**Exhibit 10.511**

 

Amended andRestated on September 14, 2005

 

CHIRON CORPORATION AUDIT COMMITTEECHARTER

 

ROLE

 

The Audit Committee (the “Committee”) of the Board of Directors (the “Board”)of Chiron Corporation (“Chiron”) represents and assists the Board in fulfillingits responsibility for oversight of the quality and integrity of theaccounting, auditing and reporting practices of Chiron and its subsidiaries,and such other duties as directed by the Board. The Committee’s role includes oversight of Chiron’s internal auditfunction and its business ethics standards and compliance.  The Committee’s role also includes aparticular focus on the integrity of financial reporting to shareholders, andon Chiron’s processes to manage business and financial risk and processes toassure compliance with significant applicable legal, ethical and regulatoryrequirements.  The Committee is directlyresponsible for the appointment, compensation, retention and oversight of thework of Chiron’s independent auditors, including resolving disagreementsbetween management and the independent auditors regarding financial reporting.

 

Except to the extent otherwise directed by the Board or required byapplicable law or Chiron’s Certificate of Incorporation or Bylaws, thisCommittee shall have the full authority of the Board over any matter withrespect to which oversight or direction is required to be exercised solely bydirectors who satisfy the independence criteria specified in this charter formembership on this Committee.  The chairpersonof the Committee, acting in consultation with all committee members who are nototherwise affected by the issue or interest under consideration, and inconsultation with such other directors, representatives of management, counselor other advisors as the chairperson may deem appropriate, may determine fromtime to time the scope of the Committee’s authority under this charter.

 

MEMBERSHIP

 

The membership of the Committee shall consist of at least threedirectors, each of whom is able to read and understand financial statements,including a company’s balance sheet, income statement and cash flow statement,and the Committee shall have at least one member who has pastemployment experience in finance or accounting, requisite professionalcertification in accounting, or any other comparable experience or backgroundwhich results in the member’s financial sophistication. No member shallbe an officer or employee of Chiron, each member shall be free of anyrelationship that, in the determination of the Board, would interfere with hisor her individual exercise of independent judgment and each member shallotherwise be “independent” and qualified to serve as a member of the Committeeunder applicable law and under the rules of the Nasdaq Stock Market, Inc.(“Nasdaq”) and the Securities and Exchange Commission (the “SEC”).  Nodirector may serve as a member of the Committee if such director serves on theaudit committees of more than two other public companies unless the Boarddetermines that such simultaneous service would not impair the ability of suchdirector to effectively serve on the Committee, and discloses thisdetermination in Chiron’s annual

 

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proxystatement. The Committee shall review, at least annually, and upon theoccurrence of any significant change, the qualification and independence of itsmembers, and shall report the result of this review to the full Board.  No member of the Audit Committee shall receive,directly or indirectly, any consulting, advisory or other compensatory fee from Chiron other than in suchmember’s capacity as a member of the Board or of any committee of the Board.

 

Subject to the requirements described above with respect to Committeemembership, members of the Committee shall be appointed by the Board inaccordance with the Governance Agreement, dated as of November 20, 1994,between the Company and Novartis AG, as amended (as it may be further amendedfrom time to time, the “Governance Agreement”). Committee members shall serve at the pleasure of the Board.  The chairperson shall be appointed by thefull Board.

 

The Committee shall meet in person or telephonically at least fourtimes a year or more frequently when deemed necessary or desirable by theCommittee or its chairperson, at such times and places as the Committeedetermines.

 

COMMUNICATIONS/REPORTING

 

The independent auditors shall report directly to the Committee.  The Committee is expected to maintain freeand open communication with the independent auditors, the internal auditors andChiron’s management.  This communicationshall include private executive sessions, at least annually, with each of theseparties.  In addition, Chiron’s Directorof Internal Audit and Chiron’s Chief Compliance Officer shall have directaccess to the Committee.  The Committeeshall prepare the report required to be prepared by audit committees forinclusion in Chiron’s annual proxy statement. The Committee shall perform or cause to be performed and approved by theCommittee annually an evaluation of the performance of the Committee of itsrole under this charter, including the duties and responsibilities set forth inAnnex A.  The evaluation shall includeconsideration of possible amendments to this charter, including the duties andresponsibilities set forth in Annex A. The performance evaluation may be conducted in such manner as theCommittee deems appropriate, and the result and recommendations shall bereported to the Board by the chairperson or any other member of the Committee.  The Committee chairperson shall report in atimely manner on Committee activities to the full Board.

 

EDUCATION

 

Chiron is responsible for providing the Committee with educationalresources related to its role and duties and responsibilities, including auditcommittee requirements and practices, accounting principles and procedures,current accounting topics pertinent to Chiron and any other material as may berequested by the Committee.  Chiron, inconjunction with its independent auditors, shall assist the Committee inmaintaining appropriate financial literacy.

 

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AUTHORITY

 

In discharging its role, duties and responsibilities, the Committee isempowered to cause and direct the investigation of any matter brought to itsattention, with full power to cause independent counsel or other experts oradvisors to be retained for this purpose. The Committee may require any officer or employee of Chiron or Chiron’soutside lawyers or independent auditors to attend a meeting of the Committee orto meet with any member of or consultants to the Committee and to provide anyinformation requested by the Committee or its members or consultants.  The Committee shall have the full authorityof the Board to discharge its duties and responsibilities, including theauthority to select, retain, terminate and approve the compensation and otherterms of engagement of independent counsel, accountants or other experts oradvisors as the Committee deems appropriate in its discretion, without seekingapproval of the Board or management.  TheCommittee shall also have the resources that it deems necessary to dischargeits duties and responsibilities.

 

Chiron shall provide for appropriate funding, asdetermined by the Committee, in its capacity as a committee of the Board, forpayment of:

 

•                  Compensationto the independent auditors and any other public accounting firm engaged forthe purpose of preparing or issuing an audit report or performing other audit,review or attest services for Chiron;

 

•                  Compensationto any advisors employed by the Committee; and

 

•                  Ordinaryadministrative expenses of the Committee that are necessary or appropriate incarrying out its duties.

 

The Committee may, in its discretion, delegate to one or more of itsmembers the authority to pre-approve any audit or non-audit services to beperformed by the independent auditors, provided that any such approvals arepresented to the Committee at its next scheduled meeting.

 

KEY DUTIES AND RESPONSIBILTIIES

 

The key duties and responsibilities of the Committee in carrying outits oversight role are delineated in Annex A. Annex A will be reviewed annually, and updated if necessary, to reflectchanges in regulatory requirements, authoritative guidance and evolving oversightpractices.  As the compendium ofCommittee duties and responsibilities, Annex A will be considered to beincorporated in, and a part of, this charter.

 

The Committee may rely on the expertise and knowledge of management,the internal auditors, the independent auditors and counsel, advisors andexperts in carrying out its oversight responsibilities.  Management of Chiron is responsible fordetermining

 

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that Chiron’s financial statements are complete and accurate inaccordance with generally accepted accounting principles and firmly representthe financial condition of Chiron. Management is also responsible for the effectiveness of disclosurecontrols and procedures and internal controls and procedures for financialreporting.  The independent auditors areresponsible for auditing Chiron’s financial statements.  It is not the duty of the Committee to planor conduct audits, to determine that the financial statements are complete andaccurate and are in accordance with generally accepted accounting principles,to conduct investigations, to assure the adequacy or effectiveness of Chiron’sinternal controls or disclosure procedures or to assure compliance with lawsand regulations or Chiron’s internal policies, procedures and controls.

 

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**ANNEX A**

 

The following are the key duties and responsibilities of the Committee:

 

# 1.                                       Withrespect to the independent auditors,

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## (i)                                     tohave direct responsibility for the appointment, compensation (including thesole authority to approve all audit engagement fees and terms), retention andoversight of the work of Chiron’s independent auditors (including resolution ofdisagreements between management and the independent auditors regardingfinancial reporting) and any other registered public accounting firm engagedfor the purpose of preparing or issuing an audit report or performing otheraudit, review or attestation services for Chiron, and Chiron’s independentauditors and any such other registered public accounting firm shall reportdirectly to the Committee;

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## (ii)                                  toapprove all audit engagement fees and terms, as well as all non-auditengagements of the independent auditors;

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## (iii)                               topre-approve all audit and non-audit services to be provided by the independentauditors, and to consider whether such provision of non-audit services toChiron is compatible with maintaining the independence of the independentauditors;

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## (iv)                              toreview annually the fees billed for each of the last two fiscal years for thefollowing categories of services rendered by the independent auditors:  (a) the audit of Chiron’s annualfinancial statements and the reviews of the financial statements included inChiron’s Quarterly Reports on Form 10-Q for each such fiscal year; (b) assuranceand related services that are reasonably related to the performance of theaudit or reviews of Chiron’s financial statements for each such fiscal year,describing each subcategory of services comprising the fees disclosed underthis category; (c) tax compliance, tax consulting and tax planningservices for each such fiscal year; and (d) all other products or servicesprovided by the independent auditors for each such fiscal year, describing eachsubcategory of products or services comprising the fees disclosed under thiscategory;

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## (v)                                 toassess the independent auditors’ independence by reviewing all relationshipsbetween the independent auditors and Chiron, including each non-audit serviceprovided to Chiron and the matters set forth in Independence Standards Board No. 1,and to discuss with the independent auditors any relationships or services thatmay impact the quality of audit services or the objectivity and independence ofChiron’s independent auditors;

 

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## (vi)                              todiscuss with the independent auditors in connection with any audit of Chiron’sfinancial statements required under the securities laws, prior to each filingof the audit report with the SEC, all critical accounting policies andpractices used, all material alternative treatments of financial informationwithin generally accepted accounting principles that have been discussed withmanagement, ramifications of the use of such alternative disclosures andtreatments, and the treatment preferred by the independent auditors, and anymaterial written communications between the independent auditors andmanagement, such as any “management representation” letter, reports onobservations and recommendations on internal control or schedule ofunadjusted differences; and

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## (vii)                           todiscuss with management the timing and the process for implementing rotation ofany “audit partner” (as defined in the rules of the SEC) in accordancewith the rules of the SEC with respect thereto.

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# 2.                                       Withrespect to financial reporting principles and policies and internal auditcontrols and procedures,

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## (i)                                     toconsider any reports or communications (and management’s and/or the internalaudit department’s responses thereto) submitted to the Committee by theindependent auditors required by or referred to in SAS 61 (as codified byAU Section 380), as it may be modified or supplemented;

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## (ii)                                  toestablish procedures for the receipt, retention and treatment of complaintsreceived by Chiron regarding accounting, internal accounting controls orauditing matters, and for the confidential, anonymous submission by Companyemployees of concerns regarding questionable accounting or auditing matters;

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## (iii)                               toestablish hiring policies for employees or former employees of the independentauditors in accordance with applicable law, rules and regulations;

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## (iv)                              tomeet with management, the independent auditors and, if appropriate, thedirector of the internal auditing department: (a) to discuss the scope ofthe annual audit; (b) to review and discuss Chiron’s annual auditedfinancial statements and quarterly financial statements, including the specificdisclosures under “Management’s Discussion and Analysis of Financial Conditionand Results of Operations”; (c) to discuss any difficulties theindependent auditors encountered in the course of the audit, including anyrestrictions on their activities or access to requested

 

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## information and anysignificant disagreements with management; and (d) to discuss, as appropriate (1) any majorissues regarding accounting principles and financial statement presentations,including any significant changes in Chiron’s selection or application ofaccounting principles, and major issues as to the adequacy of Chiron’s internalcontrols and any special audit steps adopted in light of material controldeficiencies, (2) analyses prepared by management and/or the independentauditors setting forth significant financial reporting issues and judgmentsmade in connection with the preparation of the financial statements, includinganalyses of the effects of alternative GAAP methods on the financialstatements, and (3) the effect of regulatory and accounting initiatives,as well as off-balance sheet structures, on the financial statements of Chiron;

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## (v)                                 to discuss guidelines and policies governingthe process by which senior management of Chiron and the relevant departmentsof Chiron assess and manage Chiron’s exposure to risk, and to discuss Chiron’smajor financial risk exposures and the steps management has taken to monitorand control such exposures; and

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## (vi)                              to oversee the internal audit function, toreview and approve the appointment or change in the director of the internalauditing department and to meet with the director of the internal auditingdepartment in executive session.

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# 3.                                       Withrespect to reporting and recommendations,

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## (i)                                     to discuss and review the type andpresentation of information to be included in earnings press releases;

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## (ii)                                  to discuss the types of financial informationand earnings guidance provided, and the types of presentations made, toanalysts and rating agencies;

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## (iii)                               toreview and assess the adequacy of this Charter at least annually;

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## (iv)                              toprepare the report for inclusion in Chiron’s annual proxy statement inaccordance with SEC rules, and include a copy of the Committee Charter as anappendix to the annual proxy statement at least once every three years; and

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## (v)                                 toreview related party transactions for potential conflict of interestsituations, and to approve all such transactions, unless such transactions havebeen reviewed and approved by another independent body of the Board. Forpurposes hereof, the term “related party transaction” refers to transactionsrequired to be disclosed pursuant to SEC Regulation S-K, Item 404.

 

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