<PAGE>
AUDIT COMMITTEE CHARTER
(Approved May 26, 2000)
The Board of Directors of Chiron Corporation (the "Board"), upon
recommendation of the Audit Committee of the Board, has adopted this Audit
Committee Charter to define certain of the functions, responsibilities and
authorities of the Audit Committee of the Board.
The Board shall appoint three of its members to serve as the Audit Committee.
Its membership shall comply with applicable law and regulatory standards and
shall include persons knowledgeable in financial and accounting matters and
one or more persons having a background in accounting or related financial
management. Each member of the Committee shall be free of any relationship
that, in the opinion of the Board, would interfere with his or her
independent exercise of appropriate judgment and shall be independent of
management of the Company, provided, however, that the Board may determine
that it is in the best interests of the Company and its stockholders that not
more than one member of the Audit Committee may be appointed who is not
independent of management within the meaning of the standards of independence
established by the Securities and Exchange Commission and the listing
requirement of the NASDAQ National Market System. Notwithstanding the
foregoing, currently serving employees or officers of the Company, or their
immediate family members, shall not serve as members of the Audit Committee.
<PAGE>
The Audit Committee is a standing committee of the Board, whose primary
function is to assist the Board in fulfilling the Board's general oversight
responsibilities with respect to (i) the quality and integrity of financial
information provided to stockholders and others; and (ii) the quality and
integrity of the Company's system of internal controls.
Specifically, the Audit Committee shall have the following functions:
- The Committee shall provide the primary oversight on behalf of the Board
of the selection, engagement, performance and termination of the
independent auditors for the annual audit of the Company's financial
statements. The Committee shall review the independence of the
independent auditors, including consideration of their annual written
affirmation of independence, review of any other material engagements
with the Company or its subsidiaries, and such other matters as the
Committee may determine to be appropriate.
- The Committee shall review with the independent auditors and management
the nature and proposed scope of the annual audit.
- The Committee shall review with management and the independent auditors
the financial statements (including quarterly reports) of the Company.
The Committee will review, prior to release or filing with the Securities
and Exchange Commission, the annual consolidated financial statements of
the Company. Review of quarterly financial statements and related reports
need not precede the public release or filing of such
-2-
<PAGE>
statements by the Company. It is anticipated that these reviews will
include discussion of the quality of earnings, reviews of reserves and
accruals, consideration of the suitability of accounting principles,
reviews of the judgmental areas and audit adjustments, whether or not
recorded.
- The Committee shall receive and discuss with management and the
independent auditors the reports required to be delivered to the Audit
Committee on behalf of the Board pursuant to applicable auditing
standards.
- The Committee shall oversee Chiron's internal audit function. The
Committee shall review the audit plans and results of the internal audit
function as they relate to the Committee's areas of responsibility. The
internal auditor shall have direct access to the Committee. The internal
auditor, however, shall be subject to the administration and supervision
of the Chief Financial Officer or other member of management and may
perform such other duties and responsibilities as management shall
determine. Consequently, the internal auditor is not expected to be
independent of management.
- The Committee shall assess on behalf of the Board the quality and
adequacy of Chiron's internal control environment and shall receive
reports from the independent auditors and internal auditors regarding
control matters. The Committee shall oversee the follow-up by management
of any material control weakness reported by independent auditors or
internal auditors or otherwise identified by the Committee.
-3-
<PAGE>
- The Audit Committee may receive periodic reports and may discuss with
management the status of material contingent liabilities, including, as
appropriate, litigation, taxation matters, environmental or other areas
of risk exposure as they relate to the areas of responsibility of the
Committee, including review of financial statements disclosure and the
quality of the control environment and otherwise as the Committee may
determine in its discretion.
- The Committee shall assess and discuss with management the quality and
adequacy Chiron's internal legal compliance programs. The Committee shall
review reports from the Chief Compliance Officer with respect to matters
within the Committee's areas of responsibility. The Chief Compliance
Officer shall have direct access to the Committee. However, as the Chief
Compliance Officer performs other functions within the Company, he or she
is not expected to be independent of management.
- The Committee shall report to the Board periodically on activities within
its areas of responsibility and shall review periodically its function
under this Charter and provide recommendations to revise its
responsibility or authority under this Charter for consideration by the
Board.
The Audit Committee is expected to establish and maintain free and open
communication with the Company's independent auditors, the internal
auditors, and management of the Company. The Committee shall be
available to meet periodically and upon request in
-4-
<PAGE>
private executive sessions with representatives of independent auditors
and the internal auditors.
In discharging its oversight role, the Audit Committee is authorized to
investigate any activity of the Company within its area of responsibility
and to retain and direct the Company to pay the costs of such external
advisers, including legal counsel or other experts, as the Committee may
deem appropriate for this purpose.
All officers and employees of the Company and its consolidated
subsidiaries are directed to cooperate fully with and provide all
information requested by the Committee. The Committee is entitled to rely
upon factual reports, advice and recommendations provided by
representatives of management, employees of the Company and its
subsidiaries and expert advisors, to the fullest extent that the Board is
so entitled under applicable law.
-5-
