any corporation owned, directly or indirectly, by thestockholders of the Company in substantially the same proportions as theirownership of stock of the Company); or

 

(ii)           Duringany period of two (2) consecutive years, individuals who at the beginning ofsuch period constitute the Board of Directors of the Company and any newdirector (other than a director designated by a person who has entered into anagreement with the Company to effect a transaction described in i. above) whoseelection by the Board of Directors or nomination for election by theCompany’s stockholders was approved by a vote of at least two-thirds of thedirectors then still in office who either were directors at the beginning ofthe period or whose election or nomination for election was previously soapproved, cease for any reason to constitute a majority thereof; or

 

(iii)          Thestockholders of the Company approve a definitive agreement to sell or otherwisedispose of all or substantially all of its assets, or adopt a plan forliquidation, provided that such sale or liquidation has not been abandoned.

 

Notwithstanding anythingelse contained herein to the contrary, in no event shall a Change in Control bedeemed to have occurred by reason of a purchase, or series of purchases ofCompany

 

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stock by Novartis or itssuccessor such that the acquiring entity remains subject to the terms of thatcertain Governance Agreement dated as of November 20, 1994, as amended,provided the acquiring entity’s Company stock holdings, direct or indirect, inthe aggregate, represent less than seventy-nine and nine-tenths of a percent(79.9%) of the combined voting power of all outstanding Company securities. Inaddition, in no event shall a Change in Control be deemed to have occurred, withrespect to you, if you are part of a purchasing group thatconsummates the Change-in-Control transaction. You shall be deemed “part of apurchasing group” for purposes of the preceding sentence if you are an equityparticipant in the purchasing company or group (except for: (i) passiveownership of less than three percent (3%) of the stock or other equity of thepurchasing company; or (ii) ownership of equity participation in the purchasingcompany or group which is otherwise not significant, as determined prior to theChange in Control by a majority of the nonemployee continuing Directors).

 

b.             “QualifyingTermination” means: (i) an involuntary termination of your employment by theCompany for reasons other than Cause, death or permanent disability or (ii) avoluntary termination by you for Good Reason pursuant to a written notice oftermination delivered to the Company; provided that, if upon receiving suchnotice of termination, the Company requests that you remain an employee for aperiod ending no later than six (6) months following the date of the Change inControl or the Novartis Closing, as applicable (the “Transition EmploymentPeriod”) with compensation and benefits equal to or greater than yourcompensation and benefits immediately before the Qualifying Termination (or, ifmore favorable to you, immediately before the Change in Control or the NovartisClosing, as applicable), you will not be deemed to have a QualifyingTermination unless you remain employed throughout the Transition Period or youremployment earlier terminates due to death, disability or involuntarytermination by the Company for reason other than Cause.

 

c.             “Cause”means:

 

(i)            Yourwillful failure to substantially perform your duties with the Company (otherthan any such failure resulting from disability);

 

(ii)           Yourmaterial act of dishonesty, fraud or embezzlement against the Company,unauthorized disclosure of confidential information or trade secrets of any ofthe Company or an affiliate (whether or not in violation of any confidentialityagreement) or other willful conduct (other than conduct covered under (i)above) that is demonstrably injurious to the Company, monetarily or otherwise;or

 

(iii)          Yourhaving been convicted of a felony.

 

For purposes of this subparagraph, no act, or failureto act, on your part shall be deemed “willful” unless done, or omitted to bedone, by you not in good faith and without reasonable belief that the action oromission was in the best interests of the Company.

 

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d.             “GoodReason” shall mean, without yourexpress written consent, the occurrence of any one or more of the followingwithin twenty-four (24) months following the Change in Control or Novartis Closing,as applicable;

 

(i)            The assignment of you to duties materiallyinconsistent with your authorities, duties, responsibilities as an employee ofthe Company, or a material reduction in the nature or status of yourauthorities, duties, or responsibilities from those in effect immediately precedingthe Change in Control or the Novartis Closing, as applicable;

 

(ii)           The Company’s requiring you to be based at alocation which is at least fifty (50) miles further from your current primaryresidence than is such residence from the Company’s current headquarters,except for required travel on the Company’s business to an extent substantiallyconsistent with your business obligations as of the effective date of the Changein Control or the Novartis Closing, as applicable;

 

(iii)          A material reduction in your base salary orbonus opportunity as in effect on the effective date of the Change in Control orthe Novartis Closing, as applicable oras the same shall be increased from time to time;

 

(iv)          A material reduction in your level ofparticipation in any of the Company’s short- and/or long-term incentivecompensation plans, or employee benefit or retirement plans, policies,practices, or arrangements in which you participate immediately preceding theChange in Control or the Novartis Closing, as applicable; provided, however, that reductions in thelevels of participation in any such plans shall not be deemed to be “GoodReason” if your reduced level of participation in each such program remainssubstantially consistent with the average level of participation of otheremployees who have positions commensurate with your position. Long-termincentive plans shall mean the Chiron Executive Long-Term Incentive Plan, the2004 Stock Compensation Plan (formerly, the 1991 Stock Option Plan), and anyother similar plans instituted by the Company.

 

However, the occurrence ofan event set forth in (i) through (iv) above shall not constitute Good Reasonif the Company has cured such event within fifteen (15) days of receipt ofwritten notice from you that such event has occurred and constitutes GoodReason.

 

11.           Inthe event any change is made to the CommonStock (whether by reason of merger, consolidation, reorganization,recapitalization, stock dividend, stock split, combination of shares, exchangeof shares, or other change in corporate or capital structure of the Companyaffecting the outstanding Common Stock as a class without the Company’s receiptof consideration but excluding the Novartis Acquisition) then, unless suchchange results in the termination of your Award, the number and/or classof securities subject to your Award will be appropriately adjusted to precludeany dilution or enlargement of your rights under the Award.

 

12.           Neitheryou nor, in the event of your death, your beneficiary shall have any rights asa shareholder with respect to the shares of Common Stock issuable hereunderuntil you

 

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shall have been issued astock certificate for such shares. It is the intention of the parties that theCompany’s obligations under your Award are unfunded for purposes of theInternal Revenue Code and that the Employee Retirement Income Security Act of1974 does not apply to your Award.

 

13.           TheCompensation Committee, may, in its discretion, modify or waive any or all ofthe terms, conditions or restrictions hereof, provided, however, that no suchmodification or waiver may, without your or, if applicable, your beneficiary’sconsent, adversely affect the rights of you or your beneficiary hereunder.

 

14.           TheCompensation Committee has full authority to administer the Plan, includingauthority to interpret and construe any provision thereof and hereof and toadopt such rules and regulations for administering the Plan as it may deemnecessary. Decisions of the Compensation Committee are final and binding on allpersons who have an interest in the Plan.

 

15.           Thisgrant shall not constitute a contract of employment. The Company (or anysubsidiary employing you) may terminate or change the terms of your employmentat any time and for any reason and whether or not such termination or changecauses a loss of rights under the Plan or this Award, except to the extent thatthe terms of any employment contract or, with respect to changes in yourcompensation, any written compensation agreement between the Company and youmay expressly provide otherwise.

 

16.           Forpurposes of this Award, the term “Company” shall include any successor.

 
|   | Very truly yours,  |
|--------|--------------------|
|   |               |
|   | CHIRON CORPORATION |
|   |               |
|   |               |
|   | By                 |   |   |
|   |               | Howard H. Pien |
|   |               | Chief Executive Officer; |
|   |               | Chairman of the Board |

 

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