Document:

Prepared by MERRILL CORPORATION

QuickLinks
 -- Click here to rapidly navigate through this document

 
 
 

Exhibit 4.02    
  

REGISTRATION RIGHTS AGREEMENT  

    THIS REGISTRATION RIGHTS AGREEMENT is made and entered into as of June 12, 2001 by and between Chiron Corporation, a Delaware corporation ("the
Company"), and Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated (the "Initial Purchaser"), pursuant to a purchase agreement, dated June 7, 2001 (the
"Purchase Agreement"), between the Company and the Initial Purchaser. In order to induce the Initial Purchaser to enter into the Purchase Agreement, the Company has agreed to provide the registration
rights set forth in this Agreement. The execution of this Agreement is a condition to the closing under the Purchase Agreement. 

        The
Company agrees with the Initial Purchaser, (i) for its benefit as Initial Purchaser and (ii) for the benefit of the beneficial owners (including the Initial
Purchaser) from time to time of the LYONs (as defined herein), and the beneficial owners from time to time of the Underlying Common Stock (as defined herein) issued upon conversion of LYONs (each of
the foregoing a "Holder" and together the "Holders"), as follows: 

        SECTION
1.  Definitions.  Capitalized terms used herein without definition shall have their respective
meanings set forth in the Purchase Agreement. As used in this Agreement, the following terms shall have the following meanings: 

        "Affiliate" With respect to any specified person, an "affiliate," as defined in Rule 144, of such person. 

        "Applicable Conversion Price" The Applicable Conversion Price as of any date of determination means the Applicable Principal Amount per
$1,000 principal amount at maturity of LYONs as of such date of determination divided by the Conversion Rate in effect as of such date of determination or, if no LYONs are then outstanding, the
Conversion Rate that would be in effect were LYONs then outstanding. 

        "Applicable Principal Amount" Applicable Principal Amount as of any date of determination, with respect to each $1,000 principal amount
at maturity of LYONs means the sum of the initial issue price of such LYONs ($550.45) plus accrued original issue discount and contingent additional principal, if any (and accrued original issue
discount thereon), with respect to such LYON through such date of determination or, if no LYONs are then outstanding, such sum calculated as if such LYONs were then outstanding. 

        "Business Day" Each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which banking institutions in The City of New
York are authorized or obligated by law or executive order to close. 

        "Common Stock" The Common Stock, $0.01 par value, of the Company and any other shares of common stock as may constitute "Common Stock"
for purposes of the Indenture, including the Underlying Common Stock. 

        "Conversion Rate" Conversion Rate shall have the meaning assigned to such term in the Indenture. 

        "Damages Accrual Period" See Section 2(e) hereof. 

        "Damages Payment Date" Each June 12 and December 12. 

        "Deferral Notice" See Section 3(i) hereof. 

        "Deferral Period" See Section 3(i) hereof. 

        "Effectiveness Deadline Date" See Section 2(a) hereof. 

        "Effectiveness Period" The period of two years from the Issue Date or such shorter period ending on the date that all Registrable
Securities have ceased to be Registrable Securities. 

 

        "Event" See Section 2(e) hereof. 

        "Event Termination Date" See Section 2(e) hereof. 

        "Event Date" See Section 2(e) hereof. 

        "Exchange Act" The Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder. 

        "Filing Deadline Date" See Section 2(a) hereof. 

        "Holder" See the second paragraph of this Agreement. 

        "Indenture" The Indenture dated as of the date hereof between the Company and State Street Bank and Trust Company of California, N.A.,
as trustee, pursuant to which the LYONs are being issued. 

        "Initial Purchaser" Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated. 

        "Initial Shelf Registration Statement" See Section 2(a) hereof. 

        "Issue Date" means June 12, 2001. 

        "Liquidated Damages Amount" See Section 2(e) hereof. 

        "Losses" See Section 6 hereof. 

        "LYONs" The Liquid Yield OptionTM Notes due 2031 of the Company to be purchased pursuant to the Purchase Agreement. 

        "Material Event" See Section 3(i) hereof. 

        "Notice and Questionnaire" A written notice delivered to the Company containing substantially the information called for by the Selling
Security Holder Notice and Questionnaire attached as Annex A to the Offering Memorandum of the Company dated June 7, 2001 relating to the LYONs. 

        "Notice Holder" On any date, any Holder that has delivered a Notice and Questionnaire to the Company on or prior to such date. 

        "Prospectus" The prospectus included in any Registration Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 415 promulgated under the Securities Act), as amended or supplemented
by any amendment or prospectus supplement, including post-effective amendments, and all materials incorporated by reference or explicitly deemed to be incorporated by reference in such
Prospectus. 

        "Purchase Agreement" See the first paragraph of this Agreement. 

        "Record Holder" With respect to any Damages Payment Date relating to any LYON or shares of Underlying Common Stock as to which any
Liquidated Damages Amount has accrued, the registered holder of such LYON or such shares of Underlying Common Stock, as the case may be, on the 15th day prior to such Damages Payment Date. 

        "Registrable Securities" The LYONs and the Underlying Common Stock until such securities have been converted or exchanged and, at all
times subsequent to any such conversion or exchange, any securities into or for which such securities have been converted or exchanged, and any security issued with respect thereto upon any stock
dividend, split, merger or similar event until, in the case of any such security, the earliest of (i) its effective registration under the Securities Act and resale in accordance with the
Registration Statement covering it, (ii) expiration of the holding period that would 

2

 

be applicable thereto under Rule 144(k) were it not held by an Affiliate of the Company, or (iii) its sale to the public pursuant to Rule 144. 

        "Registration Expenses" See Section 5 hereof. 

        "Registration Statement" Any registration statement of the Company that covers any of the Registrable Securities pursuant to the
provisions of this Agreement, including the Prospectus, amendments and supplements to such registration statement, including post-effective amendments, all exhibits, and all materials
incorporated by reference or explicitly deemed to be incorporated by reference in such registration statement. 

        "Restricted Securities" As this term is defined in Rule 144. 

        "Rule 144" Rule 144 under the Securities Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC. 

        "Rule 144A" Rule 144A under the Securities Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC. 

        "SEC" The Securities and Exchange Commission. 

        "Securities Act" The Securities Act of 1933, as amended, and the rules and regulations promulgated by the SEC thereunder. 

        "Shelf Registration Statement" See Section 2(a) hereof. 

        "Subsequent Shelf Registration Statement" See Section 2(b) hereof. 

        "Tax Event" shall have the meaning assigned to such term in the Indenture. 

        "TIA" The Trust Indenture Act of 1939, as amended. 

        "Trustee" State Street Bank and Trust Company of California, N.A. (or any successor entity), the Trustee under the Indenture. 

        "Underlying Common Stock" The Common Stock into which the LYONs are convertible or issued upon any such conversion or payment of the
purchase price of a purchase of LYONs. 

        SECTION
2.  Shelf Registration.  

        (a)  The
Company shall prepare and file or cause to be prepared and filed with the SEC no later than a date which is ninety (90) days after the Issue Date (the
"Filing Deadline Date") a Registration Statement for an offering to be made on a delayed or continuous basis pursuant to Rule 415 of the Securities Act (a "Shelf Registration Statement")
registering the resale from time to time by Holders thereof of all of the Registrable Securities (the "Initial Shelf Registration Statement"). The Initial Shelf Registration Statement shall be on
Form S-3 or another appropriate form permitting registration of such Registrable Securities for resale by such Holders in accordance with the methods of distribution reasonably
elected by the Holders and set forth in the Initial Shelf Registration Statement; provided, that in no event will such method(s) of distribution take the form of an underwritten offering of the
Registrable Securities without the prior agreement of the Company. The Company shall use reasonable efforts to cause the Initial Shelf Registration Statement to be declared effective under the
Securities Act by the date (the "Effectiveness Deadline Date") that is one-hundred-and-eighty (180) days after the Issue Date, and to keep the Initial Shelf
Registration Statement (or any Subsequent Shelf Registration Statement) continuously effective under the Securities Act until the expiration of the Effectiveness Period. At the time the Initial Shelf
Registration Statement is declared effective, each Holder that became a Notice Holder on or prior to the date 10 Business Days prior to such time of effectiveness shall be named as a selling security
holder in the Initial Shelf Registration Statement and the related Prospectus in such a manner as to permit such Holder to deliver such 

3

 

Prospectus to purchasers of Registrable Securities in accordance with applicable law (other than laws not generally applicable to all such Holders). With the exception of Novartis AG, none of the
Company's security holders (other than the Holders of Registrable Securities) shall have the right to include any of the Company's securities in the Shelf Registration Statement. 

        (b)  If
the Initial Shelf Registration Statement or any Subsequent Shelf Registration Statement ceases to be effective for any reason at any time during the
Effectiveness Period, the Company shall use reasonable efforts to obtain the prompt withdrawal of any order suspending the effectiveness thereof, and in any event shall within thirty (30) days
of such cessation of effectiveness amend the Shelf Registration Statement in a manner reasonably expected by the Company to obtain the withdrawal of the order suspending the effectiveness thereof, or
file an additional Shelf Registration Statement covering all of the securities that as of the date of such filing are Registrable Securities (a "Subsequent Shelf Registration Statement"). If a
Subsequent Shelf Registration Statement is filed, the Company shall use reasonable efforts to cause the Subsequent Shelf Registration Statement to become effective as promptly as is reasonably
practicable after such filing or, if filed during a Deferral Period, after the expiration of such Deferral Period, and to keep such Registration Statement (or subsequent Shelf Registration Statement)
continuously effective until the end of the Effectiveness Period. 

        (c)  The
Company shall supplement and amend the Shelf Registration Statement if required by the rules, regulations or instructions applicable to the registration form
used by the Company for such Shelf Registration Statement, if required by the Securities Act or, to the extent to which the Company does not reasonably object, as reasonably requested by the Initial
Purchaser or by the Trustee on behalf of the registered Holders. 

        (d)  Each
Holder of Registrable Securities agrees that if such Holder wishes to sell Registrable Securities pursuant to a Shelf Registration Statement and related
Prospectus, it will do so only in accordance with this Section 2(d) and Section 3(i). Each Holder of Registrable Securities wishing to sell Registrable Securities pursuant to a Shelf
Registration Statement and related Prospectus agrees to deliver a Notice and Questionnaire to the Company at least five (5) Business Days prior to any intended distribution of Registrable
Securities under the Shelf Registration Statement. From and after the date the Initial Shelf Registration Statement is declared effective, the Company shall, as promptly as practicable after the date
a Notice and Questionnaire is delivered, (i) if required by applicable law, file with the SEC a post-effective amendment to the Shelf Registration Statement or prepare and, if
required by applicable law, file a supplement to the related Prospectus or a supplement or amendment to any document incorporated therein by reference or file any other document required by the
SEC so that the Holder delivering such Notice and Questionnaire is named as a selling security holder in the Shelf Registration Statement and the related Prospectus in such a manner as to permit such
Holder to deliver such Prospectus to purchasers of the Registrable Securities in accordance with applicable law (other than laws not generally applicable to all Holders of Registrable Securities
wishing to sell Registrable Securities pursuant to the Shelf Registration Statement and related Prospectus) and, if the Company shall file a post-effective amendment to the Shelf
Registration Statement, use reasonable efforts to cause such post-effective amendment to be declared effective under the Securities Act as promptly as is reasonably practicable;
(ii) provide such Holder copies of any documents filed pursuant to Section 2(d)(i); and (iii) notify such Holder as promptly as practicable after the effectiveness under the
Securities Act of any post-effective amendment filed pursuant to Section 2(d)(i); provided, that if such Notice and Questionnaire is delivered during a Deferral Period, the Company
shall so inform the Holder delivering such Notice and Questionnaire and shall take the actions set forth in clauses (i), (ii) and (iii) above upon expiration of the Deferral Period in
accordance with Section 3(i), provided, further, that if under applicable law the Company has more than one option as to the type or manner of making any such filing, as set forth in an opinion
of nationally-recognized counsel experienced in such matters delivered by the Holder to the Company, it will make the required filing or filings in the manner or of a type that is reasonably expected
to result in the 

4

 

earliest availability of the Prospectus for effecting resales of Registrable Securities. Notwithstanding anything contained herein to the contrary, the Company shall be under no obligation to name any
Holder that is not a Notice Holder as a selling security holder in any Registration Statement or related Prospectus; provided, however, that any Holder that becomes a Notice Holder pursuant to the
provisions of Section 2(d) of this Agreement (whether or not such Holder was a Notice Holder at the time the Registration Statement was initially declared effective) shall be named as a selling
security holder in the Registration Statement or related Prospectus subject to and in accordance with the requirements of this Section 2(d). 

        (e)  The
parties hereto agree that the Holders of Registrable Securities will suffer damages, and that it would not be feasible to ascertain the extent of such damages
with precision, if (i) the Initial Shelf Registration Statement has not been filed on or prior to the Filing Deadline Date, (ii) the Initial Shelf Registration Statement has not been
declared effective under the Securities Act on or prior to the Effectiveness Deadline Date, or (iii) the aggregate duration of Deferral Periods in any period exceeds the number of days
permitted in respect of such period pursuant to Section 3(i) hereof (each of the events of a type described in any of the foregoing clauses (i) through (iii) are
individually referred to herein as an "Event," and the Filing Deadline Date in the case of clause (i), the Effectiveness Deadline Date in the case of clause (ii), and the date on which
the aggregate duration of Deferral Periods in any period exceeds the number of days permitted by Section 3(i) hereof in the case of clause (iii), being referred to herein as an
"Event Date"). Events shall be deemed to continue until the "Event Termination Date," which shall be the following dates with respect to the respective types of Events: the date the Initial Shelf
Registration Statement is filed in the case of an Event of the type described in clause (i), the date the Initial Shelf Registration Statement is declared effective under the Securities Act in
the case of an Event of the type described in clause (ii), termination of the Deferral Period that caused the limit on the aggregate duration of Deferral Periods in a period set forth in
Section 3(i) to be exceeded in the case of the commencement of an Event of the type described in clause (iii). 

        Accordingly,
commencing on (and including) any Event Date and ending on (but excluding) the next date on which there are no Events that have occurred and are continuing (a "Damages
Accrual Period"), the Company agrees to pay, as liquidated damages and not as a penalty, an amount (the "Liquidated Damages Amount"), payable on the Damages Payment Dates to Record Holders of then
outstanding LYONs that are Registrable Securities or of then outstanding shares of Underlying Common Stock issued upon conversion of LYONs that are Registrable Securities, as the case may be,
accruing, for each portion of such Damages Accrual Period beginning on and including a Damages Payment Date (or, in respect of the first time that the Liquidation Damages Amount is to be paid to
Holders on a Damages Payment Date as a result of the occurrence of any particular Event, from the Event Date) and ending on but excluding the first to occur of (A) the date of the end of the
Damages Accrual Period or (B) the next Damages Payment Date, at a rate per annum equal to one-quarter of one percent (0.25%) for the first 90-day period from the Event
Date, and thereafter at a rate per annum equal to one-half of one percent (0.5%) of the aggregate Applicable Principal Amount of such LYONs and the aggregate Applicable Conversion Price of
the shares of Underlying Common Stock, as the case may be, in each case determined as of the Business Day immediately preceding the next Damages Payment Date; provided, that any Liquidated Damages
Amount accrued with respect to any LYON or portion thereof called for redemption on a redemption date or converted into Underlying Common Stock on a conversion date, shall, in any such event, be paid
instead to the Holder who submitted such LYON or portion thereof for redemption or conversion on the applicable redemption date or conversion date, as the case may be, on such date (or promptly
following the conversion date, in the case of conversion). Notwithstanding the foregoing, no Liquidated Damages Amounts shall accrue as to any Registrable Security from and after the earlier of
(x) the date such security is no longer a Registrable Security and (y) expiration of the Effectiveness Period. The rate of accrual of the Liquidated Damages Amount with respect to any
period shall not exceed the rate provided for in this paragraph notwithstanding the occurrence of multiple concurrent Events. Following the cure of all 

5

 

Events requiring the payment by the Company of Liquidated Damages Amounts to the Holders of Registrable Securities pursuant to this Section, the accrual of Liquidated Damages Amounts will cease
(without in any way limiting the effect of any subsequent Event requiring the payment of the Liquidated Damages Amount by the Company). 

        The
Trustee shall be entitled, on behalf of Holders of LYONs or the Underlying Common Stock, as the case may be, to seek any available remedy for the enforcement of this Agreement,
including for the payment of any Liquidated Damages Amount. Notwithstanding the foregoing, the parties agree that the sole monetary damages payable for a violation of the terms of this Agreement with
respect to which liquidated damages are expressly provided shall be such liquidated damages. Nothing shall preclude a Notice Holder or Holder of Registrable Securities from pursuing or obtaining
specific performance or other equitable relief with respect to this Agreement. 

        All
of the Company's obligations set forth in this Section 2(e) that are outstanding with respect to any Registrable Security at the time such security ceases to be a
Registrable Security shall survive until such time as all such obligations with respect to such security have been satisfied in full (notwithstanding termination of this Agreement pursuant to
Section 8(j)). 

        The
parties hereto agree that the liquidated damages provided for in this Section 2(e) constitute a reasonable estimate of the damages that may be incurred by Holders of
Registrable Securities by reason of the failure of the Shelf Registration Statement to be filed or declared effective or available for effecting resales of Registrable Securities in accordance with
the provisions hereof. 

        SECTION
3.  Registration Procedures.  In connection with the registration obligations of the Company
under Section 2 hereof, the Company shall: 

        (a)  Before
filing any Registration Statement or Prospectus or any amendments or supplements (other than supplements that do nothing more substantive than name one or
more Notice Holders as selling security holders) thereto with the SEC, furnish to the Initial Purchaser copies of all such documents proposed to be filed and use reasonable efforts to reflect in each
such document when so filed with the SEC such comments as the Initial Purchaser reasonably shall propose within two (2) Business Days of the delivery of such copies to the Initial Purchaser. 

        (b)  Prepare
and file with the SEC such amendments and post-effective amendments to each Registration Statement as may be necessary to keep such
Registration Statement continuously effective for the applicable period specified in Section 2(a); cause the related Prospectus to be supplemented by any required Prospectus supplement, and as
so supplemented to be filed pursuant to Rule 424 (or any similar provisions then in force) under the Securities Act; and use its reasonable efforts to comply with the provisions of the
Securities Act applicable to it with respect to the disposition of all securities covered by such Registration Statement during the Effectiveness Period in accordance with the intended methods of
disposition by the sellers thereof set forth in such Registration Statement as so amended or such Prospectus as so supplemented. 

        (c)  As
promptly as practicable give notice to the Notice Holders and the Initial Purchaser (i) when any Prospectus, Prospectus supplement, Registration
Statement or post-effective amendment to a Registration Statement has been filed with the SEC and, with respect to a Registration Statement or any post-effective amendment,
when the same has been declared effective (provided, however, that the Company shall not be required by this clause (i) to notify (A) the Initial Purchaser of the filing of a Prospectus
supplement that does nothing more substantive than name one or more Notice Holders as selling security holders or (B) any Notice Holder of the filing of a Prospectus supplement that does
nothing more substantive than name one or more other Notice Holders as selling security holders, (ii) of any request, following the effectiveness of the Initial Shelf Registration Statement
under the Securities Act, by the SEC or any other federal or state governmental authority for amendments or supplements to any Registration Statement or related Prospectus or for additional
information, (iii) of 

6

 

the issuance by the SEC or any other federal or state governmental authority of any stop order suspending the effectiveness of any Registration Statement or the initiation or threatening of any
proceedings for that purpose, (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the
Registrable Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose, (v) of the occurrence of (but not the nature of or details concerning) a
Material Event (provided, however, that no notice by the Company shall be required pursuant to this clause (v) in the event that the Company either promptly files a Prospectus supplement to
update the Prospectus or a Form 8-K or other appropriate Exchange Act report that is incorporated by reference into the Registration Statement, which, in either case, contains the
requisite information with respect to such Material Event that results in such Registration Statement no longer containing any untrue statement of material fact or omitting to state a material fact
necessary to make the statements contained therein not misleading) and (vi) of the determination by the Company that a post-effective amendment to a Registration Statement will be
filed with the SEC, which notice may, at the discretion of the Company (or as required pursuant to Section 3(i)), state that it constitutes a Deferral Notice, in which event the provisions of
Section 3(i) shall apply. 

        (d)  Use
reasonable efforts to obtain the withdrawal of any order suspending the effectiveness of a Registration Statement or the lifting of any suspension of the
qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction in which they have been qualified for sale, in either case at the earliest practicable
moment or, if any such order or suspension is made effective during any Deferral Period, at the earliest practicable moment after the expiration of such Deferral Period. 

        (e)  If
requested by the Initial Purchaser or any Notice Holder, as promptly as practicable incorporate in a Prospectus supplement or post-effective
amendment to a Registration Statement such information as the Initial Purchaser or such Notice Holder shall, on the basis of an opinion of nationally-recognized counsel experienced in such matters,
determine to be required to be included therein by applicable law and make any required filings of such Prospectus supplement or such post-effective amendment; provided, that the Company
shall not be required to take any actions under this Section 3(e) that are not, in the reasonable opinion of counsel for the Company, in compliance with applicable law. 

        (f)  As
promptly as practicable furnish to each Notice Holder and the Initial Purchaser, upon their request and without charge, at least one (1) conformed copy
of the Registration Statement and any amendment thereto, including financial statements, but excluding schedules, all documents incorporated or deemed to be incorporated therein by reference and all
exhibits (unless requested in writing to the Company by such Notice Holder or the Initial Purchaser, as the case may be). 

        (g)  During
the Effectiveness Period, deliver to each Notice Holder in connection with any sale of Registrable Securities pursuant to a Registration Statement, without
charge, as many copies of the Prospectus or Prospectuses relating to such Registrable Securities (including each preliminary prospectus) and any amendment or supplement thereto as such Notice Holder
may reasonably request; and the Company hereby consents (except during such periods that a Deferral Notice is outstanding and has not been revoked) to the use of such Prospectus or each amendment or
supplement thereto by each Notice Holder in connection with any offering and sale of the Registrable Securities covered by such Prospectus or any amendment or supplement thereto in the manner set
forth therein. 

        (h)  Subject
to Section 3(i), prior to any public offering of the Registrable Securities pursuant to the Shelf Registration Statement, use its reasonable efforts
to register or qualify or cooperate with the Notice Holders in connection with the registration or qualification (or exemption from such registration or qualification) of such Registrable Securities
for offer and sale under the securities or Blue Sky laws of such jurisdictions within the United States as any Notice Holder reasonably requests 

7

 

in writing (which request may be included in the Notice and Questionnaire), it being agreed that no such registration or qualification will be made unless so requested; prior to any public offering of
the Registrable Securities pursuant to the Shelf Registration Statement, use its reasonable efforts to keep each such registration or qualification (or exemption therefrom) effective during the
Effectiveness Period in connection with such Notice Holder's offer and sale of Registrable Securities pursuant to such registration or qualification (or exemption therefrom) and do any and all other
acts or things necessary to enable the disposition in such jurisdictions of such Registrable Securities in the manner set forth in the relevant Registration Statement and the related Prospectus;
provided, that the Company will not be required to (i) qualify as a foreign corporation or as a dealer in securities in any jurisdiction where it is not otherwise qualified or (ii) take
any action that would subject it to general service of process in suits or to taxation in any such jurisdiction where it is not then so subject. 

        (i)  Upon
(A) the issuance by the SEC of a stop order suspending the effectiveness of the Shelf Registration Statement or the initiation of proceedings with
respect to the Shelf Registration Statement under Section 8(d) or 8(e) of the Securities Act, (B) the occurrence of any event or the existence of any fact (a "Material Event") as a
result of which any Registration Statement shall contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements
therein not misleading, or any Prospectus shall contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were
made, not misleading (including, in any such case, as a result of the non-availability of financial statements), or (C) the occurrence or existence of any corporate development
that, in the discretion of the Company, makes it appropriate to suspend the availability of the Shelf Registration Statement and the related Prospectus, (i) in the case of clause (B)
above, subject to the next sentence, as promptly as practicable prepare and file a post-effective amendment to such Registration Statement or a supplement to the related Prospectus
or any document incorporated therein by reference or file any other required document that would be incorporated by reference into such Registration Statement and Prospectus so that such Registration
Statement does not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and such
Prospectus does not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, as thereafter delivered to the purchasers of the Registrable Securities being sold thereunder, and, in the case of a
post-effective amendment to a Registration Statement, subject to the next sentence, use its reasonable efforts to cause it to be declared effective as promptly as practicable, and
(ii) give notice to the Notice Holders that the availability of the Shelf Registration Statement is suspended (a "Deferral Notice") and, upon receipt of any Deferral Notice, each Notice Holder
agrees not to sell any Registrable Securities pursuant to the Registration Statement until such Notice Holder's receipt of copies of the supplemented or amended Prospectus provided for in
clause (i) above, or until it is advised in writing by the Company that the Prospectus may be used, and has received copies of any additional or supplemental filings that are incorporated or
deemed incorporated by reference in such Prospectus. The Company will use its reasonable efforts to ensure that the use of the Prospectus may be resumed (x) in the case of clause (A)
above, as promptly as is practicable, (y) in the case of clause (B) above, as soon as, in the sole judgment of the Company, public disclosure of such Material Event would not be
prejudicial to or contrary to the interests of the Company or, if necessary to avoid unreasonable burden or expense, as soon as practicable thereafter and (z) in the case of clause (C)
above, as soon as, in the discretion of the Company, such suspension is no longer appropriate. The period during which the availability of the Registration Statement and any Prospectus is suspended
(the "Deferral Period") shall, without the Company incurring any obligation to pay liquidated damages pursuant to Section 2(e), not exceed forty-five (45) days in any three
(3) month period or one-hundred-and-twenty (120) days in any twelve (12) month period. 

8

 

        (j)  If requested in writing in connection with a disposition of Registrable Securities pursuant to a Registration Statement, make reasonably available for inspection
during normal business hours by a representative for the Notice Holders of such Registrable Securities and any broker-dealers, attorneys and accountants retained by such Notice Holders, all relevant
financial and other records, pertinent corporate documents and properties of the Company and its subsidiaries, and cause the appropriate executive officers, directors and designated employees of the
Company and its subsidiaries to make reasonably available for inspection during normal business hours all relevant information requested by such representative for the Notice Holders or any such
broker-dealers, attorneys or accountants in connection with such disposition, in each case as is customary for similar "due diligence" examinations; provided, however, that such persons shall first
agree in writing with the Company pursuant to a customary confidentiality agreement that any information that is reasonably designated by the Company in writing as confidential at the time of delivery
of such information shall be kept confidential by such persons and shall be used solely for the purposes of exercising rights under this Agreement, unless (i) disclosure of such information is
required by court or administrative order or is necessary to respond to inquiries of regulatory authorities, (ii) disclosure of such information is required by law (including any
disclosure requirements pursuant to federal securities laws in connection with the filing of any Registration Statement or the use of any Prospectus referred to in this Agreement), (iii) such
information becomes generally available to the public other than as a result of a disclosure or failure to safeguard by any such person or (iv) such information becomes available to any such
person from a source other than the Company and such source is not bound by a confidentiality agreement; and provided further, that the foregoing inspection and information gathering shall, to the
greatest extent possible, be coordinated on behalf of all the Notice Holders and the other parties entitled thereto by the counsel referred to in Section 5. 

        (k)  Comply
with all applicable rules and regulations of the SEC and make generally available to its securityholders earning statements (which need not be audited)
satisfying the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder (or any similar rule promulgated under the Securities Act) no later than 45 days after the
end of any 12-month period (or 90 days after the end of any 12-month period if such period is a fiscal year) commencing on the first day of the first fiscal quarter of
the Company commencing after the effective date of a Registration Statement, which statements shall cover said 12-month periods. 

        (l)  Cooperate
with each Notice Holder to facilitate the timely preparation and delivery of certificates representing Registrable Securities sold pursuant to a
Registration Statement, and cause such Registrable Securities to be in such denominations as are permitted by the Indenture and registered in such names as such Notice Holder may request in writing at
least two Business Days prior to any sale of such Registrable Securities. 

        (m)  Provide
a CUSIP number for all Registrable Securities covered by each Registration Statement not later than the effective date of such Registration Statement and
provide the Trustee for the LYONs and the transfer agent for the Common Stock with certificates for the Registrable Securities that are in a form eligible for deposit with The Depository Trust
Company. 

        (n)  Make
reasonable effort to provide such information as is required for any filings required to be made with the National Association of Securities
Dealers, Inc. 

        (o)  Upon
(i) the filing of the Initial Shelf Registration Statement and (ii) the effectiveness of the Initial Shelf Registration Statement, announce the
same, in each case by release to Reuters Economic Services and Bloomberg Business News or other means of dissemination reasonably expected to make such information known publicly. 

        (p)  Take
all actions necessary, or reasonably requested by the holders of a majority of the Registrable Securities being sold, in order to expedite or facilitate
disposition of such Registrable 

9

 

Securities; provided that the Company shall not be required to take any action in connection with an underwritten offering without its consent; and 

        (q)  Cause
the Indenture to be qualified under the TIA not later than the effective date of any Registration Statement; and in connection therewith, cooperate with the
Trustee to effect such changes to the Indenture as may be required for the Indenture to be so qualified in accordance with the terms of the TIA and execute, and use reasonable efforts to cause the
Trustee to execute, all documents as may be required to effect such changes, and all other forms and documents required to be filed with the SEC to enable the Indenture to be so qualified in a timely
manner. 

        SECTION
4.  Holder's Obligations.  Each Holder agrees, by acquisition of the Registrable Securities, that
no Holder of Registrable Securities shall be entitled to sell any of such Registrable Securities pursuant to a Registration Statement or to receive a Prospectus relating thereto, unless such Holder
has furnished the Company with a Notice and Questionnaire as required pursuant to Section 2(d) hereof (including the information required to be included in such Notice and Questionnaire) and
the information set forth in the next sentence. Each Notice Holder agrees promptly to furnish to the Company all information required to be disclosed in order to make the information previously
furnished to the Company by such Notice Holder not misleading, any other information regarding such Notice Holder and the distribution of such Registrable Securities as may be required to be disclosed
in the Registration Statement under applicable law or pursuant to SEC comments and any information otherwise required by the Company to comply with applicable law or regulations. Each Holder further
agrees, following termination of the Effectiveness Period, to notify the Company within 10 business days of request, of the amount of Registrable Securities sold pursuant to the Registration Statement
and, in the absence of a response, the Company may assume that all of the Holder's Registrable Securities were so sold. 

        SECTION
5.  Registration Expenses.  The Company shall bear all fees and expenses incurred in connection
with the performance by the Company of its obligations under Sections 2 and 3 of this Agreement whether or not any of the Registration Statements are declared effective. Such fees and expenses shall
include, without limitation, (i) all registration and filing fees (including, without limitation, fees and expenses (x) with respect to filings required to be made with the National
Association of Securities Dealers, Inc. and (y) of compliance with federal and state securities or Blue Sky laws to the extent such filings or compliance are required pursuant to this
Agreement (including, without limitation, reasonable fees and disbursements of the counsel specified in the next sentence in connection with Blue Sky qualifications of the Registrable Securities under
the laws of such jurisdictions as the Notice Holders of a majority of the Registrable Securities being sold pursuant to a Registration Statement may designate)), (ii) printing expenses
(including, without limitation, expenses of printing certificates for Registrable Securities in a form eligible for deposit with The Depository Trust Company), (iii) duplication expenses
relating to copies of any Registration Statement or Prospectus delivered to any Holders hereunder, (iv) fees and disbursements of counsel for the Company in connection with the Shelf
Registration Statement, and (v) reasonable fees and disbursements of the Trustee and its counsel and of the registrar and transfer agent for the Common Stock. In addition, the Company shall
bear or reimburse the Notice Holders for the reasonable fees and disbursements of one firm of legal counsel for the Holders, which shall, upon the written consent of the Initial Purchaser (which shall
not be unreasonably withheld), be a nationally recognized law firm experienced in securities law matters
designated by the Company. In addition, the Company shall pay the internal expenses of the Company (including, without limitation, all salaries and expenses of officers and employees performing legal
or accounting duties), the expense of any annual audit, the fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange on which the same
securities of the Company are then listed and the fees and expenses of any person, including special experts, retained by the Company. 

        SECTION
6.  Indemnification; Contribution.  

10

 

        (a)  The Company agrees to indemnify and hold harmless the Initial Purchaser and each holder of Registrable Securities and each person, if any, who controls the Initial
Purchaser or any holder of Registrable Securities within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act, as follows: 

	(i)
	against
any and all loss, liability, claim, damage and expense whatsoever, as incurred, arising out of any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement (or any amendment thereto), or the omission or alleged omission therefrom of a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made, not misleading or arising out of any untrue statement or alleged untrue statement of a material fact included in any
preliminary prospectus or the Prospectus (or any amendment or supplement thereto), or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not misleading;

	(ii)
	against
any and all loss, liability, claim, damage and expense whatsoever, as incurred, to the extent of the aggregate amount paid in settlement of
any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or of any claim whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, provided that (subject to Section 6(d) below) any such settlement is effected with the prior written consent of the Company; and

	(iii)
	subject
to Section 6(c) below, against any and all expense whatsoever, as incurred (including the fees and disbursements of counsel),
reasonably incurred in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, to the extent that any such expense is not paid under (i) or (ii) above; 

provided, however, that this indemnity agreement shall not apply to any loss, liability, claim, damage
or expense to the extent arising out of any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with written information furnished to the
Company by or on behalf of the Initial Purchaser, such holder of Registrable Securities (which also acknowledges the indemnity provisions herein) or any person, if any, who controls the Initial
Purchaser or any such holder of Registrable Securities expressly for use in the Registration Statement (or any amendment thereto), or any preliminary prospectus or the Prospectus (or any amendment or
supplement thereto); provided, further, that this indemnity agreement shall not apply to any loss, liability, claim, damage or expense (1) arising from an offer or sale of Registrable
Securities occurring during a Deferral Period, if a Deferral Notice was given to such Notice Holder in accordance with Section 8(b), or (2) if the Holder fails to deliver at or prior to
the written confirmation of sale, the most recent Prospectus, as amended or supplemented, and such Prospectus, as amended or supplemented, corrected such untrue statement or omission or alleged untrue
statement or omission of a material fact and the delivery thereof was required by law and would have constituted a complete defense to the claim in respect of such untrue statement or omission or
alleged untrue statement or omission. 

        (b)  In
connection with any Shelf Registration in which a holder, including, without limitation, the Initial Purchaser, of Registrable Securities is participating, in
furnishing information relating to such holder of Registrable Securities to the Company in writing expressly for use in such Registration Statement, any preliminary prospectus, the Prospectus or any
amendments or supplements thereto, the holders of such Registrable Securities agree, severally and not jointly, to indemnify and hold harmless the Initial Purchaser and each person, if any, who
controls the Initial Purchaser within the meaning of 

11

 

either Section 15 of the Securities Act or Section 20 of the Exchange Act and the Company, and each person, if any, who controls the Company within the meaning of either such Section,
against any and all loss, liability, claim, damage and expense described in the indemnity contained in subsection (a) of this Section, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Registration Statement (or any amendment thereto), or any preliminary prospectus or the Prospectus (or any amendment or supplement
thereto) in reliance upon and in conformity with written information furnished to the Company by or on behalf of such holder of Registrable Securities (which also acknowledges the indemnity provisions
herein) or any person, if any, who controls any such holder of Registrable Securities expressly for use in the Registration Statement (or any amendment thereto) or such preliminary prospectus or the
Prospectus (or any amendment or supplement thereto). 

        The
Initial Purchaser agrees to indemnify and hold harmless the Company, the holders of Registrable Securities, and each person, if any, who controls the Company or any holder of
Registrable Securities within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act against any and all loss, liability, claim, damage and expense
described in the indemnity contained in subsection (a) of this Section, as incurred, but only with respect to untrue statements or omissions, or alleged untrue statements or omissions, made in
the Registration Statement (or any amendment thereto), or any preliminary prospectus or the Prospectus (or any amendment or supplement thereto) in reliance upon and in conformity with written
information furnished to the Company by or on behalf of by the
Initial Purchaser expressly for use in the Registration Statement (or any amendment thereto) or such preliminary prospectus or the Prospectus (or any amendment or supplement thereto). 

        (c)  Each
indemnified party shall give notice as promptly as reasonably practicable to each indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, but failure to so notify an indemnifying party shall not relieve such indemnifying party from any liability hereunder to the extent it is not materially prejudiced
as a result thereof and in any event shall not relieve it from any liability which it may have otherwise than on account of this indemnity agreement. The indemnifying party, upon request of the
indemnified party, shall retain counsel reasonably satisfactory to the indemnified party to represent the indemnified party and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding. In any such proceeding, any indemnified party shall have the right to retain its own counsel, but the fees and expenses
of such counsel shall be at the expense of such indemnified party unless (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel or
(ii) the named parties to any such proceeding (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same
counsel would be inappropriate due to actual or potential differing interests between them. It is understood that the indemnifying party shall not, in respect of the legal expenses of any indemnified
party in connection with any proceeding or related proceedings in the same jurisdiction, be liable for (a) the reasonable fees and expenses of more than one separate firm (in addition to any
local counsel) for the Initial Purchaser, Holders of Registrable Securities, and all persons, if any, who control the Initial Purchaser or Holders of Registrable Securities within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange Act, or (b) the reasonable fees and expenses of more than one separate firm (in addition to any local
counsel) for the Company, its directors, and each person, if any, who controls the Company within the meaning of either such Section, and that all such reasonable fees and expenses shall be reimbursed
as they are incurred. In the case of any such separate firm for the Initial Purchaser, Holders of Registrable Securities, and control persons of the Initial Purchaser and Holders of Registrable
Securities, such firm shall be designated in writing by the Initial Purchaser. In the case of any such separate firm for the Company, and such directors, officers and control persons of the Company,
such firm shall be designated in writing by the Company. No indemnifying party shall, without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to 

12

 

any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever in respect of which indemnification or contribution could be
sought under this Section 6 (whether or not the indemnified parties are actual or potential parties thereto), unless such settlement, compromise or consent (i) includes an unconditional
release of each indemnified party from all liability arising out of such litigation, investigation, proceeding or claim and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act by or on behalf of any indemnified party. 

        (d)  If
at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel, such
indemnifying party agrees that it shall be liable for any settlement of the nature contemplated by Section 6(a)(ii) effected without its written consent if (i) such settlement is
entered into more than 60 days after receipt by such indemnifying party
of aforesaid request, (ii) such indemnifying party shall have received notice of the terms of such settlement at least 30 days prior to such settlement being entered into and
(iii) such indemnifying party shall not have reimbursed such indemnified party in accordance with such request prior to the date of such settlement;  provided, that an indemnifying party shall not
be liable for any such settlement effected without its consent if such indemnifying party
(1) reimburses such indemnified party in accordance with such request to the extent it considers such request to be reasonable and (2) provides written notice to the indemnified party
describing any unpaid balance it believes is unreasonable and the reasons therefor, in each case prior to the date of such settlement. 

        (e)  If
the indemnification to which an indemnified party is entitled under this Section 6 is for any reason unavailable to or insufficient although applicable
in accordance with its terms to hold harmless an indemnified party in respect of any losses, liabilities, claims, damages or expenses referred to therein, then each indemnifying party shall contribute
to the aggregate amount of such losses, liabilities, claims, damages and expenses incurred by such indemnified party, as incurred, in such proportion as is appropriate to reflect the relative fault of
the indemnifying party or parties on the one hand and of the indemnified party on the other hand in connection with the statements or omissions which resulted in such losses, liabilities, claims,
damages or expenses, as well as any other relevant equitable considerations. 

        The
relative fault of the Company on the one hand and the holders of the Registrable Securities or the Initial Purchaser on the other hand shall be determined by reference to, among
other things, whether any such untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Company or by the
holder of the Registrable Securities or the Initial Purchaser and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. 

        The
parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 6(e) were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred to above in this Section 6(e). The aggregate amount of losses, liabilities, claims, damages, and expenses
incurred by an indemnified party and referred to above in this Section 6(e) shall be deemed to include any out-of-pocket legal or other expenses reasonably incurred by
such indemnified party in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue or alleged untrue statement or omission or alleged omission. 

        Notwithstanding
the provisions of this Section 6, neither the holder of any Registrable Securities nor the Initial Purchaser, shall be required to indemnify or contribute any
amount in excess of the amount by which the total price at which the Registrable Securities sold by such holder of Registrable Securities or by the Initial Purchaser, as the case may be, and
distributed to the public were offered to the public exceeds the amount of any damages that such holder of Registrable Securities or 

13

 

the Initial Purchaser has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. 

        No
person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. 

        For
purposes of this Section 6(e), each person, if any, who controls the Initial Purchaser or any holder of Registrable Securities within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act shall have the same rights to contribution as the Initial Purchaser or such holder, and each person, if any, who controls the Company within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act shall have the same rights to contribution as the Company. 

        SECTION
7.  Information Requirements.  The Company covenants that, if at any time before the end of the
Effectiveness Period the Company is not subject to the reporting requirements of the Exchange Act, it will cooperate with any Holder of Registrable Securities and take such further reasonable action
as any Holder of Registrable Securities may reasonably request in writing (including, without limitation, making such reasonable representations as any such Holder may reasonably request), all to the
extent required from time to time to enable such Holder to sell Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by Rule 144
and Rule 144A under the Securities Act and customarily taken in connection with sales pursuant to such exemptions. Upon the written request of any Holder of Registrable Securities, the Company
shall deliver to such Holder a written statement as to whether it has complied with such filing requirements, unless such a statement has been included in the Company's most recent annual or quarterly
report required to be filed and filed pursuant to Section 13 or Section 15(d) of Exchange Act. Notwithstanding the foregoing, nothing in this Section 7 shall be deemed to require
the Company to register any of its securities under any section of the Exchange Act. 

        SECTION
8.  Miscellaneous; No Conflicting Agreements.  The Company is not, as of the date hereof, a party
to, nor shall it, on or after the date of this Agreement, enter into, any agreement with respect to its securities that conflicts with the rights granted to the Holders of Registrable Securities in
this Agreement. The Company represents and warrants that the rights granted to the Holders of Registrable Securities hereunder do not in any way conflict with the rights granted to the holders of the
Company's securities under any other agreements. 

        (a)  Amendments and Waivers.  The provisions of this Agreement, including the provisions of this
sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the Company has obtained the written consent of
Holders of a majority of the then outstanding Underlying Common Stock constituting Registrable Securities (with Holders of LYONs deemed to be the Holders, for purposes of this Section, of the number
of outstanding shares of Underlying Common Stock into which such LYONs are or would be convertible or exchangeable as of the date on which such consent is requested). Notwithstanding the foregoing, a
waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively
to the rights of Holders of Registrable Securities whose securities are being sold pursuant to a Registration Statement and that does not directly or indirectly affect the rights of other Holders of
Registrable Securities may be given by Holders of at least a majority of the Registrable Securities being sold by such Holders pursuant to such Registration Statement; provided, that the provisions of
this sentence may not be amended, modified, or supplemented except in accordance with the provisions of the immediately preceding sentence. Each Holder of Registrable Securities outstanding at the
time of any such amendment, modification, supplement, waiver or consent or thereafter shall be bound by any such amendment, modification, supplement, waiver or consent effected pursuant to this
Section 8(a), whether or not any notice, writing or marking indicating such 

14

 

amendment, modification, supplement, waiver or consent appears on the Registrable Securities or is delivered to such Holder. 

        (b)  Notices.  All notices and other communications provided for or permitted hereunder shall be made in
writing by hand delivery, by telecopier, by courier guaranteeing overnight delivery or by first-class mail, return receipt requested, and shall be deemed given (i) when made, if made by hand
delivery, (ii) upon confirmation, if made by telecopier, (iii) one (1) Business Day after being deposited with such courier, if made by overnight courier or (iv) on the
date indicated on the notice of receipt, if made by first-class mail, to the parties as follows: 

        (w)  if
to a Holder of Registrable Securities that is not a Notice Holder, at the address for such Holder then appearing in the Registrar (as defined in the Indenture); 

        (x)  if
to a Notice Holder, at the most current address given by such Holder to the Company in a Notice and Questionnaire or any amendment thereto; 

        (y)  if
to the Company, to: 

              Chiron
Corporation

              4560 Horton Street

              Emeryville, CA 94608

              Attention: Senior Vice President, General Counsel and Secretary

              Telecopier No.: (510) 655-9910 

        and

              Sullivan &
Cromwell

              1888 Century Park East

              Los Angeles, California 90067-1725

              Attention: Frank H. Golay, Jr., Esq.

              Telecopier: (310) 712-8800 

        and

        (z)  if
to the Initial Purchaser, to: 

              Merrill
Lynch & Co.,

              Merrill Lynch, Pierce, Fenner & Smith Incorporated

              North Tower

              World Financial Center

              New York, New York 10281

              Attention: Paul Pepe

              Telecopier: (212) 738-1069 

or
to such other address as such person may have furnished to the other persons identified in this Section 8(b) in writing in accordance herewith. 

        (c)  Approval of Holders.  Whenever the consent or approval of Holders of a specified percentage of
Registrable Securities is required hereunder, Registrable Securities held by the Company or its affiliates (as such term is defined in Rule 405 under the Securities Act) (other than the Initial
Purchaser or subsequent Holders of Registrable Securities if such subsequent Holders are deemed to be such affiliates solely by reason of their holdings of such Registrable Securities) shall not be
counted in determining whether such consent or approval was given by the Holders of such required percentage. 

        (d)  Successors and Assigns.  This Agreement shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties and, without requiring any express assignment, shall inure to the benefit of and be binding upon each Holder of any Registrable Securities. 

15

 

        (e)  Counterparts.  This Agreement may be executed in any number of counterparts and by the parties
hereto in separate counterparts, each of which when so executed shall be deemed to be original and all of which taken together shall constitute one and the same agreement. 

        (f)  Headings.  The headings in this Agreement are for convenience of reference only and shall not limit
or otherwise affect the meaning hereof. 

        (g)  Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK. 

        (h)  Severability.  If any term, provision, covenant or restriction of this Agreement is held to be
invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected,
impaired or invalidated thereby, and the parties hereto shall use their best efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction, it being intended that all of the rights and privileges of the parties shall be enforceable to the fullest extent permitted by law. 

        (i)  Entire Agreement.  This Agreement is intended by the parties as a final expression of their
agreement and is intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein and the registration
rights granted by the Company with respect to the Registrable Securities. Except as provided in the Purchase Agreement, there are no restrictions, promises, warranties or undertakings, other than
those set forth or referred to herein, with respect to the registration rights granted by the Company with respect to the Registrable Securities. This Agreement supersedes all prior agreements and
undertakings among the parties with respect to such registration rights. 

        (j)  Termination.  This Agreement and the obligations of the parties hereunder shall terminate upon the
end of the Effectiveness Period, except for any liabilities or obligations under Sections 4, 5 or 6 hereof and the obligations to make payments of and provide for liquidated damages under
Section 2(e) hereof to the extent such damages accrue prior to the end of the Effectiveness Period, each of which shall remain in effect in accordance with its terms. 

        IN
WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date first written above. 

	 	 	CHIRON CORPORATION
	

 	
 	

By:	
 	

/s/ JAMES R. SULAT   
 Name: James R. Sulat

Title:Vice President and Chief Financial Officer

Accepted
as of the date

first above written: 

MERRILL
LYNCH & CO.

MERRILL LYNCH, PIERCE, FENNER & SMITH

                           INCORPORATED 

By: MERRILL
LYNCH, PIERCE, FENNER & SMITH

                                 INCORPORATED 

	By:	 	/s/ JAMES KARRELS   
 Authorized Signatory	 	 

16

QuickLinks

Exhibit 4.02 Registration Rights AgreementPrepared by MERRILL CORPORATION

QuickLinks
 -- Click here to rapidly navigate through this document
  

 
 

Redacted Version    
  

[**] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.  

  
 

    SECOND AMENDMENT AGREEMENT    
  

    This Second Amendment Agreement is made and dated as of June 15, 2001 between Schering Aktiengesellschaft ("Schering") and Chiron Corporation
("Chiron"). 

    WHEREAS,
Schering and Chiron have entered into the Regulatory Filing, Development and Supply Agreement as of May 10, 1993 and the Amendment Agreement (HDS Fees and Deeply
Discounted Vials) as of September 23, 1997 (the Regulatory Filing, Development and Supply Agreement as amended by the Amendment Agreement being hereinafter referred to as the "RFDS Agreement");
and 

    WHEREAS,
Schering and Chiron have entered into a Term Sheet as of January 31, 2001 (the "Term Sheet") pursuant to which the Parties agreed to amend certain terms of the RFDS
Agreement relating to the establishment and qualification by Chiron of a second production site and to the supply of Betaseron; and 

    WHEREAS,
Schering and Chiron wish to amend the RFDS Agreement to reflect the terms of the Term Sheet. 

    NOW
THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows: 

    Capitalized
terms used in this Second Amendment Agreement and not defined herein shall have the meanings assigned to them in the RFDS Agreement. 

SECTION ONE: AMENDMENTS TO ARTICLE ONE: DEFINITIONS ARTICLE  

    Reference is made to Article 1 of the RFDS Agreement (entitled "Definitions"). 

    1.1
Additional Definitions. The Parties agree to amend Article 1 of the RFDS Agreement to add the following new definitions in
the appropriate numerical order. 

    "1.49
"Amended BI Agreement" shall mean the BI Agreement as amended and extended on January 31, 2001 and any extension thereof." 

    "1.50
"Added costs" shall mean, with respect to an [**] (or such other amount and size vial as may be agreed upon by the Parties in writing), the
[**] between: 

	(i)
	[**]
pursuant to the Amended BI Agreement; and

	(ii)
	[**]
which, for the purposes of this Section 1.50, shall be deemed to be the [**] of the
[**] and [**]." 

    "1.51
"[**]" shall mean, with respect to the Major Processing Steps of [**], and, with respect to the Major Processing Step of
[**] appointed by Chiron in accordance with Sections 7.4 and 8.2 of the RFDS Agreement." 

    1.2
Amended Definitions. The Parties agree to amend Article 1 of the RFDS Agreement to delete in their entirety Sections 1.4,
1.21 and 1.22 and to replace such Sections with the following Sections. 

    "1.4
"Allocated Supply Cost" shall mean the amount paid by Schering for Betaseron supplied to Schering by BI pursuant to the BI
Agreement or the Amended BI Agreement, as applicable, or 

1

 

by other parties (including Schering but excluding Chiron, its Affiliates, and their subcontractors) pursuant to this Agreement, and shall only include bona fide payments for supply of Betaseron;
provided that to the extent that Schering manufactures Betaseron, performs any Major Processing Step or provides any materials or services relating thereto, the "Allocated Supply Cost" shall mean
Schering's costs for such activities, which shall be calculated in a manner consistent with Chiron's accounting methodology (to the extent it is consistent with Schering's operations and accounting
practices). Where payments have been made in lump sum amounts (rather than as transfer or royalty payments based on delivery or sales of Betaseron), such as retainer or execution fees directly related
to the supply of Betaseron (including up-front payments for establishing processes or capacity) such amounts shall be included in Allocated Supply Cost and shall be amortized, based on a
straight-line amortization beginning with the First European Commercial Sale, over the [**]. 

    "1.21
"[**]" shall mean October 21, 1993. 

    "1.22
"First European Commercial Sale" shall mean December 15, 1995. 

    1.46
"Worldwide Target" shall mean [**] of Betaseron. 

SECTION TWO: AMENDMENTS TO ARTICLE V—NON-CHIRON SUPPLY OF BETASERON  

    Reference is made to Article V of the RFDS Agreement (entitled "Non-Chiron Supply of Betaseron"). 

    2.1
BI. The Parties agree to amend Article V of the RFDS Agreement to delete in its entirety Section 5.1 and to replace it with the following Section. 

    "5.1
BI. With the consent of Chiron, Schering entered into the BI Agreement for the supply of Schering's requirements of Betaseron in
Europe until [**]. With the consent of Chiron, Schering further entered into the Amended BI Agreement for the supply of certain quantities of Betaseron to Schering from
[**] or, in the event that the Amended BI Agreement is extended as permitted under Section 7.3, until the end of the Original Term. In implementing and performing the BI
Agreement and the Amended BI Agreement, Schering shall use its best efforts to: (i) minimize the amount of any Allocated Supply Cost; (ii) provide maximum opportunity for Chiron to
supply Betaseron for sale outside the United States as Chiron creates capacity; (iii) except as provided in Section 7.14, limit BI's right to supply Betaseron: (a) in the case of
the BI Agreement to the lesser of the amount necessary to satisfy European demand or [**] per year; and (b) in the case of the Amended BI Agreement to
[**] per year; and (iv) maximize the sharing of technical and other related information between BI and Chiron concerning the manufacture of Betaseron. In connection with
such best efforts obligation, Schering shall keep Chiron reasonably informed as to the status of such negotiations relevant to Chiron's interests. Schering shall, at Chiron's request, fully disclose
to Chiron the BI Agreement (when
executed) and the terms of any other agreement or agreements that result from those discussions or which relate in any way to the supply of Betaseron. Schering has separately provided Chiron with a
letter accurately setting forth the status of the proposed BI Agreement. The key terms of the Amended BI Agreement are set out in Appendix 1 to this Second Amendment Agreement. 

    2.2
Payments to Chiron: The Parties agree to further amend Article V of the RFDS Agreement to add the following
Section 5.3. 

    "5.3
Payments to Chiron: Notwithstanding any other term of this Agreement (including Sections 7.3.4, 9.4 and 9.5), in the case of Net
Sales by Schering of Product comprising the minimum quantities of Betaseron which Schering is obliged to purchase from BI under the Amended BI Agreement between [**] and
[**] (being a total of [**] Vials), (the "BI Minimum 

2

 

Net Sales"), Schering shall, within 60 days after the end of each calendar quarter, pay to Chiron an amount equal to the aggregate of: 

	(a)
	BI
Minimum Net Sales for such quarter multiplied by the applicable Effective Percentage Rate, less the Allocated Supply Cost attributable to such BI Minimum Net Sales; and

	(b)
	[**]
of the Added Cost attributable to such BI Minimum Net Sales. 

    For
the avoidance of doubt, it is hereby agreed and declared that the above provisions of this Section 5.3 do not apply to: (i) Net Sales by Schering of Product
comprising Betaseron which Schering is obliged to purchase from BI under the Amended BI Agreement in excess of the minimum quantities provided for in the Amended BI Agreement, to which the provisions
of Section 7.14 apply; or (ii) Net Sales by Schering of Product comprising Betaseron which Schering is entitled to purchase from BI pursuant to any extension of the Amended BI Agreement
between [**] or pursuant to any other supply agreement entered into by Schering as authorized under Section 7.3.4, to which the provisions of
Section 7.3.4(iii) shall apply. Schering shall have the right to audit the Chiron Variable Cost according to the provisions of Section 10.2.3. 

SECTION THREE: AMENDMENTS TO ARTICLE SEVEN: SUPPLY OF PRODUCT  

    Reference is made to Article VII of the RFDS Agreement (entitled "Supply of Product"). 

    3.1
Supply Amendments. The Parties agree to amend Article VII to delete in their entirety Sections 7.2, 7.3 and 7.4 and to
replace them with the following Sections: 

    "7.2  Phase I Commercial Supply. Subject to the terms and conditions of this Agreement (including Sections 7.4 and 7.13), during Phase
1, Chiron shall supply to Schering, and Schering shall purchase from Chiron, all of the worldwide requirements for Betaseron of Schering and its Affiliates and licensees, except to the extent that:
(i) Schering is required to purchase Betaseron from BI for sale in Europe pursuant to the BI Agreement; and (ii) Schering is required to purchase [**] quantities
of Betaseron from BI for sale in Europe pursuant to the Amended BI Agreement and any extensions thereof; and (iii) except that if at any time Chiron is unable or otherwise fails to supply
Betaseron in the quantities ordered pursuant to Section 7.11, Schering shall be entitled to obtain that shortfall amount of Betaseron from any other supplier or manufacturer as set forth in
Section 7.14. 

    "7.3
Transition to Phase II. If the conditions set forth in this Section 7.3 have been satisfied, Phase II shall commence and
Phase I shall end as of [**]. The conditions precedent to the commencement of Phase II hereunder are as follows: 

	.1
	As
of [**]:

	(a)
	Chiron
shall not be in breach of this Agreement in any material respect (or if it is in breach it shall cure such breach within sixty days of notice thereof);

	(b)
	Chiron
shall have established production facilities which (i) in the aggregate shall be reasonably capable of meeting the Worldwide Target as of the commencement of Phase II;
(ii) shall comprise at least [**] (being [**]), and in determining whether Chiron's Capacity meets the Worldwide Target, the Capacity to perform
no more than [**] of the Worldwide Target (or [**] if the Worldwide Target is less than [**] Vials) of any of the Major
Processing Steps shall be attributed to any one such facility; (iii) are mechanically complete and (iv) are in the process of being validated for the purpose of being licensed by the
FDA, or by one or more regulatory agencies or authorities in Canada, Germany, Italy, France and Great Britain such that approval to make Betaseron will be obtained for one or more Chiron Site(s) with
respect to each such jurisdiction. 

3

 

	(c)
	Each
Chiron Site used to supply Betaseron during Phase I shall have been validated and licensed by the FDA or other applicable regulatory agency or authority as required for such
Phase I supply.

	(d)
	Chiron
shall have, (i) during the previous [**], timely delivered substantially all amounts of Betaseron for commercial sale as to which orders timely
placed pursuant hereto were accepted, and (ii) substantially achieved the delivery targets recited in Exhibit 4.1 for the years [**] through
[**], and after [**] such lesser or greater volume as is reasonably required to meet orders for Betaseron to be sold in the U.S. and Canada that have
been placed pursuant to Section 7.11.

	(e)
	If,
by [**], the conditions set out in Sections 7.3.1(a) and (d) have been met and Chiron can demonstrate that it has been and is proceeding with all
reasonable due diligence to meet the conditions set out in Sections 7.3.1(b) and (c), then the deadline for meeting such conditions shall be extended by a period of [**]. 

	 	 	.2	 	By [**], the conditions set forth in Section 7.3.1 shall all be fully satisfied and Chiron, with the assistance of Schering as contemplated herein, shall have filed applications and commenced the process of obtaining
FDA Licensing and such other regulatory approvals set forth in Section 7.3.1(b)(iv) for the facilities necessary to meet the Worldwide Target. If, by [**], the conditions set forth in Section 7.3.1 shall all be fully satisfied and
Chiron can demonstrate that it has been and is proceeding with all reasonable due diligence to file the applications and commence the process of obtaining FDA Licensing and other regulatory approvals referred to in this Section 7.3.2, then the
deadline for meeting the conditions of this Section 7.3.2 shall be extended by a period of [**].
	

 	
 	

 .3	
 	

By [**], the conditions set forth in Sections 7.3.1 and 7.3.2 shall all be fully satisfied and the regulatory approvals shall have been obtained as set forth in Section 7.3.1(b)(iv) for the facilities necessary to meet the Worldwide Target.
If, by [**], such approvals have not been obtained, but the applicable agencies have neither rejected such application for such approval nor indicated that approval will not be granted, then Phase I shall continue and the start of Phase II shall be
delayed for up to one year until such approval is obtained. If approval is not obtained within [**], or at such earlier date if the application for approval is rejected, Phase II shall not commence and this condition shall not have been
satisfied.
	

 	
 	

 .4	
 	

(i)	
 	

If either the conditions set out in Section 7.3.1 or the conditions set out in Section 7.3.2 above have not been satisfied, in each case by the date specified in the relevant section (as extended, if applicable), then, upon written notice
from Schering, (a) Phase II shall not commence; (b) Schering may extend the Amended BI Agreement and purchase from BI, for the remainder of the term of this Agreement, the minimum quantities of Betaseron which Schering is required to
purchase from BI pursuant to the Amended BI Agreement; and (c) the provisions of Section 7.3.4(iii) shall apply.
	

 	
 	

 	
 	

(ii)	
 	

If the conditions set out in Section 7.3.3 above have not been satisfied by the date specified in such Section 7.3.3 (as extended, if applicable), then, upon written notice from Schering, (a) Phase II shall not commence;
(b) Schering may purchase from BI or from any other third party and sell an [**] quantity of [**] Vials of Betaseron for the remainder of the term of the RFDS Agreement; and (c) the provisions of Section 7.3.4(iii) shall
apply.

4

 

	

 	
 	

 	
 	

(iii)	
 	

Notwithstanding any other term of this Agreement (including Sections 9.4 and 9.5), in the event that Schering shall exercise its rights under Section 7.3.4(i) or Section 7.3.4(ii) to purchase Betaseron from BI or another third
party, Chiron shall receive as [**] on account of such [**] an amount equal to [**] thereof during the term of this Agreement and [**].
	

 	
 	

 .5	
 	

Chiron shall advise Schering as soon as practicable (a) if it is unable or does not elect to satisfy the conditions to Phase II set forth in Section 7.3, and (b) of the occurrence of any of the events set forth in
Section 7.3.3.

    "7.4
Use of Subcontractors to Meet Phase II Conditions. Chiron may include the manufacturing capacity of subcontractors (other than BI)
in meeting no more than [**] of the Worldwide Target with respect to any Major Processing Step, but only to the extent that such subcontractors: (a) have satisfied the
conditions of Section 8.2, including having been approved by Schering pursuant thereto; (b) have been performing their duties pursuant to their respective subcontracting agreements to
the reasonable satisfaction of each of Chiron and Schering; and (c) were supplying goods or services for the production of Betaseron as of the Fixing Date (defined below) provided, however,
that [**]. 

SECTION FOUR: AMENDMENTS TO ARTICLE 9: PAYMENTS  

    Reference is made to Article IX of the RFDS Agreement (entitled "Payments"). 

    3.1
Supply Amendments. The Parties agree to amend Article IX to delete in its entirety Section 9.4 and to replace it with
the following Section: 

    "9.4  Payment for Foreign Non-Chiron Sales and Credits. 

	1.
	Foreign Non-Chiron Sales Payments. Subject to Sections 5.3, 7.3.4 and 9.4.2, within 60 days after the end of each
calendar quarter, Schering shall pay Chiron an amount equal to the greater of

	(a)
	Foreign
Non-Chiron Sales for such quarter multiplied by the applicable Effective Percentage Rate, less the Allocated Supply Cost attributable to such sales; or

	(b)
	[**]
multiplied by such Foreign Non-Chiron Sales. 

To
the extent, if any, that the amount payable pursuant to the preceding sentence, plus the Allocated Supply Cost attributable to such Foreign Non-Chiron Sales, exceeds
[**] multiplied by such Foreign Non-Chiron Sales, such excess amounts shall be deemed to be "Schering Credits" and shall be applied by Schering against certain
amounts otherwise due to Chiron or carried forward, as set forth in Section 9.4.2. For the avoidance of doubt, it is hereby expressly agreed and declared that the provisions of this
Section 9.4.1 shall not apply to the BI Minimum Net Sales, for which Schering shall pay to Chiron the amounts set out in Section 5.3 of this Agreement." 

SECTION FIVE: MISCELLANEOUS  

    5.1 Effective Date. This Second Amendment Agreement shall be effective from and after
[**]. From and after [**], all references to the RFDS Agreement shall be deemed to be references to such agreement as amended by this Second Amendment
Agreement. 

    5.2 Term Sheet. This Second Amendment Agreement supersedes the terms of the Term Sheet. 

    5.3 Scope of Amendment. This Second Amendment Agreement is limited as specified herein and shall not constitute a waiver, modification
or amendment of any other provision of the RFDS Agreement, which shall continue in full force and effect except as set forth herein. 

5

 

    5.4 Applicable Law. This Second Amendment Agreement shall be governed by, subject to and construed in accordance with the laws of the
State of California and the Parties consent to the jurisdiction of the courts of that state. Except as set forth expressly herein, no dispute shall be submitted to arbitration without the advance
written consent of both Parties. 

    5.5 Counterparts. This Second Amendment Agreement may be executed in two or more counterparts (and via facsimile), each of which shall
constitute an original, but all of which, when taken together, shall constitute but one instrument. 

    5.6 Headings. The section headings contained in this Second Amendment Agreement are included for convenience only and form no part of
the agreement between the Parties. 

    5.7 Construction. This Second Amendment Agreement is the product of mutual negotiation and is not to be construed strictly against
either Party. 

    IN
WITNESS WHEREOF, the Parties have executed this Second Amendment Agreement as of the date first written above. 

	

SCHERING AKTIENGESELLSCHAFT	
 	

 	
 	

CHIRON CORPORATION
	

By	

/s/ ILLEGIBLE   
 Title Industrial Operations & Envir.	

 	

15-6-01	

 	

By	

/s/ PHILIP K. MOODY   
 Title V.P. Finance & Operations
	

By	

/s/ ILLEGIBLE   
 Title IT & Controlling PPh	

 	

 	

 	

 	

 

6

 
 
 

APPENDIX 1
  
    Key Terms of BI Amendment Agreement    
  

	1.
	Duration: [**] from [**] with a right to extend as set out in paragraph 5
below. Each period of [**] starting [**] is referred to in this Appendix as an Agreement Year.

	2.
	Capacity: BI to make available capacity of [**] vials per Agreement Year.

	3.
	Commitment: Schering to commit to purchase a minimum quantity of [**] vials per Agreement Year from BI.

	4.
	Price: Price per vial to be as follows: 

	

 	
 	

 
	

[**] vials	
 	

[**] per vial
	

[**] vials	
 	

[**] per vial
	

[**] vials	
 	

[**] per vial
	

[**] vials	
 	

[**] per vial

Price
basis is [**]. These prices are subject to [**] increase, from [**] onwards, of [**]. 

	5.
	Extension: Schering to have the option, under the circumstances set out in Section 7.3.4 of the RFDS Agreement (as amended by
the Second Amendment Agreement) to extend the Amended BI Agreement in accordance with the terms set forth in this Appendix, for a further [**] period by notice delivered to BI
no later than [**]. 

[**] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.  

7

QuickLinks

Redacted Version

SECOND AMENDMENT AGREEMENT

APPENDIX 1 Key Terms of BI Amendment Agreement

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00028-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00028-of-00352.parquet"}]]