<PAGE>
[CHIRON LETTERHEAD]
May 28, 1999
CONFIDENTIAL
------------
Dr. Peder Jensen
40 Gatehouse Road
Bedminster, New Jersey 07921
Via Fax 908-781-7914
Dear Peder:
We are pleased to confirm the terms of our offer to you as the Head of
Development at Chiron Corporation, reporting to me. As discussed, you will be
elected as a corporate Vice President and confirmation of your role as an
executive officer of Chiron will take place at the next Board of Directors
meeting. Following an internal review of titles, your position may well
qualify as a Senior Vice President, but the review is not complete and
individual title changes are subject to approval by the Board. You will chair
the company's Development Committee and be a senior member of the REAP
Committee.
Your starting salary will be $310,000 per annum. We are offering you a
signing bonus of $50,000, payable within 10 days following your start date.
You will be eligible to participate in Chiron's Annual Incentive Plan (AIP)
program. The results of the company and the Research and Development division
and your own performance during the calendar year determine awards under this
program. You will be eligible for an award of between 0 and 90% of your base
salary, with a target of 45%. Executive compensation is reviewed annually in
February. Annual incentive plan payments and merit increases to base salary
are effective in March. We will guarantee a minimum bonus of 45% for 1999,
prorated according to your employment in this year. For the full performance
year 2000, we will guarantee a minimum AIP payment of $100,000.
You will be eligible to participate in our stock option program. Subject to
the approval of the Board of Directors, we will award you the following under
the program. Beginning in year 2000 you will be eligible for further stock
option grants based on your performance.
- A stock option grant of 140,000 options to purchase Chiron common stock.
The options vest fully over a four-year period, with the first 25% of
the shares vesting at the one-year grant anniversary. Shares vest on a
pro-rated monthly basis over the remaining three years of the vesting
period. The exercise price of the option will be set at the fair market
value (as defined in the Option Plan) of a share of Chiron stock on the
date the option is approved. We expect the grant to be approved and
effective by the end of the month in which your employment begins.
- A restricted share right grant for 25,000 shares. The share rights vest
40% at 2 years from date of grant and the remaining 60% at 4 years from
date of grant. The date of grant will be your first day of employment.
<PAGE>
We will assist you in your relocation from New Jersey. The enclosed sheets
detail the relocation benefits offered. In addition we will arrange for
a rental car or cars for up to 60 days, as needed as part of your
temporary living expenses. In addition, subject to other aspects of the Loss
Protection policy for sale of your New Jersey home, we will increase the
maximum reimbursement to $60,000 from the policy limit of $15,000. According
to policy this benefit is eligible for tax gross up. Your miscellaneous
relocation expense allowance will be $10,000.
Also in addition to standard relocation benefits, we are prepared to make you
a two part loan which must be used exclusively for the purchase of your
principal residence and which must be secured by a second deed of trust on
that residence. Part one, consisting of $200,000 will be subject to the
Applicable Federal Rate of Interest and will require interest only payments.
The principal amount of this part will be forgiven as follows: $35,000 at the
end of the first anniversary of your employment. On the second through fifth
anniversaries of employment the amounts forgiven will be $35,000, $40,000,
$40,000 and $50,000, respectively. The second part of the loan, of up to
$200,000, will be at the Applicable Federal Rate of Interest and will be
payable, at your option, either on an interest only basis for 10 years with a
balloon payment of the principle due at the end of ten years or as a fully
amortized loan over 10 years. Both parts of the loan are repayable within 90
days should you voluntarily resign. Taxes arising from the loan forgiveness
are your responsibility.
In the event of a change in control and your employment is severed, you will
be eligible for severance of a minimum of one year of base salary plus bonus,
the bonus portion being calculated as the average of the prior 2 years bonus
payments. This benefit is in lieu of any other Chiron change of control
severance plan payments you might be due. Novartis exercising its right to
purchase up to 55% under the governance agreement in place does not
constitute a change in control for purposes of this severance benefit.
At your request, in lieu of executive financial counseling benefits in the
first year of your employment, we will reimburse you for tax preparation
services for the year 2000 up to a maximum of $10,000. Beginning in year
2001 you would be eligible for the annual executive financial counseling
benefit ($5,000 per annum) that you may use for tax preparation if you so
choose.
The information sheets following your offer letter contain some of the
highlights of Chiron's benefits programs. You should note that, while this
offer is being made under the terms of our current benefits and compensation
programs, changes do occur from time to time and any system-wide changes that
occur will apply to you as well. You requested information on our current
health and life insurance rates. The 1999 monthly cost for our Aetna PPO plan
for family coverage is $126.10 per month and Delta Dental Plan coverage for
family is $23.42 per month. Chiron provides "credits" in our flex benefits
program to pay for 2 times annual salary in life insurance. An employee may
purchase additional amounts up to a maximum of $800,000. Additional amounts
are approximately $0.133 per thousand dollars of coverage per month. Age and
lifestyle habits will affect the exact rates.
Some of the benefit programs are effective immediately upon your employment,
while others are dependent upon established enrollment periods. Your group
medical insurance benefits generally start on the first day of the month
FOLLOWING your date of hire. If, however, your date of hire is the first
business day of the month, your coverage becomes effective on that date. Note
also that, with few exceptions, Chiron extends benefits coverage to qualified
family members, including opposite- and same-sex domestic partners.
<PAGE>
As a part of Chiron's routine medical surveillance program, employees with
certain project assignments may be advised to provide a baseline blood sample
for archival storage. The Chiron Occupational Health Department will notify
you if a baseline blood draw is recommended.
This offer is contingent upon your ability, as required by federal law, to
establish your employment eligibility as a U.S. citizen, a U.S. lawful
permanent resident, or an individual specifically authorized for employment
in the U.S. by the Immigration and Naturalization Service.
Under California law, employment with Chiron is not for any specified term
and can be terminated at any time for any reason by you or Chiron. Any
contrary representations that have been made or may be made to you are
superseded by this offer. When you accept the offer, the terms described in
this letter and the Chiron Employee Invention and Confidential Information
Agreement shall constitute the terms of your employment.
We are anxious to confirm your acceptance and set a starting date. I think
this opportunity is an excellent one for you and I believe Chiron will
benefit from your experience and expertise. We would like a response to our
enhanced offer by Friday, May 28 but at latest Tuesday, June 1. Linda Short
and I are available to answer questions, so do not hesitate to call.
Sincerely,
CHIRON CORPORATION
/s/ Lewis T. Williams
Lewis T. Williams
President, Research and Development
Enclosures
cc: Human Resources
Please indicate your understanding of the terms of this offer and your
acceptance of this offer by signing this letter and returning the letter to
me as soon as possible.
/s/ Peder Jensen 6-1-99
---------------------------------------
Name Date
<PAGE>
PROMISSORY NOTE A
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$200,000.00 SEPTEMBER 21, 1999
Emeryville, California
FOR VALUE RECEIVED, the undersigned, PEDER K. JENSEN AND ISABEL
J. JENSEN (collectively, hereinafter called "Borrower"), hereby promise to
pay CHIRON CORPORATION, a Delaware corporation or order ("Lender"), the
principal sum of TWO HUNDRED THOUSAND DOLLARS AND NO/100THS CENTS
($200,000.00), in lawful money of the United States of America, with interest
equal to 5.980%, to purchase that certain improved real property located at
71 Bay Way, San Rafael, Marin County, California (the "Property")
constituting Borrower's principal residence in California (the "Loan").
1. All payments of principal, interest and any other amounts payable on
or in respect of this Note or the indebtedness evidenced hereby shall be made
to the account of Lender at its principal office located at 4560 Horton
Street, Emeryville, California 94608, or to such other place as Lender may
from time to time designate by written notice to Borrower. All payments
shall be in lawful money of the United States of America.
2. The principal amount of Two Hundred Thousand Dollars ($200,000.00)
hereunder shall become due and payable on the earlier to occur of the
following: (i) August 2, 2004, which is five (5) years from the date of Peder
K. Jensen's ("Dr. Jensen") date of employment ["Jensen's Employment Date"]
(the "Maturity Date"), or (ii) such earlier date as described in Paragraph 5
below (the "Repayment Date").
3. Borrower shall make annual interest payments on the outstanding
principal balance hereunder over the five-year term, commencing on the first
anniversary of Jensen's Employment Date, and on each successive anniversary
date thereafter, through and including the Maturity Date, as more
particularly described on ANNEX 1 attached hereto.
4. Notwithstanding the foregoing provisions, the principal amount of this
Note shall be reduced and forgiven in five (5) annual increments as follows:
beginning on the first anniversary after Dr. Jensen's Employment Date,
Thirty-Five Thousand Dollars ($35,000.00); on the second anniversary after
Dr. Jensen's Employment Date, Thirty-Five Thousand Dollars ($35,000.00); on
the third anniversary after Dr. Jensen's Employment Date, Forty Thousand
Dollars ($40,000.00); on the fourth anniversary after Dr. Jensen's Employment
Date, Forty Thousand Dollars ($40,000.00); and on the fifth anniversary after
Dr. Jensen's Employment Date, Fifty Thousand Dollars ($50,000.00), through
and including the Maturity Date, as more particularly described on ANNEX 1
attached hereto, with the outstanding principal balance forgiven in full on
the Repayment Date, if and only if on the applicable forgiveness date, Dr.
Jensen continues to be a full-time employee of Chiron Corporation or an
affiliate thereof.
<PAGE>
5. Notwithstanding the above provisions, in the event that Dr. Jensen
voluntarily leaves Chiron Corporation or an affiliate thereof, or is
terminated for cause, prior to the Maturity Date, the outstanding principal
balance of the Loan and all accrued, but unpaid interest owing thereon
through and including the Repayment Date shall become immediately due and
payable and shall be repaid by Borrower in full within a reasonable period
not to exceed ninety (90) days from the date of Dr. Jensen's leaving the
full-time employ of Chiron Corporation or an affiliate thereof.
6. Borrower and Lender agree that the indebtedness evidenced by this Note
shall be Borrower's sole and personal liability, and shall be secured by a
Deed of Trust executed by Borrower in favor of Lender and recorded against
the Property, which Deed of Trust shall be subordinate to that of the lien
secured by first mortgagor's Deed of Trust encumbering the Property.
Borrower agrees to use their best efforts to enable Lender to record such
Deed of Trust in favor of Lender for the total amount of this Loan, and any
related loan for additional funds extended by Lender to Borrower, including
that certain note in the principal sum of $200,000.00, dated of even date
herewith and executed by Borrower in favor of Lender (collectively, the
"Notes"), the aggregate amount of which shall be secured by the Property,
pursuant to that certain Deed of Trust to be recorded against the Property as
soon as practicable after Borrower closes escrow on the purchase of the
Property with first mortgagor.
7. Nothing herein shall be deemed to create any obligation of continued
employment on the part of Dr. Jensen or Chiron Corporation.
8. Borrower and Lender agree that upon recordation of a Deed of Trust
covering the Property in substantially the form attached hereto as ANNEX 2,
the obligations of Borrower under this Note, and any related loan for
additional funds extended by Lender to Borrower in connection with Borrower's
purchase of such Property, including the Notes, shall become subject to the
terms of that certain Deed of Trust which contains the following provision:
"In the event the herein described property or any part thereof, or any
interest therein is sold, agreed to be sold, conveyed or alienated by the
Trustor (Borrower), or by the operation of law or otherwise, all obligations
secured by this instrument, irrespective of the maturity dates expressed
therein, at the option of the holder hereof and without demand or notice
shall immediately become due and payable."
9. In the event that Borrower intends to, sell, agrees to sell, transfers
or conveys their interest in the Property or any part thereof or any interest
therein, Lender and Borrower agree that they shall execute in writing an
agreement as to a substitution of security for the indebtedness covered
hereunder, or Lender will repay this Note in full, including all accrued but
unpaid interest owing thereon through the Repayment Date.
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<PAGE>
10. Should the indebtedness evidenced by this Note be collected by action
at law, or in bankruptcy, receivership or other court proceeding, or should
this Note be placed in the hands of attorneys for collection after default,
Borrower agrees to pay, upon demand of Lender, in addition to principal and
interest, and other sums, if any, due and payable hereunder, court costs and
reasonable attorneys' fees and other reasonable collection charges, whether
suit be brought or not, unless prohibited by law. Borrower hereby waives
diligence, presentment, protest and demand of every kind and (to the full
extent permitted by law) the right to plead any statute of limitations as a
defense to any demand or action hereunder or in connection with any security
herefor, and hereby agrees that no failure on the part of Lender to exercise
any power, right or privilege hereunder, or to insist upon prompt compliance
with the terms hereof, shall constitute a waiver thereof.
11. In the event of any failure on the part of Borrower to make any
payment when due, Borrower hereby agrees to pay, upon demand of Lender, in
addition to principal and interest and other sums, if any, due and payable
hereunder, court costs and reasonable attorneys' fees and other reasonable
collection charges that Lender shall be entitled to recover from Borrower,
whether suit be brought or not.
12. Any notice to either party hereto may be given by delivering the same
in writing to such party in person, or by sending the same by registered or
certified mail, postage prepaid, to the following mailing addresses or to any
other mailing addresses within the State of California of which the parties
notify each other:
Borrower: Peder K. Jensen and Isabel J. Jensen
71 Bay Way
San Rafael, California 94901
Lender: Chiron Corporation
4560 Horton Street
Emeryville, California 94608
Attn: Office of the General Counsel
13. In the event that any one or more of the provisions contained in this
Note shall for any reason be held to be invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability shall not affect
any other provision of this Note, but this Note shall be construed as if such
invalid, illegal or unenforceable provisions had never been contained herein
or therein.
3
<PAGE>
14. Any failure of the Lender to exercise or enforce any right hereunder
shall not constitute a waiver of such right. All rights of the Lender
hereunder shall be cumulative and not alternative and shall be in addition to
any other rights and remedies granted to the Lender pursuant to any other
agreement, by statute, or by law.
15. Borrower shall not assign, convey, transfer, delegate, subordinate or
otherwise, mortgage, hypothecate or encumber, any of his interest, rights or
obligations hereunder to any other party.
16. This Note may not be changed orally, but only by an agreement in
writing signed by the parties against whom enforcement of any waiver, change,
modification or discharge is sought.
17. This Note shall be construed and enforced in accordance with, and
governed by, the laws of the State of California and shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
heirs, executors, administrators, legal representatives, successors and
assigns.
WITNESS the due execution hereof with the intent of being legally bound,
effective as of the date first set forth above.
BORROWER:
/s/ Peder K. Jensen September 11, 1999
---------------------------- -------------------------
PEDER K. JENSEN Date
/s/ Isabel J. Jensen
By Peder K. Jensen as
Attorney-in-Fact September 11, 1999
---------------------------- -------------------------
ISABEL J. JENSEN Date
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<PAGE>
PROMISSORY NOTE B
-----------------
$200,000.00 SEPTEMBER 21, 1999
Emeryville, California
FOR VALUE RECEIVED, the undersigned, PEDER K. JENSEN AND ISABEL J.
JENSEN (collectively, hereinafter called "Borrower"), hereby promise to pay
CHIRON CORPORATION, a Delaware corporation or order ("Lender"), the principal
sum of TWO HUNDRED THOUSAND DOLLARS AND NO/100THS CENTS ($200,000.00), in
lawful money of the United States of America, with interest equal to 6.250%,
to purchase that certain improved real property located at 71 Bay Way, San
Rafael, Marin County, California (the "Property") constituting Borrower's
principal residence in California (the "Loan").
1. All payments of principal, interest and any other amounts payable on
or in respect of this Note or the indebtedness evidenced hereby shall be made
to the account of Lender at its principal office located at 4560 Horton
Street, Emeryville, California 94608, or to such other place as Lender may
from time to time designate by written notice to Borrower. All payments
shall be in lawful money of the United States of America.
2. The principal amount of Two Hundred Thousand Dollars ($200,000.00.00)
hereunder shall become due and payable on the earlier to occur of the
following: (i) August 2, 2009, which is ten (10) years from the date of Peder
K. Jensen's ("Dr. Jensen") date of employment ["Jensen's Employment Date"]
(the "Maturity Date"), or (ii) such earlier date as described in Paragraph 5
below (the "Repayment Date").
3. Borrower shall make annual interest payments on the outstanding
principal balance hereunder over the ten-year term, commencing on the first
anniversary of Jensen's Employment Date, and on each successive anniversary
date thereafter, through and including the Maturity Date, as more
particularly described in ANNEX 1 attached hereto.
4. Notwithstanding the foregoing provisions, the principal amount of this
Note and all accrued but unpaid interest owing thereon through and including
the Maturity Date shall be due and payable on August 2, 2009.
5. Notwithstanding the above provisions, in the event that Dr. Jensen
voluntarily leaves Chiron Corporation or an affiliate thereof, or is
terminated for cause, prior to the Maturity Date, the outstanding principal
balance of the Loan and all accrued, but unpaid interest owing thereon
through and including the Repayment Date shall become immediately due and
payable and shall be repaid by Borrower in full within a reasonable period
not to exceed ninety (90) days from the date of Dr. Jensen's leaving the
full-time employ of Chiron Corporation or an affiliate thereof.
<PAGE>
6. Borrower and Lender agree that the indebtedness evidenced by this Note
shall be Borrower's sole and personal liability, and shall be secured by a
Deed of Trust executed by Borrower in favor of Lender and recorded against
the Property, which Deed of Trust shall be subordinate to that of the lien
secured by first mortgagor's Deed of Trust encumbering the Property.
Borrower agrees to use their best efforts to enable Lender to record such
Deed of Trust in favor of Lender for the total amount of this Loan, and any
related loan for additional funds extended by Lender to Borrower, including
that certain note in the principal sum of $200,000.00, dated of even date
herewith and executed by Borrower in favor of Lender (collectively, the
"Notes"), the aggregate amount of which shall be secured by the Property,
pursuant to that certain Deed of Trust to be recorded against the Property as
soon as practicable after Borrower closes escrow on the purchase of the
Property with first mortgagor.
7. Nothing herein shall be deemed to create any obligation of continued
employment on the part of Dr. Jensen or Chiron Corporation.
8. Borrower and Lender agree that upon recordation of a Deed of Trust
covering the Property in substantially the form attached hereto as ANNEX 2,
the obligations of Borrower under this Note, and any related loan for
additional funds extended by Lender to Borrower in connection with Borrower's
purchase of such Property, including the Notes, shall become subject to the
terms of that certain Deed of Trust which contains the following provision:
"In the event the herein described property or any part thereof, or any
interest therein is sold, agreed to be sold, conveyed or alienated by the
Trustor (Borrower), or by the operation of law or otherwise, all obligations
secured by this instrument, irrespective of the maturity dates expressed
therein, at the option of the holder hereof and without demand or notice
shall immediately become due and payable."
9. In the event that Borrower intends to, sell, agrees to sell, transfers
or conveys their interest in the Property or any part thereof or any interest
therein, Lender and Borrower agree that they shall execute in writing an
agreement as to a substitution of security for the indebtedness covered
hereunder, or Lender will repay this Note in full, including all accrued but
unpaid interest owing thereon through the Repayment Date.
10. Should the indebtedness evidenced by this Note be collected by action
at law, or in bankruptcy, receivership or other court proceeding, or should
this Note be placed in the hands of attorneys for collection after default,
Borrower agrees to pay, upon demand of Lender, in addition to principal and
interest, and other sums, if any, due and payable hereunder, court costs and
reasonable attorneys' fees and other reasonable collection charges, whether
suit be brought or not, unless prohibited by law. Borrower hereby waives
diligence, presentment, protest and demand of every kind and (to the full
extent permitted by law) the right to plead any statute of limitations as a
defense to any demand or action hereunder or in connection with any security
herefor, and hereby agrees that no failure on the part of Lender to exercise
any power, right or
2
<PAGE>
privilege hereunder, or to insist upon prompt compliance with the terms
hereof, shall constitute a waiver thereof.
11. In the event of any failure on the part of Borrower to make any
payment when due, Borrower hereby agrees to pay, upon demand of Lender, in
addition to principal and interest and other sums, if any, due and payable
hereunder, court costs and reasonable attorneys' fees and other reasonable
collection charges that Lender shall be entitled to recover from Borrower,
whether suit be brought or not.
12. Any notice to either party hereto may be given by delivering the same
in writing to such party in person, or by sending the same by registered or
certified mail, postage prepaid, to the following mailing addresses or to any
other mailing addresses within the State of California of which the parties
notify each other:
Borrower: Peder K. Jensen and Isabel J. Jensen
71 Bay Way
San Rafael, California 94901
Lender: Chiron Corporation
4560 Horton Street
Emeryville, California 94608
Attn: Office of the General Counsel
13. In the event that any one or more of the provisions contained in this
Note shall for any reason be held to be invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability shall not affect
any other provision of this Note, but this Note shall be construed as if such
invalid, illegal or unenforceable provisions had never been contained herein
or therein.
14. Any failure of the Lender to exercise or enforce any right hereunder
shall not constitute a waiver of such right. All rights of the Lender
hereunder shall be cumulative and not alternative and shall be in addition to
any other rights and remedies granted to the Lender pursuant to any other
agreement, by statute, or by law.
15. Borrower shall not assign, convey, transfer, delegate, subordinate or
otherwise, mortgage, hypothecate or encumber, any of his interest, rights or
obligations hereunder to any other party.
16. This Note may not be changed orally, but only by an agreement in
writing signed by the parties against whom enforcement of any waiver, change,
modification or discharge is sought.
3
<PAGE>
17. This Note shall be construed and enforced in accordance with, and
governed by, the laws of the State of California and shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
heirs, executors, administrators, legal representatives, successors and
assigns.
WITNESS the due execution hereof with the intent of being legally bound,
effective as of the date first set forth above.
BORROWER:
/s/ Peder K. Jensen September 11, 1999
---------------------------- -------------------------
PEDER K. JENSEN Date
/s/ Isabel J. Jensen
By Peder K. Jensen as
Attorney-in-Fact September 11, 1999
---------------------------- -------------------------
ISABEL J. JENSEN Date
4
