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Exhibit 10.501    
    

 
 

CHIRON 2004 STOCK COMPENSATION PLAN
  (As Amended and Restated February 13, 2004)    
    

I.    PURPOSES  

        This Chiron 2004 Stock Compensation Plan, as amended and restated February 13, 2004, ("Plan"), formerly the Chiron 1991 Stock Option Plan, is intended to
enable Chiron Corporation ("Corporation") to attract and retain the following individuals by offering them incentives and rewards, in the form of options, stock issuances, restricted shares, share
rights, share units, stock appreciation rights (collectively, "awards") and purchase rights to purchase shares of the Corporation at periodic intervals through a purchase program, all of which will
encourage them to acquire a proprietary interest in the Corporation, to continue in the service of the Corporation or its subsidiaries, and to provide incentive to build value for stockholders:
(a) employees (including officers and directors) of the Corporation and its subsidiaries, (b) non-employee members of the Board of Directors of the Corporation ("Board"), and
(c) consultants and independent contractors who perform valuable services for the Corporation and its subsidiaries. This restatement of the Plan shall become effective upon receipt of
stockholder approval at the 2004 Annual Meeting, except as otherwise set forth herein. 

II.    STRUCTURE OF THE PLAN  

        (a)   The
Plan shall be divided into three separate programs: 

        (1)   The
Discretionary Awards Program under which eligible individuals may, at the discretion of the Committee, be granted awards, 

        (2)   The
Automatic Awards Program under which non-employee members of the Board will automatically receive awards at designated intervals over their period of
Board service, and 

        (3)   The
Purchase Program under which eligible employees may, at the discretion of the Committee, be provided with the opportunity to acquire stock in the Corporation through
an employee stock purchase program, designed to qualify under Section 423 of the Internal Revenue Code (the "Code"). 

        (b)   The
provisions of Sections IV and VIII shall apply only to the Discretionary Awards Program and the Automatic Awards Program. The provisions of Sections III, V, and X
shall apply to all programs under the Plan. 

III.    ADMINISTRATION  

        The Plan will be administered by a committee or committees appointed by the Board and consisting of one or more members of the Board or a subcommittee or
subcommittees thereof. The Board may delegate the responsibility for administration of the Plan with respect to designated classes of award holders and different programs to different committees,
subject to such limitations as the Board deems appropriate, and each committee may similarly delegate its responsibilities to one or more subcommittees. Members of a committee or subcommittee will
serve for such term as the Board or committee may determine, and will be subject to removal by the Board at any time. The Board or a committee or subcommittee with authority to make awards hereunder
may delegate such authority to an officer of the Corporation to the extent permitted by Delaware corporate law. With respect to any matter, the term "Committee," when used in this Plan, will refer to
the committee or subcommittee or officer that has been delegated authority with respect to such matter. 

        In
determining the composition of any committee or subcommittee, the Board or committee, as the case may be, shall consider the desirability of compliance with the compositional
requirements of (i) Rule 16b-3 of the Securities and Exchange Commission with respect to award holders who are subject to the trading restrictions of Section 16(b) of
the Securities Exchange Act of 1934 ("1934 Act") 

 

with
respect to securities of the Corporation and (ii) Section 162(m) of the Code with respect to awards intended to qualify thereunder, but shall not be bound by such compliance. 

        Each
Committee will have full authority to administer the Plan within the scope of its delegated responsibilities, including authority to interpret and construe any relevant provision of
the Plan, to adopt such rules and regulations as it may deem necessary, and to determine the terms and conditions of awards made under the Plan (which need not be identical). With regard to the
Purchase Program, the Committee will have the full authority to interpret and construe any provision of the Purchase Program as it may deem necessary to comply with the requirements of
Section 423 of the Code. Decisions of a Committee made within the discretion delegated to it by the Board will be final and binding on all persons who have an interest in the Plan. 

IV.    ELIGIBILITY FOR AWARDS  

        (a)   DISCRETIONARY
AWARDS PROGRAM. From time to time the Committee may, in its discretion, select individuals from among the following categories to receive awards under the
Plan: 

        (1)   EMPLOYEES.
The Committee may select employees of the Corporation or its parent or subsidiaries (including officers, whether or not they are also members of the Board). 

        (2)   CONSULTANTS
AND INDEPENDENT CONTRACTORS. The Committee may select consultants and independent contractors whose services tend to contribute materially to the success of
the Corporation or a parent or subsidiary or whose services may reasonably be anticipated to so contribute. 

        (3)   DIRECTORS.
The Committee may select non-employee members of the Board or the board of directors of a parent or subsidiary for discretionary awards under the
Plan in addition to awards made to such non-employee Board members in accordance with the Automatic Awards Program under Section VII. 

        (b)   AUTOMATIC
AWARDS PROGRAM. Members of the Board who are not employees of the Corporation or a subsidiary will receive awards in accordance with the Automatic Awards
Program under Section VII. 

V. STOCK SUBJECT TO THE PLAN  

        (a)   CLASS.
The stock subject to awards under the Plan is (i) the Corporation's authorized but unissued or reacquired Common Stock ("Common Stock"), or
(ii) shares of one or more series of the Corporation's authorized but unissued or reacquired Restricted Common Stock, in the aggregate, "Company Stock." In connection with the grant of awards
under the Plan or issuance of shares under the Purchase Program, the Corporation may repurchase shares in the open market or otherwise. 

        (b)   AGGREGATE
AMOUNT 

        (1)   SHARES.
Subject to adjustment under Sections V(c) and V(b)(4), the aggregate maximum number of shares of Company Stock reserved for issuance over the term of the Plan
shall not exceed 79,239,508 shares. Such reserve includes the reserve of up to 6,400,000 shares to be transferred from the 1997 Employee Stock Purchase Plan subject to approval by the shareholders at
the 2004 Annual Meeting. Notwithstanding the foregoing, as of the first day of each fiscal year beginning after January 1, 2004, the aggregate number of shares of Company Stock that may be
subject to awards and purchase rights under the Plan will be increased by the lesser of: 1% of the number of Chiron Common Equivalent Shares outstanding as of last day of the preceding fiscal year, or
3,000,000 shares, subject to adjustment under Section V(c). "Chiron Common Equivalent Shares" are the total number of outstanding shares of Common Stock plus the total number of shares of
Common Stock issuable upon conversion or exercise of outstanding 

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warrants,
options and convertible securities. Of the total share reserve listed above, no more than 6,400,000 shares shall be available for issuance under the Purchase Program. Options of a company
acquired by the Corporation that are assumed or substituted outside the terms of the Plan, including under the terms of a plan of the acquired company, shall not count against the share limit of the
Plan. 

        (2)   INDIVIDUAL
LIMIT. Subject to adjustment under Section V(c), the maximum number of shares of Company Stock with respect to which awards may be granted to any
employee during the term of the Plan is 4,000,000 shares. Shares purchased by participants under the Purchase Program will not be counted against this limitation; however, the Committee, in its
discretion, may impose separate limitations under the Purchase Program. 

        (3)   RESTRICTED
COMMON STOCK. Shares of Restricted Common Stock may be issued under the Plan in one or more separate series. The rights, preferences and privileges, together
with the
restrictions and limitations and the number of shares, of each series of Restricted Common Stock issuable under the Plan will be set forth in the Corporation's Certificate of Determination of
Preferences of Common Stock ("Certificate") as in effect from time to time during the term of the Plan. Shares of each series of Restricted Common Stock will be convertible or exchangeable into shares
of Common Stock in accordance with the terms and provisions of the Certificate applicable to that series. In no event may more than 2,000,000 shares of Restricted Common Stock, whether in a single
series or in multiple series be subject to awards under the Plan. 

        (4)   REUSE
OF SHARES. If any outstanding option or stock appreciation right under this Plan is terminated or canceled for any reason before being exercised for the full
number of shares to which it applies, then the shares allocable to the unexercised portion of such option or stock appreciation right will not be charged against the limitations of
Section V(b)(1) and will become available for subsequent grants under the Plan. To the extent that a share right or share unit expires or is terminated, or is canceled or forfeited for any
reason, any remaining shares allocable to the unpaid portion of such share right or share unit shall not be charged against the limitations of Section V(b)(1) and will become available again
for subsequent grants under the Plan. Unvested shares issued under the Plan and subsequently cancelled, forfeited or repurchased by the Corporation at the original exercise or issue price paid per
share pursuant to the Corporation's repurchase rights under the Plan shall be added back to the number of shares of Common Stock reserved for issuance under Section V(b)(1). If the exercise
price of an option under the Plan is paid with shares of Common Stock then the number of shares of Common Stock available for issuance under Section V(b)(1) shall be reduced by the net number
of shares issued to the holder of the Option. However, if shares of Common Stock otherwise issuable under the Plan are withheld by the Corporation in satisfaction of the withholding taxes incurred in
connection with the exercise of an option or the vesting of a stock issuance under the Plan, then the number of shares of Common Stock available for issuance under Section V(b)(1) shall be
reduced by the gross number of shares for which the option is exercised or which vest under the stock issuance, and not by the net number of shares of Common Stock issued to the holder of such option
or stock issuance. 

        (c)   ADJUSTMENTS.
In the event any change is made to the Company Stock subject to the Plan (whether by reason of merger, consolidation, reorganization, recapitalization,
stock dividend, stock split, combination of shares, exchange of shares, or other change in corporate or capital structure of the Corporation affecting the outstanding Common Stock as a class without
the Corporation's receipt of consideration) then, unless such change results in the termination of all awards, the Committee will make appropriate adjustments to (i) the number and/or class of
securities available under the Plan, (ii) the maximum number and/or class of securities by which the share reserve is to increase automatically each fiscal year pursuant to
Section V(b)(1), (iii) the number and/or class of securities for which any one person may be granted awards during the term of the Plan, (iv) the maximum number 

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and/or
class of securities for which awards may be made to non-employee directors in any year, (v) the number and/or class of securities for which awards are to be made under
automatic grants to non-employee directors, (vi) the number and/or class of securities and, where applicable, price per share of securities subject to outstanding awards and
(vii) the number and class of securities available for issuance under the Purchase Program. Such adjustments are to be effected in a manner which shall preclude the enlargement or dilution of
rights and benefits of awards and shall be final, binding and conclusive. 

VI.   TERMS AND CONDITIONS OF DISCRETIONARY AWARDS PROGRAM  

        (a)   NATURE
OF AWARDS 

        (1)   STOCK
OPTIONS. Discretionary stock options granted under the Plan may, in the Committee's discretion, be either incentive stock options ("Incentive Options") qualifying
under Section 422 of the Code or nonstatutory options. Only individuals who are employees of the Corporation or its parents or subsidiaries (within the meaning of Section 424 of the
Code) may be granted Incentive Options. Options will be evidenced by instruments in such form as the Committee may from time to time approve. These instruments will conform to the following terms and
conditions and, in the discretion of the Committee, may contain such other terms, conditions and restrictions as are not inconsistent with the following: 

        (i)    OPTION
PRICE. The option price per share will be fixed by the Committee, provided, however that in no event will the option price per share be less than
eighty-five percent (85%) of the Fair Market Value of the option shares on the date of the option grant except as otherwise provided in Section VI(e) below; provided, further, that
in no event will the option price per share of an Incentive Option be less than one hundred percent (100%) of the Fair Market Value of the option shares on the date of the option grant. However, the
Committee may grant options with an option price per share less than eighty-five percent (85%) of the Fair Market Value of the option shares on the date of the option grant in substitution
for the outstanding options of the acquired company in a merger, if such options are granted with an option price per share which preserves the option price of the outstanding options, as adjusted for
the merger. 

        (ii)   NUMBER
OF SHARES, TERM AND EXERCISE TERMS. Each option granted under the Plan will be exercisable on such date or dates, during such period, and for such number of
shares of Company Stock as the Committee determines and sets forth in the instrument evidencing the option. No option granted under the Plan will have an expiration date that is more than
10 years after the date of the option grant, unless necessary to comply with, or take advantage of favorable taxation under, foreign or local law. 

        (A)
EXERCISE. After any option granted under the Plan becomes exercisable, it may be exercised by delivering notice in such form to such person as the Corporation may designate at any
time prior to the termination of such option. The option price for the number of shares for which the option is exercised will become due and payable upon exercise. 

        (B)
PAYMENT. The option price will be payable in full in cash (including cash equivalents); provided, however, that the Committee may, either at the time the option is granted or at the
time it is exercised and subject to such limitations as it may determine, authorize payment of all or a portion of the option price in one or a combination of the following alternative forms: 

        a.
payment in shares of Common Stock valued as of the exercise date and held for the requisite period, if any, to avoid a charge to the Corporation's earnings; or 

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        b.
to the extent the option is exercised for vested shares, through a special sale and remittance procedure pursuant to which the optionee shall provide irrevocable instructions, in such
form and pursuant to such procedures as the Corporation shall specify, to (a) a brokerage firm (specified by the Committee, if the Committee so determines) to effect the immediate sale of the
purchased shares and remit to the Corporation, out of the sale proceeds available on the settlement date, sufficient funds to cover the aggregate exercise price payable for the purchased shares plus
the minimum applicable income and employment taxes required to be withheld by the Corporation by reason of such exercise, and (b) the Corporation to deliver the certificates for the purchased
shares directly to such brokerage firm in order to complete the sale. 

        (iii)  TERMINATION
OF SERVICES. The Committee will determine and set forth in each option whether the option will continue to be exercisable, and the terms and conditions of
such exercise, on and after the date that an optionee ceases to be employed by, or to provide services to, the Corporation or its subsidiaries. The date of termination of an optionee's employment or
services will be determined by the Committee, which determination will be final. 

        (iv)  INCENTIVE
OPTIONS. Options granted under the Plan that are intended to be Incentive Options will be subject to the following additional terms and conditions: 

        (A)
DOLLAR LIMITATION. To the extent that the aggregate Fair Market Value (determined as of the respective date or dates of grant) of shares with respect to which options that are
granted and that would otherwise be Incentive Options are exercisable for the first time by any individual during any calendar year under the Plan (or any other plan of the Corporation, a parent or
subsidiary corporation or predecessor thereof) exceeds the sum of $100,000 (or such greater amount as may be permitted under the Code), whether by reason of acceleration or otherwise, such options
will not be treated as Incentive Options. In making such a determination, options will be taken into account in the order in which they were granted. 

        (B)
10% STOCKHOLDER. If any employee to whom an Incentive Option is to be granted pursuant to the provisions of the Plan is, on the date of grant, the owner of stock (determined with
application of the ownership attribution rules of Section 424(d) of the Code) possessing more than ten percent (10%) of the total combined voting power of all classes of stock of his or her
employer corporation or of its parent or subsidiary corporation ("10% Stockholder"), then the following special provisions will apply to the option granted to such individual: 

        a.
The option price per share of the stock subject to such Incentive Option will not be less than one hundred ten percent (110%) of the Fair Market Value of the option shares on the date
of grant; and 

        b.
The option will not have a term in excess of five (5) years from the date of grant. 

        (C)
PARENT AND SUBSIDIARY. For purposes of this Section VI(d), "parent corporation" and "subsidiary corporation" will have the meaning attributed to those terms, as they are used
in Section 422(b) of the Code. 

        (v)   INDEXED
OPTIONS. The Committee may grant indexed options which will have an initial exercise price equal to the Fair Market Value per share of Company Stock on the date
of grant (the "Initial Price"). The Initial Price will be adjusted upward or downward as of the date of exercise of the indexed option by a percentage equal to the aggregate increase or 

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decrease
(expressed as a whole percentage point followed by three decimal places) in a benchmark determined by the Committee to be representative of the Corporation's peer group (including S&P 500
Health Care Index, the AMEX Biotechnology Index and the Merrill Lynch Biotech Basket HOLDR, among others as the Committee may determine) for the period beginning on the date of grant and ending on the
trading day immediately preceding the date of exercise. 

        (vi)  WITHHOLDING

        (A)
OBLIGATION. The Corporation's obligation to deliver stock certificates upon the exercise of an option will be subject to the option holder's satisfaction of all applicable income and
employment tax withholding requirements. 

        (B)
PAYMENT. In the event that an option holder is required to pay to the Corporation an amount with respect to income and employment tax withholding obligations in connection with
exercise of an option, the Committee may, in its discretion and subject to such limitations and rules as it may adopt,
permit the option holder to satisfy the obligation, in whole or in part, by delivering shares of Common Stock already held by the option holder or by making an irrevocable election that a portion of
the total value of the shares subject to the option be paid in the form of cash in lieu of the issuance of Company Stock, and that such cash payment be applied to the satisfaction of the withholding
obligations. 

        (2)   STOCK
ISSUANCES. The Committee may make direct stock issuances of fully vested shares of Company Stock under the Plan. The terms and conditions to which such stock
issuances are subject shall be determined by the Committee and shall be evidenced by instruments in such form as the Committee may from time to time approve and may vary from grant to grant. The
Committee shall have the discretion to determine the consideration to be received by the Corporation and its subsidiaries as a condition precedent to such issuances of stock. 

        (3)   RESTRICTED
SHARES. A restricted share granted under the Plan shall consist of shares of Company Stock, the retention and transfer of which are subject to such terms,
conditions and restrictions (whether based on performance standards or periods of service or otherwise and including repurchase and/or forfeiture rights in favor of the Corporation) as the Committee
shall determine. The terms, conditions and restrictions to which restricted shares are subject shall be evidenced by instruments in such form as the Committee may from time to time approve and may
vary from grant to grant. The Committee shall have the discretion to determine whether any consideration (other than the services of the potential award holder) is to be received by the Corporation or
its subsidiaries as a condition precedent to the issuance of restricted shares. 

        (4)   SHARE
RIGHTS. A share right granted under the Plan shall consist of the right, subject to such terms, conditions and restrictions (whether based on performance standards
or periods of service or otherwise), to receive a share of Company Stock (together with cash dividend equivalents if so determined by the Committee) as the Committee shall determine and shall be
evidenced by instruments in such form as the Committee may from time to time approve. The Committee shall have the discretion to determine whether any consideration (other than the services of the
potential award holder) is to be received by the Corporation or its subsidiaries as a condition precedent to the issuance of shares pursuant to share rights. The terms, conditions and restrictions to
which share rights are subject may vary from grant to grant. 

        (5)   SHARE
UNITS. A share unit granted under the Plan shall consist of the right to receive an amount in cash equal to the Fair Market Value of one share of Company Stock on
the date of valuation of the unit (together with cash dividend equivalents if so determined by the Committee) less such amount, if any, as the Committee shall specify. The date of valuation and
payment of 

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cash
under a share unit and the conditions, if any, to which such payment will be subject (whether based on performance standards or periods of service or otherwise) shall be determined by the
Committee. The terms, conditions and restrictions to which share units are subject may vary from grant to grant. 

        (6)   STOCK
APPRECIATION RIGHTS. A stock appreciation right shall entitle the award holder to receive a payment in cash or shares of Common Stock equal to the appreciation, if
any, of one share of Company Stock between the grant date of such stock appreciation right and the date of exercise of the stock appreciation right. For these purposes, appreciation is defined as the
difference between (a) the Fair Market Value of a share of Company Stock on the date of exercise of the stock appreciation right and (b) the exercise price per stock appreciation right
(or accompanying award). A stock appreciation right shall become exercisable during such times and subject to such terms and conditions as shall be determined by the Committee, in its sole discretion.
The terms of stock appreciation rights shall be set forth in a separate instrument or in an instrument governing another form of award, if such stock appreciation rights are granted in tandem with
such other award. 

        (b)   WITHHOLDING.
The Committee may require, or permit an award holder to elect, that a portion of the total value of the shares of Company Stock otherwise payable under an
award be paid in the form of cash in lieu of the issuance of Company Stock and that such cash payment be applied to the satisfaction of the minimum income and employment tax withholding obligations
that are imposed under such award. 

        (c)   CASH
PAYMENTS. The Committee may provide award holders with an election to receive a percentage of the total value of the Company Stock subject to an award in the form
of a cash payment, subject to such terms, conditions and restrictions as the Committee shall specify. 

        (d)   ELECTIVE
AND TANDEM AWARDS. The Committee may award stock issuances, restricted shares, share rights, share units and stock appreciation rights independently of other
compensation or in lieu of compensation that would otherwise be paid in cash or another form of award, whether at the election of the potential award holder or otherwise. The number of shares,
restricted shares, share rights, share units or stock appreciation rights to be awarded in lieu of any cash compensation amount or other awards shall be determined by the Committee in its sole
discretion and need not be equal to such foregone compensation in Fair Market Value. In addition, restricted shares, share rights, share units and stock appreciation rights may be awarded in tandem
with stock options, so that a portion of such award becomes payable or becomes free of restrictions only if and to the extent that the tandem options are not exercised or are forfeited, subject to
such terms and conditions as the Committee may specify. 

        (e)   MODIFICATION
OF AWARDS. Subject to (f) below, the Committee may, in its sole discretion, modify or waive any or all of the terms, conditions or restrictions
applicable to any outstanding restricted share, share right, share unit or stock appreciation right; provided, however, that no such modification or waiver shall, without the consent of the holder of
an outstanding award, adversely affect the holder's rights thereunder. 

        (f)    SECTION
162(m). Stock options and stock appreciation rights granted with an exercise price equal to the Fair Market Value of the underlying shares are intended to
satisfy the performance-based compensation exemption from the limits of Section 162(m). The Committee may grant other awards that are intended to satisfy such exemption by basing the right to
payment thereunder or the vesting thereunder upon attainment of specified performance goals over a specified performance period, in accordance with the following provisions: 

        (1)   PERFORMANCE
GOALS. The Committee will determine the performance goal or goals that must be met to achieve the maximum payout within the shorter of the first
90 days of the 

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specified
performance period over which the performance goal or goals will be measured, or 25% of such performance period. The Committee may establish a goal based on more than one performance
criteria, or may establish multiple goals, but any payout must be based on the satisfaction of at least one goal. The Committee may provide for different levels of payouts based on relative
performance toward a performance goal. 

        (2)   PERFORMANCE
CRITERIA. Performance goals may be based on one or more of the following performance criteria: (i) total shareholder return; (ii) the
achievement of a specified closing or average closing price of Common Stock; (iii) the absolute or percentage increase in the closing or average closing price of Common Stock; (iv) the
absolute or percentage increase in market share; (v) one or more of the following measures of the Corporation's net income for the specified performance period determined in accordance with
generally accepted accounting principles as consistently applied by the Corporation: absolute net income (before or after taxes) or operating income or a percentage or absolute dollar increase in net
income (before of after taxes) or operating income; earnings per share or a percentage or absolute dollar increase in earnings per share; return on assets employed, equity, capital or investment or a
percentage or absolute dollar increase in return on assets employed, equity, capital or investment; absolute gross (or net or operating) margins or percentage increase in gross (or net or operating)
margins absolute cash flow from operations or a percentage on absolute dollar increase in cash flow; or the Corporation's absolute gross revenues or a percentage or absolute dollar increase in gross
revenues for the specified performance period determined in accordance with generally accepted accounting principles as consistently applied by the Corporation; and/or (vi) achievement of
advances in research; implementation or completion of projects or processes; new product development; development of products to pre-clinical phase; commencement, advancement or completion
of clinical trials for a product; FDA or other regulatory body approval for commercialization of products; commercial launch of new products; the formation of joint ventures or collaborations;
increase in customer base; measures of customer satisfaction or economic value added. The awards may be based on the Corporation's performance alone, or the Corporation's performance may be measured
against variously weighted published benchmark indices that the Committee determines are representative of the Corporation's peer group, which indices may include the S&P Health Care Index, the AMEX
Biotechnology Index and the Merrill Lynch Biotech Basket HOLDR, among others as the Committee may determine. 

        For
purposes of this Plan, net income and gross revenues shall be net income and gross revenues of the Corporation and its consolidated subsidiaries as reported by the Corporation and
certified by its
independent public accountants, but the Committee in fixing any goal may exclude any or all of the following if they have a material effect on annual net income or gross revenues: events or
transactions that are either unusual in nature or infrequent in occurrence (such as restructuring/reorganization charges, the purchase or sale of in process technology, the sale or discontinuance of a
business segment, the sale of investment securities, losses from litigation, the cumulative effect of changes in accounting principles and natural disasters), depreciation, interest or taxes. 

        (3)   REDUCTION
OR CANCELLATION OF AWARDS. Satisfaction of the applicable performance goal under an award that is intended to satisfy the performance-based exemption from
Section 162(m) shall be determined by the Committee, which may reserve the discretion to reduce or cancel any payout thereunder for reasons other than failure to satisfy the applicable
performance goal. 

VII. TERMS AND CONDITIONS OF AUTOMATIC AWARDS PROGRAM  

        In addition to the discretionary awards which may be granted to Board members as per Section IV(a)(3), the Board may also authorize automatic awards to be
made to non-employee members of the Board according to the following provisions of this Section VII. However, no individual non-employee Board member shall receive in
any one calendar year discretionary awards and automatic awards with respect to more than 25,000 shares of Common Stock, provided that the limit shall be 55,000 shares during his or her first calendar
year of Board service. Commencing June 30, 2003 and continuing until the Committee determines, in its sole discretion, to change the automatic grant program, the program shall be as described
below. 

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        (a)   OPTIONS. Non-employee members of the Board ("Eligible Directors") will automatically be granted nonstatutory options to purchase the number of shares of
Common Stock determined as set forth below (subject to adjustment under Section V(c) hereof) on the dates and terms set forth below: 

        (1)   INITIAL
OPTION GRANTS. On the date that an individual is first elected or appointed as an Eligible Director, he or she will receive an option to purchase 30,000 shares
of Common Stock (the "Initial Option Grant"), subject to adjustment in accordance with Section V(c). 

        (2)   TERMS
AND CONDITIONS. The terms and conditions applicable to each Initial Option Grant will be as follows: 

        (i)    PRICE.
The option price per share will be equal to one hundred percent (100%) of the Fair Market Value of one share of Common Stock on the date of grant. 

        (ii)   TERM.
Each Initial Option Grant will have a term of ten (10) years, measured from the date of grant. 

        (iii)  EXERCISE.
Each Initial Option Grant will become exercisable, in a series of three (3) equal annual installments over the three (3)-year period
measured from the grant date, provided the optionee continues to provide service to the Corporation. In addition, each Initial Option Grant will become fully exercisable, should one or more of the
following events occur while the optionee is providing such services: (A) the optionee's death, or (B) the optionee's permanent disability. 

        (iv)  PAYMENT.
Upon exercise of the Initial Option Grant, the option price for the purchased shares will become payable immediately in cash or in shares of Common Stock that
the optionee has held for at least six (6) months. Payment may also be made by delivery of a properly executed exercise notice together with irrevocable instructions to a broker to promptly
deliver to the Corporation the amount of sale or loan proceeds to pay the option price, subject to the resale restriction imposed by Section VII(a)(2)(vi) below. 

        (v)   CESSATION.
In the event the optionee ceases to provide services to the Corporation or its subsidiaries as a director, an employee, a consultant or an independent
contractor, then, to the extent exercisable at the time of such cessation in accordance with Section VII(a)(2)(iii) above, the Initial Option Grant may be exercised for a period of three
(3) years after the date of such cessation or, if shorter the remaining portion of the ten (10) year term of the Initial Option Grant. In the case of death, the Automatic Option may be
exercised within such period by the estate or heirs of the optionee. 

        (vi)  RESALE
RESTRICTION. Fifty percent (50%) of the shares purchased under the Initial Option Grant may not be sold or otherwise transferred for value unless and until the
optionee beneficially owns, and will continue to beneficially own immediately following the sale or other transfer for value, vested shares of Common Stock (including for this purpose shares issuable
pursuant to any vested share right award) with a fair market value of at least $500,000. If a portion of the exercise price of an Initial Option is paid in the form of Common Stock pursuant to
Section VII(a)(2)(iv) above, the resale restriction shall apply only to 50% of the net number of new shares received by the optionee upon exercise. If a portion of the exercise price of
an Initial Option is paid with the proceeds of the sale of a portion of the option shares pursuant to Section VII(a)(2)(iv) above, the resale restriction shall not apply to the shares
sold to pay the exercise price, but shall apply to the remaining shares subject to the exercise. 

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        (b)   SHARE
RIGHTS. Eligible Directors will automatically be granted a number of share rights determined as set forth below (subject to adjustment under Section V(c)
hereof) on the dates and terms set forth below: 

        (1)   AUTOMATIC
SHARE RIGHT AWARD. Each Eligible Director shall receive an annual share rights grant (the "Automatic Share Right Award") on the last business day of April each
year (the "Automatic Grant Date"). However, with respect to the 2002 year, share rights shall be granted on June 30, 2003. An Automatic Share Right shall be fully vested and entitle the
holder to receive a number of shares of Common Stock following cessation of service on the Board pursuant to his or her election, as described below. The number of share rights subject to each
Automatic Share Right Award shall be that number of shares (rounded to the nearest whole share) equal to (i) $160,000 divided by (ii) the Fair Market Value of one share of Common Stock
on the date of grant; provided that each Eligible Director who was newly elected or appointed on a date after the previous year's Automatic Grant Date (or, with respect to the June 30, 2003
grants, after June 30, 2002), will receive in lieu thereof on the current Automatic Grant Date, an Automatic Share Right Award for a pro rata number of whole shares of Common Stock determined
by multiplying $13,333 by the number of calendar months (calculated to the nearest whole month, but not to exceed 12) between the continuing Eligible Director's election or appointment date and
the current Automatic Grant Date and dividing the product by the Fair Market Value of one share of Common Stock on the Automatic Grant Date. 

        (2)   SHARE
RIGHT ACCOUNT. A "Share Right Account" will be established for each Eligible Director who receives an Automatic Share Right Award and all such Automatic Share
Right Awards made to such director shall be credited to such account. The share rights credited to such account shall be an unfunded and unsecured right of a general creditor. 

        (3)   DIVIDEND
RIGHTS. Each time a dividend is paid on Common Stock after an Automatic Share Right Award is made to an Eligible Director, the Eligible Director will be
credited with a dollar amount equal to the dividend paid per share multiplied by the number of shares previously credited to the participant's Share Right Account and not distributed as of the record
date for the dividend. As of the first business day in January of each year, the Eligible Director's Share Right Account will be credited with a number of share rights equal to (i) the cash
dividend equivalent amounts credited to the Eligible Director for the immediately preceding year divided by (ii) the average of the Fair Market Value of one share of Common Stock on each of the
dates in the immediately preceding year on which dividends were paid. 

        (4)   DISTRIBUTION
ELECTIONS. Each Eligible Director shall elect to receive a distribution from his or her Share Right Account either (i) within thirty (30) days
following his or her termination of Board service or (ii) on February 1 of the year following the year of his or her termination of Board service, and to receive payments from his or her
Share Right Account either (i) in the form of a single lump sum or (ii) in up to ten (10) annual installments. Such election must be filed (ii) before July 30, 2003
for directors eligible to receive Automatic Share Rights in the 2003 year and (ii) for all Eligible Directors first eligible to receive Automatic Share Right Awards in any year after
2003, before the date of grant of the first Automatic Share Right. An election will apply to any and all Automatic Share Right Awards received by the Eligible Director and will remain in effect until
all payments from the Eligible Director's Share Right Account have been made, unless earlier revoked or changed by filing a written revocation in such form as the Committee shall specify, but any
revocation or change cannot be made effective unless it is made at least one (1) year before the date of the Eligible Director's termination of Board service. 

        (5)   CORPORATE
TRANSACTION/CHANGE IN CONTROL. In the event an Automatic Share Right Award is to be assumed by the successor corporation or parent thereof or replaced with a
comparable award in accordance with Section VII(b)(2), such Automatic Share Right Award 

10

 

shall
be deemed assumed for purposes of Section VII(b)(2) only if in the opinion of the Committee, the award holder is entitled, upon distribution of his or her assumed Share Right Account, to
any additional shareholder rights awarded to the Corporation's common stockholders in connection with the applicable transaction. 

        Subject
to the limitations of Section X(b) and the annual limits specified above in this Section VII, the Board may change the automatic award program as it deems
appropriate. Additionally, the receipt of an automatic award, as specified in this Section VII, shall not preclude a non-employee member of the Board from receiving a discretionary
award. 

VIII. OTHER TERMS AND CONDITIONS APPLICABLE TO DISCRETIONARY AWARDS PROGRAM AND AUTOMATIC AWARDS PROGRAM  

        (a)   ASSIGNABILITY.
No award granted under the Plan is assignable or transferable by the award holder other than by will or by the laws of descent and distribution, and
during the lifetime of the award holder, only the award holder may exercise options or exercise the rights provided under awards granted under the Plan. However, if and to the extent that the
Committee so authorizes at the time an award is granted or amended, an option (other than an option designated as an Incentive Option) or other award may be assigned in whole or in part during the
grantee's lifetime to one or more of the grantee's family members or an entity substantially owned, benefiting or controlled by the grantee or one or more of grantee's family members if and to the
extent that the Securities and Exchange Commission Form S-8 Registration Statement would continue to be available for the exercise of the award and resale of the underlying
securities following such assignment. The terms applicable to the assigned portion shall be the same as those in effect for the award immediately prior to such assignment and shall be set forth in
such documents issued to the assignee as the Committee may deem appropriate. 

        (b)   ACCELERATION
AND TERMINATION OF AWARDS 

        (1)   ACCELERATION.
If the Corporation or its stockholders enter into an agreement to dispose of all or substantially all of the assets of the Corporation, enter into an
agreement to merge or consolidate with another entity or enter into a plan of reorganization or liquidation, each award will be automatically accelerated so that (1) options become fully
exercisable with respect to the total number of shares purchasable under the options; (2) restrictions on restricted shares will be eliminated, and the shares will immediately vest; and
(3) share rights and share units will immediately vest and become payable. The Committee may also provide for the automatic termination of repurchase rights upon the occurrence of such an
event. 

        (2)   NO
ACCELERATION. No acceleration of awards will occur if the terms of the agreement require that each such award either be assumed by the successor corporation or parent
thereof or be replaced with a comparable award subject to shares of the successor corporation or parent thereof. The determination of such comparability will be made by the Committee, and its
determination will be final, binding and conclusive. Upon consummation of the transaction contemplated by the agreement, all outstanding options and stock appreciation rights shall terminate unless
assumed pursuant to a written agreement by the successor corporation or parent thereof and other awards shall be paid in full unless otherwise provided for in the agreement. However, nothing in this
Section will prohibit the Committee from granting an award that provides for the acceleration of exercisability and/or vesting of the award either (i) upon the occurrence of any specified
event, including a corporate transaction or change in control of the Corporation (as defined by the Committee) whether or not the award is assumed or
replaced with a comparable award or (ii) upon termination of employment or other occurrence following such an event. 

        (3)   CORPORATE
STRUCTURE. The grant of awards under this Plan will in no way affect the right of the Corporation to adjust, reclassify, reorganize, or otherwise change its
capital or 

11

 

business
structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets. 

        (c)   VALUATION

        With
regard to awards granted under this Plan, for all valuation purposes under the Plan, the Fair Market Value of a share of Common Stock or Restricted Common Stock (as the case may be)
on any relevant date will be determined in accordance with the following provisions: 

        (1)   If
the Common Stock or Restricted Common Stock is not at the time listed or admitted to trading on any stock exchange, but is traded in the
over-the-counter market, the Fair Market Value will be the average between the reported high price and the reported low price of one share of Common Stock or Restricted Common
Stock (as the case may be) on the date in question in the over-the-counter market, as such prices are reported by the National Association of Securities Dealers through its
NASDAQ system or any successor system. 

        (2)   If
the Common Stock or Restricted Common Stock is at the time listed or admitted to trading on any stock exchange, then the Fair Market Value will be the average between
the reported high price and the reported low price of one share of Common Stock or Restricted Common Stock (as the case may be) on the date in question on the stock exchange that is the primary market
for the stock, as such prices are officially quoted on such exchange. 

        (3)   If
the Common Stock or Restricted Common Stock (as the case may be) is at the time neither listed nor admitted to trading on any stock exchange nor traded in the
over-the-counter market, or if the Committee determines that neither subparagraph (a) nor subparagraph (b) above reflects Fair Market Value of the stock and the
award was not granted pursuant to the Plan's Automatic Award provisions, then the Fair Market Value will be determined by the Committee after taking into account such factors as the Committee deems
appropriate, or in the case of Automatic Awards, by an independent third party valuation. 

        (d)   REPURCHASE
RIGHTS 

        The
Committee may, in its discretion, establish as a term of one or more awards granted under the Plan that the Corporation (or its assigns) will have the right, exercisable upon the
award holder's termination of employment with, or cessation of services for, the Corporation and its subsidiaries, to repurchase at the original price paid, if any, for such shares of
(1) Company Stock acquired by the award holder pursuant to the granted award, or (2) Common Stock into which acquired Restricted Common Stock may have been converted or for which
Restricted Common Stock may have been exchanged. Any such repurchase right will be exercisable by the Corporation (or its assigns) upon such terms and conditions (including provisions for the
expiration of such right in one or more installments) as the Committee may specify in the instrument evidencing such right. The Committee will also have full power and authority to provide for the
automatic termination of the Corporation's repurchase rights, in whole or in part, thereby accelerating the vesting of any or all of the purchased shares (other than purchased shares obtained pursuant
to the Automatic Award provisions of this Plan) upon the occurrence of any change in control specified in Section VIII(b). 

        (e)   RIGHT
OF FIRST REFUSAL 

        The
Committee may, in its discretion, establish as a term of one or more awards granted under the Plan that the Corporation has a right of first refusal with respect to the proposed
disposition by the award holder (or any successor in interest by reason of purchase, gift or other mode of transfer) of any shares of (1) Company Stock acquired by the award holder pursuant to
the granted award, or (2) Common Stock into which purchased Restricted Common Stock may have been converted or for which acquired Restricted Common Stock may have been exchanged. Any such right
of first refusal will 

12

 

be
exercisable by the Corporation or its assigns in accordance with the terms and conditions specified in the instrument evidencing such right. 

IX.   TERMS AND CONDITIONS OF THE PURCHASE PROGRAM  

        The Purchase Program is intended to allow eligible employees to purchase shares of Common Stock at periodic intervals, with their accumulated payroll deductions. 

        (a)   STOCK
SUBJECT TO PURCHASE PROGRAM. Subject to adjustment under Section V(c), the maximum number of shares of Common Stock which may be issued under the Purchase
Program is 6,400,000 shares. 

        (b)   ELIGIBILITY.
Unless otherwise specified by the Committee, each individual who is an employee of the Corporation (or parent or subsidiary, whether now existing or
subsequently established) is eligible to participate in the Purchase Program. 

        (c)   OFFERING
PERIODS. Shares of Common Stock will be offered under the Purchase Program in a series of successive offering periods, each with a maximum duration of
twenty-seven (27) months. Each offering period will be comprised of a series of one or more successive purchase intervals at the end of which shares will be purchased on behalf of each
participant. 

        (d)   PURCHASE
RIGHTS AND OTHER TERMS. The terms and conditions of the Purchase Program, including but not limited to the length of the offering periods and purchase
intervals, the terms of the purchase rights, the purchase price, the method of payment of the purchase price, limitations on payroll deductions and the number of shares purchasable during any purchase
interval or offering period and the rules and restrictions governing the Common Stock purchased pursuant to this program will be determined by the Committee in its sole discretion. 

X. GENERAL PLAN PROVISIONS  

        (a)   EFFECTIVE
DATE AND TERM OF PLAN 

        (1)   EFFECTIVE
DATE. This restatement of the Plan will become effective upon approval by the Corporation's stockholders at the 2004 Annual Meeting, except as otherwise set
forth herein. 

        (2)   TERM.
No awards may be made under the Plan after February 12, 2014. 

        (b)   AMENDMENT
OR DISCONTINUANCE 

        (1)   BOARD.
The Board may amend, suspend or discontinue the Plan in whole or in part at any time; provided, however, that (a) except to the extent necessary to qualify
as Incentive Options any or all options granted under the Plan that are intended to so qualify, such action may not, without the consent of the award holder, adversely affect rights and obligations
with respect to awards outstanding
under the Plan; (b) certain amendments may, as determined by the Board in its sole discretion, require stockholder approval pursuant to applicable laws or regulations. 

        (2)   COMMITTEE.
The Committee will have full power and authority to modify or waive any or all of the terms, conditions or restrictions applicable to any outstanding award
(other than Automatic Option Grants), to the extent not inconsistent with the Plan; provided, however, that except for adjustments made pursuant to Section V(c), no outstanding option will be
amended to lower the exercise price or will be canceled for the purpose of reissuing such option to the option holder at a lower exercise price without the approval of the Corporation's stockholders. 

        (c)   NO
OBLIGATION 

        Nothing
contained in the Plan (or in any award granted under this Plan) shall confer upon any employee, consultant, or independent contractor any right to continue in the employ of, or
to provide 

13

 

services
to, the Corporation or any affiliate or constitute a contract or agreement of employment or for the provision of services, or interfere in any way with the right of the Corporation or an
affiliate to reduce such employee's, consultant's or independent contractor's compensation from the rate in existence at the time of the granting of an award or to terminate such employee's,
consultant's or independent contractor's employment or services at any time, with or without cause; but nothing contained in the Plan or in any award granted under this Plan shall affect any
contractual rights of an employee pursuant to a written employment agreement. 

        (d)   USE
OF PROCEEDS 

        The
cash proceeds received by the Corporation pursuant to awards granted under the Plan will be used for general corporate purposes. 

        (e)   COMPLIANCE

        No
option may be exercised, and the Corporation will not be obligated to issue stock under any award unless, in the opinion of counsel for the Corporation, such exercise and issuance is
in compliance with all applicable federal and state securities laws. As a condition to the grant of any award, or to the issuance of stock under any award, the Committee may require that the award
holder agree to comply with such provisions of federal and state securities laws as may be applicable to such grant, or to the
sale of stock acquired pursuant to the Plan, and that the award holder deliver to the Corporation a written agreement, in form and substance satisfactory to the Corporation and its counsel,
implementing such agreement. 

14

 
 
 

APPENDIX A
  SPECIAL PROVISIONS RELATED TO 1995 CIBA-GEIGY TRANSACTION    
    

        Those persons holding options to acquire shares of Common Stock under the Corporation's Stock Option Plan (formerly the Corporation's "1991 Stock Option Plan") on
November 20, 1994 were granted the following rights ("Rights") with respect to each such option: 

        (i)    the
right to receive upon the closing of the tender offer contemplated under the Investment Agreement entered into on such date among the Corporation and
Ciba-Geigy Limited, Ciba-Geigy Corporation and Ciba Biotech Partnership, Inc. (the "Closing") a cash payment equal to (A) 37.33% of the number of shares of Common
Stock with respect to which each such option would first become exercisable in calendar year 1995 multiplied by (B) the difference between $117 per share and the exercise price per share of
such option with respect to such shares and 

        (ii)   with
respect to the remaining shares of Common Stock subject to each such option, the right, exercisable at any time after the later of the Closing or the date that
such an option first becomes exercisable with respect to such shares, to surrender that portion of such option relating to 37.33% of such shares in return for a cash payment equal (A) to the
difference between $117 per share and the exercise price per share of such option multiplied by (B) the number of shares with respect to which such option is so surrendered. However, the grant
and exercise of any such right with respect to any officer or director subject to Section 16 of the Securities Exchange Act of 1934 shall be subject to stockholder approval of the grant of such
rights at the Corporation's 1995 stockholder meeting. The grant of such rights, which are made with respect to 1,858,776 optioned shares shall be in addition to, and shall not count against, the
aggregate and annual limits on the number of shares with respect to which other awards under the Plan may be made to all individuals and/or a single individual. 

15

QuickLinks

Exhibit 10.501

CHIRON 2004 STOCK COMPENSATION PLAN (As Amended and Restated February 13, 2004)

APPENDIX A SPECIAL PROVISIONS RELATED TO 1995 CIBA-GEIGY TRANSACTIONQuickLinks
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Exhibit 10.508    
    

PERSONAL
AND CONFIDENTIAL 

                        ,
2004 

«First_Name»
«Last_Name»

«JOB_TITLE»

Chiron Corporation

«ADDRESS», M/S «MS»

«CITY_STATE_ZIP» 

        Re:
Share Rights Award 

Dear:
«First_Name» 

        Pursuant
to the Chiron Corporation 2004 Stock Compensation Plan (the "Plan"), Chiron Corporation (the "Company") hereby grants you a share rights award (the "Award") which will entitle
you to receive shares of Company common stock. The number of shares you will receive will be based on your target award, the level of achievement of specified performance goals over a specified
performance period and your service period. 

        The
Award is granted to you in accordance with the restrictions, terms, and conditions hereinafter set forth and is in all respects limited and conditioned by the provisions of the Plan. 

        1.     Your
target award is «Shrs_Grntd» («Shrs_Grntd_Wrds»). Depending on the level of performance goals achieved, you may
receive up to 150% of your target shares. 

        2.     The
performance goals applicable to your Award and the percentage of your target award payable to you upon achievement of different levels of these goals are specified in
Exhibit A. If the minimum performance goals specified in Exhibit A are not achieved, your Award will terminate. 

        3.     The
performance period (the "Performance Period") over which the performance is measured is June 1, 2004 to December 31, 2006. 

        4.     The
Compensation Committee will determine the level of performance goal achievement and the number of shares (if any) that you are entitled to receive under your Award at
its meeting (the "Determination Date") held in the first calendar quarter of 2007 to determine officer bonuses and stock awards. The shares of common stock payable under your Award (including any
shares payable under paragraph 5.b or 5.c) will be paid as soon as practicable following the Determination Date. 

        5.     You
must remain employed with the Company through the last day of the Performance Period to receive the maximum number of shares you may be eligible for under
Exhibit A. If your employment terminates prior to the end of the Performance Period, the following rules will apply: 

        a.
If the Company terminates your employment for Cause before January 1, 2007, the Award will be canceled automatically and no shares of common stock will be issued thereunder. 

        b.
In the event that prior to January 1, 2007, (i) you voluntarily terminate employment with the Company for any reason (other than Retirement), (ii) your employment
with the Company terminates by reason of death or permanent disability or (iii) the Company terminates your employment for any reason (other than for Cause), the Award will be canceled
automatically except as follows: 

        (i)
if your termination date is after May 31, 2005, and before May 1, 2006, you will be entitled to receive one-third (1/3) of the number of shares that you
would have received had you stayed in employment through the end of the Performance Period based on the level of performance achieved through the end of the Performance Period. 

        (ii)
if your termination date is after April 30, 2006, and before January 1, 2007, you will be entitled to receive two-thirds (2/3) of the number of shares that
you would have received 

 

had
you stayed in employment through the end of the Performance Period based on the level of performance achieved through the end of the Performance Period. 

        You
will be deemed to be permanently disabled if, by reason of any medically determinable physical or mental impairment expected to result in death or to be of continuous duration of not
less than 12 months, you are unable to engage in any substantial gainful employment. 

        c.
If you terminate employment by reason of Retirement, you will be entitled to receive that number of shares equal to the product of (i) the number of shares that you would have
received had you stayed in employment through the end of the Performance Period based on the level of performance achieved through the end of the Performance Period and (ii) a fraction, the
numerator of which is the number of whole months of your employment after June 1, 2004 and the denominator of which is thirty-one (31). 

        6.     The
issuance of shares of Common Stock under your Award is subject to satisfaction of all tax withholding obligations with respect to such shares and you agree to make
appropriate arrangements with the Company to satisfy all such obligations. Unless you elect in writing to satisfy such obligations by payment in cash before issuance of shares under your Award, the
number of shares of common stock which you would otherwise be entitled to receive will be reduced by that number of shares which, as of the Determination Date, has an aggregate Fair Market Value (as
defined in the Plan) equal to the total amount of tax withholding obligations. 

        7.     Your
Award hereunder may not be sold, assigned, transferred, alienated, subject to garnishment or otherwise encumbered in any manner other than by transfer, to the extent
provided below, by will or the laws of descent and distribution. In the event of your death prior to the issuance of shares of common stock under your Award, any shares issuable hereunder will pass
pursuant to your will or by the laws of descent and distribution. 

        8.     In
the event any change is made to the common stock (whether by reason of merger, consolidation, reorganization, recapitalization, stock dividend, stock split,
combination of shares, exchange of shares, or other change in corporate or capital structure of the Company affecting the outstanding common stock as a class without the Company's receipt of
consideration) then, unless such change results in the termination of your Award, the number and/or class of securities subject to your Award will be appropriately adjusted to preclude any dilution or
enlargement of your rights under the Award. 

        9.     The
issuance of shares of common stock hereunder shall be subject to compliance by the Company and yourself or your beneficiary with all applicable requirements of law
relating thereto and with all regulations of any stock exchange on which the common stock may be listed at the time of such issuance. 

        10.   If
the Company or its stockholders enter into an agreement to dispose of all or substantially all of the assets of the Company, enter into an agreement to merge or
consolidate with another entity, or enter into a plan of reorganization or liquidation prior to January 1, 2007, then you will receive, immediately before the consummation of such transaction,
a number of shares of common stock equal to 100% of your target award regardless of the level of performance goals achieved at such time. If your employment has terminated prior to such transaction,
you will receive the number of shares determined under paragraph 5 based on 100% of your target award. 

        11.   If
there is a Change in Control of the Company pursuant to which the Award continues and within twenty-four (24) calendar months thereafter there is a
Qualifying Termination of your employment, then to the extent the Award remains outstanding at the time of such Qualifying Termination, you will receive a number of shares of common stock equal to
100% of your target award. 

2

 

        12.   For
this letter agreement, the following definitions apply: 

        a.     "Change
in Control" of the Company shall be deemed to have occurred as of the first day that any one or more of the following conditions is satisfied and regulatory
approval has been granted if necessary: 

        (i)    The
"beneficial ownership" (as defined in Rule 13d-3 under the Securities Exchange Act of 1934) of securities representing more than thirty percent
(30%) of the combined voting power of all securities of the Company is acquired, directly or indirectly, by a Person (other than the Company, any trustee or other fiduciary holding securities under an
employee benefit plan of the Company or an
affiliate thereof, or any corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company); or 

        (ii)   During
any period of two (2) consecutive years, individuals who at the beginning of such period constitute the Board of Directors of the Company and any new
director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in i. above) whose election by the Board of Directors or
nomination for election by the Company's stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof; or 

        (iii)  The
stockholders of the Company approve a definitive agreement to sell or otherwise dispose of all or substantially all of its assets, or adopt a plan for liquidation,
provided that such sale or liquidation has not been abandoned. 

        Notwithstanding
anything else contained herein to the contrary, in no event shall a Change in Control be deemed to have occurred by reason of a purchase, or series of purchases of
Company stock by Novartis or its successor such that the acquiring entity remains subject to the terms of that certain Governance Agreement dated as of January 5, 1995, as amended through
December 9, 2000, provided the acquiring entity's Company stock holdings, direct or indirect, in the aggregate, represent less than seventy-nine and nine-tenths of a
percent (79.9%) of the combined voting power of all outstanding Company securities. In addition, in no event shall a Change in Control be deemed to have occurred, with respect to you, if you are part
of a purchasing group that consummates the Change-in-Control transaction. You shall be deemed "part of a purchasing group" for purposes of the preceding sentence if you are an
equity participant in the purchasing company or group (except for: (i) passive ownership of less than three percent (3%) of the stock or other equity of the purchasing company; or
(ii) ownership of equity participation in the purchasing company or group which is otherwise not significant, as determined prior to the Change in Control by a majority of the nonemployee
continuing Directors). 

        b.     "Qualifying
Termination" means an involuntary termination of your employment by the Company for reasons other than Cause, death or permanent disability. 

        c.     "Cause"
means: 

        (i)    Your
willful failure to substantially perform your duties with the Company (other than any such failure resulting from disability); 

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

3

 

        (iii)  Your
having been convicted of a felony. 

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

        d.     "Retirement"
means termination of employment by you (by reason other than death or Cause) after all of the following has occurred (i) you have completed 5 or more
years of continuous employment, (ii) you have attained age 55 and (iii) the sum of your age in full years and full years of employment equals at least 65. 

        13.   Neither
you nor, in the event of your death, your beneficiary shall have any rights as a shareholder with respect to the shares of common stock issuable hereunder until
you shall have been issued a stock certificate for such shares. It is the intention of the parties that the Company's obligations under your Award is unfunded for purposes of the Internal Revenue Code
and that the Employee Retirement Income Security Act of 1974 does not apply to your Award. 

        14.   The
Compensation Committee, may, in its discretion, modify or waive any or all of the terms, conditions or restrictions hereof, provided, however, that no such
modification or waiver may, without your or, if applicable, your beneficiary's consent, adversely affect the rights of you or your beneficiary hereunder. 

        15.   The
Compensation Committee has full authority to administer the Plan, including authority to interpret and construe any provision thereof and hereof and to adopt such
rules and regulations for administering the Plan as it may deem necessary. Decisions of the Compensation Committee are final and binding on all persons who have an interest in the Plan. 

        16.   This
grant shall not constitute a contract of employment. The Company (or any subsidiary employing you) may terminate or change the terms of your employment at any time
and for any reason and whether or not such termination or change causes a loss of rights under the Plan, except to the extent that the terms of any employment contract or, with respect to changes in
your compensation, any written compensation agreement between the Company and you may expressly provide otherwise. 

	 	 	Very truly yours,
	

 	
 	

CHIRON CORPORATION
	

 	
 	

By	
 	

 Howard H. Pien

President and

Chief Executive Officer

4

  

 
 

EXHIBIT A
  PERFORMANCE GOALS AND PAYOUT AMOUNT    
    

Performance Goals  

        Your Award is subject to the achievement of two separate performance goals—total shareholder return and specified milestones. The actual number of
shares payable under the Award will be determined based on the level of performance achieved as specified in the table below. The minimum levels of performance for each goal must be achieved in order
for you to receive any shares under the Award. 

        1.     Total Shareholder Return ("TSR") is the ranking of the Company TSR compared to that of a peer group (the "Peer Group").
TSR is the sum of share price appreciation plus dividends paid over the Performance Period. The Peer Group will be comprised of companies included in the Merrill Lynch Biotech HOLDRs Trust and Serono
Group. The Company TSR must perform at least in the second quintile compared to the Peer Group TSR over the Performance Period. 

        2.     Milestones. There are three (3) milestones for your Award as specified on page 3 of Exhibit A. At least one
of the milestones must be achieved during the Performance Period. If more than one milestone is achieved, you may be eligible for a higher percentage of your target award. The milestones may be
achieved in any order. 

1

 
Percent of Target Award Earned  

The
following table will be used to determine the actual percentage of the target award earned based on the ranking of the Chiron TSR compared to the Peer Group TSR and the number of milestones
achieved: 

	 
	 	Number of Milestones Achieved

	Ranking of Chiron TSR vs.

Peer Group TSR
 

	 	1
	 	2
	 	3

	5th Quintile	 	95%	 	120%	 	150%
	
4th Quintile	
 	

80%	
 	

110%	
 	

135%
	
3rd Quintile	
 	

65%	
 	

100%	
 	

120%
	
2nd Quintile	
 	

50%	
 	

65%	
 	

95%
	
1st Quintile TSR	
 	

0%	
 	

0%	
 	

0%

2

 

        Milestones for Your Award    The three (3) milestones specified for your Award are advancements in biopharma portfolio
projects, blood testing and vaccines as specified below. At least one of the milestones must be achieved during the Performance Period. 

	1.
	Biopharma Portfolio Projects. There are two (2) components to this milestone. Both Component 1 and Component 2 must be achieved: 

        Component 1: One of the following must be achieved: 

	(a)
	Demonstrated
success based upon response rate in a randomized study of Proleukin/Rituxan combination in Rituxan-naive patients; or

	(b)
	Positive
results from Phase III study of TFPI in Severe Community Acquired Pneumonia patients. 

        Component 2: One of the following must be achieved: 

	(a)
	Product
launch of CSI; or

	(b)
	Product
launch of Daptomycin.

	2.
	Blood Testing: U.S. Approval For Tigris/Ultrio.

	3.
	Vaccines: There are two (2) components to this milestone. Both Component 1 and Component 2 must be achieved: 

        Component 1: Strengthening of the Company's flu franchise. At least two of the following must be achieved: 

	(a)
	US
pediatric flu launch;

	(b)
	flu
cell culture milestones to allow EU launch in 2008 and US launch in 2010;

	(c)
	achieve
planned scale up of egg-based flu production. 

        Component 2: Company takes leadership in meningococcal franchise. At least two of the following must be achieved: 

	(a)
	Menjugate
launch in US;

	(b)
	3-year
development milestones in ACWY;

	(c)
	3-year
development milestones in Men B Recombinant. 

3

QuickLinks

Exhibit 10.508

EXHIBIT A PERFORMANCE GOALS AND PAYOUT AMOUNT

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