Document:

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                                                                    EXHIBIT 10.1
                                                                  EXECUTION COPY
                                                               FEBRUARY 22, 2002

                              SEPARATION AGREEMENT

                                    between

            NESTLE S.A., ave. Nestle 55, CH-1800 Vevey, Switzerland

                              (hereinafter NESTLE)

                                      and

             ALCON, INC., Bosch 69, CH-6331 Hunenberg, Switzerland

                              (hereinafter ALCON)

   Nestle and Alcon together hereinafter referred to as the PARTIES or each a
                                     PARTY.

                                   HOMBURGER
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                               TABLE OF CONTENTS

<Table>
<S>  <C>                                                            <C>
1    DEFINITIONS.................................................      1
2    THE SEPARATION..............................................      1
     2.1 General.................................................      1
     2.2 Pre-IPO Corporate Restructurings........................      1
     2.3 Pre-IPO Restructuring of Share Capital..................      2
     2.4 Share Certificates and Share Register...................      5
     2.5 Registration Matters....................................      5
     2.6 Registration Statement..................................      6
     2.7 Financial Matters.......................................      7
3    CORPORATE GOVERNANCE OF THE ALCON GROUP.....................      7
     3.1 General.................................................      7
     3.2 Governance of the Alcon Group...........................      8
     3.3 Board of Directors......................................      8
     3.4 Executive Management....................................      9
     3.5 Accounting and Reporting................................     10
     3.6 Dividend Resolutions....................................     11
4    ALLOCATION OF LIABILITIES...................................     11
     4.1 General.................................................     11
     4.2 Product Liability.......................................     11
     4.3 Environmental, Health & Safety Matters..................     11
5    EMPLOYMENT MATTERS..........................................     12
     5.1 Employees...............................................     12
     5.2 Pension Funds...........................................     13
     5.3 Alcon Incentive Plan....................................     13
6    FURTHER OBLIGATIONS OF THE PARTIES..........................     13
     6.1 Contracts of the Alcon Group............................     13
     6.2 Shared Sites............................................     13
     6.3 Services provided by Nestle to Alcon....................     13
     6.4 Insurance...............................................     14
     6.5 Intellectual Property Rights............................     14
     6.6 Omitted Matters.........................................     14
     6.7 Misdirected Funds.......................................     14
7    RESTRICTIVE COVENANTS.......................................     14
     7.1 Covenant not to Compete.................................     14
     7.2 Non-Interference and Non-Solicitation...................     15
     7.3 Remedies................................................     16
</Table>

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<Table>
<S>  <C>                                                            <C>
8    INDEMNITY...................................................     16
     8.1 Scope...................................................     16
     8.2 Third Party Claims......................................     16
     8.3 Direct Claims...........................................     17
     8.4 Adjustment of Indemnifiable Losses......................     17
     8.5 No Third Party Beneficiaries............................     18
     8.6 Statute of Limitations..................................     18
9    COSTS AND TAXES.............................................     18
     9.1 Costs...................................................     18
     9.2 Taxes...................................................     18
10   GENERAL PROVISIONS..........................................     19
     10.1 Effect on Third Parties................................     19
     10.2 Notices................................................     20
     10.3 Entire Agreement.......................................     20
     10.4 Amendments and Waivers.................................     20
     10.5 Severability; Good Faith...............................     20
     10.6 Confidentiality........................................     20
     10.7 Public Announcements...................................     21
11   GOVERNING LAW AND DISPUTE RESOLUTION........................     21
     11.1 Governing Law..........................................     21
     11.2 Dispute Resolution.....................................     21
     11.3 Arbitration............................................     21
</Table>

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     THIS SEPARATION AGREEMENT is made on February 22, 2002, between Nestle
S.A., a company organized under the laws of Switzerland with places of
incorporation in Cham and Vevey, and Alcon, Inc., a company organized under the
laws of Switzerland with place of incorporation in Hunenberg.

WHEREAS --:

     A. The share capital of Alcon is CHF 60,000,000, divided into 300,000,000
fully paid registered shares with a par value of CHF 0.20 each. All shares of
Alcon are beneficially owned by Nestle, as set out in Exhibit 0.

     B. On October 19, 2001, Nestle publicly announced its intention to effect
an initial public offering (IPO) of Alcon. Following the IPO, Nestle intends to
continue to hold a majority interest in the share capital and voting rights of
Alcon.

     C. Nestle and Alcon intend to effect the IPO pursuant to the terms and
conditions set forth in this Agreement. This Agreement further contains the
principles for the corporate governance of Alcon and the principles governing
the business relations between Nestle and Alcon after the IPO.

NOW, THEREFORE, the Parties hereto agree as follows --:

1 DEFINITIONS

     Capitalized terms used in this Agreement shall have the meaning specified
in Annex A.

2 THE SEPARATION

  2.1 General

     The terms and conditions of this Agreement shall govern the overall
relationship between Nestle and Alcon with respect to the following:

          (a) the corporate restructuring of Alcon prior to the IPO;

          (b) the refinancing of intercompany debt, and the termination or
     continuation of other intercompany agreements with effect as of the IPO;

          (c) the corporate governance of the Alcon Group after the IPO;

          (d) rights and obligations of the Parties after the IPO.

     It is understood and agreed by the Parties that the IPO of Alcon may be
cancelled by Nestle, acting in its sole discretion, at any time prior to pricing
of the Alcon shares. If the IPO is cancelled, the provisions set forth in
Section 2.2 and Section 2.3.1(a) shall continue to apply, while the remaining
provisions shall lapse or not take any force and effect.

     Whenever this Agreement refers to a third party, in particular any
financial institutions engaged in the IPO process, it is understood and agreed
that such third party shall not be bound or obligated in any manner by the
provisions of this Agreement. The Parties will, however, use their best efforts
to procure that any such third party or parties shall take the steps outlined in
this Agreement, and the Parties will enter into appropriate arrangements with
such third party or parties to this effect.

  2.2 Pre-IPO Corporate Restructurings

     2.2.1 Germany

     The capital structure of Alcon Pharma GmbH, Freiburg im Breisgau, Germany,
is set out in Exhibit 2.2.0.

     All shares in Alcon Pharma GmbH which were held by Nestle Unternehmungen
Deutschland GmbH, Frankfurt am Main, Germany, have been transferred to Alcon at
a purchase price of EUR 46,400,000, payable in cash, with effective date January
1, 2002 (the EFFECTIVE DATE) and a value

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date of January 3, 2002. The share purchase was closed as of January 1, 2002.
The share purchase was made as per the deed attached hereto as Exhibit 2.2.1.

     2.2.2 Belgium

     The capital structure of S.A. Alcon-Couvreur N.V., Puurs, Belgium, is set
out in Exhibit 2.2.0.

     The 77 shares in S.A. Alcon-Couvreur N.V. which were held by Nestle
Belgilux S.A., Brussels, Belgium, have been transferred to Alcon Pharmaceuticals
Ltd., Hunenberg, Switzerland at a purchase price of EUR 95,982.04, with
effective date November 30, 2001.

     2.2.3 Thailand

     The capital structure of Alcon Laboratories (Thailand) Ltd., Bangkok,
Thailand, is set out in Exhibit 2.2.0.

     Nestle and Alcon have entered into appropriate agreements allowing for a
transfer of the economic risks and rewards of Alcon Laboratories (Thailand) Ltd.
from Nestle to Alcon.

     2.2.4 Alcon Holdings, Inc.

     The capital structure of Alcon Holdings, Inc., Wilmington DE, USA, is set
out in Exhibit 2.2.0.

     The 40 class D preferred shares of Alcon Holdings, Inc. which were held by
Nestle have been transferred to Alcon at a purchase price of CHF 3,626,000, with
effective date November 30, 2001.

     2.2.5 Nominee Shareholders

     To the extent any shares in an Alcon Group company are held by nominee
directors or representatives appointed by Nestle, the Parties shall enter into
appropriate arrangements for the transfer of such nominee shares to any
replacement nominees designated by Alcon in such Alcon Group companies, as
further set out in Section 3.4.3.

  2.3 Pre-IPO Restructuring of Share Capital

     2.3.1 Reclassification of Shares prior to IPO

     Prior to the IPO, Nestle, in its capacity as sole shareholder of Alcon,
shall reclassify the share capital of Alcon in the following steps and within
the following deadlines:

          (a) On December 20, 2001, Alcon has held an extraordinary general
     meeting (EGM) in which its current share capital of CHF 60,000,000, divided
     into 60,000 registered shares of CHF 1,000 par value each, was subdivided
     into 300,000,000 fully paid registered common shares of CHF 0.20 par value
     each.

          This share split was recorded in the commercial register of the Canton
     of Zug prior to December 31, 2001.

          (b) On or by February 25, 2002, Alcon shall hold an EGM in which the
     following resolutions shall be taken:

             (i) conversion of 69,750,000 fully paid registered common shares of
        CHF 0.20 par value each into 69,750,000 fully paid registered nonvoting
        preferred shares (Vorzugs-Partizipationsscheine) of CHF 0.20 par value
        each. The articles of association of Alcon shall hold that the non-
        voting preferred shares shall have special dividend and liquidation
        rights, the amount and scope of which shall be left to the discretion of
        the shareholders of the company;

             (ii) ordinary capital increase (ordentliche Kapitalerhohung) in
        which the Board of Directors of Alcon is authorized, within 3 months
        after the date of the resolution, to issue up to 69,750,000 fully paid
        registered common shares of CHF 0.20 par value each. For this ordinary
        capital

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        increase, Nestle shall, in the deed of capital increase, formally waive
        its pre-emptive rights to subscribe for new shares pursuant to Art. 652b
        of the Swiss Federal Code of Obligations (CO) in favor of Credit Suisse
        First Boston, Zurich (CSFB ZURICH), acting on behalf of a syndicate of
        financial institutions undertaking the IPO;

             (iii) authorized capital increase (genehmigte Kapitalerhohung)
        allowing the Board of Directors to increase Alcon's share capital, no
        later than July 31, 2002, by issuing up to 6,975,000 fully paid
        registered common shares of CHF 0.20 par value each. The Board of
        Directors shall be authorized to withdraw the pre-emptive rights of
        existing shareholders if the shares are to be used in connection with
        the over-allotment option conferred on the underwriting banks, as
        further set out in Section 2.3.5;

             (iv) conditional capital increase (bedingte Kapitalerhohung) by
        which Alcon's share capital shall be increased by a maximum amount of
        CHF 6,000,000 through the issuance of a maximum of 30,000,000 fully paid
        registered common shares of CHF 0.20 par value each. Such shares will be
        issued upon exercise of option rights which employees and members of the
        Board of Directors of Alcon Group companies are granted pursuant to the
        Alcon Incentive Plan referred to in Section 2.3.6;

             (v) election of members of the Board of Directors pursuant to
        Section 3.3.1, to become effective as of the Pricing Date;

             (vi) election of the special auditors pursuant to Section 3.5.1,
        second paragraph, to become effective as of the Pricing Date.

     The resolutions passed pursuant to this Section 2.3.1(b), other than the
resolutions under subsections (v) and (vi) shall be recorded in the commercial
register of the Canton of Zug no later than March 1, 2002.

     2.3.2 Pre-IPO Special Dividend

     The EGM convened pursuant to Section 2.3.1(b) shall, in addition to the
resolutions referred to therein, resolve on a special dividend in the amount of
up to CHF 2,100,000,000, to the extent permitted under applicable Swiss law,
payable in CHF. This dividend resolution shall be passed on the basis of year
end financial statements prepared by Alcon as of December 31, 2001 and certified
by Alcon's statutory auditors.

     The dividend resolved by the EGM shall be paid from Alcon to Nestle prior
to the date of pricing of the Alcon shares sold in the IPO (the PRICING DATE).
If necessary, Alcon shall take out a short-term loan to procure the cash amount
required to pay out the special dividend.

     Nestle and Alcon shall use their best efforts to procure that the Swiss
withholding tax of 35% due on the dividend payment can be waived pursuant to the
notification procedure (Meldeverfahren) under the Swiss Federal Withholding Tax
Act.

     2.3.3 Issuance of Firm Shares

     The shares to be sold in the IPO on the Pricing Date shall be issued as
follows:

          (a) Prior to publication of the preliminary prospectus for the IPO,
     Nestle shall determine the number of shares to be issued in the IPO on the
     basis of investor demand and expectations of the estimated IPO proceeds
     (the FIRM SHARES). The number of Firm Shares shall be communicated to Alcon
     and to CSFB Zurich.

          (b) CSFB Zurich shall pay in the par value for the Firm Shares, and
     shall de-liver a subscription form to Alcon's Board of Directors, no later
     than 5:00 p.m. Central European Time 3 business days prior to the Pricing
     Date.

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          (c) Upon receipt of such confirmation and subscription form, the Board
     of Directors of Alcon shall immediately resolve, in a notarized deed of
     capital increase, to increase Alcon's share capital by issuing the Firm
     Shares. The capital increase shall be filed for registration with the
     commercial register of the Canton of Zug, Switzerland, no later than 2:00
     p.m. Central European Time 2 business days prior to the Pricing Date.

          (d) The capital increase by issuance of Firm Shares shall be recorded
     in the commercial register of the Canton of Zug no later than 1 business
     day prior to the Pricing Date. The newly issued shares shall be delivered
     to or to the order of CSFB Zurich, for account of the underwriters, and
     shall be recorded in the share register of Alcon accordingly.

     2.3.4 Redemption of Preferred Shares

     Immediately following the Pricing Date, Alcon shall resolve on a redemption
of non-voting preferred shares pursuant to the following principles:

          (a) Alcon shall convene an EGM to be held on or around 10:00 a.m.
     Central European Time on the business day following the Pricing Date. Such
     EGM shall resolve, on the basis of an interim balance sheet drawn up by
     Alcon and certified by Alcon's statutory auditors in a special report
     pursuant to Art. 732 para. 2 CO, to reduce Alcon's issued and outstanding
     share capital by redemption of all 69,750,000 non-voting preferred shares
     of CHF 0.20 par value each, the proceeds of which shall be paid to Nestle.

          The amount at which the redemption shall be made shall correspond to
     the net proceeds of the sale of Firm Shares then ascertained by Alcon.

          (b) Immediately following the shareholders' resolution set forth in
     the preceding paragraph, Alcon shall publish the notice to creditors
     pursuant to Art. 733 CO.

          (c) Unless otherwise agreed by the Parties, the preferred shares shall
     be redeemed, and the proceeds of the redemption shall be paid to Nestle, as
     soon as practicable following the statutory waiting period set forth in
     Art. 734 CO, but in no event later than May 31, 2002.

          (d) Pending redemption of the preferred shares, the net proceeds of
     the IPO shall remain with Alcon, and shall be invested in such manner as
     Alcon's executive officers deem appropriate. Any proceeds from such
     investment shall go to Alcon.

     2.3.5 Issuance of Option Shares

     The shares to be sold in the IPO as a result of an exercise by the
underwriters of the over-allotment option (which may be exercised once or twice)
granted pursuant to the Underwriting Documentation shall be issued as follows:

          (a) Credit Suisse First Boston Corporation, New York (CSFB NEW YORK),
     in its capacity as global coordinator for the IPO and following
     consultation with Merrill Lynch, shall inform Nestle and Alcon of its
     intention to exercise the over-allotment option, and of the number of
     shares to which the over-allotment option relates (the OPTION SHARES).

          (b) Upon exercise by CSFB New York of the over-allotment option, CSFB
     Zurich shall pay in the par value for the Option Shares, and shall deliver
     a subscription form to Alcon's Board of Directors, no later than 10:00 a.m.
     on the business day following the exercise of the over-allotment option.

          (c) Upon receipt of such confirmation and subscription form, the Board
     of Directors of Alcon shall immediately resolve, in a notarized deed of
     capital increase,

             (i) to increase Alcon's share capital out of authorized capital by
        issuing the Option Shares, and

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             (ii) to make the corresponding changes to Alcon's articles of
        association,

     and shall file such capital increase for registration with the commercial
     register of the Canton of Zug, Switzerland, immediately thereafter.

          (d) The capital increase by issuance of Option Shares shall be
     recorded in the commercial register of the Canton of Zug no later than 3
     business days following exercise of the over-allotment option. The newly
     issued shares shall be delivered to CSFB Zurich, for account of the Joint
     Lead Managers, and shall be recorded in the share register of Alcon
     accordingly.

     It is understood and agreed that there will be no dividend payment made for
the financial year 2002 on the non-voting preferred shares, whether pursuant to
Section 2.3.2 or otherwise.

     2.3.6 Shares for Incentive Plan

     It is understood and agreed that out of the 30,000,000 shares of
conditional capital created pursuant to Section 2.3.1(b)(iv), a number of shares
of CHF 0.20 par value each shall be used for the roll-over of Alcon's existing
phantom stock scheme (the ROLLOVER SHARES). The Rollover Shares shall be issued
as follows:

          (a) Alcon shall make available to qualifying employees the preliminary
     prospectus for the IPO, and shall allow such employees to convert the value
     of their existing phantom stock into Rollover Shares. Such converting
     employees will receive an additional 20% of the value of such phantom stock
     in the form of non-qualified stock options (the exact parameters of
     valuation to be made by Alcon). Employees shall be requested to make their
     election with respect to conversion within ten calendar days after the date
     of publication of the preliminary prospectus;

          (b) Alcon and its subsidiaries shall determine the number of phantom
     stock being rolled over, and the value (calculated in USD) attributable to
     such phantom stock, and will communicate these numbers to Nestle no later
     than two Business Days prior to the Pricing Date;

          (c) The value (calculated in USD) attributable to such phantom stock
     being converted into Rollover Shares shall be divided by the offering price
     (in USD) determined on the Pricing Date in order to obtain the exact number
     of Rollover Shares to be issued;

          (d) Alcon shall subscribe, or designate an Alcon Group company to
     subscribe, for the Rollover Shares, such subscription to be effected no
     later than July 15, 2002;

          (e) The Board of Directors shall issue the Rollover Shares, and shall
     deliver such shares to the subscribing Alcon Group company for the account
     of the beneficial owners of Rollover Shares, on or by July 31, 2002.

  2.4 Share Certificates and Share Register

     The share register of Alcon shall be maintained at Alcon's offices until
the Pricing Date. All share certificates issued by Alcon shall be destroyed on
or by the Pricing Date.

     As from the Pricing Date, the share register of Alcon shall be maintained
by the Bank of New York, New York, U.S.A. The Parties shall enter into
appropriate arrangements with the Bank of New York allowing for a keeping of the
share register in line with U.S. market practice, to the extent Swiss statutory
law so permits. Alcon shall further authorize Bank of New York to issue share
certificates to record shareholders of Alcon from time to time in accordance
with market practice in the United States of America. Any such share
certificates shall be validly issued both under Swiss and under applicable U.S.
federal and state laws.

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  2.5 Registration Matters

     2.5.1 General

     Nestle shall have the right, in its sole discretion, to require that Alcon
file a registration statement with the U.S. Securities and Exchange Commission
(SEC) with respect to its common shares.

     Nestle shall not sell or otherwise transfer or dispose of any common shares
of Alcon (excluding shares acquired in or following the IPO) for such period of
time as required by the underwriters in the Underwriting Documentation, such
period not to exceed 180 days following the effective date of the registration
statement for such offering. All registration expenses, costs and taxes incurred
in connection with the filing of the registration statement for the IPO shall be
borne by Alcon, provided, however, that the following costs shall be borne by
Nestle:

          (a) the costs of Nestle's Swiss and U.S. legal and tax advisers;

          (b) any taxes, duties and levies payable or reimbursable by Nestle
     pursuant to Section 9.2.2.

     2.5.2. Registration Rights

     Immediately prior to the Pricing Date, Nestle and Alcon shall enter into a
registration rights agreement substantially in the form attached hereto as
Exhibit 2.5.2.

  2.6 Registration Statement

     2.6.1 General

     The Registration Statement on Form F-1 (file no. 333-[     ]) and the
prospectus which forms a part of such registration statement (collectively, the
REGISTRATION STATEMENT) registering the sale of Alcon's common shares in the IPO
shall be prepared by officers of the Alcon Group with the advice and assistance
of counsel and financial institutions. Nestle shall be entitled to review,
verify and change those sections of the Registration Statement that directly or
indirectly relate to Nestle's business and the transactions contemplated by this
Agreement.

     To the extent any indemnity has to be given to third parties (including
financial institutions) for misstatements and omissions in the Registration
Statement or for any other claims arising out of or in connection with the
offering, such indemnity shall be given by Alcon only.

     The provisions of Section 8 shall apply mutatis mutandis.

     2.6.2. Post-IPO Indemnification

     Alcon shall indemnify and hold harmless Nestle and each director, officer,
Subsidiary and Affiliate of Nestle (each, a NESTLE INDEMNITEE) from and against
any and all liabilities caused by any untrue statement or alleged untrue
statement of a material fact contained in any document filed with the U.S.
Securities and Exchange Commission (the SEC) by Nestle or any other Nestle
Indemnitee pursuant to the U.S. Securities Act of 1933, as amended, or the U.S.
Securities Exchange Act of 1934, as amended, or caused by any omission or
alleged omission to state therein a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, in each case to the extent, but only to the extent, that
those liabilities are caused by any such untrue statement or omission or alleged
untrue statement or omission based upon information that is either furnished to
any Nestle Indemnitee by Alcon or any of its Subsidiaries or Affiliates or
incorporated by reference by any Nestle Indemnitee from any filings made by
Alcon or any of its Subsidiaries or Affiliates with the SEC under the Securities
Act or the Securities Exchange Act, if that statement or omission was made or
occurred after the date of the IPO.

     Nestle shall indemnify and hold harmless each director, officer, Subsidiary
and Affiliate of Alcon (each, an ALCON INDEMNITEE) from and against any and all
liabilities caused by any untrue statement or alleged untrue statement of a
material fact contained in any document filed with the SEC by Alcon or any

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other Alcon Indemnitee pursuant to the U.S. Securities Act or the Securities
Exchange Act, or caused by any omission or alleged omission to state therein a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, in each case to the
extent, but only to the extent, that those liabilities are caused by any such
untrue statement or omission or alleged untrue statement or omission based upon
information that is either furnished to any Alcon Indemnitee by Nestle or any of
its Subsidiaries or Affiliates or incorporated by reference by any Alcon
Indemnitee from any filings made by Nestle or any of its Subsidiaries or
Affiliates with the SEC under the Securities Act or the Securities Exchange Act,
if that statement or omission was made or occurred after the date of the IPO.

     Unless this Section 2.6.2 explicitly provides otherwise, the provisions of
Section 8 shall apply mutatis mutandis.

  2.7 Financial Matters

     2.7.1 Refinancing of Intercompany Debt

     Except as otherwise listed in Exhibit 2.7.1, the outstanding intercompany
debt between the Nestle Group on the one hand, the Alcon Group on the other hand
shall be refinanced on or immediately after the Pricing Date by bank loans or by
the issuance by Alcon of commercial paper under a newly established commercial
paper program fully guaranteed by Nestle.

     With respect to any future financing of Alcon or an Alcon Group company,
Nestle shall have the opportunity to offer financing to Alcon, and Alcon shall
be at liberty either to accept financing on such terms or to procure independent
third party financing with or without the backing of Nestle.

     2.7.2 Refinancing of Third-Party Financial Indebtedness

     All third party financial indebtedness of the Alcon Group shall, unless
specifically otherwise agreed, not be refinanced as of the IPO.

     The Parties may agree, with respect to any third party financing procured
after the Effective Date, whether such financing shall be procured by Alcon on a
stand-alone basis or whether Nestle shall provide guarantees or similar
undertakings to support such third party financing, in which case Nestle shall
be reimbursed with a guarantee commission at arm's length terms. Any decision
with respect to future third party financial indebtedness shall be made by Alcon
at its discretion, and Alcon shall not be obligated to procure third party
financing with the consent or backing of Nestle.

     2.7.3 Guarantees

     All guarantees, commitments and undertakings given by Nestle or any Nestle
Group company in favor of Alcon or any of the Alcon Group companies, particulars
of which as of the date of this Agreement are set forth in Exhibit 2.7.3, shall
continue to be effective after the IPO in accordance with their terms.

     Following the Effective Date, the Parties shall agree, on a case-by-case
basis, whether any such guarantees, commitments or undertakings shall be
renewed, and if such renewal is made, under what terms Alcon shall reimburse
Nestle for such guarantees, commitments and undertakings.

     2.7.4 Cash Management and Treasury

     All cash management and treasury functions currently undertaken by the
Nestle Group in favor of the Alcon Group shall be continued with effect as from
the Effective Date as set out in Exhibit 2.7.4.

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3 CORPORATE GOVERNANCE OF THE ALCON GROUP

  3.1 General

     3.1.1 Place of Incorporation

     Alcon shall be and remain the holding company of the Alcon Group, with
place of incorporation and registered office at Bosch 69, CH-6331 Hunenberg,
Switzerland.

     Alcon shall qualify as a holding company domiciled and taxed in Switzerland
for purposes of Swiss tax legislation.

     3.1.2 Constituting Documents

     The articles of association of Alcon shall be in the form set out in
Exhibit 3.1.2(a).

     The organizational regulations of Alcon shall be substantially in the form
as set out in Exhibit 3.1.2(b).

  3.2 Governance of the Alcon Group

     The Parties understand and agree that all business and operational
decisions (including cost control and similar measures) as well as decisions of
business strategy of the Alcon Group going forward shall be determined by the
Alcon Board of Directors. Any managerial, strategic or operational influence
taken by Nestle on the Alcon Group shall be made through Nestle's
representatives in the Alcon Board of Directors, and shall not be taken directly
by the Nestle Board of Directors or Group Executive Management of Nestle.

  3.3 Board of Directors

     3.3.1 Composition

     The Board of Directors of Alcon shall comprise no less than 7 members.

     The initial Board of Directors of Alcon shall consist of 8 members, of
which 4 shall be appointees of Nestle, 1 shall be the chief executive officer of
Alcon Laboratories, Inc. (ALCON LABS), and 3 shall be independent (as that term
is defined under the listing rules of the NYSE (the NYSE RULES)). The initial
board members appointed by Nestle respectively representing Alcon Labs shall be
as follows:

     - Nestle Appointees: Messrs. Peter Brabeck-Letmathe, Francisco Castaner,
       Wolfgang H. Reichenberger, and Werner Bauer;

     - Alcon Labs CEO: Mr. Timothy R.G. Sear.

     - Independent Directors to be designated by Nestle, following consultation
       with Alcon, prior to the Pricing Date.

All directors of Alcon who do not yet serve on the Board of Directors shall be
elected to office in a shareholders' meeting prior to the Pricing Date, and
shall be recorded in the commercial register of the Canton of Zug on or
immediately after the Pricing Date.

     3.3.2 Board Committees

     Alcon shall have the Board Committees set forth in Article V of the form of
Organizational Regulations attached hereto as Exhibit 3.1.2(b). The initial
composition of the Board Committees shall be determined on or immediately after
the Pricing Date.

     In addition to the above committees, Alcon shall appoint a Research and
Development Scientific Advisory Board, the members of which shall not form part
of the governing bodies of Alcon or the Alcon Group.

                                        8
<PAGE>

     3.3.3 Board Vacancies

     As further set out in Article III of Alcon's form of Organizational
Regulations attached hereto as Exhibit 3.1.2(b), any member of the Board of
Directors of Alcon shall be appointed for a term of office of 3 years. All
directors shall be re-eligible, provided, however, that non-executive directors
shall be re-eligible only for a maximum of two additional terms. Board members
shall retire from office no later than the annual general meeting after their
72nd birthday.

     Vacancies on the board, whether by retirement, removal, voluntary
resignation, death, incapacity or otherwise, shall be filled as follows:

          (a) Any Nestle appointees terminating their office shall be replaced
     by other appointees nominated by Nestle.

          (b) If the Alcon Labs CEO terminates his office, his or her successor
     shall be nominated by the Alcon Board of Directors.

          (c) If any independent board members terminate their office, their
     successor (who shall fulfill the same qualifications as to independence)
     shall be nominated by the Alcon Board of Directors.

     In any deliberations of the Board of Directors pursuant to lit. (b) or (c)
of this Section 3.3.3, the resigning board member shall abstain from
deliberation and voting on the matter.

     Any replacement board members nominated in accordance with this Section
3.3.3 shall be proposed to be elected to the board at the next annual general
shareholders' meeting of Alcon. Until such meeting, the nominee shall be invited
to participate in board meetings as a guest, and shall receive all information
otherwise made available to members of the Board of Directors.

     Nestle undertakes, for so long as it holds a Majority Shareholding in
Alcon, to vote its shares at Alcon's shareholders' meetings in favor of the
proposals of the Board of Directors made in accordance with this Section 3.3.3.
The nomination rights of Nestle shall become inapplicable if Nestle no longer
holds a Majority Shareholding in Alcon.

  3.4 Executive Management

     3.4.1 Executive Management of Alcon

     All business and operational decisions (including cost control and similar
measures) as well as decisions of business strategy of the Alcon Group shall be
determined by the Alcon Board of Directors.

     In addition, the executive officers of the Company will have the following
functions:

          (a) conducting the administrative affairs of a holding company,
     including contact with the competent commercial register and tax
     authorities and keeping of Alcon's statutory books and records;

          (b) exercise of shareholder rights with respect to those subsidiaries
     that are directly held by Alcon;

          (c) administration of trademarks owned by the company; and

          (d) funding of research and development projects of the Alcon Group on
     a Group-wide basis, administration of intellectual property rights derived
     or acquired from such research and development projects, and collection of
     license income relating to intellectual property rights derived from such
     research and development projects; and purchase of intellectual property
     rights.

     The executive management of Alcon on and after the Pricing Date shall
consist of the CEO, Messrs. Guido Koller and Stefan Basler.

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     3.4.2 Group Executive Management

     The executive management of Alcon Labs will, other than conducting the
business and affairs of Alcon Labs, coordinate the activities of the Group,
subject to the ultimate direction and control by the board of directors of the
Company. In this capacity, the executive management of Alcon Labs will

          (a) coordinate the ongoing business and operations of the operating
     subsidiaries of the Alcon Group;

          (b) coordinate research and development, manufacturing, sales and
     distribution activities of the Alcon Group;

          (c) coordinate marketing activities of the Alcon Group;

          (d) coordinate financing, treasury, risk management, insurance, legal
     and tax functions (other than matters relating directly to the holding
     company).

     The executive officers of Alcon Labs and members of Group Executive
Management on and after the Pricing Date shall be as follows:

     - Mr. Timothy R.G. Sear (Chief Executive Officer);

     - Mr. Charles E. Miller, Sr. (Senior Vice President and Chief Financial
       Officer);

     - Dr. G. Andre Bens (Senior Vice President Global Manufacturing and
       Technical Support);

     - Dr. Gerald D. Cagle (Senior Vice President Research and Development);

     - Mr. Fred J. Pettinato (Senior Vice President Alcon International);

     - Mr. Cary R. Rayment (Senior Vice President Alcon United States).

     3.4.3 Directors of Group Companies

     Promptly after the Effective Date, the Parties shall procure that all
directors of the Alcon Group companies (other than Alcon Group companies
incorporated in Switzerland) appointed or employed by Nestle shall be replaced
by directors appointed or employed by Alcon.

     Directors of the Alcon Group companies incorporated in Switzerland shall be
replaced promptly after the Pricing Date.

     The Parties shall execute all documents and take all resolutions and
actions necessary to give effect to such replacements (including, where
appropriate, the transfer of nominee shares).

  3.5 Accounting and Reporting

     3.5.1 Auditors

     KPMG shall be the statutory auditors of Alcon and the group auditors for
the Alcon Group on and after the IPO.

     Alcon shall further appoint a special auditor charged with rendering the
reports and valuations necessary in connection with certain capital increases
under Swiss law.

     3.5.2 Accounting Rules

     The financial statements of Alcon as a holding company shall be drawn up in
accordance with Swiss statutory law, and shall use CHF as reporting currency.

     The consolidated financial statements of the Alcon Group shall be drawn up
in accordance with U.S. Generally Accepted Accounting Principles, and shall use
USD as reporting currency. The auditors of the Alcon Group shall devise suitable
procedures, together with the auditors of the Nestle Group, to provide

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for a reconciliation of the Alcon Group financial information into the
consolidated financial statements of Nestle which are be drawn up in accordance
with IAS.

     3.5.3 External Financial Reporting

     Alcon shall report its financial information on a quarterly basis, and
shall, to the extent practicable, establish publication dates in line with
comparable companies active in the ophthalmic industry in the United States of
America. Any financial reporting made by Alcon shall be made in compliance with
the applicable NYSE Rules. Relevant financial information reported by Alcon
shall also be published by Nestle in accordance with reporting requirements of
the SWX Swiss Exchange and all other relevant exchanges the rules of which apply
to Nestle.

     3.5.4 Management Reporting

     Alcon will continue to comply with all Nestle internal management reporting
requirements and will supply to Nestle directly all reports and analyses which
are requested pursuant to a format and reporting schedule communicated by Nestle
to Alcon. In addition, Alcon will comply with any ad-hoc information requests
reasonably made by Nestle.

     Any information provided by Alcon to Nestle pursuant to this Section 3.5.4
shall be subject to statutory restrictions on insider trading and similar
matters, as well as to restrictions under applicable internal guidelines of
Alcon or Nestle, as the case may be.

  3.6 Dividend Resolutions

     Nestle undertakes, for so long as it holds a Majority Shareholding in
Alcon, to vote in favor of the dividend proposals made by the Alcon Board of
Directors to its shareholders.

     The Parties understand and agree that for purposes of Swiss statutory law,
all dividends must be declared and paid in CHF. The Board of Directors of Alcon
will, however, announce the dividend payment in USD and CHF, and will cause, if
advisable, Alcon to enter into appropriate currency forward agreements hedging
the currency exchange risk between the date of the announcement of a dividend
proposal and the dividend payment date.

4 ALLOCATION OF LIABILITIES

  4.1 General

     As from the Effective Date, the business and operations of Alcon and the
Alcon Group companies shall be conducted as a separate and independent matter
for the risk and benefit of Alcon only. Alcon shall, to the fullest extent
permitted under applicable law, be the only and ultimate beneficiary and
responsible person for all claims raised by third parties arising out of or in
connection with the business and operations of Alcon, whether by contract or
otherwise (collectively, the ALCON CLAIMS).

     Alcon shall assume the full responsibility for any and all Alcon Claims,
and shall fully indemnify Nestle and each Nestle Group company for, and shall
hold such companies harmless against, any costs, liabilities, losses and damages
arising out of or in connection with the assertion of any Alcon Claims against
Nestle or any Nestle Group company. The provisions of Section 8 shall apply
mutatis mutandis.

  4.2 Product Liability

     As from the Effective Date, Alcon and the Alcon Group companies shall be
fully responsible for all matters arising out of or in connection with past,
present or future production, distribution and sales activities of the Alcon
Group, including without limitation product liability and related claims.

     Alcon shall assume the full responsibility for any and all product
liability and related claims, and shall fully indemnify Nestle and each Nestle
Group company for, and shall hold such companies harmless against, any costs,
liabilities, losses and damages arising out of or in connection with the
assertion of any

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Alcon Claims against Nestle or any Nestle Group company. The provisions of
Section 8 shall apply mutatis mutandis.

  4.3 Environmental, Health & Safety Matters

     As from the Effective Date, Alcon shall be fully responsible for any and
all Environmental Matters and any and all health and safety matters arising out
of or in connection with past, present or future activities of the Alcon Group
that may give rise to any claim or investigation under applicable environmental,
health or safety laws. Responsibility for Environmental Matters shall include,
without limitation, any contaminated sites and any claims asserted in connection
with liability under applicable law (including listing as a potentially
responsible party).

     If any investigation or monitoring of Environmental Matters is made or
threatened to be made against Nestle or Alcon in connection with any sites owned
or operated by the Alcon Group of companies, or if any claims and litigation are
made or threatened in relation to such investigation, or if any claims are made
for indemnity or contribution or cost recovery in connection with any such sites
(each, a REMEDIATION), the following shall apply:

          (a) All Remediations at or of sites owned or operated by the Alcon
     Group after the IPO shall be managed by Alcon in its sole discretion.

          (b) The following procedures and responsibilities shall apply with
     respect to the management of any Remediations by Alcon:

             (i) Subject to Section 4.3(b)(iv), Alcon shall have the right, and
        shall be required, (aa) to conduct all Remediations, maintain contacts
        with relevant governmental and administrative authorities in respect of
        such Remediations, shall make all submissions and determine the
        positions to be taken with and in respect of all such relevant agencies;
        (bb) to contract for, oversee, and pay for all activities in respect of
        such Remediations; and (cc) to conduct and defend all litigations
        respecting such Remediations.

             (ii) Nestle shall have the right to attend any meeting with any
        governmental or administrative authorities if it so chooses and, if so
        requested by Alcon, Nestle shall attend such meetings; provided,
        however, that if Nestle attends such a meeting, it shall act as an
        observer and shall not take any position contrary to the position taken
        by Alcon.

             (iii) Nestle shall have the right to review all reports or
        memoranda submitted to and significant correspondence (and file
        memoranda memorializing significant communication) with any governmental
        or administrative authorities or other claimant and any significant
        litigation documents.

             (iv) Alcon and Nestle shall confer as to all significant decisions
        with respect to any Remediations, and Alcon shall consider and take into
        account the reasonable suggestions and proposals of Nestle. In order to
        give effect to the preceding sentence, the parties will establish a
        joint steering committee in which Alcon will be represented by two
        persons and Nestle will be represented by one person; such steering
        committee shall use reasonable efforts to resolve any matters brought
        before it by unanimity.

     Alcon shall assume the full responsibility for any claims and procedures
arising out of or in connection with Environmental Laws and Environmental
Matters, as well as any claims and procedures arising out of or in connection
with applicable health and safety laws, rules and best practices, and shall
fully indemnify Nestle and each Nestle Group company for, and shall hold such
companies harmless against, any costs, liabilities, losses and damages arising
out of or in connection with the assertion of any Alcon Claims against Nestle or
any Nestle Group company. The provisions of Section 8 shall apply mutatis
mutandis.

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<PAGE>

5 EMPLOYMENT MATTERS

  5.1 Employees

     The transactions contemplated by this Agreement shall not in any manner
affect the current employment relationships of the employees of the Alcon Group.

  5.2 Pension Funds

     Exhibit 5.2(a) contains a list of those countries or companies in which
employees of the Alcon Group will continue to benefit from Nestle's existing
pension funds, occupational old age and retirement, or death and disability
insurance policies or plans currently in effect for the benefit of the employees
of the Alcon Group (collectively, the BENEFIT PLANS). In countries where Benefit
Plans shall continue to be operated by Nestle or a designee of Nestle, the
relevant group companies shall fully and promptly inform each other of any
matters relating to claims made under such Benefit Plans.

     Exhibit 5.2(b) contains a list of the countries or companies in which Alcon
is operating independent Benefit Plans as of the date of this Agreement. The
arrangements made under such Benefit Plans shall continue in full force and
effect, and shall not be affected in any manner by the transactions contemplated
under this Agreement.

     As of the IPO, there will be no countries or companies in respect of which
new benefit plans shall be established by Alcon.

  5.3 Alcon Incentive Plan

     The Alcon Group shall establish an Incentive Plan to enter into effect as
of the Pricing Date. The Incentive Plan shall, among other things, provide for
the conversion of the existing phantom stock grants in operation for the Alcon
Group as of the date of this Agreement. Particulars of the Incentive Plan are
set out in Exhibit 5.3.

6 FURTHER OBLIGATIONS OF THE PARTIES

  6.1 Contracts of the Alcon Group

     Unless specifically otherwise agreed, contracts of the Alcon Group,
including those entered into with the Nestle Group shall not be affected by the
IPO.

     Particulars of the continuation and termination of certain contracts of the
Alcon Group with the Nestle Group are provided in Exhibit 6.1.

  6.2 Shared Sites

     With respect to the sites listed in Exhibit 6.2 which are leased from
Nestle Group companies to Alcon Group companies, the Parties will enter into
separate agreements on the sharing of facilities and on the appropriate terms of
lease in connection therewith, it being understood and agreed that the current
terms of the leases shall be substantially unchanged.

  6.3 Services provided by Nestle to Alcon

     6.3.1 Information Technology Services

     Following the Pricing Date, Nestle will continue to provide in favor of the
Alcon Group companies the information technology services listed in Exhibit
6.3.1 at arm's length terms.

     6.3.2 Corporate Internal Audit

     Following the Pricing Date, Alcon will continue to use the services of the
corporate internal audit team of Nestle. All services rendered by the corporate
internal audit team shall be remunerated from Alcon to Nestle on an arm's length
basis.

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<PAGE>

     6.3.3 Other Services

     The parties may separately agree on other services to be provided by the
Nestle Group companies to the Alcon Group companies.

  6.4 Insurance

     The insurance arrangements currently in place for Alcon shall continue in
full force and effect after the Pricing Date. Any insurance arrangements put in
place in favor of an Alcon Group company by Nestle or a Nestle Group company
shall be re-invoiced to the relevant Alcon Group company at arm's length terms.

     Alcon may procure directors' and officers' liability insurance in line with
best practices applicable to U.S. listed pharmaceutical companies. The costs of
any such insurance shall be borne by Alcon.

  6.5 Intellectual Property Rights

     The Parties understand and agree that all intellectual property rights
required by Alcon for the conduct of the Alcon business are owned or validly
licensed from third parties to Alcon or an Alcon Group company.

  6.6 Omitted Matters

     To the extent any matters governing the business relationships of the
Nestle Group and the Alcon Group going forward have not been dealt with by this
Agreement, the Parties shall endeavor in good faith to find the most suitable
solution in light of the provisions of this Agreement.

  6.7 Misdirected Funds

     Unless otherwise agreed,

          (a) any cash or funds received by Nestle or any of the Nestle Group
     companies subsequent to the Effective Date (or subsequent to the effective
     date of an asset transfer referred to in Section 2.2) relating to the
     business of the Alcon Group shall be refunded to Alcon, or to any Alcon
     Group company as directed by Alcon, within 10 Business Days of receipt of
     such cash or funds;

          (b) any cash or funds paid by the Nestle Group subsequent to the
     Effective Date (or subsequent to the effective date of an asset transfer
     referred to in Section 2.2) relating to the business of the Alcon Group
     shall be refunded to Nestle, or to any Nestle Group company as directed by
     Nestle, within 10 Business Days of delivery of an invoice and the
     underlying documentation explaining the nature of such refund to Alcon in
     respect of such payment;

          (c) any cash or funds received by Alcon or any of the Alcon Group
     companies subsequent to the Effective Date (or subsequent to the effective
     date of an asset transfer referred to in Section 2.2) relating to the
     businesses or assets of the Nestle Group shall be refunded to Nestle, or to
     any other of the Nestle Group companies as directed by Nestle, within 10
     Business Days of receipt of such cash or funds;

          (d) any cash or funds paid by the Alcon Group subsequent to the
     Effective Date (or subsequent to the effective date of an asset transfer
     referred to in Section 2.2) relating to the businesses or assets of the
     Nestle Group shall be refunded to Alcon, or to any of the Alcon Group
     companies as directed by Alcon, within 10 Business Days of delivery of an
     invoice and the underlying documentation explaining the nature of such
     refund to Nestle in respect of such payment.

     All payments shall be made without any deduction, any set-off or
counterclaim in immediately available, freely transferable, cleared funds by
wire transfer to an account designated by the person entitled to receive such
payment pursuant to this Section 6.7.

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7 RESTRICTIVE COVENANTS

  7.1 Covenant not to Compete

     Nestle undertakes that for so long as its holds a Majority Shareholding in
Alcon, it will not, directly or indirectly, engage in or participate in the
ownership, management or control of, any business that is active in the sector
of pharmaceutical products treating or curing vision, ear and nose diseases, as
well as vision defects (a COMPETING BUSINESS). This undertaking applies to (i)
drugs and medicines, usually administered in topical form, which are either
prescribed or sold over-the-counter, and (ii) surgical equipment and instruments
for all types of eye procedures and products for contact lens care.

     Nothing contained in this Agreement shall limit or restrict the right of
Nestle or any company of the Nestle Group

          (a) subject to the preceding paragraph, to carry on or further develop
     its world-wide business that does not constitute a Competing Business;

          (b) to hold securities that it currently owns or purchase additional
     securities of Business Associations in which it currently holds securities
     (provided that the aggregate equity interest of the Nestle Group in any
     Business Association operating a Competing Business does not exceed 20% of
     the voting rights of such Business Association);

          (c) to make investments in securities of any other Business
     Associations that are listed on a national or international securities
     exchange or regulated market in the ordinary course of business, provided
     that the aggregate equity interest of the Nestle Group in such Business
     Associations does not exceed 20% of the voting rights of such Business
     Associations;

          (d) to manufacture and/or market nutritional supplements, vitamins,
     antioxidants or any other such products to be taken orally or otherwise,
     registered or not, whose first aim is to prevent or contribute to the
     treatment of vision, ear and nose diseases;

          (e) to engage in any other pharmaceutical sector not related to eye,
     ear and nose diseases or conditions;

          (f) to engage in any business (whether as a new investment or as an
     acquisition opportunity) described in the first paragraph of this Section
     7.1 where the Board of Directors of Alcon has decided not to engage in such
     business.

     Notwithstanding any provisions of this Section 7.1 to the contrary, if
Nestle or any company of the Nestle Group acquires the assets or securities of,
or merges with, any Business Association that is engaged in a Competing
Business, such acquisition or merger shall not be deemed to be in violation of
this Section 7.1 if at the time of acquisition or merger the Competing Business
represents less than 50% of the gross revenues of the acquired Business
Association (or the Business Association merged with) for such Business
Association's most recently completed fiscal year, provided, however, that
Nestle will (i) fully and promptly inform Alcon of particulars of the competing
business to be acquired, and (ii) give Alcon a right of first refusal to acquire
these products on the basis of fair value. Should Alcon fail to exercise this
right within 30 business days of being so notified, Nestle may sell such
products or business segments to a third party or retain the products or
business segments.

  7.2 Non-Interference and Non-Solicitation

     Nestle agrees that it shall not, and shall procure that the companies of
the Nestle Group will not, for the duration of two years after the Pricing Date,
without written consent of Alcon, actively solicit for employment or hiring any
employee of the Alcon Group; provided, however, that the foregoing will not
prevent Nestle or its Subsidiaries

          (a) from employing any such employee who contacts Nestle or any
     company of the Nestle Group on his or her own initiative;

                                        15
<PAGE>

          (b) from responding to an advertisement for employment published by
     any such employee without any prior encouragement from Nestle or a Nestle
     Group company; or

          (c) from publishing and hiring through general advertisements or
     solicitations not targeted to any such employee.

  7.3 Remedies

     In case of a breach by Nestle of the restrictive covenants set out in this
Section 7, Alcon shall have the right to assert, in its own name and acting on
behalf of any Alcon Group company affected by such breach, to seek any remedies
available under applicable law, including damages, specific performance and
injunctions against Nestle, in which case Section 11 shall apply.

     The provisions of Section 8 shall apply mutatis mutandis.

8 INDEMNITY

  8.1 Scope

     The Parties have, under this Agreement, promised indemnity to each other in
various instances. In all these cases the provisions of this Section 8 shall
apply unless otherwise stated herein.

     Unless otherwise agreed,

          (a) the party liable for indemnification (the INDEMNIFYING PARTY)
     shall be liable to the party benefiting from indemnification (the
     INDEMNIFIED PARTY) for any direct damages, losses and liabilities incurred,
     costs paid (including court costs and attorney's fees) and reimbursements
     made by the Indemnified Party;

          (b) the Indemnifying Party shall further be liable to the Indemnified
     Party for any indirect, incidental, consequential or punitive damages,
     provided, however, that such obligation to indemnify shall only exist to
     the extent that liability has been successfully asserted by a third party
     that is not an Affiliate of a Party against the Indemnified Party.

  8.2 Third Party Claims

          (a) If any third party shall make any claim or commence any proceeding
     against the Indemnified Party with respect to which the Indemnified Party
     intends to make any claim for indemnification against the Indemnifying
     Party, the Indemnified Party shall promptly give written notice to the
     Indemnifying Party of such third party claim or proceeding. Failure to give
     such notice shall not, however, affect the Indemnified Party's right to
     indemnification hereunder except to the extent the Indemnifying Party
     suffers a harm, prejudice or additional cost directly caused by such
     failure.

          The Indemnifying Party shall have 20 business days after receipt of
     such notice to notify the Indemnified Party that it elects to conduct and
     control the defense of such claim, proceeding or suit (the INDEMNIFICATION
     NOTICE).

          (b) If the Indemnifying Party gives the Indemnification Notice, it
     shall have the right to undertake, conduct and control the conduct and
     settlement of such claim or proceeding at its sole expense. For such
     purpose, the Indemnifying Party may appoint counsel reasonably acceptable
     to the Indemnified Party. The Indemnified Party shall cooperate with the
     Indemnifying Party in connection therewith; provided that

             (i) the Indemnifying Party shall not permit any injunction against
        or any lien, encumbrance or other charge on any asset of the Indemnified
        Party or its Group companies;

             (ii) the Indemnifying Party shall permit the Indemnified Party (and
        counsel chosen and paid by the Indemnified Party) to monitor its conduct
        or settlement and to appoint its own

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<PAGE>

        counsel for purposes of such monitoring, and the Indemnifying Party
        shall provide the Indemnified Party with all information regarding such
        claim or proceeding as the Indemnified Party may reasonably request;

             (iii) the Indemnifying Party shall not, without the prior written
        consent of the Indemnified Party, settle or compromise any claim, or
        consent to the entry of any judgment, unless such settlement or judgment
        includes an unconditional release from all liability given by the
        claimant or the plaintiff to the Indemnified Party in respect of such
        claim or judgment; and

             (iv) the Indemnifying Party shall promptly reimburse to the extent
        required under this Section 8.2 the Indemnified Party for the full
        amount of any claim or loss resulting from such claim or proceeding and
        all related expenses incurred by the Indemnified Party (other than the
        expenses for counsel mentioned in Section 8.2(b)(ii)).

          Notwithstanding the foregoing, if the Indemnified Party, in the belief
     that a claim may materially and adversely affect it other than as a result
     of money damages or other money payments, advises the Indemnifying Party
     that it has determined to make settlement of a claim, the Indemnified Party
     shall have the right to do so at its own costs and expense, without any
     requirement to contest such claim at the request of the Indemnifying Party,
     but without any right for the indemnification by the Indemnifying Party.

          (c) If the Indemnifying Party does not give the Indemnification
     Notice, the Indemnified Party shall have the right to defend or settle such
     claim or proceeding in the exercise of its exclusive discretion subject to
     the provisions of this Section 8.2, and the Indemnifying Party shall, upon
     request from the Indemnified Party, promptly pay to the Indemnified Party
     in accordance with the other terms of this Section 8.2 the amount of any
     claim or loss (including court cost and reasonable attorneys' fees)
     resulting from its liability to the third party claimant.

          In such case, the Indemnifying Party shall nevertheless be entitled to
     monitor the conduct or settlement of such claim by the Indemnified Party.
     The Indemnified Party shall provide the Indemnifying Party and its counsel
     with information reasonably requested, but all costs and expenses incurred
     in connection with such monitoring shall be borne by the Indemnifying
     Party.

          (d) So long as the Indemnifying Party is contesting any claim or
     proceeding in good faith, the Indemnified Party shall not pay or settle any
     such claim or proceeding. If the Indemnified Party pays or settles any such
     claim or proceeding, it shall lose any right to be indemnified by the
     Indemnifying Party.

  8.3 Direct Claims

     Any claim for indemnity on account of an indemnifiable loss made directly
by the Indemnified Party against the Indemnifying Party and which does not
result from a third party claim may be asserted by written notice from the
Indemnified Party to the Indemnifying Party at any time during the applicable
statute of limitations (it being expressly understood that any prompt notice
requirement under applicable statutory law is herewith waived). Such
Indemnifying Party shall have a period of 30 business days within which to
respond thereto.

  8.4 Adjustment of Indemnifiable Losses

          (a) The amount which the Indemnifying Party is required to pay to the
     Indemnified Party shall be reduced (including, without limitation,
     retroactively) by any insurance proceeds and other amounts actually
     recovered from third parties by the Indemnified Party in reduction of the
     related claim or loss.

          The Indemnified Party agrees that the Indemnifying Party shall be
     subrogated to the Indemnified Party under any insurance policy to the
     extent it has actually indemnified the Indemnified Party.

                                        17
<PAGE>

          (b) If the Indemnified Party realizes a tax benefit or detriment in
     one or more tax periods by reason of having incurred a claim or loss for
     which it receives an Indemnity Payment from the Indemnifying Party, then,
     as the case may be,

             (i) the Indemnified Party shall pay to the Indemnifying Party an
        amount equal to the tax benefit; or

             (ii) the Indemnifying Party shall pay to the Indemnified Party an
        additional amount equal to the tax detriment;

in either case taking into account any tax detriment resulting from the receipt
of such additional amounts. Any payment due under this Section 8.4(b) with
respect to a tax benefit or tax detriment realized by an Indemnified Party in a
tax period shall be due and payable within 30 days from the time the return for
such tax period is due.

  8.5 No Third Party Beneficiaries

     The indemnification provided for in this Agreement shall not inure to the
benefit of any third party or parties (other than group companies of the
Parties) and shall not relieve any insurer or other third party who would
otherwise be obligated to pay any claim or the responsibility with respect
thereto or, solely by virtue of the indemnification provisions hereof, provide
any subrogation rights with respect thereto, and each party agrees to waive such
rights against the other to the fullest extent permitted.

  8.6 Statute of Limitations

     The statute of limitations of any indemnity provided under this Agreement
shall be ten years from the date a claim for indemnification comes into
existence.

9 COSTS AND TAXES

  9.1 Costs

     Subject to the provisions set forth in Section 2.5.1, each Party shall bear
its own costs arising out of or in connection with the negotiations of this
Agreement or the consummation of the transactions contemplated by this
Agreement.

  9.2 Taxes

     9.2.1 Taxes for Transactions under this Agreement

     Nestle shall as from the closing of the offering indemnify and hold Alcon
and the Alcon Group companies harmless against any and all costs, liabilities,
losses and damages actually suffered or incurred by Alcon or any Alcon Group
companies arising out of or resulting from any Taxes due or payable by any Alcon
Group company or as a result of the consummation of the transactions
contemplated by this Agreement, provided, however, that the following taxes
shall be borne or reimbursed by Alcon:

          (a) the Swiss issuance stamp tax (Emissionsabgabe) due on the issuance
     and sale of the Firm Shares and the Option Shares, and on the issuance of
     shares used for the Alcon Incentive Plan;

          (b) any and all Swiss transfer stamp taxes (Umsatzabgabe) due on any
     secondary share sales made in, or in connection with, the IPO (but not, for
     the avoidance of doubt, any secondary share sales made in the aftermarket
     following the IPO); and

          (c) any Swiss and other transfer stamp taxes, stamp duties and other
     levies arising as a result of or in connection with the transactions
     contemplated under Section 2.2 (but not, for the avoidance of doubt, any
     income taxes, capital gains taxes or taxes on the profit of asset sales, if
     any).

                                        18
<PAGE>

     9.2.2 Futures Taxes

     All future taxes levied on Alcon or any Alcon Group company for any tax
periods ending on or after the Pricing Date shall be the sole responsibility of
Alcon. Alcon shall fully indemnify Nestle and each Nestle Group company for, and
shall hold such companies harmless against, any costs, liabilities, losses and
damages arising out of or in connection with the assertion of any claims for
Taxes against Nestle or any Nestle Group company. The provisions of Section 8
shall apply mutatis mutandis.

     The provisions of the foregoing paragraph shall not apply with respect to
any tax claims made by the Swiss Federal tax administration against Alcon for
recapture of the Swiss issuance stamp tax (Emissionsabgabe) relating to the
corporate restructuring of Alcon closed on January 15, 1999 (the 1999
RESTRUCTURING). The Swiss issuance stamp tax on said corporate restructuring was
waived subject to the condition that Nestle's shareholding in Alcon does not
fall below 66 2/3% of Alcon's voting rights on or before January 15, 2004. If,

          (a) as a result of share sales by Nestle or as a result of capital
     increases of Alcon in which Nestle does not subscribe for shares, Nestle's
     shareholding in Alcon falls below 66 2/3% of Alcon's voting rights on or by
     January 15, 2004, and

          (b) as a consequence thereof, Alcon is obligated to pay the Swiss
     issuance stamp tax relating to the 1999 Restructuring,

     Nestle shall fully indemnify Alcon for, and shall hold Alcon harmless
against, any costs, liabilities, losses and damages arising out of or in
connection with the payment of this tax. The provisions of Section 8 shall apply
mutatis mutandis.

10 GENERAL PROVISIONS

  10.1 Effect on Third Parties

     Unless specifically otherwise provided herein, no person other than the
Parties hereto shall have any rights or benefits under this Agreement, and
nothing in this Agreement is intended to confer on any person other than the
Parties hereto any rights, benefits or remedies. Notwithstanding the foregoing,
it is understood and agreed by the Parties that,

          (a) with respect to this Agreement and the matters covered thereby,
     Nestle is acting on its own behalf and on behalf of (and with the
     obligation to procure the performance of certain undertakings by) the
     Nestle Group companies, and Alcon is acting on its own behalf and on behalf
     of (and with the obligation to procure the performance of certain
     undertakings by) the Alcon Group companies;

          (b) unless explicitly stated in this Agreement or in any ancillary
     agreement made hereunder, nothing in this Agreement shall confer on any of
     the Nestle Group companies or the Alcon Group companies any right to
     require performance, or to make any claim of any nature in its favor, under
     or in connection with this Agreement;

          (c) unless explicitly stated in this Agreement or in an ancillary
     agreement, any damages incurred by any of the Nestle Group companies or the
     Alcon Group companies and any right to require performance and to make any
     claims, as the case may be, under or in connection with this Agreement
     shall be claimed and enforced by and against Nestle and Alcon only;

          (d) unless otherwise explicitly set out herein, to the extent that
     there were any conflicts between this Agreement and the ancillary
     agreements made hereunder, the provisions of this Agreement shall prevail.

     No Party to this Agreement shall assign any of the rights or obligations
under this Agreement to any third party without the prior written consent of the
other party, it being understood that each of Alcon and Nestle shall be at
liberty to fulfill their obligations under this Agreement through a Subsidiary
or an Affiliate under their control.

                                        19
<PAGE>

  10.2 Notices

     All notices or other communications to be given under or in connection with
this Agreement shall be made in writing and shall be delivered by hand, by
registered mail (return receipt requested) or by telefax (followed by registered
mail) to the following addresses:

IF TO ALCON:

<Table>
<S>                             <C>                                 <C>
Address for service             Bosch 69, CH-6331 Hunenberg         Attn. Chairman of the Board
                                Telefax No. + 41 41 785 8887
with a copy to                  Alcon Laboratories, Inc.            Attn. President
                                6201 South Freeway
                                Fort Worth, Texas 76134, USA
                                Telefax No. +1 817 568 7510
IF TO NESTLE:
Address for service             Ave. Nestle 55, CH-1800 Vevey       Attn. General Counsel
                                Telefax No. + 41 21 924 4568
with a copy to                  Pharma & Cosmetics Management
                                Telefax No. +41 21 926 1001
</Table>

  10.3 Entire Agreement

     This Agreement, including the Exhibits and any other documents referred to
herein, constitutes the entire Agreement and understanding among the Parties
with respect to the subject matter hereof, and shall supersede all prior oral
and written agreements or understandings of the Parties relating hereto. All
references to this Agreement shall be deemed to include the Exhibits hereto.

  10.4 Amendments and Waivers

     This Agreement may only be modified or amended by a document signed by both
Parties. Any provision contained in this Agreement may only be waived by a
document signed by the Party waiving such provision.

  10.5 Severability; Good Faith

     Should any part or provision of this Agreement be held to be invalid or
unenforceable by any competent court, governmental or administrative authority
having jurisdiction, the other provisions of this Agreement shall nonetheless
remain valid. In this case, the Parties shall endeavor to negotiate a substitute
provision that best reflects the economic intentions of the Parties without
being unenforceable, and shall execute all agreements and documents required in
this connection.

     If a Party to this Agreement (the FAILING PARTY) should fail to take any
action to be taken or to deliver any document to be delivered as of a specified
date, the other Party shall not resort to any contractual remedies under this
Agreement if such failure is promptly and fully cured in good faith by the
Failing Party.

  10.6 Confidentiality

     The Parties undertake to keep all information obtained in the course of the
due diligence and in any negotiations and discussions prior to or after Closing
in strict confidence, and further undertake not to disclose any such information
to third parties (unless such third parties are also covered by a
confidentiality obligation), and the Parties to this Agreement shall in all
respects keep confidential and not

                                        20
<PAGE>

at any time disclose to anyone or use for their own or any other person's
benefit or to the detriment of the other Party or parties any confidential
information, in each case unless:

          (a) a Party is required to do so by a competent court or
     administrative authority under compulsory law;

          (b) a Party is required to do so under applicable stock exchange
     regulations;

          (c) such information is already in the public domain by reason other
     than a breach of this confidentiality undertaking.

     This confidentiality undertaking shall remain in force until 31 December
2004.

  10.7 Public Announcements

     All public announcements or press releases in connection with the
transactions contemplated under this Agreement shall only be issued after the
Parties have consulted and agreed on the contents of such public announcements
or press releases.

11 GOVERNING LAW AND DISPUTE RESOLUTION

  11.1 Governing Law

     This Agreement shall be governed by and construed in accordance with the
substantive laws of Switzerland.

  11.2 Dispute Resolution

     Should there be any disputes between the Parties as to the respective
rights and obligations under this Agreement, the Parties shall strive to find an
amicable settlement. Should such an amicable settlement not be possible after no
less than 30 business days of discussions among the Parties, the Parties shall
refer the matter to a joint committee consisting of the Chief Executive Officer
of Alcon Labs and General Manager/Executive Vice President Pharma and Cosmetics
of Nestle (the JOINT COMMITTEE). The Joint Committee shall strive to find an
amicable solution within 30 business days after the dispute has been submitted
to it. A party can resort to arbitration pursuant to Section 11.3 only if no
amicable solution can be found by the Joint Committee.

  11.3 Arbitration

     If no amicable settlement can be found pursuant to Section 11.2, all
disputes arising out of or in connection with this Agreement, including disputes
on its conclusion, validity, effects or termination, shall be settled (to the
exclusion of the ordinary courts) by a three-person arbitral tribunal formed
pursuant to the domestic arbitration rules of the Zurich Chamber of Commerce.
Each Party shall have the right to appoint one arbitrator, and the arbitrators
so appointed shall designate a chairman. The seat of the arbitral tribunal shall
be Zurich. Arbitral proceedings shall be conducted in English. The award
rendered by the

                                        21
<PAGE>

arbitral tribunal shall contain a decision on the merits, an apportionment of
costs and an award for reimbursement of fees.

SO AGREED on
------------------------------ in
------------------------------------.

<Table>
<S>                                           <C>
NESTLE S.A.

--------------------------------------------  --------------------------------------------------------
By:
Title:

ALCON, INC.

--------------------------------------------  --------------------------------------------------------
By:
Title:
</Table>

                                        22
<PAGE>

                                                                         ANNEX A

                                  DEFINITIONS

     As used in this Agreement in capitalized form, the following terms shall
have the following meaning:

     Affiliate shall mean a person or Business Association which exercises
Control over a second person or Business Association, or is under Control by it,
or is under common Control by the same person or Business Association.

     Agreement shall mean this Agreement including all of its Annexes and
Exhibits.

     Alcon Labs shall mean Alcon Laboratories, Inc., Fort Worth TX, U.S.A.

     Alcon shall mean Alcon, Inc., Hunenberg, Switzerland.

     Alcon Group shall mean Alcon and all Business Associations under the
Control of Alcon.

     Benefit Plans shall have the meaning set forth in Section 5.2.

     Board Committees shall mean the committees of the board of directors of
Alcon as constituted from time to time.

     Board of Directors shall mean the board of directors of Alcon, constituted
in accordance with Swiss law, the articles of association and the organizational
regulations of Alcon.

     Business Association shall mean a general or limited partnership, a
corporation, a business trust, a limited liability company, a trust, an
unincorporated organization doing business, a government or any department or
agency thereof, a joint venture or any other person or entity doing business.

     Business Day shall mean shall mean any day, other than Saturday, Sunday or
any other day on which commercial banks in Zurich are required by applicable law
to close.

     CHF shall mean Swiss Francs, being the lawful currency of Switzerland.

     CO shall mean the Swiss Federal Code of Obligations (Obligationenrecht) of
1911, as amended.

     Competing Business shall have the meaning set forth in Section 7.1.

     Control shall be deemed to exist if a person or Business Association
(either alone or with its Affiliates) owns more than half of the voting rights
or equity capital of a Business Association, or is otherwise able to exert a
controlling influence over another person or Business Association.

     Effective Date shall mean January 1, 2002.

     Controlling Shareholding shall mean a shareholding that confers Control of
a Person or Business Association over another Business Association.

     EGM shall mean an extraordinary general meeting of shareholders of Alcon.

     Environment means (i) land, including, without limitation, surface land,
sub-surface strata, sea bed and river bed under water and natural and man-made
structures; (ii) water, including, without limitation, coastal and inland
waters, surface waters, ground waters and water in drains and sewers; (iii) air,
including, without limitation, air inside buildings and in other natural and
man-made structures above or below ground; and (iv) any and all living organisms
or systems supported by those media, including, without limitation, humans.

     Environmental Laws means all or any international, European, national,
federal, state, district or local, civil or criminal law, common law, statutes,
statutory instruments, regulation, directive, statutory guidance and regulatory
codes of practice, order, decree, injunction or judgment which relate to the
pollution or the protection of the Environment or Environmental Matters and
which is in force as at Closing or which are no longer in force but under which
the Alcon Group companies still have obligations and liabilities.

                                        23
<PAGE>

     Environmental Matters means (i) pollution or contamination of the
Environment; (ii) the generation, manufacture, processing, handling, storage,
distribution, use, treatment, removal, transport, disposal, release, spillage,
deposit or discharge of Hazardous Substances; (iii) the exposure of any person
to Hazardous Substances; or (iv) the creation of any noise, vibration,
radiation, nuisance or other material adverse impact on the Environment.

     Failing Party shall have the meaning set forth in Section 10.5.

     Firm Shares shall mean the shares to be sold initially in the IPO, as
further set out in the Underwriting Documentation.

     Group Executive Management shall mean the management of the Alcon Group, as
further described in Section 3.4.2.

     IAS shall mean the International Accounting Standards as promulgated by the
International Accounting Standards Committee.

     Incentive Plan shall mean the incentive plan to be established for
employees and directors of the Alcon Group with effect as of or after the
Pricing Date.

     Indemnified Party shall have the meaning set forth in Section 8.1.

     Indemnifying Party shall have the meaning set forth in Section 8.1.

     IPO shall mean the Initial Public Offering of Alcon.

     Joint Committee shall have the meaning set forth in Section 11.2.

     Majority Shareholding shall mean ownership by a Person or group of Persons
acting in concert of more than half of the voting rights (whether or not such
voting rights may be exercised) in a Business Association.

     Nestle shall mean Nestle S.A., Cham and Vevey, Switzerland.

     Nestle Group shall mean shall mean Nestle and all Business Associations
under the Control of Nestle (other than the Alcon Group).

     NYSE shall mean New York Stock Exchange.

     NYSE Rules shall mean the listing rules and regulations of the NYSE in
effect from time to time.

     Offer Price shall mean the gross offering price at which Firm Shares and
the IPO Shares are sold to the public.

     Option Shares shall mean the shares to be sold in the IPO pursuant to the
Underwriters' over-allotment option, as further set out in the Underwriting
Documentation.

     Pricing Date shall mean the date of pricing of the Firm Shares.

     Registration Statement shall have the meaning set forth in Section 2.6.1.

     Remediation shall have the meaning set forth in Section 4.3.

     SEC shall mean the United States Securities and Exchange Commission.

     Rollover Shares shall have the meaning set forth in Section 2.3.6.

     Subsidiaries shall mean with respect to any Person, any Business
Association of which such Person, either directly or through or together with
any other Subsidiary of such Person owns more than 50% of the voting power or
can otherwise determine the election of directors or their equivalents, other
than as affected by events of default.

     Tax and Taxes shall mean all tax liabilities, including income taxes
(personal or corporate), capital taxes, stamp duties (both on the issuance and
on the transfer or securities), withholding taxes, value added

                                        24
<PAGE>

taxes and all other taxes, duties, charges, levies, contributions or imposts
payable to any competent taxing authority in any jurisdiction, as well as any
interest, penalties, costs and expenses reasonably related thereto.

     Taxing Authority or Authorities means any government, state or municipality
or any local, state, federal or other fiscal, revenue, customs or excise
authority, body or official anywhere in the world.

     Underwriting Documentation shall mean all agreements and instruments to be
entered into between Nestle, Alcon and the financial institutions advising on
the IPO.

                                        25<PAGE>

                                                                    EXHIBIT 10.2
                                                                           DRAFT
                                                                FEBRUARY 8, 2002

                                      2002

                              ALCON INCENTIVE PLAN

                              EFFECTIVE [--], 2002
<PAGE>

                               TABLE OF CONTENTS

<Table>
<S>   <C>                                                           <C>
                               ARTICLE I
ESTABLISHMENT AND PURPOSE.........................................    1
1.1   Purpose.....................................................    1
1.2   Effective Date; Shareholder Approval........................    1

                              ARTICLE II
DEFINITIONS.......................................................    1
2.1   "Award".....................................................    1
      (a) "Annual Incentive Awards"...............................    1
      (b) "Stock Option Awards"...................................    1
      (d) "Restricted Stock"......................................    1
      (e) "Performance-Based Awards"..............................    1
      (f) "Other Stock-Based Awards"..............................    1
2.2   "Award Certificate".........................................    1
2.3   "Board".....................................................    1
2.4   "Change-of-Control".........................................    1
2.5   "Code"......................................................    2
2.6   "Committee".................................................    2
2.7   "Common Stock"..............................................    2
2.8   "Company"...................................................    2
2.9   "Disabled"..................................................    2
2.10  "Employee"..................................................    2
2.11  "Exchange Act"..............................................    2
2.12  "Fair Market Value".........................................    2
2.13  "Fair Market Value Stock Option"............................    2
2.14  "GAAP"......................................................    3
2.15  "Grant Price"...............................................    3
2.16  "Incentive Stock Option"....................................    3
2.17  "Market Price"..............................................    3
2.18  "Non-Employee Director".....................................    3
2.19  "Nonqualified Stock Option".................................    3
2.20  "Participant"...............................................    3
2.21  "Performance-Based Awards"..................................    3
2.22  "Performance Cycle".........................................    3
2.23  "Performance Goals".........................................    3
2.24  "Performance Measure".......................................    3
2.25  "Plan"......................................................    3
2.26  "Restricted Stock"..........................................    3
2.27  "Restriction Period"........................................    4
2.28  "Retirement"................................................    4
2.29  "Shares"....................................................    4
2.30  "Stock Appreciation Rights".................................    4
2.31  "Stock Market"..............................................    4
2.32  "Stock Options".............................................    4
2.33  "Subsidiary"................................................    4
</Table>

                                        i
<PAGE>
<Table>
<S>   <C>                                                           <C>
2.34  "Termination of Employment".................................    4
2.35  "Unit"......................................................    4

                              ARTICLE III
ADMINISTRATION....................................................    4
3.1   The Committee...............................................    4
3.2   Authority of the Committee..................................    4
3.3   Effect of Determinations....................................    5
3.4   Delegation of Authority.....................................    5
3.5   No Liability................................................    5

                              ARTICLE IV
AWARDS............................................................    5
4.1   Eligibility.................................................    5
4.2   Participation...............................................    5
4.3   Form of Awards..............................................    5
4.4   Annual Incentive Awards.....................................    6
      (a) Performance Cycles......................................    6
      (b) Annual Incentive Participant............................    6
      (c) Performance Measures....................................    6
      (d) Payment of Annual Incentive Awards; Certification.......    6
      (e) Form of Payment.........................................    6
4.5   Stock Option Awards.........................................    6
      (a) Number of Shares........................................    6
      (b) Grant Price.............................................    7
      (c) Term and Timing of Exercise.............................    7
      (d) Payment of Exercise Price...............................    7
      (e) Incentive Stock Options.................................    8
      (i)  Eligibility............................................    8
      (ii) Timing of Grant........................................    8
      (iii) Amount of Award.......................................    8
      (iv) Timing of Exercise.....................................    8
      (v)  Transfer Restrictions..................................    8
      (f) No Repricing............................................    8
4.6   Stock Appreciation Rights...................................    8
      (a) Amount of Award.........................................    8
      (b) Term and Timing of Exercise.............................    9
4.7   Restricted Stock............................................    9
      (a) Eligibility and Limitations.............................   10
      (b) Restriction Period......................................   10
      (c) Restrictions............................................   10
      (d) Acceleration of Restrictions............................   10
      (e) Delivery of Restricted Stock............................   10
      (f) Legend..................................................   11
4.8   Performance-Based Awards....................................   11
      (a) Eligibility and Terms...................................   11
      (b) Limitations on Grants and Awards........................   11
      (c) Performance Goals, Performance Measures and Performance    11
      Cycles......................................................
      (d) Form of Grants..........................................   11
      (e) Payment of Awards.......................................   12
</Table>

                                        ii
<PAGE>
<Table>
<S>   <C>                                                           <C>
4.9   Other Stock-Based Awards....................................   12
      (a) Eligibility.............................................   12
      (b) Limitations on Grants and Awards........................   12
4.10  Phantom Stock Conversion....................................   12
4.11  Code Section 162(m).........................................   12

                               ARTICLE V
SHARES SUBJECT TO THE PLAN; ADJUSTMENTS...........................   12
5.1   Shares Available............................................   12
5.2   No Registration Rights......................................   13
5.3   Restrictions on Transfer -- Securities Law Restrictions.....   13
5.4   Counting Rules..............................................   13
5.5   Adjustments.................................................   13
5.6   Consolidation, Merger or Sale of Assets.....................   13
5.7   Fractional Shares...........................................   14

                              ARTICLE VI
AMENDMENT AND TERMINATION.........................................   14
6.1   Amendment...................................................   14
6.2   Termination.................................................   14

                              ARTICLE VII
GENERAL PROVISIONS................................................   14
7.1   Nontransferability of Awards................................   14
7.2   Withholding of Taxes........................................   15
      (a) Stock Options...........................................   15
      (b) Restricted Stock........................................   15
      (c) Other Awards............................................   15
7.3   Special Forfeiture Provision................................   15
7.4   Code Section 83(b) Elections................................   16
7.5   No Implied Rights...........................................   16
7.6   No Obligation to Exercise Options...........................   16
7.7   No Rights as Stockholders...................................   16
7.8   Indemnification of Board....................................   16
7.9   No Required Segregation of Assets...........................   16
7.10  Nature of Payments..........................................   16
7.11  Securities Exchange Act Compliance..........................   16
7.12  Call Option of the Company..................................   16
7.13  Governing Law; Severability.................................   16
</Table>

                                       iii
<PAGE>

                                      2002

                              ALCON INCENTIVE PLAN

                                   ARTICLE I

                           ESTABLISHMENT AND PURPOSE

     1.1 Purpose.  The purpose of the 2002 Alcon Incentive Plan (the "Plan") is
to enable Alcon, Inc. (the "Company") to achieve superior financial performance,
as reflected in the performance of its Common Stock and other key financial or
operating indicators by (i) providing incentives and rewards to certain
Employees who are in a position to contribute materially to the success and
long-term objectives of the Company, (ii) aiding in the recruitment, motivation
and retention of Employees of outstanding ability and (iii) providing Employees
an opportunity to acquire or expand equity interests in the Company, thus
aligning the interests of such Employees with those of the Company's
shareholders. Towards these objectives, the Plan provides for the grant of
Annual Incentive Awards, Stock Options, Stock Appreciation Rights, Restricted
Stock and Other Stock-Based Awards.

     1.2 Effective Date; Shareholder Approval.  The Plan is effective as of the
date the resolution of the shareholders of the Company granting to the Board of
Directors the ability to issue sufficient conditional capital has been recorded
in the Commercial Register of the Canton of Zug Switzerland. No Awards shall be
granted under the Plan prior to its effective date.

                                   ARTICLE II

                                  DEFINITIONS

     For purposes of the Plan, the following terms shall have the following
meanings, unless another definition is clearly indicated by particular usage and
context:

     2.1 "Award" means any form of incentive or performance Award granted under
the Plan, whether singly or in combination, to a Participant pursuant to such
terms, conditions, restrictions and/or limitations (if any) as the Committee may
establish and set forth in the applicable Award Certificate. Awards granted
under the Plan may consist of:

          (a) "Annual Incentive Awards" awarded pursuant to Section 4.4;

          (b) "Stock Option Awards" awarded pursuant to Section 4.5;

          (c) "Stock Appreciation Rights" awarded pursuant to Section 4.6;

          (d) "Restricted Stock" awarded pursuant to Section 4.7;

          (e) "Performance-Based Awards" awarded pursuant to Section 4.8;

          (f) "Other Stock-Based Awards" awarded pursuant to Section 4.9

     2.2 "Award Certificate" means the document distributed, either in writing
or by electronic means, to a Participant by the Committee evidencing the grant
of an Award.

     2.3 "Board" means the Board of Directors of the Company.

     2.4 "Change-of-Control" means the happening of any of the following:

          (a) any "person" including a "group" (as such terms are used in
     Sections 13(d) and 14(d) of the U.S. Securities Exchange Act of 1934, as
     amended (the "Exchange Act")), but excluding (i) the Company, (ii) any
     entity controlling, controlled by or under common control with the Company,
     including Nestle S.A. (Nestle), (iii) any employee benefit plan of the
     Company or any such entity, (iv) any entity or group acting to facilitate
     any initial public offering of the Shares and, (v) with respect to any
     particular Participant, the Participant and any "group" (as such term is
     used in

                                        1
<PAGE>

     Section 13(d)(3) of the Exchange Act) of which such Participant is a
     member, and (vi) any acquisition of securities directly from the Company,
     is or becomes the "beneficial owner" (as defined in Rule 13(d)(3) under the
     Exchange Act), directly or indirectly, of securities of the Company
     representing 50% or more of either (i) the combined voting power of the
     Company's then outstanding securities or (ii) the then outstanding Shares;
     or

          (b) the consummation of any consolidation or merger of the Company or
     subsidiary where the shareholders of the Company, immediately prior to the
     consolidation or merger, do not, immediately after the consolidation or
     merger, beneficially own (as such term is used in Rule 13(d)(3) under the
     Exchange Act), directly or indirectly, securities representing in the
     aggregate 51% or more of the combined voting power of the then outstanding
     voting securities of the corporation issuing cash or securities in the
     consolidation or merger (or its ultimate parent corporation, if any),
     except any such transaction with Nestle or any entity controlled by Nestle;
     or

          (c) any sale, lease, exchange or other transfer (in one transaction or
     in a series of transactions contemplated or arranged by any party as a
     single plan) of all or substantially all of the assets of the Company,
     other than the sale or disposition by the Company of all or substantially
     all of the Company's assets either (i) to an entity, at least 51% of the
     combined voting power of the voting securities of which are beneficially
     owned by shareholders in substantially the same proportion as their
     ownership of the Company immediately prior to such sale or (ii) to Nestle
     or to an entity controlled by Nestle, or

          (d) during any period of two consecutive years commencing on or after
     January 1, 2002, individuals who, at the beginning of the period,
     constituted the Board (together with any new directors whose election by
     such Board or whose nomination for election by the stockholders of the
     Company was approved by a majority of the directors then still in office
     who were either directors at the beginning of such period or whose election
     or nomination for election was previously so approved) cease for any reason
     to constitute at least a majority of the Board of Directors then in office.

     2.5 "Code" means the U.S. Internal Revenue Code of 1986, as amended.

     2.6 "Committee" means the Compensation Committee of the Board formed to
make recommendations for approval by the Board as a whole, or any successor
Committee or sub-committee of the Board. It is understood throughout this Plan
that the Committee only recommends actions to the Board for approval.

     2.7 "Common Stock" means the registered common stock, CHF 0.20 par value
per share, of the Company.

     2.8 "Company" means Alcon, Inc., and its subsidiaries, successors and
assigns.

     2.9 "Disabled" or "Disability" means permanently and totally disabled
within the meaning of the applicable disability plans of the Company (or its
subsidiary) for the country of residence of the affected individual.

     2.10 "Employee" means any individual, including any officer of the Company,
who is on the active payroll of the Company or a Subsidiary or serves as a
Non-Employee Director of the Company at the relevant time. "Employee" shall not
include any seasonal, independent contractors, leased or temporary employees.

     2.11 "Exchange Act" means the Securities Exchange Act of 1934, as amended.

     2.12 "Fair Market Value" means the closing sales price of a Share as
reported on the Stock Market on the date as of which the determination is being
made or, if no sale of Shares is reported on such date, on the next preceding
day on which there were sales of Shares reported.

     2.13 "Fair Market Value Stock Option" means a Stock Option with the Grant
Price set by the Board at a price per Share equal to the Fair Market Value, as
defined in Section 2.12, of a Share on the date of grant.

                                        2
<PAGE>

     2.14 "GAAP" means U.S. Generally Accepted Accounting Principles.

     2.15 "Grant Price" means the price per share at which Shares may be
purchased under a Stock Option and the price per share used as the base price
for measuring the appreciation, if any, under a Stock Appreciation Right. The
Grant Price shall not be less than the Fair Market Value of the Shares covered
by the Stock Option or Stock Appreciation Right on the date the Stock Option or
Stock Appreciation Right is granted unless specifically approved by the Board.

     2.16 "Incentive Stock Option" means a Stock Option granted under Section
4.5 of the Plan designated by the Board in an Award Certificate to be an
Incentive Stock Option that meets the requirements of (i) Section 422 of the
Code or (ii) the revenue code, and any regulations or rules promulgated
thereunder in the country of the Participant.

     2.17 "Market Price" means the Fair Market Value of a Share on the date a
Stock Option or Stock Appreciation Right is exercised.

     2.18 "Non-Employee Director" means a director of the Company described in
Rule 16(b)-3(b)(3)(i) of the Exchange Act who is not (I) a full-time employee of
Nestle, the Company, or a Subsidiary or (II) a member of the Nestle board of
directors.

     2.19 "Nonqualified Stock Option" means any Stock Option granted under
Section 4.5 of the Plan that is not an Incentive Stock Option.

     2.20 "Participant" means exclusively an Employee of the Company or a
Subsidiary who has been granted an Award under the Plan.

     2.21 "Performance-Based Awards" mean an Award to be earned in whole or in
part according to, and contingent upon, the degree of achievement of Performance
Goals over a Performance Cycle granted under Section 4.8 of the Plan in the form
of cash, Shares or any combination thereof.

     2.22 "Performance Cycle" means, with respect to any Annual Incentive Award,
Performance-Based Award or Other Stock-Based Award granted under the Plan, the
period over which the Company's level of attainment of a Performance Measure
shall be determined.

     2.23 "Performance Goals" mean, with respect to any applicable Award made
pursuant to the Plan, the one or more targets, goals or levels of attainment
required to be achieved in terms of the specified Performance Measure during the
specified Performance Cycle, all as set forth in the related Award Certificate.

     2.24 "Performance Measure" means, with respect to any Annual Incentive
Award, Performance Grant or Other Stock-Based Award granted in connection with a
Performance Cycle, the business criteria recommended by the Committee and
approved by the Board to measure the level of performance of the Company during
such Performance Cycle. The Committee may select for Board approval as the
Performance Measure for a Performance Cycle any Performance Goals and/or one or
combination of the following financial measures, as interpreted by the
Committee, which (to the extent applicable) can be determined either on a pro
forma or GAAP basis, and either pre-tax or after-tax,: Earnings per Share,
Return on Equity, Return on Invested Capital, Relative Total Shareholder Return,
Revenue Growth, Share Performance, Net Income, Return on Sales, Return on
Assets, Economic Value Added, Cash Flow, Cumulative Operating Income (which
shall equal consolidated sales minus cost of goods sold and selling,
administrative and general expense) or other measures subject to review for
compliance with 162(m).

     2.25 "Plan" means the 2002 Alcon Incentive Plan, as set forth in this
document and as may be amended from time to time.

     2.26 "Restricted Stock" means Shares issued under a Restricted Stock Award
pursuant to Section 4.7 that are subject to such restrictions recommended by the
Committee, in its discretion, and approved by the Board.

                                        3
<PAGE>

     2.27 "Restriction Period" means the period during which shares subject to a
Restricted Stock Award are subject to forfeiture or repurchase.

     2.28 "Retirement" means retirement with consent of the Board and (i) at or
after age 55 with no less than ten years of service or (ii) at or after age 62.

     2.29 "Shares" mean shares of Common Stock.

     2.30 "Stock Appreciation Rights" mean the right to an amount (payable in
Shares, in cash, or a combination thereof as the Committee shall recommend and
the Board shall approve) that does not exceed the excess of the Market Price
over the Grant Price for the number of Shares for which the Stock Appreciation
Right is exercised.

     2.31 "Stock Market" means the New York Stock Exchange or other listing
system selected by the Board in its sole discretion on which Shares are listed
or quoted for sale.

     2.32 "Stock Options" mean the right to purchase from the Company a stated
number of Shares at a specified Grant Price. Stock Options Awarded under the
Plan shall be in the form of either Incentive Stock Options or Nonqualified
Stock Options.

     2.33 "Subsidiary" means any corporation or entity in which the Company (i)
directly or indirectly owns or controls stock possessing 50% or more of the
total combined voting power of all classes of stock issued by such corporation
or entity; or (ii) otherwise has the power to determine the election or removal
of a majority of the members of the Board of directors.

     2.34 "Termination of Employment" means the date of cessation of an
Employee's employment relationship with the Company and its Subsidiaries for any
reason, with or without cause as determined by the Company or the relevant
Subsidiary; provided, however, that for purposes of this Plan, an Employee's
employment relationship shall be treated as continuing intact while the Employee
is on military reserve duty, sick leave or other bona fide leave of absence
(such as temporary employment with the Government) that has been approved by the
Company or the relevant Subsidiary to the extent the period of the leave does
not exceed the longer of 90 days or the period the Employee's right to continued
employment and reemployment with the Company or the relevant Subsidiary is
guaranteed either by law or by contract. Employees called for active Military
Duty shall have their employment relationship continued intact for the duration
of their term of required military service. Where the period of leave exceeds
ninety (90) days and where the Employee's right to continued employment and
reemployment is not guaranteed either by slaw or contract, the employment
relationship will be deemed to have terminated on the ninety-first (91st) day of
such leave.

     2.35 "Unit" means a bookkeeping entry used by the Company to record and
account for the grant, settlement or, if applicable, deferral of an Award until
such time as such Award is paid, canceled, forfeited or terminated, as the case
may be, which, except as otherwise specified by the Committee, shall be equal to
one Share.

                                  ARTICLE III

                                 ADMINISTRATION

     3.1 The Committee.  The Plan shall be administered by the Committee, under
the review and approval of the Board. Subject to Section 3.4, the Committee
shall only have the authority to recommend actions and decisions for approval by
the Board. The Board shall have the exclusive authority to approve actions and
decisions made hereunder.

     3.2 Authority of the Committee.  The Committee, subject to approval of the
Board (which approval may be granted ex ante or ex post), shall have authority,
in its sole and absolute discretion and subject to the terms of the Plan, to (1)
interpret the Plan; (2) prescribe such rules and regulations as it deems
necessary for the proper operation and administration of the Plan, and amend or
rescind any existing rules or regulations relating to the Plan; (3) select
employees to receive Awards under the Plan; (4) determine

                                        4
<PAGE>

the form of an Award, the number of Shares subject to an Award, all the terms,
conditions, restrictions and/or limitations, if any, of an Award including,
without limitation, the timing or conditions of exercise or vesting, and the
terms of any Award Certificate; (5) determine whether Awards will be granted
singly, in combination or in tandem; (6) establish and administer Performance
Measures and Performance Goals in connection with Annual Incentive Awards,
Performance-Based Awards or Other Stock-Based Awards granted to Employees under
the Plan, and certify the level of performance attainment for such Performance
Goals; (7) except as provided in Section 4.5(f), waive or amend any terms,
conditions, restrictions or limitations of an Award; (8) in accordance with
Article V, adjust the number of Shares available under the Plan or any Award;
(9) accelerate the vesting, exercise or payment of an Award when such action or
actions would be in the best interest of the Company; (10) provide for the
deferred payment of Awards in Shares and the extent to which such payment shall
be credited with dividend equivalents; (11) determine whether Nonqualified Stock
Options may be transferable to family members, a family trust or a family
partnership; (12) establish such Subplans as the Committee may determine to be
necessary in order to implement and administer the Plan in various countries;
and (13) take any and all other action it deems necessary or advisable for the
proper operation or administration of the Plan. Notwithstanding the foregoing,
Awards made to officers and directors of the Company, as described in Rule 16b-3
of the Exchange Act, shall be approved by the Board in compliance with Rule
16b-3(d)(1) of the Exchange Act.

     3.3 Effect of Determinations.  All determinations of the Board and the
Committee shall be final, binding and conclusive on all persons having an
interest in the Plan.

     3.4 Delegation of Authority.  The Board, in its discretion, may delegate
its authority and duties under the Plan to such other individual, individuals or
committee as it may deem advisable, under such conditions and subject to such
limitations as the Board shall recommend. Notwithstanding the foregoing, only
the Committee shall have the authority to establish and certify Performance
Goals.

     3.5 No Liability.  No member of the Committee or Board, nor any person
acting as a delegate of the Committee or Board in respect of the Plan, shall be
liable for any losses incurred by any person resulting from any action,
interpretation or construction of the Plan.

                                   ARTICLE IV

                                     AWARDS

     4.1 Eligibility.  Except as otherwise provided herein with respect to a
specific form of an Award, all Employees shall be eligible to receive Awards
granted under the Plan.

     4.2 Participation.  The Committee, in its sole discretion, shall recommend
from time to time Participants from those persons eligible under Section 4.1
above to receive Awards under the Plan. Non-Employee Directors shall only be
eligible to receive Non-Qualified Options pursuant to Section 4.5. Nothing in
this Plan shall make Non-Employee Directors eligible for Incentive Stock Options
or any other form of Award.

     4.3 Form of Awards.  Awards granted under the Plan shall be in the form of
Annual Incentive Awards, Stock Options, Stock Appreciation Rights, Restricted
Stock, Performance-Based Awards and Other Equity-Based Awards. Awards shall be
in the form determined by the Board, in its discretion, and shall be evidenced
by an Award Certificate. Awards may be granted singly, in combination or in
tandem with other Awards. The terms and conditions applicable to Annual
Incentive Awards shall be as set forth in Section 4.4. The terms and conditions
applicable to Stock Options shall be as set forth in Section 4.5. The terms and
conditions applicable to Stock Appreciation Rights shall be set forth in Section
4.6. The terms and conditions applicable to Restricted Stock Awards shall be set
forth in Section 4.7. The terms and conditions applicable to Performance-Based
Awards shall be set forth in Section 4.8. The terms and conditions applicable to
Other Equity-Based Awards shall be set forth in Section 4.9.

                                        5
<PAGE>

     4.4 Annual Incentive Awards.  The Board may grant Annual Incentive Awards
under the Plan only to such Employees as the Committee may from time to time
recommend, in such amounts and subject to such terms and conditions as the Board
in its discretion may determine. The Board shall establish a maximum Award that
may be granted for each annual Performance Cycle. Notwithstanding the foregoing,
any Annual Incentive Awards granted to an Employee shall be subject to the
provisions of paragraphs (a) through (e) below:

          (a) Performance Cycles. Annual Incentive Awards for Employees shall be
     granted in connection with a Performance Cycle. The first Performance Cycle
     under the Plan shall commence on January 1, 2002.

          (b) Annual Incentive Participant. Subject to Section 1.2, within 25%
     of the Performance Cycle period, after the commencement of a Performance
     Cycle, the Board shall determine the Employees who shall be eligible to
     receive an Annual Incentive Award for such Performance Cycle.

          (c) Performance Measures. (i) Within 25% of the performance cycle
     period after the commencement of a Performance Cycle, the Board shall fix
     and establish, in writing, (A) the Performance Measure(s) that shall apply
     to such Performance Cycle, (B) an objective formula for computing the
     amount of the Annual Incentive Awards for such Performance Cycle, where the
     amount shall be based upon the attainment of various Performance Goals for
     the applicable Performance Measure(s).

             (ii) Notwithstanding anything to the contrary, the Board may, on a
        case by case basis and in its sole discretion, reduce, but not increase,
        the Annual Incentive Award payable to any Participant with respect to
        any given Performance Cycle (unless the Participant has a vested right
        under applicable employment law to receive the full Award), provided,
        however, that no such reduction shall result in an increase to any other
        Employee.

             (iii) The maximum dollar amount (or dollar value) payable to any
        Participant for a single Performance Cycle in respect of an Annual
        Incentive Award shall be $3.0 million, including deferred amounts

          (d) Payment of Annual Incentive Awards; Certification. No Annual
     Incentive Award shall be paid to a Participant under this Section unless
     and until the Committee certifies in writing the level of attainment of the
     applicable Performance Goals for the applicable Performance Cycle and
     Participants shall not have any right or claim whatsoever for payment of
     any Award until the Committee has made such certification in writing.

          (e) Form of Payment. Annual Incentive Awards shall be paid in the form
     of cash, Shares or any combination thereof; provided, however, that the
     Board shall determine the form of payment of any Annual Incentive Awarded
     to a Participant within ninety (90) days after the commencement of the
     applicable Performance Cycle. Deferrals may be allowed upon approval of the
     Board

     4.5 Stock Option Awards.  Stock Options granted under the Plan shall, at
the discretion of the Board, be in the form of either Nonqualified Stock
Options, Incentive Stock Options or a combination of the two, subject to the
restrictions set forth in paragraph (e) below. Where both a Nonqualified Stock
Option and an Incentive Stock Option are granted to a Participant at the same
time, such Awards shall be deemed to have been granted in separate grants, shall
be clearly identified, and in no event will the exercise of one such Award
affect the right to exercise the other Award. The Board shall designate the form
of the Stock Option at the time of grant and such form shall be specified in the
Award Certificate. Stock Options shall be subject to the following terms and
conditions:

          (a) Number of Shares. The Board may grant Stock Options to a
     Participant in such amounts as the Board may determine, subject to the
     limitations set forth in Section 5.1 of the Plan. The number of Shares
     subject to a Stock Option shall be set forth in the applicable Award
     Certificate. The maximum number of Shares subject to Stock Options that may
     be issued to any Participant during any calendar year shall not exceed
     750,000.

                                        6
<PAGE>

          (b) Grant Price. The Grant Price, as determined by the Board shall be
     set forth in the applicable Award Certificate.

          (c) Term and Timing of Exercise. Each Stock Option granted under the
     Plan shall be exercisable in whole or in part, subject to the following
     conditions, limitations and restrictions:

             (i) Unless the applicable Award Certificate provides otherwise,
        each Stock Option shall become exercisable in full on the third
        anniversary of the date of grant;

             (ii) Unless an applicable Subplan or an applicable Award
        Certificate provides a different period, each Stock Option shall lapse
        on the tenth anniversary of the date of grant,

             (iii) The Board may, on a case by case basis, provide in an Award
        Certificate that the Stock Options subject to the Award shall become
        immediately exercisable upon a Change-of-Control;

             (iv) All Stock Options granted to a Participant shall become
        immediately exercisable upon the death or permanent Disability of the
        Participant and must be exercised within 60 months after such
        Participant's death or Disability, but in no event after the date such
        Stock Options would otherwise lapse, by the Participant or, in the event
        of his death, by the Participant's estate or by the person given
        authority to exercise such Stock Options by the Participant's will or by
        operation of law. In the event a Stock Option is exercised by the
        executor or administrator of a deceased Participant, or by the person or
        persons to whom the Stock Option has been transferred by the
        Participant's will or the applicable laws of descent and distribution,
        the Company shall be under no obligation to deliver Shares thereunder
        unless and until the Board is satisfied that the person or persons
        exercising the Stock Option is or are the duly appointed executor(s) or
        administrator(s) of the deceased Participant or the person to whom the
        Stock Option has been transferred by the Participant's will or by the
        applicable laws of descent and distribution;

             (v) Except as otherwise provided in Section 7.3, upon an Employee's
        Termination of Employment, for any reason other than death, Disability
        or Retirement, all Stock Options that have not become exercisable as of
        the date of termination shall be forfeited. If the Participant's
        termination constitutes a Retirement, all Stock Options shall become
        vested and exercisable for the full length of the remaining term. Except
        as, determined by the Board and set forth in the applicable Award
        Certificate, for all other methods of termination, to the extent that
        Stock Options have become exercisable as of such date, such Stock
        Options shall expire as of 30 days after such termination or the
        earliest date permitted by law if the law requires greater than 30 days.
        In those jurisdictions where forfeiture is not permitted, the Company
        shall have the right to call Stock Options at a price of CHF 0.01 per
        outstanding Stock Option held by the Participant; and

             (vi) Notwithstanding the foregoing, the Board may, in its
        discretion, set forth in the applicable Award Certificate vesting
        schedules and time periods for permitted exercise that differ from those
        provided herein, provided, however, that in no event shall the Board
        provide in an Award Certificate for the exercise of any portion of a
        Stock Option before the six-month anniversary of Award, or after the
        tenth anniversary of the date of grant of such Stock Option.

          (d) Payment of Exercise Price. The applicable Grant Price shall be
     paid in full when any portion of the Stock Option is exercised and Shares
     shall be issued to the Participant only upon receipt of such payment.
     Payment of the Grant Price may be made in cash or by certified check, bank
     draft, wire transfer, or postal or express money order to the account of a
     Swiss bank held in favor of the Company. In addition, at the discretion of
     the Board, payment of all or a portion of the Grant Price may be made by

             (i) Delivering a properly executed exercise notice to the Company,
        or its agent, together with irrevocable instructions to a broker to
        deliver promptly to the account of a Swiss bank held in favor of the
        Company the amount of sale or loan proceeds with respect to the portion
        of the

                                        7
<PAGE>

        Shares to be acquired upon exercise having a Fair Market Value on the
        date of exercise equal to the sum of the applicable portion of the Grant
        Price being so paid;

             (ii) Tendering (actually or by attestation) to the Company
        previously acquired Shares that have been held by the Participant for at
        least six months having a Fair Market Value on the day prior to the date
        of exercise equal to the applicable portion of the Grant Price being so
        paid; or

             (iii) any combination of the foregoing.

          (e) Incentive Stock Options. Incentive Stock Options granted under the
     Plan shall be subject to the following additional conditions, limitations
     and restrictions:

             (i) Eligibility.  Incentive Stock Options may only be granted to
        Employees of the Company or its Subsidiaries other than individuals who
        are Employees solely in their capacity as Non-Employee Directors. In no
        event may an Incentive Stock Option be granted to an Employee who owns
        stock possessing more than 10% of the total combined voting power of all
        classes of stock of the Company.

             (ii) Timing of Grant.  No Incentive Stock Option shall be granted
        under the Plan after the 10-year anniversary of the date the Plan is
        adopted by the Board or, if earlier, the date the Plan is approved by
        the Company's shareholders pursuant to Section 1.2.

             (iii) Amount of Award.  The aggregate Fair Market Value on the date
        of grant of the Shares with respect to which such Incentive Stock
        Options first become exercisable during any calendar year under the
        terms of the Plan for any Participant may not exceed $100,000. For
        purposes of this $100,000 limit, the Participant's Incentive Stock
        Options under this Plan and all Plans maintained by the Company shall be
        aggregated. To the extent any Incentive Stock Option first becomes
        exercisable in a calendar year and such limit would be exceeded, the
        portion of such Incentive Stock Option that shall thereafter be treated
        as a Nonqualified Stock Option for all purposes of the Plan shall be
        determined in accordance with the rules applicable to Incentive Stock
        Options and the IRS rulings.

             (iv) Timing of Exercise.  In the event that the Board permits an
        Incentive Stock Option to be exercised by a Participant more than 30
        days after the Participant's Termination of Employment and such exercise
        occurs more than three months after such Participant has ceased being an
        Employee (or more than 12 months after the Participant is Disabled),
        such Incentive Stock Option shall thereafter be treated as a
        Nonqualified Stock Option for all purposes.

             (v) Transfer Restrictions.  In no event shall the Board permit an
        Incentive Stock Option to be transferred by a Participant other than by
        will or the laws of descent and distribution, and any Incentive Stock
        Option granted hereunder shall be exercisable, during his or her
        lifetime, only by the Participant.

          (f) No Repricing.  Except as otherwise provided in Section 5.3, in no
     event shall the Board decrease the Grant Price of a Stock Option after the
     date of grant or cancel outstanding Stock Options and grant to Participants
     holding such cancelled Stock Options within six months of such cancellation
     replacement Stock Options with a lower Grant Price without, in either case,
     first obtaining the approval of the shareholders in the manner described in
     Section 1.2.

     4.6 Stock Appreciation Rights.  The Board may grant Stock Appreciation
Rights that provide Participants with the opportunity to receive the
appreciation over the Grant Price for the number of Shares specified in the
applicable Award Certificate

          (a) Amount of Award.

          The Board may grant Stock Appreciation Rights to a Participant in such
     amounts as the Board determines, subject to the limitations set forth in
     Section 5.1 of the Plan. The number of Shares subject to Stock Appreciation
     Rights shall be set forth in the applicable Award Certificate. The

                                        8
<PAGE>

     maximum number of Shares subject to Stock Appreciation Rights that may be
     granted to any Participant during any calendar year shall not exceed
     750,000.

          Upon exercise of a Stock Appreciation Right, the Participant shall be
     entitled to a payment equal to the difference between the Grant Price and
     the Fair Market Value of the applicable number of Shares on the date of
     exercise.

          (b) Term and Timing of Exercise.

          Each Stock Appreciation Right granted under the Plan shall be
     exercisable in whole or in part, subject to the following conditions,
     limitations and restrictions:

             (i) Unless the applicable Award Certificate provides otherwise, the
        Stock Appreciation Right shall be fully exercisable on the third
        anniversary of the date of grant;

             (ii) Unless an applicable subplan or an applicable Award
        Certificate provides a different period, Stock Appreciation Rights shall
        lapse 10 years after the date of grant;

             (iii) The Board may, on a case by case basis, provide in an Award
        Certificate that the Stock Appreciation Rights subject to the Award
        shall become immediately exercisable upon a Change-of-Control;

             (iv) The value of Stock Appreciation Rights shall be settled in any
        combination of cash or shares, as determined by the Board;

             (v) All Stock Appreciation Rights granted to a Participant shall
        become immediately exercisable upon the death or Disability of the
        Participant and must be exercised within 60 months after such
        Participant's death or Disability, but in no event after the date such
        Stock Appreciation Rights would otherwise lapse, by the estate or by the
        person given authority to exercise such Stock Appreciation Rights by the
        Participants will or by operation of law. In the event a Stock
        Appreciation Right is exercised by the executor or administrator of a
        deceased Participant, or by the person or persons to whom the Stock
        Appreciation Right has been transferred by the Participant's will or the
        applicable laws of descent and distribution, the Company shall be under
        no obligation to make payment thereunder unless and until the Board is
        satisfied that the person or persons exercising the Stock Appreciation
        Right is or are the duly appointed executor(s) or administrator(s) of
        the deceased Participant or the person to whom the Stock Appreciation
        Right has been transferred by the Participant's will or by the
        applicable laws of descent and distribution;

             (vi) Except as otherwise provided in Section 7.3, upon a
        Participant's Termination of Employment, for any reason other than
        death, Disability or Retirement, all Stock Appreciation Rights that have
        not become exercisable as of the date of termination shall be forfeited.
        If the Participant's termination constitutes a Retirement, all Stock
        Appreciation Rights shall become vested and exercisable for the full
        length of the remaining term. Except as determined by the Board and set
        forth in the applicable Award Certificate, for all other methods of
        termination, to the extent that Stock Appreciation Rights have become
        exercisable as of such date, such Stock Appreciation Rights shall expire
        as of 30 days after such termination or the earliest date permitted by
        law if the law requires greater than 30 days;

             (vii) Notwithstanding the foregoing, the Board may, on its
        discretion, set forth in the applicable Award Certificate vesting
        schedules and time periods for permitted exercise that differ from those
        provided herein; provided, however, that in no event shall the Board
        provide in an Award Certificate for the exercise of any portion of a
        Stock Appreciation Right before the six-month anniversary of Award, or
        after the tenth anniversary of the date of grant of such Stock
        Appreciation Right.

     4.7 Restricted Stock.  A Restricted Stock Award is the transfer of shares
to an Employee, subject to such terms and conditions as the Board shall deem
appropriate, including, without limitation, restrictions

                                        9
<PAGE>

on the sale, assignment, transfer or other disposition of such shares and the
requirement that the Employee shall forfeit such shares back to the Company
without payment or shall be obligated to sell and the Company shall be entitled
to buy from the Participant such shares at a price of CHF 0.01 per share, as
legislation requires, in each case (i) upon Termination of Employment for any
reason other than death or Disability prior to the end of the Restriction
Period, (ii) if any specified Performance Goals are not achieved during a
specified Performance Cycle, or (iii) if such other conditions as the Board may
specify at the time of grant are not satisfied.

          (a) Eligibility and Limitations.  Any officer of the Company and any
     other key Employee of the Company or a Subsidiary selected by the Board may
     receive a Restricted Stock Award. The Board, in its sole discretion, shall
     determine whether a Restricted Stock Award shall be made, the Employee to
     receive the Restricted Stock Award, and the conditions and restrictions
     imposed on the Restricted Stock Award. The Board may grant Restricted Stock
     to an Employee in such amounts as the Board may determine, subject to the
     limitations set forth in Section 5.1 of the Plan. The maximum number of
     Shares that may be issued to any Participant as Restricted Stock during any
     calendar year shall not exceed 200,000.

          (b) Restriction Period.  Each Award Certificate shall specify the
     conditions upon which restrictions applicable to Restricted Stock Awards
     shall lapse, including, without limitations, conditions related to the
     continued employment of a Participant or the achievement of Performance
     Goals during a Performance Cycle, by the Company or its Subsidiaries until
     a specified date.

          (c) Restrictions.  The following restrictions and conditions shall
     apply to each Restricted Stock Award during the Restriction Period: (i) the
     Participant shall not be entitled to physical delivery of the shares until
     the lapse of the Restriction Period; (ii) the Participant may not sell,
     assign, transfer, pledge, hypothecate, encumber or otherwise dispose of or
     realize on the shares subject to the Restricted Stock Award; and (iii) the
     shares subject to a Restricted Stock Award shall be forfeited to the
     Company if the Participant for any reason other than death or Disability
     ceases to be an Employee prior to the end of the Restriction Period, except
     due to circumstances specified in the related Award Certificate or
     otherwise approved by the Board. The Board may, in its sole discretion,
     include such other restrictions and conditions as it may deem appropriate.
     In those jurisdictions where forfeiture is not permitted, the Company shall
     have the right to call, and the Participants shall be required to sell,
     shares subject to a Restricted Stock Award at a price of CHF 0.01 per
     share. The Board shall have authority to designate vesting requirements in
     grants of Restricted Stock specific to a Participant.

          (d) Acceleration of Restrictions.  Notwithstanding the foregoing, the
     Restriction Period applicable to all shares subject to the Restricted Stock
     Award shall immediately expire and such shares shall become vested and
     nonforfeitable upon the death or Disability of the Participant. The Board
     may, on a case by case basis, provide in the Award Certificate that the
     Restriction Period applicable to all shares subject to the Restricted Stock
     Award shall immediately expire and such shares shall become vested and
     nonforfeitable upon a change-of-control. In case of Participant's
     Retirement, the Restriction Period applicable to all shares of Restricted
     Stock expire and such shares shall become vested and nonforfeitable at the
     earlier of (a) Retirement, or (b) the end of Restriction Period. Section
     4.10 shall govern Restricted Stock Awards made in connection with
     conversion of phantom shares.

          (e) Delivery of Restricted Stock.  Upon expiration of the Restriction
     Period and if all conditions have been satisfied and any applicable
     Performance Goals attained, the shares will be delivered to the
     Participant, subject to satisfaction of applicable withholding tax
     requirements, free of all restrictions; provided, that the Board may, in
     its discretion, require (i) the further deferral of any shares subject to a
     Restricted Stock Award beyond the initially specified Restriction Period,
     (ii) that the shares subject to a Restricted Stock Award be retained by the
     Company, or (iii) that the Participant receive a cash payment in lieu of
     delivery of the applicable shares.

                                        10
<PAGE>

          (f) Legend.  In order to enforce any restrictions that the Board may
     impose on shares subject to a Restricted Stock Award, the Committee shall
     cause a legend or legends setting forth a specific reference to such
     restrictions to be placed on all certificates for shares subject to
     Restricted Stock Awards. Subject to Section 4.7(e) as restrictions are
     released, a new certificate, without the legend, for the number of shares
     with respect to which restrictions have been released shall be issued and
     upon request by the Participant, shall be delivered to the Participant as
     soon as possible thereafter.

     4.8 Performance-Based Awards.

          (a) Eligibility and Terms.  The Board may grant to officers of the
     Company and other key Employees of the Company and its Subsidiaries the
     prospective contingent right, expressed in Units, to receive payments of
     shares, cash or any combination thereof, with each Unit equivalent in value
     to one share, or equivalent to such other value or monetary amount as may
     be designated or established by the Board ("Performance-Based Awards"),
     Performance-Based Awards shall be earned by Participants only if specified
     Performance Goals are satisfied in the applicable Performance Cycle. The
     Board shall, in its sole discretion, determine the officers of the Company
     and other key Employees eligible to receive Performance-Based Awards. At
     the time each Performance Grant is made, the Board shall establish the
     applicable Performance Cycle, the Performance Measure and Performance Goals
     in respect of such Performance Based Award. The number of shares and/or the
     amount of cash earned and payable in settlement of a Performance Based
     Award shall be determined by the Committee at the end of the Performance
     Cycle.

          (b) Limitations on Grants and Awards.  The Board may grant
     Performance-Based Awards to a Participant in such amounts as the Board may
     determine, subject to the limitations set forth in Section 5.1 of the Plan.
     The maximum dollar amount (or dollar value) payable to any Participant in
     respect of a Performance-Based Award in any calendar year shall be $3.0
     million.

          (c) Performance Goals, Performance Measures and Performance
     Cycles.  The Award Certificate for each Performance Based Award shall
     provide that, in order for a Participant to earn all or a portion of the
     Units subject to such Performance Based Award, the Company must achieve
     certain Performance Goals over a designated Performance Cycle having a
     minimum duration of one year. The Performance Goals and Performance Cycle
     shall be established by the Board in its sole discretion. The Board shall
     establish a Performance Measure for each Performance Cycle for determining
     the portion of the Performance-Based Award, which will be earned or
     forfeited, based on the extent to which the Performance Goals are achieved
     or exceeded. In setting Performance Goals, the Board shall use a
     Performance Measure as defined Article II of this document. Performance
     Goals may include minimum, maximum and target levels of performance, with
     the size of the Performance Based Award based on the level attained. Once
     established by the Board and specified in the Award Certificate, and if and
     to the extent provided in or required by the Award Certificate, the
     Performance Goals and the Performance Measure in respect of any
     Performance-Based Award (or any Restricted Stock Grant or Stock-Based Award
     that requires the attainment of Performance Goals as a condition to the
     Award) shall not be changed other than as required by changes in U.S. GAAP.
     The Board may, in its discretion, eliminate or reduce (but not increase)
     the amount of any Performance-Based Award (or Restricted Stock or
     Stock-Based Award) that otherwise would be payable to a Participant upon
     attainment of the Performance Goal(s) unless the Participant has a vested
     right under applicable employment law to receive the full Award.

          (d) Form of Grants.  Performance-Based Awards may be made on such
     terms and conditions not inconsistent with the Plan, and in such form or
     forms, as the Board may from time to time approve. Performance-Based Awards
     may be made alone, in addition to in tandem with, or independent of other
     grants and Awards under the Plan. Subject to the terms of the Plan, the
     Board shall, in its discretion, determine the number of Units subject to
     each Performance Grant made to a Participant and the Board may impose
     different terms and conditions on any particular Performance-Based Award
     made to any Participant. The Performance Goals, the Performance Cycle and
     the

                                        11
<PAGE>

     Performance Measure applicable to a Performance Grant shall be set forth in
     the relevant Award Certificate.

          (e) Payment of Awards.  Each Participant shall be entitled to receive
     payment in an amount equal to the aggregate Fair Market Value (if the Unit
     is equivalent to a share), or such other value as the Board shall specify,
     of the Units earned in respect of such Performance Award. Payment in
     settlement of a Performance-Based Award may be made in shares, in cash, or
     in any combination of shares and cash, and at such time or times, as the
     Board, in its discretion, shall determine.

     4.9 Other Stock-Based Awards.

          (a) Eligibility.  The Board may, from time to time, grant to an
     Employee Awards (other than Annual Incentive Awards, Stock Options, Stock
     Appreciation Rights, Restricted Stock or Performance-Based Awards) under
     Section 4.9 that consist of, or are denominated in, payable in, valued in
     whole or in part by reference to, or otherwise based on or related to,
     shares. These Awards may include, among other things shares, Restricted
     Stock Options, phantom or hypothetical shares and share units. The Board
     shall determine, in its discretion, the terms, conditions, restrictions and
     limitations, if any, that shall apply to Awards granted pursuant to this
     Section 4.9, including whether dividend equivalents shall be credited with
     respect to any Award, which terms, conditions, restrictions and/or
     limitations shall be set forth in the applicable Award Certificate.

          (b) Limitations on Grants and Awards.  The Board may grant Other
     Stock-Based Awards to a Participant in such amounts as the Board may
     determine, subject to the limitations set forth in Section 5.1 of the Plan.
     The maximum dollar amount (or dollar value) payable to any Participant in
     respect of a Other Stock-Based Award in any calendar year shall be $3.0
     million.

     4.10 Phantom Stock Conversion.  The Company sponsors the 1994 Phantom Stock
Plan pursuant to which eligible employees were granted deferred phantom stock
units that are paid out over time. The Board may permit certain Employees to
convert their outstanding phantom stock units into shares of Restricted Stock
and also grant Stock Options to any such person electing to convert. The Board
shall determine the terms and conditions of such conversion and of the related
Awards made hereunder. Any Awards of Restricted Stock or Stock Options made
under this Section 4.10 shall not count against the limits set forth in Section
4.5(a) and 4.7(a). In addition, Restricted Stock Awards granted under this
Section 4.10 shall not be subject to any restrictions of the types described in
clauses (ii) or (iii) of the first paragraph of Section 4.7. Stock Options
granted under this Section 4.10 shall not be subject to the same vesting
conditions described in Section 4.5(c)(i). Stock Options granted under this
Section 4.10 shall vest under the conditions set forth in the applicable Award
Certificate. Any Awards of Restricted Stock or Stock Options made under this
Section 4.10 shall only be made after the effective date of this Plan.

     4.11 Code Section 162(m).  It is the intent of the Company, that Awards
granted under the Plan satisfy, and that Article IV be interpreted in a manner
that satisfies, the requirements of Code Section 162(m) and the regulations
thereunder, if applicable, so that the Company's tax deduction for Awards is not
disallowed in whole or in part by operation of Code Section 162(m). If any
provision of this Plan or of any Award would otherwise frustrate or conflict
with such intent, that provision shall be interpreted and deemed amended so as
to avoid such conflict.

                                   ARTICLE V

                    SHARES SUBJECT TO THE PLAN; ADJUSTMENTS

     5.1 Shares Available.  Subject to adjustment in accordance with Section
5.3, the total number of Shares with respect to which Awards may be issued under
the Plan shall not exceed in the aggregate 30 million Shares; the number of
Shares delivered pursuant to the exercise of Stock Options or delivered after
the lapse of a Restriction Period shall not exceed 10% of the total number of
Shares issued and outstanding at the time such shares are delivered.

                                        12
<PAGE>

     5.2 No Registration Rights.  The Company may, but shall not be obligated
to, register or qualify the sale of shares under the Securities Act or any other
applicable law. The Company shall not be obligated to take any affirmative
action in order to cause the sale of shares under this Agreement to comply with
any law.

     5.3 Restrictions on Transfer -- Securities Law Restrictions.  Regardless of
whether the offering and sale of shares under the Plan have been registered
under the Securities Act or have been registered or qualified under the
securities laws of any country, the Company at its discretion may impose
restrictions upon the sale, pledge or other transfer of such shares (including
the placement of appropriate legends on stock certificates or the imposition of
stop-transfer instructions) if, in the judgment of the Company, such
restrictions are necessary or desirable in order to achieve compliance with the
Exchange Act, the securities laws of any country or any other law.

     5.4 Counting Rules.  For purposes of determining the number of shares
remaining available under the Plan, only Awards payable in shares or Awards in
Stock Options the terms of which allow for physical delivery of shares shall be
counted. Any shares related to Awards, which terminate by expiration,
forfeiture, cancellation or otherwise without issuance of shares, or are settled
in cash in lieu of shares, shall be available again for issuance under the Plan.
In the event shares are tendered or withheld in payment of all or part of the
Exercise Price of a Stock Option, or in satisfaction of the withholding
obligations thereunder, the shares so tendered or withheld shall become
available for issuance under the Plan. An outstanding Stock Appreciation Right
shall not be taken into account in determining the aggregate number of shares
with respect to which Stock Options may thereafter be granted.

     5.5 Adjustments.  In the event of a change in the outstanding shares by
reason of any stock split, consolidation of shares, dividend or other
distribution (whether in the form of cash, shares, other securities or other
property), extraordinary cash dividend, recapitalization, merger, consolidation,
split-up, spin-off, reorganization, combination, repurchase or exchange of
shares or other securities, the exercisability of stock purchase rights received
under the Award Agreement, the issuance of warrants or other rights to purchase
shares or other securities, or other similar corporate transaction or event, if
the Board shall determine, in its sole discretion, that, in order to prevent
dilution or enlargement of the benefits or potential benefits intended to be
made available under the Plan, such transaction or event equitably requires an
adjustment in the number or kind of shares that may be issued under the Plan, in
the number or kind of shares subject to an outstanding Award, or in the Grant
Price of a Stock Option, Stock Appreciation Right or other Award, such
adjustment shall be made by the Committee and shall be conclusive and binding
for all purposes under the Plan. Notwithstanding the foregoing, no adjustments
shall be made with respect to Awards to the extent such adjustment would cause
the Award to fail to qualify as performance-based compensation under Section
162(m) of the Code.

     5.6 Consolidation, Merger or Sale of Assets.  Upon the occurrence of (i) a
merger, consolidation, acquisition of property or stock, reorganization or
otherwise involving the Company in which the Company is not to be the surviving
corporation, (ii) a merger, consolidation, acquisition of property or stock,
reorganization or otherwise involving the Company in which the Company is the
surviving corporation but holders of shares receive securities of another
corporation, or (iii) a sale of all or substantially all of the Company's assets
(as an entirety) or capital stock to another person, any Award granted hereunder
shall be deemed to apply to the securities, cash or other property (subject to
adjustment by cash payment in lieu of fractional interests) to which a holder of
the number of shares equal to the number of shares the Participant would have
been entitled, and proper provisions shall be made to ensure that this clause is
a condition to any such transaction; provided, however, that in the event of a
transaction described in this Section 5.6 or a Change-of-Control, the Board
shall, in its discretion, have the power to either:

          (a) provide, upon written notice to Participants, that all Awards that
     are currently exercisable must be exercised within the time period
     specified in the notice and that all Awards not exercised as of the
     expiration of such period shall be terminated without consideration; or

                                        13
<PAGE>

          (b) cancel any or all Awards and, in consideration of such
     cancellation, pay to each Participant an amount in cash with respect to
     each Share issuable under an Award equal to the difference between the Fair
     Market Value of such Share on such date and the Exercise Price, if any; or

          (c) provide for the immediate vesting and exercisablilty of all Stock
     Options and Stock Appreciation Rights, removal of all restrictions on
     outstanding Restricted Stock, Performance-Based Awards and other Stock
     Based Awards, and vest and pay (on a pro-rata basis) all outstanding
     incentive Awards.

     5.7 Fractional Shares.  No fractional shares shall be issued under the
Plan. In the event that a Participant acquires the right to receive a fractional
share under the Plan, such Participant shall receive, in lieu of such fractional
share, cash equal to the Fair Market Value of the fractional share as of the
date of settlement.

                                   ARTICLE VI

                           AMENDMENT AND TERMINATION

     6.1 Amendment.  The Plan may be amended at any time and from time to time
by the Board without the approval of shareholders of the Company, except that no
amendment that increases the aggregate number of Shares may be issued pursuant
to the Plan shall be effective unless and until the same is approved by the
shareholders of the Company. No amendment of the Plan shall adversely affect any
right of any Participant with respect to any Award theretofore granted without
such Participant's written consent.

     6.2 Termination.  The Plan shall terminate upon the earlier of the
following dates or events to occur:

          (a) the adoption of a resolution of the Board terminating the Plan; or

          (b) the tenth anniversary of the date of the Company's 2002 Annual
     Meeting of Stockholders

No Awards shall be granted under this Plan after it has been terminated.
However, the termination of the Plan shall not alter or impair any of the rights
or obligations of any person, without such person's consent, under any Award
theretofore granted under the Plan. After the termination of the Plan, any
previously granted Awards shall remain in effect and shall continue to be
governed by the terms of the Plan and the applicable Award Certificate.

                                  ARTICLE VII

                               GENERAL PROVISIONS

     7.1 Nontransferability of Awards.  Except as otherwise provided in this
Section 7.1, no Awards under the Plan shall be subject in any manner to
alienation, anticipation, sale, assignment, pledge, encumbrance or transfer,
other than by will or by the laws of descent or distribution, by the Participant
and no other persons shall otherwise acquire any rights therein. Nothing in the
preceding sentence, however, shall bar the transfer of an Award (other than an
Incentive Stock Option) to a Participant's spouse pursuant to a qualified
domestic relations order (QDRO) as defined by Section 414(p) of the Code or
Section 206(d) of the Employee Retirement Income Security Act of 1974, as
amended. During the lifetime of a Participant, Stock Options (except for
Nonqualified Stock Options that are transferable pursuant to subparagraphs (a)
and (b) below) shall be exercisable only by the Participant and shall not be
assignable or transferable except as provided above.

          (a) In the case of a Nonqualified Stock Option, the Board may, in its
     sole discretion, provide in the applicable Award Certificate that all or
     any part of such Nonqualified Stock Option may, subject to the prior
     written consent of the Board, be transferred to one or more of a following
     classes of donees: family member, a trust for the benefit of a family
     member, a limited partnership whose partners are solely family members or
     any other legal entity set up for the benefit of family members. For
     purposes of this Section 7.1, a family member means a Participant's spouse,
     children,

                                        14
<PAGE>

     grandchildren, parents, grandparents (natural, step, adopted, or in-laws),
     siblings, nieces, nephews and grandnieces and grandnephews.

          (b) Except as otherwise provided in the applicable Award Certificate,
     any Nonqualified Stock Option transferred by a Participant pursuant to sub
     paragraph (a) above may be exercised by the transferee only to the extent
     such Nonqualified Stock Option would have been exercisable by the
     Participant had no transfer occurred. Any such transferred Nonqualified
     Stock Option shall be subject to all of the same terms and conditions as
     provided in the Plan and in the applicable Award Certificate. The
     Participant or the Participant's estate shall remain liable for any
     withholding or other tax which may be imposed by any federal, state or
     local tax authority and the transfer of shares upon exercise of such
     Nonqualified Stock Option shall be conditioned on the payment of such
     withholding or other tax. The Board may, in its sole discretion, withhold
     its consent to all or a part of any transfer of a Nonqualified Stock Option
     pursuant to this Section 7.1 unless and until the Participant makes
     arrangements satisfactory to the Board for the payment of any such
     withholding tax. The Participant must immediately notify the Board, in such
     form and manner as required by the Committee, of any proposed transfer of a
     Nonqualified Stock Option pursuant to this Section and no such transfer
     shall be effective until the Board consents thereto in writing.

          (c) Anything in this Section 7.1 to the contrary notwithstanding, in
     no event may the Committee permit an Incentive Stock Option to be
     transferred by any Participant other than by will or the laws of descent
     and distribution.

     7.2 Withholding of Taxes.  (a) Stock Options.  As a condition to the
delivery of any shares pursuant to the exercise of a Stock Option, the Committee
may require that the Participant, at the time of such exercise, pay to the
Company by cash or by certified check, bank draft, wire transfer or postal or
express money order an amount sufficient to satisfy any applicable tax
withholding obligations. The Board may, however, in its discretion, accept
payment of tax withholding obligations through any of the Exercise Price payment
methods described in Section 4.5(d). In addition, the Board may, in its
discretion, permit payment of tax withholding obligations to be made by
instructing the Company to withhold shares that would otherwise be issued on
exercise having a Fair Market Value on the date of exercise equal to the
applicable portion of the tax withholding obligations being so paid.
Notwithstanding the foregoing, in no event may any amount greater than the
minimum statutory withholding obligation be satisfied by tendering or
withholding shares.

     (b) Restricted Stock.  The Company shall satisfy tax withholding
obligations arising in connection with the release of restrictions on shares of
Restricted Stock by withholding shares that would otherwise be available for
delivery upon such release having a Fair Market Value on the date of release
equal to the minimum statutory withholding obligation.

     (c) Other Awards.  Notwithstanding the above, in most jurisdictions all
non-stock based Performance-Based Awards will require the reporting of income
and withholding of appropriate taxes. Wherever and whenever such reporting and
withholding is required, the Company will fully comply by reporting all income
as defined in the jurisdiction and withholding and submitting all required taxes
levied against said income.

     7.3 Special Forfeiture Provision.  The Board may, at its discretion,
provide in an Award Certificate that a Stock Option or Restricted Stock Award
granted to any Participant who, without prior written approval of the Company,
enters into any employment or consultation arrangement (including service as an
agent, partner, stockholder, consultant, officer or director) to any entity or
person engaged in any business in which the Company or its affiliates is engaged
which, in the sole judgment of the Company, is competitive with the Company or
any subsidiary or affiliate, (i) shall forfeit all rights under any outstanding
Stock Option and shall return to the Company the amount of any profit realized
upon the exercise, within such period as the Committee may determine, of any
Stock Option and (ii) shall forfeit and return to the Company all shares of
Restricted Stock (or the equivalent thereof) which are not then vested or which
would not have vested but for an acceleration event (such as Retirement), but
with respect to the latter, the amount forfeited is limited to the amount that
would have vested in the ordinary course after the date such Participant engaged
in such conduct. In jurisdictions where forfeiture is not

                                        15
<PAGE>

permitted under applicable law, the Company shall have the right to repurchase,
and the Participant shall have the obligation to sell and deliver, any and all
Stock Options and Shares held by the Participant in each case at a price of CHF
0.01 per Share and CHF 0.01 per Stock Option; in this event, the Participant
authorizes the Company to perform on his or her behalf all actions necessary to
transfer ownership of the Shares and/or Stock Options back to the Company.

     7.4 Code Section 83(b) Elections.  Neither the Company, nor the Board shall
have any responsibility in connection with a Participant's election, or attempt
to elect, under Code Section 83(b) to include the value of a Restricted Stock
Award in the Participant's gross income for the year of payment. Any Participant
who makes a Code Section 83(b) election with respect to any such Award shall
promptly notify the Committee of such election and provide the Committee with a
copy thereof.

     7.5 No Implied Rights.  The establishment and subsequent operation of the
Plan, including eligibility as a Participant, shall not be construed as
conferring any legal or other right upon any Employee for the continuation or
his or her employment, for any Performance Cycle or any other period. The
Company expressly reserves the right, which may be exercised at any time and
without regard to when, during a Performance Cycle or other accounting period,
such exercise occurs, to discharge any individual and/or treat him or her
without regard to the effect which such treatment might have upon him or her as
a Participant in the Plan.

     7.6 No Obligation to Exercise Options.  The granting of a Stock Option
shall impose no obligation upon the Participant to exercise such Stock Option.

     7.7 No Rights as Stockholders.  A Participant granted an Award under the
Plan shall have no rights as a stockholder of the Company with respect to such
Award unless and until such time as the shares underlying the Award are
registered in such Participant's name or in the name of a custodian or nominee
holding such shares to the benefit of such Participant. The right of any
Participant to receive an Award by virtue of participation in the Plan shall be
no greater than the right of any unsecured general creditor of the Company.

     7.8 Indemnification of Board.  The Company shall indemnify, to the full
extent permitted by law, each person made or threatened to be made a party to
any civil or criminal action or proceeding by reason of the fact that he, or his
testator or intestate, is or was a member of the Board or a delegate of the
Board so acting.

     7.9 No Required Segregation of Assets.  The Company shall not be required
to segregate any assets that be at any time be represented by Awards granted
pursuant to the Plan.

     7.10 Nature of Payments.  All Awards made pursuant to the Plan are in
consideration of services for the Company. Any gain realized pursuant to Awards
under the Plan constitutes a special incentive payment to the Participant and
shall not be taken into account as compensation for purposes of any of the
employee benefit plans of the Company.

     7.11 Securities Exchange Act Compliance.  Awards under the Plan are
intended to satisfy the requirements of Rule 16b-3 under the Exchange Act. If
any provision or this Plan or of any grant of an Award would otherwise frustrate
or conflict with such intent, that provision shall be interpreted and deemed
amended so as to avoid such conflict.

     7.12 Call Option of the Company.  Wherever this Plan refers to a call
option of the Company relating to Shares or Stock Options Awarded to a
Participant, the Participant shall be deemed to consent to all actions the
Company may take which are necessary to transfer title to such Shares or Stock
Options from the Participant to the Company, and the Company may execute all
necessary documents and take all necessary actions on its behalf and on behalf
of the Participant to give effect to such transfer.

     7.13 Governing Law; Severability.  The Plan and all determinations made and
actions taken thereunder shall be governed by the substantive laws of
Switzerland. If any provision of the Plan shall be held unlawful or otherwise
invalid or unenforceable in whole or in part, the unlawfulness, invalidity or
unenforceability shall not affect any other provision of the Plan or part
thereof, each of which shall remain in full force and effect.

                                        16

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