SC 13E3/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13E-3

(Amendment No. 2)

Rule 13E-3 Transaction Statement under Section 13(e)
of the Securities Exchange Act of 1934

ALCON, INC.

(Name of the Issuer)

ALCON, INC.

NOVARTIS AG

(Name of Person(s) Filing Statement)

Common Shares, par value CHF 0.20 per share

(Title of Class of Securities)

H01301102

(CUSIP Number of Class of Securities)

Thomas Werlen Novartis AG Lichtstrasse 35 4056 Basel Switzerland +41 61 324 1111	Elaine Whitbeck Corporate Secretary and General Counsel Alcon, Inc. 6201 South Freeway Fort Worth, Texas 76134 +1 817 293 0450
(Name, Address and Telephone Number of Person Authorized to Receive Notice and Communications on Behalf of the Person(s) Filing Statement)

With Copies to:

Eric S. Shube Allen & Overy LLP 1221 Avenue of the Americas New York, New York 10020 +1 212 610 6300 George E. Zobitz Cravath, Swaine & Moore LLP Worldwide Plaza 825 Eighth Avenue New York, New York 10019 +1 212 474 1000 Martin Lipton Wachtell, Lipton, Rosen & Katz 51 West 52nd Street New York, NY 10019 +1 212 403 1000

This statement is filed in connection with (check the appropriate box):

a.	x	The filing of solicitation materials or an information statement subject to Regulation 14A (§§240.14a-1 through 240.14b-2), Regulation 14C (§§240.14c-1 through 240.14c-101) or Rule 13e-3(c) (§240.13e-3(c)) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
b.	x	The filing of a registration statement under the Securities Act of 1933.
c.	o	A tender offer.
d.	o	None of the above.

Check the following box if the soliciting materials or information statement referred to in checking box (a) are preliminary copies: x

Check the following box if the filing is a final amendment reporting the results of the transaction: o

CALCULATION OF FILING FEE

Transaction Valuation(1)	Amount of Filing Fee(2)
$12,434,678,690	$886,592.59

(1)	For purposes of calculating the filing fee only, the transaction value was determined as follows: (a) 76,785,714, the sum of (i) the aggregate number of Alcon shares outstanding as of December 17, 2010 (other than Alcon shares owned by Novartis) and (ii) the aggregate number of Alcon shares issuable pursuant to vested Alcon equity awards as of a recent date assuming an Alcon share price of $168 plus (iii) an assumed number of additional Alcon shares that might be issued prior to completion of the proposed merger, multiplied by (b) $161.94, the average of the high and low prices for the Alcon shares reported on the New York Stock Exchange on December 21, 2010.
(2)	Calculated by multiplying the transaction value calculated in accordance with (1) above of $12,434,678,690 by 0.0000713.
x	Check the box if any part of the fee is offset as provided by Rule 0-11(a)(2) under the Exchange Act and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

Amount Previously Paid: $886,592.59

Form or Registration No.: Registration Statement on Form F-4 (Registration No. 333-171381)

Filing Party: Novartis AG

Date Filed: December 23, 2010

TABLE OF CONTENTS

	Page
INTRODUCTION	1
ITEM 1. SUMMARY TERM SHEET	1
ITEM 2. SUBJECT COMPANY INFORMATION	1
ITEM 3. IDENTITY AND BACKGROUND OF FILING PERSON	2
ITEM 4. TERMS OF THE TRANSACTION	2
ITEM 5. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS	3
ITEM 6. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS	4
ITEM 7. PURPOSES, ALTERNATIVES, REASONS AND EFFECTS	4
ITEM 8. FAIRNESS OF THE TRANSACTION	4
ITEM 9. REPORTS, OPINIONS, APPRAISALS AND NEGOTIATIONS	5
ITEM 10. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION	6
ITEM 11. INTEREST IN SECURITIES OF THE SUBJECT COMPANY	6
ITEM 12. THE SOLICITATION OR RECOMMENDATION	7
ITEM 13. FINANCIAL STATEMENTS	7
ITEM 14. PERSONS/ASSETS, RETAINED, EMPLOYED, COMPENSATED OR USED	7
ITEM 15. ADDITIONAL INFORMATION	7
ITEM 16. EXHIBITS	8

ii

INTRODUCTION

This Amendment No. 2 to the Transaction Statement on Schedule 13E-3 (the “Transaction Statement”) is being filed with the Securities and Exchange Commission (the “SEC”) pursuant to Section 13(e) of the Exchange Act, and Rule 13e-3 thereunder, by Alcon, Inc., a stock corporation incorporated under the laws of Switzerland (“Alcon” and the issuer of the equity securities that are the subject of the Rule 13e-3 transaction reported hereby) and Novartis AG, a stock corporation incorporated under the laws of Switzerland (“Novartis” and, together with Alcon, the “Filing Persons”).

This Transaction Statement relates to the merger agreement, dated as of December 14, 2010, between Novartis and Alcon. Pursuant to the merger agreement, Alcon will merge with and into Novartis, with Novartis continuing as the surviving corporation.  In the merger, each outstanding Alcon share, other than Alcon shares held by Novartis or any of its subsidiaries, will be converted into consideration valued at $168 in accordance with the provisions of the merger agreement, including common shares of Novartis, nominal value CHF 0.50 per share (“Novartis shares”).

Concurrently with the filing of this Transaction Statement, Novartis is filing with the SEC Amendment No. 2 to its registration statement on Form F-4, which includes a preliminary prospectus of Novartis relating to the annual general meeting of shareholders of Alcon, at which shareholders of Alcon will be asked to approve the merger agreement. Approval of the merger agreement requires 2/3 of the votes represented at the annual general meeting of Alcon shareholders.

The cross-references below are being supplied pursuant to General Instruction G to Schedule 13E-3 and, unless otherwise noted, show the location in the prospectus of the information required to be included in response to the items of Schedule 13E-3. The information contained in the prospectus, including all appendices thereto, is incorporated in its entirety herein by reference, and the responses to each Item in this Transaction Statement are qualified in their entirety by the information contained in the prospectus and the annexes thereto. As of the date hereof, the prospectus is in preliminary form and is subject to completion or amendment. All information contained in this Transaction Statement concerning any Filing Person has been provided by such Filing Person and no other Filing Person takes responsibility for the accuracy of any information not supplied by such Filing Person.

ITEM 1. SUMMARY TERM SHEET

Item 1001 of Regulation M-A:

Summary Term Sheet. The information set forth in the prospectus under the following captions is incorporated herein by reference:

“Question and Answers About the Merger”

“Summary”

ITEM 2. SUBJECT COMPANY INFORMATION

Item 1002 of Regulation M-A:

(a)Name and Address. The information set forth in the prospectus under the following captions is incorporated herein by reference:

“Summary—Novartis AG”

“Summary—Alcon, Inc.”

(b)Securities. The information set forth in the prospectus under the following captions is incorporated herein by reference:

“Summary—The Annual General Meeting of Alcon Shareholders”

“The Annual General Meeting of Alcon Shareholders—Shareholders Entitled to Vote; Admission Cards/Voting Materials”

(c)Trading Market and Price. The information set forth in the prospectus under the following captions is incorporated herein by reference:

“Summary—Comparative Market Price and Dividend Information”

(d)Dividends. The information set forth in the prospectus under the following captions is incorporated herein by reference:

“Summary—Comparative Market Price and Dividend Information”

“Special Factors—Effects of the Merger on Alcon”

“The Merger Agreement and the Merger—Alcon Dividend”

(e)Prior Public Offerings. Not applicable.

1

(f)Prior Stock Purchases. See Item 11 of this Transaction Statement. In addition, the information set forth in the prospectus under the following caption is incorporated herein by reference:

“Special Factors—Background of the Merger”

ITEM 3. IDENTITY AND BACKGROUND OF FILING PERSON

Item 1003 of Regulation M-A

(a)-(b)Name and Address; Business and Background of Entities: Alcon is the issuer of the equity securities that are the subject of the Rule 13e-3 transaction reported hereby.

Novartis is an affiliate of Alcon because Novartis owns approximately 78% of the outstanding Alcon shares. These shareholdings of Novartis represent approximately 78% of the voting power of the outstanding Alcon shares. Additionally, Dr. Daniel Vasella, Chairman of the Board of Directors of Novartis, also serves as Chairman of the Board of Directors of Alcon.

The name, citizenship, current principal occupation or employment and material occupations, positions, offices or employment of the past five years of each director and executive officer of Novartis are set forth in Novartis AG’s Annual Report on Form 20-F for the year ending December 31, 2010, filed with the SEC on January 27, 2010, which is incorporated herein by reference.

The information set forth in the prospectus under the following captions is incorporated herein by reference:

“Summary—Novartis AG”

“Summary—Alcon, Inc.”

“Directors and Executive Officers of Alcon”

(c)Business and Background of Natural Persons.  The information set forth in the prospectus under the following captions is incorporated herein by reference:

“Directors and Executive Officers of Alcon”

The information set forth in Alcon, Inc.’s Annual Report on Form 20-F for the fiscal year ended December 31, 2009 under the caption “Item 6. Directors, Senior Management and Employees” is incorporated herein by reference.

The information set forth in Novartis AG’s Annual Report on Form 20-F for the fiscal year ended December 31, 2010 under the caption “Item 6. Directors, Senior Management and Employees” is incorporated herein by reference.

During the last five years none of the persons listed in Novartis AG’s Annual Report on Form 20-F for the fiscal year ended December 31, 2010 under the caption “Item 6. Directors, Senior Management and Employees”: (i) has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) was a party to any judicial or administrative proceeding (except for matters that were dismissed without sanction or settlement) that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of any violation of such laws.

ITEM 4. TERMS OF THE TRANSACTION

Item 1004 of Regulation M-A

(a)Material Terms. The information set forth in the prospectus under the following captions is incorporated herein by reference:

“Questions and Answers About the Merger”

“Summary”

“Special Factors”

“The Annual General Meeting of Alcon Shareholders”

“The Merger Agreement and the Merger”

“Comparison of Rights of Novartis and Alcon Shareholders”

2

Annex A—Merger Agreement

(c)Different Terms. The information set forth in the prospectus under the following captions is incorporated herein by reference:

“Questions and Answers About the Merger”

“Summary—The Merger Agreement and the Merger”

“The Merger Agreement and the Merger—Treatment of Certain Share Capital and Equity”

“Interests of Alcon’s Directors and Executive Officers in the Merger”

Annex A—Merger Agreement

(d)Appraisal Rights. The information set forth in the prospectus under the following captions is incorporated herein by reference:

“Questions and Answers About the Merger”

“Summary—Appraisal Rights”

“Special Factors—Appraisal Rights”

(e)Provisions for Unaffiliated Security Holders. None.

(f)Eligibility for Listing or Trading. The information set forth in the prospectus under the following captions is incorporated herein by reference:

“Questions and Answers About the Merger”

“Summary—Conditions to the Completion of the Merger”

“The Merger Agreement and the Merger—Listing of Novartis Shares and Novartis ADSs”

“The Merger Agreement and the Merger—Conditions to the Completion of the Merger”

ITEM 5. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS.

Item 1005 of Regulation M-A:

(a)Transactions.  Not applicable.

(b)-(c)Significant Corporate Events; Negotiations or Contacts. The information set forth in the prospectus under the following captions is incorporated herein by reference:

“Questions and Answers About the Merger”

“Summary—The Merger Agreement and the Merger”

“Special Factors—Background of the Merger”

“Special Factors—Novartis Reasons for the Merger”

“Special Factors—Position of Novartis Regarding Fairness of the Merger”

“Special Factors—Alcon Reasons for the Merger; Recommendation of the Alcon Board as to Fairness of the Merger”

“Special Factors—Recommendation of the Independent Director Committee”

“Interests of Alcon’s Directors and Executive Officers in the Merger”

Annex A—Merger Agreement

(e)Agreements involving the subject company’s securities. The information set forth in the prospectus under the following captions is incorporated herein by reference:

“Questions and Answers About the Merger”

“Summary—The Annual General Meeting of Alcon Shareholders”

“The Annual General Meeting of Alcon Shareholders—Vote Required; Voting Agreements; Novartis Ownership”

“The Annual General Meeting of Alcon Shareholders—Shareholders Entitled to Vote; Admission Cards/Voting Material”

“The Merger Agreement and the Merger—Meetings of Shareholders”

“Interests of Alcon’s Directors and Executive Officers in the Merger”

Annex A—Merger Agreement

3

ITEM 6. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS.

Item 1006 of Regulation M-A:

(b)-(c)Use of Securities Acquired; Plans. The information set forth in the prospectus under the following captions is incorporated herein by reference:

“Questions and Answers About the Merger”

“Summary”

“Special Factors—Background of the Merger”

“Special Factors—Novartis Reasons for the Merger”

“Special Factors—Alcon Reasons for the Merger; Recommendation of the Alcon Board as to Fairness of the Merger”

“Special Factors—Recommendation of the Independent Director Committee”

“Special Factors—Effects of the Merger on Alcon”

“The Merger Agreement and the Merger—Structure of the Merger”

“The Merger Agreement and the Merger—Listing of Novartis Shares and Novartis ADSs”

Annex A—Merger Agreement

ITEM 7. PURPOSES, ALTERNATIVES, REASONS AND EFFECTS.

Item 1013 of Regulation M-A:

(a)-(c)Purposes; Alternatives; Reasons. The information set forth in the prospectus under the following captions is incorporated herein by reference:

“Special Factors—Background of the Merger”

“Special Factors—Novartis Reasons for the Merger”

“Special Factors—Alcon Reasons for the Merger; Recommendation of the Alcon Board as to Fairness of the Merger”

“Special Factors—Recommendation of the Independent Director Committee”

(d)Effects. The information set forth in the prospectus under the following captions is incorporated herein by reference:

“Special Factors—Effects of the Merger on Alcon”

“Special Factors—Tax Considerations”

“Special Factors—Appraisal Rights”

ITEM 8. FAIRNESS OF THE TRANSACTION.

Item 1014 of Regulation M-A:

(a)-(b)Fairness; Factors Considered in Determining Fairness. The information set forth in the prospectus under the following captions is incorporated herein by reference:

“Special Factors—Opinion of Credit Suisse”

4

“Special Factors—Position of Novartis Regarding Fairness of the Merger”

“Special Factors—Alcon Reasons for the Merger; Recommendation of the Alcon Board as to Fairness of the Merger”

“Special Factors—Opinion of Lazard Frères & Co. LLC”

“Special Factors—Recommendation of the Independent Director Committee”

“Special Factors—Opinion of Greenhill”

(c)Approval of Security Holders. The information set forth in the prospectus under the following captions is incorporated herein by reference:

“Special Factors—Position of Novartis Regarding Fairness of the Merger”

“Special Factors—Alcon Reasons for the Merger; Recommendation of the Alcon Board as to Fairness of the Merger”

“Special Factors—Recommendation of the Independent Director Committee”

(d)Unaffiliated Representative. The information set forth in the prospectus under the following captions is incorporated herein by reference:

“Special Factors—Background of the Merger”

“Special Factors—Alcon Reasons for the Merger; Recommendation of the Alcon Board as to Fairness of the Merger”

“Special Factors—Recommendation of the Independent Director Committee”

(e)Approval of Directors. The information set forth in the prospectus under the following captions is incorporated herein by reference:

“Special Factors—Background of the Merger”

“Special Factors—Alcon Reasons for the Merger; Recommendation of the Alcon Board as to Fairness of the Merger”

“Special Factors—Recommendation of the Independent Director Committee”

(f)Other Offers. None.

ITEM 9. REPORTS, OPINIONS, APPRAISALS AND NEGOTIATIONS.

Item 1015 of Regulation M-A:

(a)-(b)Report, Opinion or Appraisal; Preparer and Summary of the Report, Opinion or Appraisal. The information set forth in the prospectus under the following captions is incorporated herein by reference:

“Special Factors—Background of the Merger”

“Special Factors—Opinion of Credit Suisse”

“Special Factors—Position of Novartis Regarding Fairness of Merger”

5

“Special Factors—Alcon Reasons for the Merger; Recommendation of the Alcon Board as to Fairness of the Merger”

“Special Factors—Opinion of Lazard Frères & Co. LLC”

“Special Factors—Recommendation of the Independent Director Committee”

“Special Factors—Opinion of Greenhill”

(c)Availability of Documents. The reports, opinions or appraisals referenced in this Item 9 will be made available for inspection and copying at the principal executive offices of Alcon or Novartis, during its regular business hours by any interested Alcon or Novartis shareholder, and copies may be obtained by requesting them in writing or by telephone from Alcon or Novartis, at the addresses provided under the caption “Where You Can Find More Information” in the prospectus, which is incorporated herein by reference.

ITEM 10. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.

Item 1007 of Regulation M-A:

(a)-(b)Source of Funds; Conditions. The information set forth in the prospectus under the following captions is incorporated herein by reference:

“Summary—Financing of the Merger”

“Special Factors—Financing of the Merger”

“The Merger Agreement and the Merger—Merger Consideration”

“The Merger Agreement and the Merger—Conditions to the Completion of the Merger”

Annex A—Merger Agreement

(c)Expenses. The information set forth in the prospectus under the following captions is incorporated herein by reference:

“Summary—Fees and Expenses/Costs”

“Special Factors—Fees and Expenses Relating to the Merger”

“The Merger Agreement and the Merger—Fees and Expenses/Costs”

(d)Borrowed Funds. The information set forth in the prospectus under the following captions is incorporated herein by reference:

“Summary—Financing of the Merger”

“Special Factors—Financing of the Merger”

ITEM 11. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.

Item 1008 of Regulation M-A:

(a)-(b)Securities Ownership; Securities Transactions. Except as otherwise set forth in the prospectus or this Transaction Statement, none of Novartis or Alcon or, to the knowledge of Novartis or Alcon, any executive officer, director or majority-owned subsidiary of Novartis or Alcon, has effected any transaction in Alcon shares or any other securities of Alcon during the past 60 days. Between December 28, 2010 and December 30, 2010 and between January 31, 2011 and February 16, 2011, Novartis purchased a total of 5,249,779 Alcon shares on the NYSE at an average-weighted price of $163.94 per Alcon share.

Alcon discontinued the purchase of Alcon shares in the open market under all share repurchase programs in December 2008 pursuant to the Purchase and Option Agreement. However, Alcon withholds shares from employees’ exercises of share-based awards to cover their taxes, and such withholding has been reported as a purchase for accounting purposes. Alcon has reported the value of such purchases to be approximately $33 million and $7 million for the years ended December 31, 2010 and 2009, respectively.

The information set forth in the prospectus under the following captions is incorporated herein by reference:

“Summary—Interests of Alcon’s Directors and Executive Officers in the Merger”

“The Annual General Meeting of Alcon Shareholders—Shares Held by Alcon Directors and Executive Officers”

“Interests of Alcon’s Directors and Executive Officers in the Merger”

6

ITEM 12. THE SOLICITATION OR RECOMMENDATION.

Item 1012 of Regulation M-A:

(d)-(e)Intent to Tender or Vote in a Going-Private Transaction; Recommendations of Others. The information set forth in the prospectus under the following captions is incorporated herein by reference:

“Questions and Answers About the Merger”

“Summary—The Annual General Meeting of Alcon Shareholders”

“Summary—Alcon Reasons for the Merger; Recommendation of the Alcon Board as to Fairness of the Merger”

“Special Factors—Background of the Merger”

“Special Factors—Alcon Reasons for the Merger; Recommendation of the Alcon Board as to Fairness of the Merger”

“Special Factors—Recommendation of the Independent Director Committee”

“The Merger Agreement and the Merger—Meetings of Shareholders”

“Interests of Alcon’s Directors and Executive Officers in the Merger”

ITEM 13. FINANCIAL STATEMENTS.

Item 1010 of Regulation M-A:

(a)-(b)     Financial Information; Pro Forma Information. The information contained in the Consolidated Financial Statements included in Alcon, Inc.’s Report on Form 6-K furnished to the SEC on February 2, 2011, incorporated herein by reference.

The information set forth in the prospectus under the following captions is incorporated herein by reference:

“Summary—Selected Historical Financial Data”

“Summary—Selected Unaudited IFRS Pro Forma Condensed Combined Income Statement Data”

“Summary—Historical and Pro Forma Per Share Data”

“Summary—Comparative Market Price and Dividend Information”

“Unaudited IFRS Pro Forma Condensed Combined Income Statements”

“Where You Can Find More Information”

ITEM 14. PERSONS/ASSETS, RETAINED, EMPLOYED, COMPENSATED OR USED.

Item 1009 of Regulation M-A:

(a)-(b)Solicitations or Recommendations; Employees and Corporate Assets. The information set forth in the prospectus under the following captions is incorporated herein by reference:

“Questions and Answers About the Merger”

“Summary—Interests of Alcon’s Directors and Executive Officers in the Merger”

“Special Factors—Background of the Merger”

“Special Factors—Opinion of Credit Suisse”

“Special Factors—Alcon Reasons for the Merger; Recommendation of the Alcon Board as to Fairness of the Merger”

“Special Factors—Opinion of Lazard Frères & Co. LLC”

“Special Factors—Recommendation of the Independent Director Committee”

“Special Factors—Opinion of Greenhill”

“The Annual General Meeting of Alcon Shareholders—Matters to be Considered at the Annual General Meeting of Alcon Shareholders”

“Interests of Alcon’s Directors and Executive Officers in the Merger”

ITEM 15. ADDITIONAL INFORMATION.

Item 1011(b) of Regulation M-A.

(b)Other Material Information. The information contained in the Exhibits referred to in Item 16 below is incorporated herein by reference.

The information set forth in the prospectus, including all appendices thereto, is incorporated herein by reference.

7

ITEM 16. EXHIBITS.

Exhibit Number	Description
(a)(1)	The preliminary prospectus of Novartis AG (incorporated herein by reference to Amendment No. 2 to the Registration Statement on Form F-4 filed by Novartis AG with the SEC on February 16, 2011).
(a)(2)	Press Release dated December 15, 2010 (incorporated herein by reference to Novartis AG’s Current Report on Form 425 filed on December 15, 2010).
(c)(1)	Opinion of Credit Suisse AG (incorporated herein by reference to Annex B to Amendment No. 2 to the Registration Statement on Form F-4 filed by Novartis AG with the SEC on February 16, 2011).
(c)(2)	Opinion of Lazard Frères & Co. LLC (incorporated herein by reference to Annex C to Amendment No. 2 to the Registration Statement on Form F-4 filed by Novartis AG with the SEC on February 16, 2011).
(c)(3)	Opinion of Greenhill & Co., LLC (incorporated herein by reference to Annex D to Amendment No. 2 to the Registration Statement on Form F-4 filed by Novartis AG with the SEC on February 16, 2011).
(c)(4)	Presentation of Credit Suisse AG to the Board of Directors of Novartis AG, dated December 14, 2010.*
(c)(5)	Presentation of Lazard Frères & Co. LLC to the Board of Directors of Alcon, Inc., dated December 14, 2010.*
(c)(6)	Presentation of Greenhill & Co., LLC to the Independent Director Committee of the Board of Directors of Alcon, Inc., dated December 2010.*
(c)(7)	Discussion Materials of Greenhill & Co., LLC, dated February 16, 2010.*
(c)(8)	Discussion Materials of Greenhill & Co., LLC, dated March 24, 2010.*
(c)(9)	Discussion Materials of Greenhill & Co., LLC, dated April 29, 2010.*
(c)(10)	Discussion Materials of Goldman Sachs International, dated May 27, 2010.*
(c)(11)	Discussion Materials of Greenhill & Co., LLC, dated June 21, 2010.*
(c)(12)	Legal Opinion of von der Crone Rechtsanwälte AG, dated May 27, 2010.
(c)(13)	Legal Opinion of Nobel & Hug Rechtsanwälte, dated July 20, 2010.
(d)(1)	Merger Agreement dated December 14, 2010, between Novartis AG and Alcon, Inc. (incorporated herein by reference to Annex A to Amendment No. 2 to the Registration Statement on Form F-4 filed by Novartis AG with the SEC on February 16, 2011).
(f)(1)	Dissenters’ rights of appraisal are described under the following captions in the prospectus, which are incorporated herein by reference: “Questions and Answers About the Merger”, “Summary—Appraisal Rights” and “Special Factors—Appraisal Rights”.

* Previously filed.

8

SIGNATURE

After due inquiry and to the best knowledge and belief of the undersigned, the undersigned hereby certify as of February 16, 2011 that the information set forth in this statement is true, complete and correct.

Novartis AG
By:	/s/ Jonathan Symonds
Name:	Jonathan Symonds
Title:	Chief Financial Officer
By:	/s/ Dr. Thomas Werlen
Name:	Dr. Thomas Werlen
Title:	Group General Counsel
Alcon, Inc.
By:	/s/ Robert Karsunky
Name:	Robert Karsunky
Title:	Chief Financial Officer
By:	/s/ Elaine Whitbeck
Name:	Elaine Whitbeck
Title:	Corporate Secretary and General Counsel

9

EX-99.(C)(12)

Exhibit 99(c)(12)

von der crone rechtsanwälte

von der Crone Rechtsanwälte AG Samariterstrasse 5, CH-8032 Zürich Telefon +41 44 267 59 59 Telefax +41 44 267 59 00 www.vondercrone.ch Hans Caspar von der Crone Prof. Dr. iur., LL.M. (Yale), Rechtsanwalt Direktwahl +41 44 267 59 01 hanscaspar.vondercrone@vondercrone.ch Eingetragen im Anwaltsregister

Alcon Inc.

Independent Director Committee

Bösch 69

6331 Hünenberg

Zurich, May 27, 2010

Alcon / Novartis Merger, Legal Opinion on Conflicts of Interests Issue

Dear Sirs

You have asked me for my legal opinion under the applicable Swiss law on the dealing with conflicts of interests and the applicability of Alcon’s internal organizational documents with regard to the planned merger between Alcon and Novartis. My assessment is based on the facts summarized below which have been presented to me by e-mail and telephone correspondence from March 3rd, 2010 onwards by Pestalozzi, Attorneys at Law Ltd, Zürich, and Sullivan & Cromwell LLP, New York.

Table of Contents:

I.	FACTS				2
II.	QUESTION				3
III.	EXECUTIVE SUMMARY				3
IV.	CONSIDERATIONS				5
	A.	Dealing with Conflicts of Interests in General			5
		1.	Measures to Overcome a Conflict of Interests		6
			a)	Additional Support	6
			b)	Dealing at Arm’s Length: Market Price and Fairness Opinion	10
			c)	Abstention from Voting	11
			d)	Conclusion	11
		2.	Consequences of a Decision Taken by a Conflicted Board		12
			a)	Voidness of Board Decisions	12
			b)	Implications on the Shareholders’ Meeting’s Merger Decision	13
			c)	Responsibility of Delegated Board Members	13
	B.	Interpretation of Alcon’s OrgReg and Charter			14
		1.	Interpretation of Internal Regulations		14
		2.	Relevant Provisions of the OrgReg		15

	3.	Interpretation of Art. 5 Section 5 (a) and (b) OrgReg	16
	4.	Scope of the IDC’s Field of Responsibility beyond Art. 5 OrgReg	18
	5.	Conclusion	19
C.	No Change of Rules after Announcement of Transaction 20
	1.	Article 11 Section 3 OrgReg	20
	2.	Pendency of Proceedings	20
	3.	Analogy to Takeover Law	21
	4.	Conclusion	22

I.FACTS

Alcon, Inc. (“Alcon”) is a company limited by shares, incorporated under the laws of Switzerland with its legal domicile in Hünenberg (ZG). It has a share capital of CHF 60’803’258.00, divided in 304’016’290 registered shares with a par value of CHF 0.20. Alcon was acquired by Nestlé AG (“Nestlé”) in 1977. In 2002, Nestlé listed 23% of its shares on the New York Stock Exchange, with Nestlé remaining Alcon’s majority shareholder, holding about 77% of Alcon shares. In April 2008, Nestlé sold 74 million (approx. 25%) Alcon shares to Novartis AG (“Novartis”) at a price of USD 143.18 per share. At the same time, Novartis was granted a call option with regard to the acquisition of the remaining Nestlé stake in Alcon (approx. 52%) at a price of USD 181 and Nestlé was granted a put option with regard to the same shares o n the same terms. The options could not be exercised prior to January 1, 2010.

On December 9, 2008, the Alcon board adopted an Independent Director Committee Charter (the “Charter”). The Independent Director Committee (the “IDC”) was established “to serve as a disinterested body with respect to transactions that relate to the Company, to the shares of the Company or to related party transactions involving one or more major shareholders of the Company [...] with a view to protect the interests of both the Company and the minority shareholders of the Company”. The Charter was adopted based on Art. 5 section 5 of the Organizational Regulations (“OrgReg”), which had been enacted in February 2002 and last amended in September 2007.

On January 4, 2010, Novartis announced that it exercised its call option and that it intends to integrate Alcon into Novartis by means of a merger under Swiss law. Whereas Nestlé will be paid USD 181 per share for its stake of approx. 52% based on the call option agreement, the remaining minority shareholders (holding approx. 23%) of Alcon would receive in the course of the merger 2.8 Novartis shares in exchange for each Alcon share. On January 4, 2010, this offer to the minority shareholders amounted to USD 153 per Alcon share. Prior to the announcement of January 4, 2010, the Alcon shares were traded at a stock exchange price of about USD 164.

The exchange ratio offered to the minority shareholders and Novartis’ additional remarks that it will attempt to implement the planned merger irrespective of the IDC’s position attracted the minority shareholders’ critique. On January 20, 2010, the IDC informed Novartis that it considered the Novartis offer to the Alcon minority shareholder to be “grossly inadequate”.

The IDC seeks to obtain an expert opinion with regard to the question of the applicability and the effects of the OrgReg and the Charter on the decision-making process within the Alcon board in the current situation.

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II.QUESTION

Under Swiss corporate law, are the provisions in the OrgReg and in the Charter of Alcon regarding the IDC applicable in the present situation? Must the IDC approve Novartis’ merger proposal before the entire Alcon board can validly decide on this topic?

III.EXECUTIVE SUMMARY

Whenever a board member’s fiduciary duties conflict with third-party interests such board member is obliged to guard, special measures must be taken to protect the integrity of the decision-making process. If the board does not adequately address a conflict of interests, the decision by such conflicted board will either be void or trigger the board members’ personal liability. With regard to a merger, the voidness of the board decision will have in particular the following implications on both the signing of the merger agreement and the subsequent shareholders’ meeting’s approval:

a)The merger agreement signed based on a decision by a conflicted board will not be effective if the counterparty to the merger agreement was or should have been aware of the conflict of interests at the board level. In the present case, this means that the merger agreement between Alcon and Novartis will not become legally effective if it is approved by a conflicted Alcon board because Novartis, after having appointed the conflicted directors to the Alcon board, will not be in a position to claim that it was unaware of the conflict of interests.

b)The shareholders’ meeting’s approval of an ineffective merger agreement based on a (void) decision taken by a conflicted board will be challengeable by a shareholder or by the board of directors.

That being said, several alternatives are available under Swiss law in order to cure conflicts of interests at the board level. The principle of dealing at arm’s length can be applied in almost all situations. Whether approval by the independent directors, approval by the shareholders’ meeting or abstention from voting is the appropriate means to overcome a conflict of interests depends upon the circumstances of the case:

a)Approval by independent board members is an appropriate means to overcome structural conflicts of interests that affect all representatives appointed by a majority shareholder to the board in particular if the company enters into business relationships with the majority shareholder. Since the board cannot completely abrogate its decision-making competence in the area of its non-delegable and inalienable tasks, the responsibility for the decision-making will be shared between the board and a committee of independent directors. The independent director committee’s decision, on the one hand, and the board’s subsequent decision, on the other hand, come together to form one informed, independent and valid decision.

b)The approval of a conflicted board’s decision by the non-conflicted shareholders would require that the shareholders’ meeting be provided with all the information that was available to the board to prepare its decision and that the shareholders interested in the respective decision abstain from voting. However, the two-step decision-making process under Swiss merger law requiring both the board’s and the shareholders’ meeting’s approval of a merger agreement leaves no room for the shareholders’ meeting’s approval of a conflicted board’s decision without circumventing the statutory two-step procedure. This method would therefore not be appropriate in the present case.

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c)The principle of dealing at arm’s length relies on either a market price or — in the absence of such — on an independent third party’s assessment of a decision’s adequacy. This presupposes that the third party is truly independent, which would not be the case e.g. if the fairness opinion is rendered by the financial advisor to one of the merging parties or if the remuneration of the third party is linked to the completion of the transaction.

d)Abstention from voting by a board member could also be an appropriate means to mitigate in particular personal conflicts of interests in certain situations.

However, despite the different possibilities of how to mitigate a conflict of interests within a board, once the board has decided to implement a particular system, changes or amendments to this system should not be made as soon as the board is aware that a situation giving rise to a conflict of interests has occurred. By establishing the IDC (Art. 5 section 5 OrgReg), the Alcon board has chosen its system of how to mitigate potential conflicts of interests in its decision-making process with regard to a merger with the majority shareholder. Good corporate governance practice requires that this choice should not be altered in the course of a specific transaction. The obligation to adhere to a previously implemented system is additionally supported by Art. 11 section 3 OrgReg requiring the IDC’s approval for any amendment affecting the IDC’s powers and duties.

Based on a detailed interpretation of the OrgReg and the Charter, it is my opinion that Novartis’ merger proposal will trigger the IDC’s competence under Art. 5 section 5 (a) or (b) OrgReg. Therefore, as outlined in more detail below, the Alcon board will not be able to validly decide on Novartis’ merger proposal without the IDC’s prior recommendation of that proposal. In addition, taking into account the wider wording of the Charter, it becomes clear that Art. 5 section 5 OrgReg contains a non-exhaustive list of situations in which the prior approval of the IDC is required. The IDC is to generally serve as a disinterested body with respect to transactions that relate to the company, to its shares or to related party transactions involving one or more major shareholders of the company.

In a nutshell, the combination of the Swiss rules governing mergers and the provisions of the OrgReg dealing with related-party transactions results in a three-step approval process that must be followed in connection with transactions such as Novartis’ merger proposal:

a)approval by the IDC according to Art. 5 section 5 OrgReg; then

b)approval by Alcon’s board of directors according to Art. 12 para. 1 Swiss Merger Act (hereinafter: “SMA”) and Art. 3 section 3 (s) OrgReg; and then

c)approval by at least two thirds of the votes allocated to the shares represented at Alcon’s shareholders’ meeting (Art. 18 para. 1 (a) SMA).

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IV.CONSIDERATIONS

Since the question of this legal opinion has been raised in the context of a merger, I make the following preliminary remarks regarding the merger procedure:

Under Swiss merger law, the ordinary merger procedure requires the approval of both the board of directors and the shareholders’ meeting (Art. 12 and Art. 18 SMA). In any case, the board of directors remains responsible to negotiate and to execute, a merger agreement (see also Art. 3 section 3 (s) OrgReg). This responsibility cannot be transferred or removed. The board may delegate the negotiations as well as the execution of the merger agreement to individual board members or others. However, notwithstanding such delegation of particular tasks, the ultimate competence and responsibility to approve the merger as such always remains with the entire board.(1) After the approval by the boards of directors of both companies, the merger agreement must be approved by the shareholders’ meetings of both companies if the ordinary merger procedure applies.(2)

A merger with a majority shareholder following the sale and acquisition of the majority stake is a special situation: Both the board members nominated by Nestlé as the current majority shareholder and the board members nominated by Novartis as the future majority shareholder are interested in the transaction. The potential consequences of the conflicts of interests which arise from such situations as well as the possible means to overcome these conflicts will be discussed in the following.

A.Dealing with Conflicts of Interests in General

Every board member of a Swiss company limited by shares must perform his or her duties with due care (duty of care) and must safeguard the interests of the company in good faith (duty of loyalty) as outlined in Art. 717 of the Swiss Code of Obligations (hereinafter “CO”). Hence, the board members must subordinate their own or third party’s interests to the interests of the company.(3) If a board member wilfully or negligently violates these duties, he becomes liable for any damages caused to the company, to any shareholder and to any creditor of the company (Art. 754 CO). In case the board member’s fiduciary duties are conflicting with other interests, special measures have to be taken to protect the integrity of the decision-making process.(4)

Basically, the following three types of conflicts of interests can be observed: (5)

a)Personal conflict of interests (hereinafter referred to as “Type A conflicts of interests”): A board decision may negatively or positively impact the personal position of one or several

(1)	See as one of many others Wolf, BSK FusG, Basel/Genf/München 2005, Art. 12, N 5 and 6; Glanzmann, Umstrukturierungen, 2nd edition, Bern 2008, N 283 et seq.
(2)	Art. 23 and 24 SMA provide for a simplified merger procedure for mergers within holding companies. In case the receiving company owns all voting rights in the transferring company or in case a holding company owns all shares in both of the merging companies, the simplified procedure allows the merger to take place without a merger report, without the necessity to have the merger agreement audited and — above all — without the general meeting’s approval. In case the receiving company owns at least 90% of the transferring company’s voting rights, the simplified procedure applies provided the minority shareholders are offered to choose between shares in the receiving company and a cash consideration.
(3)	Bauen/Venturi, Der Verwaltungsrat, Zürich 2007, N 191.
(4)	For a definition of a conflict of interests see also Roth Pellanda, Die Organisation des Verwaltungsrates, Zürich 2007, N 283.
(5)	For the division in these categories see von der Crone, Interessenkonflikte im Aktienrecht, SZW 1/94, p. 3.

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board members (e.g. the sale of a significant piece of equipment by a director to the company).

b)Company controlled by a majority shareholder (hereinafter referred to as “Type B conflicts of interests”): In this case, conflicts of interests structurally arise between the company and its majority shareholder. The board is obliged to observe the interests of the entire company including the entirety of its shareholders. Since the majority of the board members is usually nominated by the majority shareholder, the majority shareholder has also a preferential influence on the board’s decision-making process. A conflict of interests arises in particular if the company enters into business relationships with the majority shareholder.

c)Transactions with the transfer of a controlling stake in the company (hereinafter referred to as “Type C conflicts of interests”): Such transactions often lead to changes in the board and therefore affect the board members’ personal situations so that directors might be skeptical even towards transactions with positive effects on the company and its shareholders.

The Novartis merger proposal raises questions with regard to a Type B conflict of interests while the previous acquisition of the majority stake from Nestlé could give rise to a Type C conflict of interests. The different types of conflicts of interests call for different ways of overcoming them and avoiding potentially detrimental consequences. The following section IV.A.1 will discuss the different measures to address conflicts of interests. Section IV.A.2 will subsequently outline the negative consequences of a board decision taken by conflicted board members who have not adequately addressed the conflict of interests.

1.Measures to Overcome a Conflict of Interests

Conflicts of interests may be avoided by strict prohibition: Attorneys for example are not allowed to represent two opposed parties in the same court proceedings; as another example, corporate law requires auditors to be independent. However, prohibition is only practicable in such situations where (a) the conflict of interests would have intolerable consequences and (b) there is actually an alternative available by appointing a third party who does not have a conflict of interests.

Conflicts of interests within a company’s board cannot be solved by mere prohibition. If situations leading to potential conflicts of interests were forbidden — i.e. if a company could no longer enter into contractual relationships with its board members — the business perspectives and the proper functioning of a company would become severely restricted. Business between the company and its majority shareholder would no longer be tolerated and the establishing of corporate groups would only remain practicable to the extent that the holding companies become the only shareholder of their affiliates. Hence, conflicts of interests in corporate law must be addressed in another way than by prohibition.(6) In statutory law, legal doctrine and jurisprudence, several means to overcome a conflict of interests have been established which will be discussed in the following:

a)Additional Support

By seeking additional support, the board of directors can rebut the assumption to have acted contrary to its duties as a result of a conflict of interests. Seeking additional support will give proof of the board’s efforts to exclude the adverse impacts that the conflict of interests may otherwise have on the decision.(7) Approval can potentially be given by either a superior or a coequal organ.

(6)	von der Crone, Interessenkonflikte im Aktienrecht, SZW 1/94, p. 3 et seq.
(7)	von der Crone, Interessenkonflikte im Aktienrecht, SZW 1/94, p. 8.

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1)Approval by the Shareholders’ Meeting

Jurisprudence has established the possibility that some conflicted board decisions may be additionally approved by the shareholder’s meeting as a superior organ in order to overcome the conflict of interests.(8) The rationale of this procedure is to authorize ex post the board which has — due to the conflict of interests — not acted according to the rules of its mandate. However, the shareholders’ meeting does not unrestrictedly qualify as the board’s principal. The board is obliged to further the interests of the company as a whole whereas in the shareholders’ meeting the shareholders decide without being obliged to further any other interests than their own. That is why corporate law does not allow the board to delegate its tasks to the shareholders’ meeting even though such transfer could easily be done between a principal and his agent. Hence, the shareholders& #146; meeting’s approval cannot extend the board’s mandate but serves as an additional support of the board’s decision.(9) The approval by the shareholders’ meeting can demonstrate that the board’s decision is defendable even though it is affected by a conflict of interests. By obtaining the shareholders’ meeting’s approval, the board can re-establish the presumption to have acted in accordance with its duties.(10)

The successful mitigation of a conflict of interests by an approval of the shareholders’ meeting would require particular circumstances. Firstly, in order to make an informed decision, the shareholders must be provided with the same information as the board has had to prepare its decision.(11) Secondly, the interests of minority shareholders and creditors are not sufficiently protected by an approval of the shareholders’ meeting if the majority of shareholders in the shareholders’ meeting pursues the same interests as the conflicted board members.(12) In this case, the only additional protection that the shareholders’ meeting’s approval could provide the minority shareholders with is the right to challenge the shareholders’ meeting’s decision since the board’s decision cannot be challenged by the shareholders.(13) Hence, a decision of the shareholders’ meeting c an only mitigate a conflict of interest if the shareholders are adequately informed, if the shareholders directly interested in the decision abstain from voting and — in addition — if the decision does not affect the company’s creditors.(14)

However, the approval of a board decision by the shareholders’ meeting cannot mitigate a conflict of interests if a two-step approval is already required by law — as it is the case for the approval of a merger in the ordinary procedure under Art. 12 and Art. 18 SMA. It is the board’s task to negotiate, approve and sign in particular the merger agreement whereas the shareholders’ meeting shall additionally approve the final documents. If the shareholders’ meeting’s approval of the agreement should at the same time also serve as an approval of the board’s acting under a conflict of interests, the two-step-procedure would be reduced to a single approval of the shareholders’ meeting and the legislator’s hierarchy would be overruled. Against this background, it is not possible to overcome a conflict of interests within a board by asking for the shareholders’ mee tings’ approval with regard to transactions under the SMA, such as the merger proposed by Novartis.

(8)	BGE 100 II 388, E. 2.a.; BGE 127 III 334 E. 2.b.
(9)	Similar Lazopoulos, lnteressenkonflikte und Verantwortlichkeit des fiduziarischen Verwaltungsrates, Zürich 2004, p.126 et seq.
(10)	von der Crone, Interessenkonflikte im Aktienrecht, SZW 1/94, p. 8 et seq.
(11)	Roth Pellanda, Organisation des Verwaltungsrates, Zürich 2007, N 357.
(12)	Böckli, Schweizer Aktienrecht, 4th edition, Bern 2009, § 13 N 644.§ 13 N 647a; Handschin, Treuepflicht des Verwaltungsrates in der gesellschaftsinternen Entscheidfindung, in: von der Crone/Weber/Zäch/Zobl, Neuere Tendenzen im Gesellschaftsrecht, Festschrift für Peter Forstmoser, Zürich 2003, p. 178.
(13)	Roth Pellanda, Organisation des Verwaltungsrates, Zürich 2007, N 358.
(14)	Stutz/von der Crone, Kontrolle von Interessenkonflikten im Aktienrecht, SZW 2/2003, p. 110 with further references.

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2)Appointment of an Independent Board Committee

Jurisprudence also allows additional support by an organ of the same level in order to overcome a conflict of interests.(15) With regard to the board of directors, such approval can be sought from the non-conflicted board members.

Jurisprudence and the majority of doctrine assume that a decision taken by a conflicted board member can be approved by another non-conflicted board member but does not require the approval of the entire board if one single board member is competent to decide the matter in question, i.e. if the matter does not require the entire board’s approval. Accordingly, board members with only joint signatory power cannot approve such decisions alone and on their own. In addition, the articles of association or the board’s organizational regulations can require the approval of the entire board even with regard to matters which are usually in the competence of one or two board members.(16) And with regard to non-delegable and non-alienable tasks of the board, the approval of at least the majority of non-conflicted board members will always be required.(17)

In recent times, companies have started to institutionalize the approval of transactions particularly prone to conflicts of interests by non-conflicted board members. Ad-hoc or standing committees of independent directors have been established. Forstmoser(18) and Roth Pellanda(19) discuss the institutionalisation of a board member’s abstention by establishing such a committee. Especially if the entire board remains responsible for the decision, the committee’s decision or recommendation has the effect of an additional approval and does not exclude one or several board member(s) from the decision-making process. This approach is in line with the suggestion to provide for a double approval requirement, i.e. by the entire board including the conflicted board member at the one hand and by the non-conflicted board members only at the other hand.(20) This results in a two-fold decision-ma king process, regardless whether it is called institutionalised abstention or institutionalised approval by a committee of non-conflicted board members.

The implementation of standing audit, remuneration and nomination committees has become best practice under Swiss corporate law and has also been included in Art. 24-27 of the Swiss Code of Best Practice for Corporate Governance.(21) In addition to the said committees, companies may also establish other committees such as a strategy committee, expert committees, an M&A committee or a committee of independent directors to mitigate conflicts of interests. Such committees should be treated similarly to the widely institutionalised standing committees such as the nomination, audit and compensation committees. According to Art. 716a para. 2 CO, the board may delegate the preparation and the execution of its decisions and the supervision of particular aspects of the business to committees or individual members. When doing so, the board must provide for adequate reporting to the board.

All of these committees have not only a rationalising and specialising function, but also allow the mitigation of conflicts of interests by allocating the respective tasks to non-conflicted board

(15)	BGE 127 III 333, E. 2; 126 III 363, E. 3, 5, 95 II 452 E. 5.
(16)	Roth Pellanda, Organisation des Verwaltungsrates, Zürich 2007, N 356; Lazopoulos, Interessenkonflikte und Verantwortlichkeit des fiduziarischen Verwaltungsrates, Zürich 2004, p. 121.
(17)	Lazopoulos, Interessenkonflikte und Verantwortlichkeit des fiduziarischen Verwaltungsrates, Zürich 2004, p. 121.
(18)	Interessenkonflikte von Verwaltungsratsmitgliedern, in: Liber Amicorum für Hermann Schulin, Basel/Genf/München 2002, p. 19.
(19)	Organisation des Verwaltungsrates, Zürich 2007, N 352.
(20)	Roth Pellanda, Organisation des Verwaltungsrates, Zürich 2007, N 352; Watter/Roth Pellanda, Die “richtige” Zusammensetzung des Verwaltungsrates, in: Verantwortlichkeit und Unternehmensrecht III — Europa Institut Zürich, Band 67, Zürich 2006, p. 77.
(21)	economiesuisse (editor), Swiss Code of Best Practice for Corporate Governance of 25 march 2002, Zurich 2002.

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members.(22) Some committees mitigate the conflicts of interests of the executive board members by allocating the quality management with regard to their tasks to the non-executive board members.(23) A committee of independent directors mitigates the conflicts of interests in particular regarding specific transactions in which a shareholder is involved. In such cases, not only the executive directors but also non-executive directors nominated by such shareholder will be conflicted and therefore will not qualify to be elected to the independent committee.

However, even if such independent committee exists, the entire board retains a parallel power to adopt the decision. The delegation of the decision-making with regard to a core competence of the board does not reduce the board’s responsibility. The board members remain responsible for all their duties and competences. They will also be liable for mistakes of the delegatees as if they would have taken the decisions themselves unless they can prove to have reviewed the committee’s proposals and its reasoning upon plausibility and should not have recognized possible flaws.(24) Still, the delegation of such tasks can make sense even with regard to the board’s responsibility because the committee members may have more time and skills to deal with the topic in depth than the entire board would have and therefore will be able to reduce the risk of mistakes. In particular, M&A committees — and therefore also independent director committees evaluating an M&A transaction with regard to which one or several directors are conflicted — do not result in a reduced liability of the other board members. The strategic aspect of M&A transactions — particularly of those including a sale or a merger of the company — is of such significance that the entire board must also take a decision of its own. In doing so, the board can rely on the committee’s evaluation and can take the latter as a basis for the board’s own decision. Besides, all board members are personally affected in case of a sale or a merger of the company, so that also from this perspective it would not be justified to transfer entirely the decision-making authority to a group of directors only.(25) If the board decides to rely on the committee’s decision only, such decision will be treated as its own from a liability point of view. (26)

In summary, whenever a (standing) independent director committee is involved to approve a transaction which is vulnerable to conflicts of interests, this leads to a two-fold decision-making process.(27) Whereas the board cannot validly decide alone due to the conflict of interests, the independent director committee, if acting on its own, would not be competent to bind the company either. Instead, each of the board and the committee depend on the evaluation and decision of the other body and only together are they able to take an informed, independent and valid decision.

I am of the opinion that the implementation of an independent director committee is particularly suitable in case of structural conflicts of interests or in case of control transactions (Type B and C conflicts of interests(28)).

(22)von der Crone, Arbeitsteilung im Verwaltungsrat, Charlotte M. Baer ed.), Verwaltungsrat und Geschäftsleitung, SSPHW Band 76, Haupt Verlag, Bern 2006, p. 81, FN 8.

(23)von der Crone, Arbeitsteilung im Verwaltungsrat, Charlotte M. Baer ed.), Verwaltungsrat und Geschäftsleitung, SSPHW Band 76, Haupt Verlag, Bern 2006, p. 81.

(24)von der Crone, Arbeitsteilung im Verwaltungsrat, Charlotte M. Baer ed.), Verwaltungsrat und Geschäftsleitung, SSPHW Band 76, Haupt Verlag, Bern 2006, p. 96 et seq. with regard to audit and remuneration committees.

(25)von der Crone, Arbeitsteilung im Verwaltungsrat, Charlotte M. Baer ed.), Verwaltungsrat und Geschäftsleitung, SSPHW Band 76, Haupt Verlag, Bern 2006, p. 98-

(26)Watter, Verwaltungsratsausschüsse und Delegierbarkeit von Aufgaben, in: von der Crone/Weber/Zäch/Zobl, Neuere Tendenzen im Gesellschaftsrecht, Festschrift für Peter Forstmoser, Zürich 2003, p. 188 et seq.; von der Crone, Arbeitsteilung im Verwaltungsrat, Charlotte M. Baer ed.), Verwaltungsrat und Geschäftsleitung, SSPHW Band 76, Haupt Verlag, Bern 2006, p. 82.

(27)As also provided in Art. 5 section 5 para. 1 OrgReg: “ ... The board shall only resolve such matters if a majority of the members of the Independent Director Committee so recommends. ...”

(28)See section IV.A above.

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b)Dealing at Arm’s Length: Market Price and Fairness Opinion

A second possibility of seeking additional support is to apply an objective benchmark for the verification of the conditions of the decision to be taken by either the comparison with a market price or by obtaining an additional evaluation, a so-called fairness opinion. The comparison with the market price or the obtaining of a fairness opinion ensures that the conditions of the transaction concluded by a conflicted board equal the conditions a disinterested third party would have applied.(29)

A board applying the dealing at arm’s length principle can rely on the assumption to have acted according to its duties even though one or several board members are conflicted.(30), (31) In absence of a market price, the board will have to rely on the opinion of an independent outsider — usually an auditor or a bank — with regard to the specific transaction. Usually a fairness opinion gives a range of prices within which a disinterested third party might be willing to conclude a transaction. In case the fairness opinion is proven wrong, the issuer of the fairness opinion will not only be liable for damages vis-à-vis the company but also vis-à-vis third parties who relied on the opinion.(32) In complex, expensive and/or very high-levelled cases it might therefore become difficult for a board to engage an independent issuer of a fairness opinion, be it because all reputable issuers a re conflicted in the matter themselves or be it because no one is willing to take the liability risk. At this juncture, it is worth noting that only a fairness opinion rendered by a truly independent third party may cure a conflict of interests. For instance, a fairness opinion rendered by the financial advisor to one of the merging parties of by a third party whose remuneration is linked to the completion of the transaction would not be sufficient to reach this goa1(33).

In essence, dealing at arm’s length gives a certain assurance that a transaction does not disadvantage the company.(34) However, it does not give any indication as to the necessity or the advantages of a particular transaction for the company(35) which should — measured against the board’s duties as — not only be fair but also in the company’s best interests. Furthermore, a valuable fairness opinion can only be issued based on all relevant material and information,(36) and in case all board members are conflicted it might be discussed whether they are even able to provide the issuer of the fairness opinion with independent information.

In any case, dealing at arm’s length (e.g. based on a fairness opinion) does not release the board from its duty to take its own decision, but such dealing at arm’s length may serve as a basis of such decision. Therefore, in particular a fairness opinion can serve to mitigate a conflict of interests, may the conflict of interests relate only to one member of the board or even the entire board.

(29)Lazopoulos, Interessenkonflikte und Verantwortlichkeit des fiduziarischen Verwaltungsrates, Zürich 2004, p. 117.

(30)See IV.A, IV.A.1.a)1) and IV.A.1.a)2) above.

(31)Similar in the essence but different in the reasoning Lazopoulos, Interessenkonflikte und Verantwortlichkeit des fiduziarischen Verwaltungsrates, Zürich 2004, p. 117, according to whom dealing at arm’s length shall not only re-invert the assumption but entirely relieve the board from its liability with regard to the additionally supported decision.

(32)BGE 4C.230/2003. Lazopoulos, Interessenkonflikte und Verantwortlichkeit des fiduziarischen Verwaltungsrates, Zürich 2004, p. 118.

(33)See the recommendation Nr. 0162 / 01 of the Swiss Takeover Board dated April 16, 2003, Centerpulse, para. 6.3. Whilst this recommendation was rendered in a takeover situation, the underlying general principle — pursuant to which only a fairness opinion rendered by a truly independent third party can cure a conflict of interests — should also apply in the context of a merger transaction.

(34)Lazopoulos, lnteressenkonflikte und Verantwortlichkeit des fiduziarischen Verwaltungsrates, Zürich 2004, p. 119.

(35)von der Crone, lnteressenkonflikte im Aktienrecht, SZW 1/94, p. 9; Lazopoulos, Interessenkonflikte und Verantwortlichkeit des fiduziarischen Verwaltungsrates, Zürich 2004, p. 119; Roth Pellanda, Organisation des Verwaltungsrates, Zürich 2007, N 348.

(36)Roth Pellanda, Organisation des Verwaltungsrates, Zürich 2007, N 352.

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Dealing at arm’s length is suitable to overcome personal and structural conflicts of interests, as well as control transactions (Types A, B and C conflicts of interests(37)). However, it is important to note at this juncture that if the board has once decided to apply another measure to overcome a conflict of interests — e.g. by providing an independent committee based on the internal regulations — it cannot swap to a fairness opinion once a relevant transaction has been announced.(38)

c)Abstention from Voting

By abstaining from voting, the conflicted board members do not make use of their voting rights with regard to the decisions affected by their conflict of interests. Depending on the particular case and on the dimension of the conflict, it must be determined on a case-by-case basis whether or not a conflicted board member should take part in the decision-making process, attend the discussion prior to the decision or even obtain the board’s documentation regarding the respective decision.(39)

It is common understanding in jurisprudence and doctrine that abstention from voting is a valid means to address conflicts of interests within a board on an individual basis(40). Conversely, it would not be an appropriate method if, for example, it leads to a paralysis of the company because the majority of the directors would be deemed to be disqualified from taking a decision that falls within the competence of the board. If such a risk is likely to materialize, the conflict of interests should be addressed by other means, e.g. by the implementation of an independent directors’ committee or by dealing at arm’s length.(41)

d)Conclusion

As discussed above, the outlined methods for dealing with conflicts of interests (i.e., dealing at arms’ length, abstention from voting, approval by the shareholders’ meeting or establishment of an independent director committee whose recommendation is required) are not equally appropriate in all situations.

In light of the above, I am of the view that a structural conflict of interests (Type B conflict of interests) as in the present case can be overcome in two ways:

a)The board can establish an independent committee and, for purposes of a merger transaction, implement a two-fold decision process, i.e. both the independent director committee and the entire board take their own decisions and combine them to one valid and non-conflicted board decision.

b)The board can make sure that the company deals at arm’s length, e.g. based on a fairness opinion issued by a truly independent third party.

However, as it will be shown under section IV.C below in more detail, if a board has once implemented a system of how to overcome a conflict of interests (such as option a) in Alcon’s case), this system must not be altered in the course of a transaction that gives rise to a conflict of interests.

(37)See section IV.A.1 above.

(38)See section IV.C hereinafter.

(39)With regard to the abstention of a delegated board member representing Lips-Rauber, Die Rechtsbeziehung zwischen dem beauftragten fiduziarischen Verwaltungsrat und dem Fiduzianten, zürich 2005, p. 117.

(40)Lazopoulos, Massnahmen zur Bewältigung von Interessenkonflikten im Verwaltungsrat, AJP 2/2006, p. 145.

(41)See sections IV.A.1.a)2) and IV.A.1.b) above.

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2.Consequences of a Decision Taken by a Conflicted Board

If no appropriate measures have been taken to mitigate conflict of interests in the course of the decision-making process, board decisions are likely to be either void or to trigger the board members’ personal liability (Art. 754 CO). Hereinafter I will concentrate on the procedural effects of a conflicted board’s decision, in particular its voidness and its implications on the subsequent decision of the shareholders’ meeting as required, e.g. in the merger procedure.

a)Voidness of Board Decisions

The general rule of void contractual relationships under Swiss law is stated in Art. 20 CO. This provision declares for null and void all contracts which have impossible or illegal contents or which violate bonos mores. For decisions of a shareholders’ meeting, the Swiss corporate law provides a similar rule for violations of the law and violations of the articles of association. As to the consequences of such a violation, the Swiss corporate law distinguishes between void decisions (Art. 706b CO) and challengeable decisions (Art. 706 CO).(42) Hence, in the area of shareholders’ meetings’ decisions, some decisions which would be void under Art. 20 CO are only challengeable under Art. 706 CO.

Different from decisions of the shareholders’ meeting, board resolutions cannot be challenged by the shareholders. Therefore, the shareholders and the company are usually required to rely on the board members’ liability under Art. 754 CO to ask for damages caused by a board resolution that violates the law or internal regulations. Nevertheless, Art. 714 CO declares that board resolutions can be null and void in particular for the reasons provided in Art. 706b CO regarding decisions of the shareholders’ meeting.(43) Beyond the cases explicitly mentioned in Art. 706b CO in connection with Art. 714 CO, board decisions can also be null and void in cases of a violation of the basic rule of Art. 20 CO.(44) This means that in particular any impossible or immoral decisions will also be null and void. Furthermore, in accordance with longstanding practice, also severe formal defects can void a board resolution.(45)

In summary, the enumeration in Art. 706b CO is not exhausting and leaves room for other kinds of void decisions in view of the different tasks and varieties of decisions the shareholders’ meeting and the board have to take.(46) The different concepts with regard to decisions of the board and the shareholders’ meeting justify a differentiated assessment of whether a decision is void or not.(47) And since board resolutions cannot be challenged (unlike decisions of the shareholders’ meeting), there is necessarily more room to void board resolutions.(48)

Based on the above considerations, conflicts of interests within a board can result in void board decisions for several reasons. In particular, a board decision taken by conflicted board members may violate the basic structure of the company. In case of a conflict of interests, the requirement

(42)Rhein, Die Nichtigkeit von VR-Beschlüssen, Zürich 2001, p. 136.

(43)According to Art. 706b CO, a decision of the general meeting is in particular void, if it (a) revokes or restricts the right to attend a meeting of shareholders, the minimum right to vote, rights of action or other rights of shareholders mandated by mandatory law, (b) restricts shareholders’ rights to control to a greater extent than allowed by law or (c) disregards the basic structures of a corporation or violates provisions concerning the protection of the capital.

(44)Rhein, Die Nichtigkeit von VR-Beschlüssen, Zürich 2001, p. 139.

(45)Rhein, Die Nichtigkeit von VR-Beschlüssen, Zürich 2001, p. 146; Wernli, BSK OR II, 3rd edition, Basel/Genf/München 2008, Art. 714 N 19..

(46)Wernli, BSK OR II, 3rd edition, Basel/Genf/München 2008, Art. 714 N 5; for a discussion of these differences see Rhein, Die Nichtigkeit von VR-Beschlüssen, Zürich 2001, p. 153 et seq.

(47)Jagmetti, Die Nichtigkeit von Massnahmen der Verwaltung der Aktiengesellschaft, 1958, p. 104.

(48)Rhein, Die Nichtigkeit von VR-Beschlüssen, Zürich 2001, p. 163.

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to decide as an entirety and the requirement to mitigate the conflict of interests are diametrically opposed, and the board needs to find a way to decide collectively without being conflicted.(49) Thus the basic structures of corporate law with regard to the decision-making process may be violated either if a board fails to address the conflict of interests at all or if a board allows the (unjustified) abstention of a substantial numbers of its members. In addition, the severe violation of reglementary rules on the decision-making process within the board results in a void decision due to formal defects.(50)

b)Implications on the Shareholders’ Meeting’s Merger Decision

As mentioned above, a merger requires both the board’s decision to sign the merger agreement as well as the shareholders’ meeting’s approval of the entire transaction. In this context, the question arises as to how a void board decision influences the validity of the shareholders’ meeting’s decision.

As a consequence of the void board decision, the merger agreement has not been validly concluded if the other party to the merger agreement is or should be aware of the conflict of interests. The board’s power to represent the company does not include void decisions and the board is therefore not authorized to implement a void decision by signing a merger agreement. However, the board is able to enter binding commitments for the company vis-à-vis a bona fide third party even when executing a void decision.(51) Yet, Novartis would not qualify as a bona fide third party in the present case because it is well aware of the conflict of interests within the Alcon board, itself having appointed the conflicted directors to the Alcon board. Therefore, the shareholders’ meeting would be asked to approve an agreement that had not been validly concluded. The respective decision by the shar eholders’ meeting would therefore become challengeable by a shareholder(52) or by the board of directors.(53)

c)Responsibility of Delegated Board Members

Board members who have been delegated to represent a major shareholder in the board are not treated any different from the other board members with regard to their duties and responsibilities.(54) In particular, a board member cannot justify the violation of his duties vis-à-vis the company by referring to the instructions he obtained by the party he represents. The delegated board member is responsible for checking instructions upon their compliance with the applicable law and for acting accordingly. Otherwise, he may become liable under Art. 754 CO or even under criminal law.(55) According to the Swiss Federal Court, the board member’s duties vis-à-vis the company precede his duties vis-à-vis the principal he represents.(56) Instructions by the principal should only

(49)Roth Pellanda, Organisation des Verwaltungsrates, Zürich 2007, N 353.

(50)Rhein, Die Nichtigkeit von VR-Beschlüssen, Zürich 2001, p. 241.

(51)The board’s power of representation does not include void decisions and the board is therefore not authorized to implement them. However, vis-à-vis bona fide third parties, the board is able to enter binding commitments for the company even when executing a void decision. This protection of good faith does not apply as soon as the third party knew or should have realized the voidness of the board’s decision. In this case, the intended legal relationship cannot be concluded to the lack of representation power of the board. See Rhein, Die Nichtigkeit von VR-Beschlüssen, Zürich 2001, p. 173 et seq.

(52)According to Art. 106 SMA and Art. 706 CO.

(53)According to Art. 706 CO; the effects of the general meeting’s approval of a conflicted board decision in general and in view of transactions under the SMA have been discussed in section IV.A.1.a)1) above.

(54)Nussbaumer/von der Crone, Verhältnis zwischen gesellschafts- und schuldrechtlicher Verpflichtung, SZW 2/2004, p. 139, with further references.

(55)Lips-Rauber, Die Rechtsbeziehung zwischen dem beauftragten fiduziarischen Verwaltungsrat und dem Fiduzianten, Zürich 2005, p. 126 et seq.; Nussbaumer/von der Crone, Verhältnis zwischen gesellschafts- und schuldrechtlicher Verpflichtung, SZW 2/2004, p. 141.

(56)BGE 4C.143/2003, E. 6.

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be executed in situations in which the board member has absolute discretion but even then such discretion should be exercised in good faith and in the company’s interests.(57)

If a board member has been delegated by another company of which he is also a member of the board, he must fulfil his duties as a board member vis-à-vis both companies and must further both companies’ interests. Hence, a conflict of interests between the two companies will automatically result in the board member violating his duties vis-à-vis one of the companies. If such conflict of interests was foreseeable, the board member will be liable for damages caused to the company whose interests he violates. Such violation of duties cannot be avoided by an instant resignation from one of the boards because the resignation would be effected at an improper time so that the board member would remain liable to the respective company for the damages caused (Art. 404 para. 2 CO).(58)

In the end, it is in the best interest of the delegated board members (such as, in the present case, Novartis’ appointees to the Alcon board) to address conflicts of interests in the course of the board’s decision-making process in a manner that is in line with the best practices for corporate governance, since this will give such board member the best possible defence against responsibility claims from one or the other company or its shareholders.

B.Interpretation of Alcon’s OrgReg and Charter

The OrgReg provide for an IDC. In the light of the relevant wording and purpose of the OrgReg and the Charter, I examine hereinafter if the IDC is competent to approve the merger transaction mentioned in the facts. For the reasons stated hereinafter, I conclude that the IDC benefits from such a competence.

1.Interpretation of Internal Regulations

Before interpreting the OrgReg, the methods of such interpretation should be shortly discussed. The interpretation of general and abstract legal documents such as articles of association or internal regulations somewhat differs from the interpretation of individual contracts. The Swiss Federal Court has dealt with the interpretation of a company’s articles of association already several times and came to the following conclusions:

a)If the provisions to be interpreted deal with a dispute in very close circumstances within the company or if they even have contractual dimensions, they should be interpreted as a contract.

b)If the effects of the provisions in question affect a wider environment and might be of interest for potential shareholders or creditors or if the articles of a public company are interpreted, they should be interpreted similarly to statutory law. In general, articles of association should be interpreted as a whole, based on the idea that the shareholder acquiring the company’s shares read them as one document without thinking about the background of every single provision.(59)

(57)Nussbaumer/von der Crone, Verhältnis zwischen gesellschafts- und schuldrechtlicher Verpflichtung, SZW 2/2004, p. 140, with an overview of current doctrine in footnote 19.

(58)Kissling, Der Mehrfachverwaltungsrat, Zürich 2006, N 178; for the board member’s liability in case of abstention see section IV.A.1.c) above.

(59)Böckli, Schweizer Aktienrecht, 4th edition, Bern 2009, § 1 N 632 et seq.

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According to legal doctrine, organizational regulations are to be interpreted based on the same rules as articles of association.(60) Given the fact that Alcon is a public company with its OrgReg publicly available on its website and containing provisions that affect potential investors directly, it is appropriate to interpret the OrgReg like a statute. For the interpretation of a statutory provision, the Swiss Federal Court pragmatically applies different methods depending on the particular case (this approach being commonly referred to, in German, as the “Methodenpluralismus”).(61) The typical interpretation elements include the following:(62)

a)the grammatical interpretation concentrates on the wording of a statute, its meaning as well as the structure of the sentences;

b)the systematic interpretation relates to the coherence and the consistency of a rule within both the statute and the entire legal system;

c)the teleological interpretation concentrates on the ratio legis, the spirit and purpose of a rule;

d)the historical element discusses the legislator’s intention upon enactment of a rule.

In case of differences between the wording of a statute and its ratio legis, a deviation from a clear wording may not only be allowed but even required (called, in German, the “teleologische Reduktion”). Such a situation may occur in case the application of a rule based on its wording would lead to unsatisfactory results e.g. by applying a rule on a situation the legislator did not intend to be covered by the respective rule.(63)

2.Relevant Provisions of the OrgReg

The relevant provision regarding transactions with a majority shareholder is Art. 5 section 5 OrgReg. According to this provision, the board is to establish an IDC consisting of no less than three independent directors responsible for the protection of the interests of minority shareholders if one of the following situations occurs:

“(a)a proposed merger, takeover, business combination or related party transaction of the Company with the Majority Shareholder or any group company of the Majority Shareholder;

(b)a proposed bid for the shares of the Company by any entity owning a majority of the Company’s outstanding voting rights;

(c)a proposed repurchase by the Company of all the shares not owned by an entity owning a majority of the outstanding voting rights of the Company; or

(d)any change to the powers and duties of the Independent Director Committee.”

Art. 5 section 5 para. 1 OrgReg further provides that the Board shall only resolve such matters if a majority of the IDC members so recommends.

In addition to these rules particularly applicable on transactions with majority shareholders, Art. 8 OrgReg addresses the area of conflicted board members in general. A board member is deemed to be conflicted in case it has a financial or non-financial interest in, or is otherwise closely linked to, the matter, and such interest is of such significance to the board member or a related person

(60)Müller/Lipp/Plüss, Der Verwaltungsrat, 3. ed., 2007, p. 37; Watter/Roth Pellanda, BSK-OR II, Art. 716b, N 26.

(61)BGE 131 III 314, 127 III 415.

(62)Middendorf/Grob, Handkommentar zum Schweizer Privatrecht, Zürich/Basel/Genf 2007, ZGB 1 N 7 et seq.

(63)Middendorf/Grob, Handkommentar zum Schweizer Privatrecht, Zürich/Basel/Genf 2007, ZGB 1 N 9.

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that the interest would reasonably be expected to interfere with the board member’s judgement in case of participation in the discussions with regard to or any vote on the matter. A related person is among others defined as an entity of which the board member is a director, general partner, agent, major shareholder, employee or designee of such person or entity to the board. According to Art. 8 section 2 OrgReg, the chairman of the board must implement the appropriate measures to ensure that Alcon’s interests are adequately protected and resolve to what extent the conflicted director shall be excluded from the matter. In case the conflicted member disagrees, he may request that the board consisting of non-conflicted directors only shall resolve as to the issue of the existence of a conflict of interests and the measure to be taken.

3.Interpretation of Art. 5 Section 5 (a) and (b) OrgReg

The term “Majority Shareholder” is defined in Art. 5 section 2 OrgReg as “the Company’s majority shareholder”. However, since this definition is made in connection with the current majority shareholder Nestlé(64), the question arises whether the term “Majority Shareholder” shall refer to Nestlé only or to any majority shareholder of Alcon.

With regard to the Nominating and Corporate Governance Committee, Art. 5 section 4 OrgReg provides that “at least one Committee member shall be designated by Nestlé as long as Nestlé remains as the Majority Shareholder”. This provision implies that there may be another “Majority Shareholder” than Nestlé once Nestlé has sold its majority stake. Besides, from a literal point of view, in Art. 5 section 2 OrgReg, the capitalized terms “Majority Shareholder” are not placed directly after “Nestlé” but after the term “the Company’s majority shareholder” so that it may as well define any potential holder of a majority of Alcon shares and not Nestlé as a specific shareholder. Therefore, the conclusion can be drawn that the term “Majority Shareholder” refers to any present or future majority shareholder of Alcon who may ch ange from time to time. A fortiori, this interpretation must apply to a shareholder who follows directly Nestlé in its position as a majority shareholder of Alcon by acquiring exactly the stake previously held by Nestlé.

Furthermore, Art. 11 section 4 OrgReg provides that the special rights of the Majority Shareholder in the OrgReg “shall be amended or repealed as soon as the equity interest of the Majority Shareholder in the Company shall fall below 50% of the voting rights of the Company and/or the equity interest of Novartis AG falls below 10% of the voting rights of the Company.” This may addresses the current situation with Nestlé as Alcon’s majority shareholder and Novartis as second important shareholder. However, whereas Novartis is explicitly mentioned with its company name, the identity of the Majority Shareholder is left open and may therefore change from time to time.

In addition, the question arises why Art. 5 sections 5 (b) and 5 (c) OrgReg provide separate rules for an “entity owning a majority of the Company’s outstanding voting rights” if there is in fact no difference in the entities covered by Art. 5 section 5 (a), (b) and (c) OrgReg. Moreover, if any shareholder holding a majority would be qualified as Majority Shareholder, it is not clear at first sight if there is really a material difference between the transactions mentioned Art. 5 section 5 (a) OrgReg and a bid according to Art. 5 section 5 (b) OrgReg. Thus the question arises if these differences are just poor drafting or if they contain an intentional distinction. A closer look at Art. 5 section 5 (a) and 5 (b) OrgReg opens room for the following interpretations.

(64)Art. 5 Section 2 OrgReg reads as follows: “The Compensation Committee shall be comprised of at least four members of the Board, at least one of which shall be designated by Nestlé as long as Nestlé remains as the Company’s majority shareholder (the Majority Shareholder), one of which shall be designated by Novartis AG for so long as it is a shareholders of the Company holding at least 10% of the Company’s outstanding shares, and at least two of which shall be independent directors ...”.

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The two provisions are different in two respects. Art. 5 section 5 (a) OrgReg on one hand refers to the “Majority Shareholder” and lists the transactions covered in a specific manner by enumerating mergers, takeovers, business combinations or related party transactions. Art. 5 section 5 (b) OrgReg on the other hand relates to “any entity owning a majority of the Company’s outstanding voting rights” and only refers to “a proposed bid”, a term not used in Art. 5 section 5 (a) OrgReg. The interpretation shall therefore concentrate on the differences in the definition of the parties covered, on the one hand, and the definition of the transactions covered, on the other hand.

With regard to the entities covered, Art. 5 section 5 (a) OrgReg only refers to the term shareholder whereas Art. 5 section 5 (b) OrgReg refers to an entity holding a majority of Alcon’s voting rights, i.e. a distinction is made between the holding of shares and the holding of voting rights. It is legally possible to separate the authority to exercise the voting rights and the ownership in the shares. The Alcon board might have addressed the respective danger by requiring the IDC’s recommendation not only in case a “Majority Shareholder” wanted to implement any of the transactions under Art. 5 section 5 (a) OrgReg but also in case someone became able to exercise the majority of Alcon’s voting rights without being the owner of the shares. Hence, a majority shareholder being subject to Art. 5 section 5 (a) OrgReg will usually also be subject to Art. 5 section 5 (b) OrgReg as he will most likely be entitled to exercise the voting rights in the shares whereas “an entity owning a majority of the company’s voting rights” may be subject to Art. 5 section 5 (b) OrgReg only as long as it is not the owner of the shares.

Even based on this interpretation, it is still not clear why the two sections refer to different transactions. The question to be answered is how the term “bid” should be interpreted and whether it includes more or less or different situations than those mentioned in Art. 5 section 5 (a) OrgReg. The situations listed in Art. 5 section 5 (a) OrgReg refer in quite a detailed manner to all sorts of possible transactions between the Majority Shareholder and Alcon. However, the term “bid” as it is used in Art. 5 section 5 (b) OrgReg is not mentioned at all.

In corporate law language “bid” usually refers to a situation in which an offeror company addresses an offeree company’s shareholders by offering them a monetary payment or securities in exchange of their shares in the company. The prototype of such a bid may be a public takeover offer; however, also private bids for non-listed companies may be described by that term. From a formal point of view, a merger might not be a bid as it is a legal transaction requiring the mutual approval of both the boards and the shareholders of the companies involved as well as a mutual implementation, leading to one combined company whereas in case of a bid the offeree company’s shareholders decide on whether to accept or deny the offer by the offeror who is theoretically able to initiate and implement the transaction ending with the addition of a daughter company to its holding structure on its own. In fa ct, from an economic point of view, a merger can have exactly the same consequences for the shareholders than a (takeover) bid, especially in case the latter is an exchange offer. The shareholders of the transferring company are offered an exchange ratio and are asked to accept — not individually but collectively by voting in the shareholders’ meeting. They end up being shareholders of the receiving company or — in case of a cash out merger— with money. Based on its effects, mergers and takeover bids could therefore both be subsumed under the term “bid”.

This might less apply to business combinations as long as this term is defined any different from a merger or even a takeover bid which could — grammatically — also be called business combinations. But since Art. 5 section 5 (a) OrgReg distinguishes between all of them, business combination might rather refer to joint ventures or cross ownerships, i.e. transactions not leading to one entity being merged into or being completely acquired by the other. If business combinations are defined like this, they can hardly fall under the term “bid”.

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Related party transactions finally are a general term for all kinds of business deals or arrangements between two parties being joined by a special relationship prior to the deal which can be a source of a conflict of interests. Be it management transactions potentially conflicting with the interests of the company or transactions between the company and affiliates of its controlling shareholder potentially threatening the interest of minority shareholders.(65)

Overall, the conception of Art. 5 section 5 (a) OrgReg and Art. 5 section 5 (b) OrgReg leaves room for interpretation. It is therefore appropriate to ask for the provisions’ ratio legis (thus applying the teleological interpretation, see section IV.B.1 above). The reason behind these provisions was apparently that the Alcon board wanted to address conflicts of interests arising out of transactions into which both Alcon as a company and a person owning Alcon’s shares or voting rights are involved and which significantly impact Alcon’s future. The chosen means to overcome these conflicts of interests was the requirement of the IDC’s approval (i.e. additional support as a way to address a conflict of interests, see section IV.A.1.a) above). In all likelihood, the board intended to cover as many of such situations as possible by subsuming transactions with shareholders holding a majo rity of shares under Art. 5 section 5 (a) OrgReg and transactions with an entity holding a majority of voting rights under Art. 5 section 5 (b) OrgReg. Given the somewhat inconsistent drafting of the provisions, it is justifiable to rely on the teleological interpretation by concluding that any merger of Alcon with any shareholder holding a majority of Alcon’s shares will be subject to Art. 5 section 5 (a) OrgReg and require a prior recommendation by the IDC.

Even if this assessment proved wrong, the above discussed subsumption of a merger under the term “bid” as discussed above leads to the conclusion that the proposed merger of Alcon with Novartis who will be holding the majority of Alcon’s voting rights is in any case to be deemed a “bid” within the meaning of Art. 5 section 5 (b) OrgReg and therefore subject to the IDC’s prior approval.

Based on the preceding considerations, I am of the opinion that the term “Majority Shareholder” refers to the current and any future majority shareholder of Alcon. A fortiori, this interpretation shall apply to any shareholder following Nestlé in its position as an owner of the majority of Alcon’s shares by acquiring exactly the stake previously held by Nestlé (such as Novartis in the present case). This conclusion can be drawn in application of both the grammatical and the teleological interpretation method. Hence, the Novartis merger proposal qualifies as a transaction under Art. 5 section 5 (a) OrgReg requiring the IDC’s recommendation. But even if Novartis as the new majority shareholder could not be subsumed under the term “Majority Shareholder” as used in Art. 5 section 5 (a) OrgReg, the planned merger as outlined in the facts would still have to be subs umed under the term “bid” as used in Art. 5 section 5 (b) OrgReg so that the IDC’s approval would again be required. Some way or the other, I am therefore of the opinion that Novartis’ merger proposal cannot be approved by the entire board without previously obtaining the IDC’s recommendation.

4.Scope of the IDC’s Field of Responsibility beyond Art. 5 OrgReg

Independent from the above considerations regarding Art. 5 section 5 OrgReg it can also be discussed whether the IDC is competent beyond the cases specifically mentioned in Art. 5 section 5 OrgReg as examples, i.e. whether situations not mentioned in this provision could also be subject to the IDC’s analysis or approval.

In its press release dated January 4, 2010, the IDC highlighted its installation as a standing committee after Novartis’ acquisition of the first stake of Alcon shares from Nestlé in 2008. The standing IDC is meant to protect the minority shareholders in connection with a number of transactions,

(65)   Hertig/Kanda, Related Party Transactions, in: The Anatomy of Corporate Law, Oxford 2004, p. 101.

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including related party transactions between Alcon and major shareholders of Alcon. In December 2008, the Alcon board (comprising also a Novartis appointee) adopted unanimously the Charter where it is stated that the IDC shall “serve as a disinterested body with respect to transactions that relate to the Company, to its shares or to related party transactions involving one or more major shareholders of the Company”. Such transactions were defined as “Special Transactions”. Furthermore the IDC was given the authority and responsibility for evaluating any proposed Special Transaction and to — among other things — make recommendations to the board as to the position it should take with respect to a Special Transaction. Hence, the term Special Transaction seems to refer to a wider range of transactions than those specified in Art. 5 section 5 OrgReg.

Since both the OrgReg and the Charter have been issued by the Alcon board and refer to internal organizational questions of the board, the Charter could be seen as further defining Art. 5 section 5 OrgReg. By explicitly referring to transactions “involving one or more major shareholders” without naming any of them, the Charter applies to the merger proposed by Novartis. Provided the Charter applies on a wider scope of transactions than Art. 5 section 5 OrgReg, the question remains whether the requirement of Art. 5 section 5 Org Reg — allowing Alcon to only resolve the matters defined in Art. 5 section 5 (a) — (d) OrgReg based on a positive recommendation of a majority of the members of the IDC — also applies on that wider scope.

The Charter itself does not require any approval by the IDC but simply asks the IDC to provide the board with an opinion as to its position with respect to a transaction. However, if the board was allowed to decide on such matters also contrary to the IDC’s recommendation, the conflicts of interests within the board would not have been dealt with and the board’s decision would be flawed (for the legal consequences of a flawed board decision, see section IV.A.2.).

5.Conclusion

Based on both the above interpretation, I am of the opinion that the term “Majority Shareholder” as defined in Art. 5 section 2 OrgReg refers to the current and any future majority shareholder of AI-con; a fortiori, this interpretation shall apply to any shareholder following Nestlé in its position as an owner of the majority of Alcon’s shares by acquiring exactly the stake previously held by Nestlé. Consequently, the contemplated Novartis merger triggers the IDC’s competence according to Art. 5 section 5 (a) OrgReg. Beyond this, the planned merger of Alcon and Novartis can also be subsumed under Art. 5 section 5 (b) OrgReg since a merger can be qualified as a “bid”. In addition, taking into account the wider wording of the Charter, it becomes clear that Art. 5 section 5 OrgReg contains only a list of examples for the applicability of the IDC. The IDC shall generally serve as a disinterested body with respect to transactions that relate to the company, to its shares or to related party transactions involving one or more major shareholders of the company.

Finally, as it has been shown under section IV.A above, structural (Type B) conflicts of interests such as the one arising in the context of a merger between a controlled company and its major shareholder, can only be overcome by either establishing a two-fold decision-making process involving both the board and an independent director committee or by dealing at arm’s length. Alcon chose to implement the first of these two options in Art. 5 section 5 OrgReg. This means in practical terms that, in my opinion, the Alcon board cannot validly decide on the merger proposal published by Novartis on January 4, 2010 if the IDC has not recommended such transaction.

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C.No Change of Rules after Announcement of Transaction

Novartis’ indication to proceed with the merger based on the approval of the Alcon board irrespective of whether the IDC had recommended the transaction or not gives rise to the question whether the established internal rules of how to deal with a conflict of interests can be altered in the course of an announced transaction that gives rise to a conflict of interests.

The situation is comparable with a change of the rules of a game in the middle of a competition: No tennis player would accept an increase of the number of sets to be won once the game has been started and no golf tournament participant would understand the admission of the use of smaller balls by the remaining participants after he finished his round. This example illustrates a general rule which also applies in the present case: Once a transaction has been announced, a change of the rules for the internal approval of such transaction would be perceived as a moving of the goalposts in the middle of the game and would therewith not be acceptable to the involved parties. This undoubted sense of justice is also confirmed by the following legal reasoning.

1.Article 11 Section 3 OrgReg

According to Art. 11 section 3 OrgReg, any amendment of the OrgReg affecting the powers and duties of the IDC shall only be valid if approved by a majority of such committee. Hence, any change of system with regard to the means of how to overcome a conflict of interests will be subject to the IDC’s approval.

This provision corresponds with the general legal principle that a measure having been adopted in order to protect a certain group cannot be removed without this group’s consent which is also included in Art. 704 para. 2 CO. According to Art. 704 para. 2 CO, provisions in the articles of association providing for a greater voting requirement than prescribed by law for specific matters may only be adopted if such provision is approved by the same number of shareholders that the greater voting requirement itself requires. The legal doctrine commonly agrees that the greater voting requirements must also be applied on the removal of such provisions in the articles of associations. Otherwise, i.e. if they could be abolished by a single majority, greater voting requirements would be of no practical use.(66)

2.Pendency of Proceedings

The situation is also comparable to the enactment of new law.(67) Every time a new act comes into effect, the question arises whether the act shall be applied on ongoing disputes or whether these conflicts shall be solved by applying pre-existing law. With respect to black letter law, the new act usually includes rules for these situations.

As a general rule, a newly adopted legislation does not have a retroactive effect. As an exception of this general rule, Art. 2 of the End Titles to the Swiss Civil Code provides for the immediate application only of provisions of the Civil Code which relate to public order and morality on all facts notwithstanding these facts had occurred prior to the enactment of the law.(68)

In case the legislator did not include such rules in a new act, general principles shall be applied. With regard to public law, the Swiss Federal Court does not apply changes of law having taken

(66)Dubs/Truffer, BSK OR II, 3rd edition, Basel/Genf/München 2008, Art. 704 N 11.

(67)This paragraph is based on Häfelin/Müller/Uhlmann, Allgemeines Verwaltungsrecht, 5th edition, Zürich/St. Gallen 2006, N 322 et seq.

(68)Kilde, Handkommentar zum Schweizer Privatrecht, zürich/Basel/Genf 2007, SchIT ZGB 2, N 1.

20

place after a decision has been issued in the course of the decision’s judicial review. In these situations, new law shall only apply for compelling reasons based on public policy.(69)

The same general principles apply in the present case, because, among other things, the methods of interpretation used for general and abstract legal documents shall also apply to the OrgReg (see section IV.B.1 above). Based on the above considerations, the following conclusions can be drawn with regard to the change of a company’s internal regulations regarding the overcoming of conflicts of interests within the board: The internal regulations of a board do not serve the protection of any public interest and thus fall outside the scope of public policy issues. If a change of internal regulations concerns provisions ensuring the functioning of the company or protecting the minority shareholders’ rights, there is no public interest that would mandate the immediate application of a newly-adopted provision on pre-existing facts. Hence, it is appropriate to apply the pre-existing rules on a situation the board of directors was aware of at the time it decided to change its rules. In the present case, Novartis informed the Alcon board on January 4, 2010 of its intention to merge at an already defined exchange ratio. Hence, after that date, a change of the internal regulations in full awareness of the particular scenario could be qualified as an abuse of rights and would thus not be applicable in the present case.

3.Analogy to Takeover Law

Art. 22 para. 2 of the Swiss Stock Exchange Act (SESTA) allows companies to — prior to their securities being admitted to official listing on a stock exchange — include a provision in their articles of association releasing a potential offeror from the obligation to make a public offer (so called “opting-out clause”). According to Art. 22 para. 3 SESTA, such provision may be adopted at any time provided that it does not prejudice the interests of shareholders within the meaning of Art. 706 CO (which governs the contestation of decisions by the shareholders’ meeting). E.g. the implementation of an opting-out clause in the course of the company being listed at a Swiss stock exchange will only be allowed in case the intervention in the minority shareholders’ rights can be justified. According to the Swiss Takeover Board’s standing jurisdiction, the implementation of an optin g-out clause in view of a specific transaction is not allowed. Even though the wording would most likely be abstract, the clause itself would favour the majority shareholders only and allow them to benefit from a control premium to the detriment of the minority shareholders. The Swiss Takeover Board therefore applies a waiting period of five years until an opting-out clause will become effective. Thus, the rules on mandatory takeovers will still apply on control transactions during the first five years after the implementation of an opting-out clause. And even after the expiry of that period the opting-out clause will not be effective if there is proof that the transaction leading to a change of control had already been planned at the time of the clause’s implementation.(70)

The SESTA does not apply expressly to the transaction contemplated by Novartis’ merger proposal. That being said, the Swiss Takeover Board’s approach with respect to opting-out clauses can also serve as an analogy as how to change a company’s once chosen system to overcome a conflict of interests after a specific situation has occurred. Similar to the requirement to launch a mandatory takeover offer upon exceeding the relevant threshold, the measures to overcome a conflict of interests also aim at the protection of minority shareholders. The Swiss Takeover Board applies a five-year or even longer period until it recognizes the shareholders’ meeting’s decision as effective in case the opting-out has been established with regard to a particular transaction. Hence, the Swiss Takeover Board weighs minority protection higher than a decision by the shareholders’ meeting potentially influenced by the majority shareholder. Thus, minority protection

(69)BGE 112 V 89 and 112 IB 42.

(70)Schenker, Schweizerisches Übernahmerecht, Bern 2009, p. 535 et seq.

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should be weighted even higher in comparison with a conflicted board decision. Therefore, a conflicted board should not be able to change the company’s system of how to overcome a conflict of interests with regard to a particular (planned and announced) transaction.

4.Conclusion

If the board has taken a decision as to how to proceed in case of a conflict of interests within the board by choosing an acknowledged means to overcome a conflict of interests, the chosen system can generally be replaced by another acknowledged means as it is in the board’s competence to structure its own organization and to enact its internal regulations. However, the Article 11 section 3 OrgReg requires for such replacement the approval by the majority of the IDC. This requirement arises out of a general legal principle according to which protection granted to a particular group shall not be removed without this group’s consent. This general principle would apply even if it was not enshrined in Article 11 section 3 OrgReg. Besides, once a specific situation has occurred, the once selected system of how to mitigate the arising conflict of interests should not be dismissed and the respective pro visions in the OrgReg should only be altered in an extraordinary situation.

The alteration of the board’s system to overcome conflicts of interests in the course of its decision-making process is similar to the adoption of a new law. If the board is aware of a specific transaction, this transaction can be considered as pending comparable to a pending litigation. Since there are no similar public interests to be observed when deciding whether to apply existing or new internal regulations, the pre-existing rules shall apply on all the transactions the board was aware of when deciding the new rules. The change and application of new internal regulation on such a situation could on one hand qualify as an abuse of law; on the other hand the decision to change the internal regulations will definitely already be influenced by the conflict of interests the said regulations are supposed to overcome. Finally, analogies with Swiss takeover law also suggest refraining from an alteration of a board’s system of conflict of interests’ mitigation once a specific transaction has been announced.

I trust that the above covers all your questions raised. If you have any further questions, please do not hesitate to contact me.

Yours sincerely

Hans Caspar von der Crone

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EX-99.(C)(13)

Exhibit 99.(c)(13)

By E-mail /By Mail Dr. Thomas Werlen Group General Counsel
Novartis International AG
Lichtstrasse 35 4056 Basel Zurich, July 20, 2010 PN/HAM/PB Alcon / Novartis Merger Legal Opinion on Conflict of Interest Issues as Addressed by Prof. Hans Caspar von der Crone in his Opinion of May 27, 2010 Dear Dr. Werlen, You have asked me to provide a legal opinion with regard to the conclusions made by Prof. Hans Caspar von der Crone in his opinion of May 27, 2010 (the “von der-Crone-Opinion” or the “Opinion”) on the intended Swiss Merger between Alcon, Inc. (hereinafter: “Alcon”) and Novartis AG (hereinafter: “Novartis”), mainly about board members which are allegedly in a conflict of interest situation. Summed up in a nutshell, the von der Crone-Opinion makes the assumption that the board members nominated by a major shareholder are eo ipso in a conflict of interest. It argues that, because of this conflict, the Alcon board will not be able to validly decide on Novartis’ merger proposal without the Independent Director Committee’s NOBEL & HUG RECHTSANWÄLTE BÜRO ZÜRICH PROF. DR. PETER NOBEL DR. BENNO BERNET DR. LEO GRANZIOL* DR. CHRISTOPH PETER DR. PHILIPP PERREN DIPL. MASCH. ING. ETH DR. DIETER GESSLER LIC. IUR. MARCO HABRIK ZUSÄTZLICH FACHANWALT SAV ARBEITSRECHT C. S. ANDERFUHREN-WAYNE (J. D.) NUR IN NEW YORK ZUGELASSEN DR. ISABEL STIRNIMANN LIC. IUR. SANDRA SPIRIG LIC. IUR. MICHÈLE FORSTER DR. NINA SAUERWEIN LIC. IUR. MICHAEL HÄUPTLI LIC. IUR. THOMAS MEYRAT MARKUS KAEMPF DEUTSCHER RECHTSANWALT LIC. IUR. PATRICIA BUSCHOR DR. HANS-JÜRG HUG KONSULENT DUFOURSTRASSE 29 POSTFACH 1372 CH-8032 ZÜRICH TELEFON +41 (0) 44 269 77 77 Fax +41 (0) 44 262 00 92 E-MAIL: INFO@NOBEL-HUG.CH INTERNET: WWW.NOBEL-HUG.CH EINGETRAGEN IM ANWALTSREGISTER DES KANTONS ZÜRICH *EINGETRAGEN IM ANWALTSREGISTER
DES KANTONS ZUG BÜRO ZUG DR. LEO GRANZIOL RECHTSANWALT + NOTAR PROF. DR. PETER NOBEL** LIC. IUR. OLIVER HABKE RECHTSANWALT + NOTAR BAHNHOFSTRASSE 32 CH-6300 ZUG TELEFON +41 (0) 41 726 07 60 Fax +41 (0) 41 726 07 66 E-MAIL: OFFICE-ZUG@NOBEL-HUG.CH INTERNET: WWW.NOBEL-HUG.CH EINGETRAGEN IM ANWALTSREGISTER DES KANTONS ZUG **EINGETRAGEN IM ANWALTSREGISTER
DES KANTONS ZÜRICH BÜRO ST. GALLEN PROF. DR. PETER NOBEL*** GUISANSTRASSE 36 CH-9010 ST. GALLEN TELEFON +41 (0) 71 242 62 42 FAX +41 (0) 71 242 62 02 E-MAIL: OFFICE-SG@NOBEL-HUG.CH INTERNET: WWW.NOBEL-HUG.CH ***EINGETRAGEN IM ANWALTSREGISTER
DES KANTONS ZÜRICH MWST-NR. 299.284

(“IDC”) prior positive recommendation on that proposal according to article 5 section 5 of the Organizational Regulations (“OrgReg”). The Opinion considers a decision by the board without such prior recommendation as void, and incurable by the general meeting of shareholders. Such a view cannot be upheld.

A further issue is the question whether the IDC is not grossly over-emphasizing its role. The answer is yes.

In the following, I will examine these conclusions under the applicable Swiss law and based on the facts as outlined in Sec. II.

I.	Executive Summary					3
II.	Facts					5
	A.	Alcon				5
	B.	Shareholders of Alcon				5
	C.	Merger Intention				6
	D.	Members of the Board of Directors of Alcon				7
	E.	Organizational Regulation and Independent Director Committee				10
	F.	Alcon Litigation Trust				16
III.	Legal Considerations					18
	A.	The Duties and the Organization of the Board of Directors in General				18
	B.	Competences and Remedies in the Swiss Merger law of 2003				21
		1.	The Duties of the Board of Directors and the General Meeting of Shareholders in View of a Merger			21
		2.	The Remedies of the Swiss Merger Act			24
			a.	General Remarks		24
			b.	Article 105 Merger Act		25
				aa.	General Remarks	25
				bb.	Costs	26
			c.	Article 106 Merger Act		27
				aa.	General Remarks	27
				bb.	Costs	28
			d.	Article 108 Merger Act		29
				aa.	General Remarks	29
				bb.	Costs	30
	C.	Conflict of Interests Situations of Board Members				30
		1.	Conflict of Interest			30
		2.	Solutions for Conflict of Interest Situations			32
		3.	Consequences of a Decision Made by a Conflicted Board			34
		4.	Independent and Dependent (“Fiduciary”) Board Members			36
			a.	Definition and General Remarks		36
			b.	Specific Definitions of Independence		37
			c.	The Impact of the Nomination of a Board Member by a Shareholder		38
IV.	Conclusions					39
	A.	The Limitation the Competences of Independent Director Committee and the Duties of Its Members under Swiss Law				39
	B.	The Status of Board Members Nominated by Novartis Under Swiss Law				41
	C.	Consequences of a Hypothetical Conflict of Interest or Inadequate Compensation under Swiss Law				44
	D.	The Litigation Trust				46

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I.Executive Summary

1.At the outset, it must be said that all material aspects are governed by Swiss law. This is undisputed.

2.The conclusion of the eventual merger agreement is a non-transferable and inalienable duty of the entire board of directors and, therefore, the respective competence cannot be assigned to the Independent Director Committee. The von der Crone-Opinion’s view that “the board cannot validly decide alone [due to the conflict of interest](1)” is incompatible with the mandatory arrangement of article 716a of the Code of Obligations (“CO”). In order to be compatible with the applicable Swiss law, article 5 Section 5 OrgReg has to be interpreted as a mere recommendation to follow the IDC’s recom mendation. This interpretation is also consistent with the rules that the IDC has itself adopted in its Charter.

3.Furthermore, the Swiss Merger Act already provides for solutions to eliminate negative effects for minority shareholders. In particular, article 105 of the Merger Act specifically addresses the problem of a possible inadequate compensation. The Opinion’s view, that the Alcon board cannot validly decide on Novartis’ merger proposal without the IDC’s prior recommendation, is based on a procedural concept that embraces a confrontational approach between shareholder groups on the level of the board and the general meeting of shareholders. This concept, however, is inconsistent with Swiss Company and Merger law.

4.With respect to the IDC, its members have, like all the other members of the board, a duty of care and a duty to safeguard the interests of the company. They are not the advocates of specific shareholders and auctioning such shareholders’ shares in a merger is not their duty. When acting for the IDC, they also have no power to represent the company. In this respect, the von der Crone-Opinion lacks any reference to the most important question, namely, whether or not the merger is in the interest of the company.

(1)  Von der Crone-Opinion, p. 9.

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5.The von der Crone-Opinion is not to be followed in its assumption that the board members nominated by Novartis would automatically be conflicted with regard to the Novartis merger proposal. First, a conflict between minority and majority shareholders does not by itself result in a conflict of interest within the board. Second, the question as to whether or not a conflict of interest exists in a certain situation has to be evaluated with a criteria-based approach that takes consideration of the specific circumstances in the specific case. In accordance with the doctrine concerning fiduciary or dependent board members, the relevant question is whether or not a board member nominated by a majority shareholder is contr actually obliged to follow instructions and will generally act in the third parties’ interest. Third, based on the definitions and description of independence regulated in the Swiss Code of Best Practice for Corporate Governance, the New York Stock Exchange Rules, the Organization Regulations of the board of Alcon and the Charter, there are no reasons for excluding board members from voting on the merger agreement solely as a result of being nominated by a major shareholder.

6.The von der Crone-Opinion’s suggestion that a decision taken by a board with a conflicted majority would be void is wrong. The view of the Opinion is not only contrary to the Swiss doctrine, but also to the practice of the Swiss Federal Court, which reflects a pragmatic view focusing on the interests of the company.

7.Finally, the Litigation Trust Agreement, which was concluded between Alcon and the current members of the IDC, is incompatible with both Swiss Company law and the procedural provisions of the Swiss Merger Act. Within the meaning of Swiss Company law, the beneficiaries of the trust agreement are third parties. They are not a part of the company and their interests are not the interests of the company. Therefore, board members are not allowed to use company funds in order to support the interests of minority shareholders. Moreover, the Swiss Merger Act already protects minority shareholders from the potential financial burdens with respect to the remedies it offers. There is no room for the preemptive use of company funds f or this purpose.

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II.Facts

A.Alcon

8.Alcon is a Swiss corporation, duly registered in Switzerland (Hunenberg/Canton of Zug). Its share capital amounts to CHF 60’735’861.20 and is divided into 303’679’306 nominal shares. Alcon is a producer of ophthalmology products. The corporation is listed on the New York Stock Exchange (“NYSE”).

B.Shareholders of Alcon

9.Nestlé S.A. (hereinafter: “Nestlé”), a Swiss stock corporation duly registered in Switzerland (Vevey/Canton of Vaud), acquired Alcon in 1978 and retained 100 percent ownership of Alcon until March 2002. In March 2002, Nestle sold 23 percent of Alcon’s shares to the public in an initial public offering (the “IPO”); Alcon has been listed on the NYSE since this time.

10.On April 6, 2008, Nestlé and Novartis, a Swiss stock corporation, duly registered in Switzerland (Basel/Canton of Basel City), executed two agreements. On the one hand, a Purchase and Option Agreement was concluded, which gave Novartis the right to immediately purchase 25 percent of Nestlé’s Alcon stock(2) and also an option, during the period beginning on January 1, 2010 and ending on July 31, 2011,(3) to purchase the remainder of Nestlé’s Alcon stock for the call price.(4) This agreement was concluded under Swiss law (see section 10.9 of the

(2)According to Section 2.1 of the Purchase and Option Agreement it was agreed upon that Novartis shall purchase from Nestlé, 74’061’237 Common Shares for an aggregate purchase price equal to USD 10’603’962’009.

(3)See Section 3.1 (a) of the Purchase and Option Agreement.

(4)Pursuant to Section 3.2 (b) of the Purchase and Option Agreement the Second Stage Purchase Price means in the event a Buyer Exercise Notice shall have been delivered [as in the current case] the Call Price. “Call Price” means an amount equal to (A) the product of (I) the number of Second Stage Shares minus 4’088’485, multiplied by (II) US $ 181.00, plus (B) 4’088’485 multiplied by $ 143.1783, plus (C) (if the Second Stage Closing Date is after 1 January 2010) interest accrued on the sum of the amounts calculated pursuant to subparts (A) and (B) at a rate per annum of 1.45% , calculated on the basis of a 360-day year, for the period from (and including) 1 January 2010 to (but excluding) the Second St age Closing Date.

5

agreement). On the other hand, Nestlé and Novartis executed a Shareholders Agreement (hereinafter “Shareholders Agreement”) that, among other things, outlined the corporate relationship between Novartis and Nestlé as shareholders of Alcon. According to cipher 7.8 of the Shareholders Agreement, Swiss law shall govern the contract.

11.On July 7, 2008, Novartis purchased 25 percent of Nestlé’s Alcon stock from Nestlé for USD 10.4 billion, or USD 143 per share. Furthermore, Novartis retained its option to purchase Nestlé’s remaining 52 percent of Alcon stock.

12.On January 4, 2010, Novartis exercised its option to purchase the remaining 52 percent of Nestlé’s Alcon stocks for USD 28.1 billion, or USD 180 per share in cash. The closing of this transaction, which would provide Novartis with a 77 percent share of Alcon, remains subject to certain conditions and regulatory approvals. The purchase is expected to be completed in the second half of 2010.

13.Together, the transactions for 77 percent of the Alcon stock are estimated to cost approximately USD 38.5 billion, with an average cost of USD 168 per share.

C.Merger Intention

14.On January 4, 2010, Novartis also announced its intention to integrate the remaining 23 percent equity stake, held by minority public shareholders(5), in order to attain full ownership of Alcon. Novartis thus announced the intention to merge Alcon with and into Novartis.

15.The planned transaction is not a public takeover; rather, it is a Swiss merger of Alcon into Novartis whereby Alcon will be established as a new Novartis division following successful completion of the merger. As a consequence of the

(5)These shareholders are among others Erica P. John Fund (formerly known as the Archdiocese of Milwaukee Supporting Fund), Oklahoma Firefighters Pension & Retirement System, City of Monroe Employees’ Retirement System, City of Westland Police & Fire Retirement System, Massachusetts Bricklayers and Masons Trust Funds, and Boilermakers Lodge 154 Retirement Plan.

6

merger, the 23 percent of Alcon’s shares traded on the NYSE and held by public shareholders would be exchanged for Novartis stock according to the exchange ratio.

16.Both Alcon and Novartis are Swiss corporations in that they are duly incorporated in Switzerland. The foreseen transaction qualifies as a Swiss national legal merger, more specifically as a merger by absorption. Therefore, the Swiss Company and Merger law is applicable and not the Stock Exchange Act.

17.Novartis offered a fixed exchange ratio of 2.80 Novartis shares for each remaining Alcon share. Alcon’s shareholders shall have the choice of receiving Novartis American Depositary Shares (ADSs) as merger consideration.

18.Based on the Novartis closing share price of CHF 56.50 on December 30, 2009 (the last trading day before the announcement) and an exchange rate of CHF 1.04 = USD 1.00, this proposal represented an implied price of USD 153 per Alcon share and a 12% premium to Alcon’s unaffected publicly-traded share price.

19.Novartis and Alcon intend to conclude a merger agreement according to which Alcon shall be absorbed into Novartis.

D.Members of the Board of Directors of Alcon

20.In March 2002, during which time period Nestlé (77 percent) and a minority group (23 percent) were shareholders of Alcon, the following persons were appointed as members of the board of directors of Alcon:

·Timothy Sear, British national, in Forth Worth (US), President

·Franciso Castañer, Spanish national, in Pully, Member

·Peter Brabeck Lethmathe, Austrian national, in La Tour de Peilz, Vice president

·Wolfgang Reichenberger, from Ruswil, in Chambésy, Member

·Werner Bauer, German national, in Lutry, Member

·James Cash, American national, in Wellesley (US), Member

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·Philip Geier, American national, in New York (US), Member

·Lodewijk De Vink, American national, in Peapack (US), Member

·Thomas G. Plaskett, American national, in Irving (US), Member

21.According to cipher 2.1 (b) of the Shareholders Agreement among Nestlé and Novartis, after the First Stage Closing Date (namely after Novartis purchased 25% of Nestlé’s Alcon stock), the parties thereto shall use their reasonable best efforts to cause to be elected to the board of Alcon such individuals so that, after such election and the due qualification of such individuals as Directors, the board shall be comprised of (A) one individual nominated by Novartis, (B) five individuals nominated by Nestlé, (C) three individuals nominated by the Nominating and Corporate Governance Committee that qualify as Independent Directors and who are not Novartis Designees or Nestlé Designees and (D)&n bsp;the Chief Executive Officer of the Company.

22.The Shareholders Agreement will terminate, in essence, once all Alcon shares are held by Novartis (see cipher 6.2 of the Shareholders Agreement).

23.In July 2008, during which time period Nestlé (52 percent), Novartis (25 percent) and a minority group (23 percent) were shareholders of Alcon, the following persons were appointed as members of the board of directors of Alcon:

·Werner Bauer, German national, in Lutry, Member

·Lodewijk De Vink, American national, in Peapack (US), Member

·Thomas G. Plaskett, American national, in Irving (US), Member

·Franciso Castañer, Spanish national, in Pully, Vice President

·Paul Polman, Dutch national, in La Tour de Peilz, Member

·Gerhard Mayr, Austrian national, in Cairo (EG), Member

·Cary Rayment, American national, in Colleyville (US), President

·Paul Bulcke, Belgian national, in Montreux, Member

·James Singh, Canadian national, in St-Légier-La Chiésaz, Member

·Dr. Daniel Vasella, from Poschiavo, in Risch, Member

8

24.In January 2010, during which time period Nestlé (52 percent), Novartis (25 percent) and a minority group (23 percent) were shareholders of Alcon and during the time period Novartis decided to exercise its option rights, the following persons were appointed as members of the board of directors of Alcon:

·Werner Bauer, German national, in Lutry, Member (nominated by Nestlé)

·Lodewijk De Vink, American national, in Peapack (US), Member

·Thomas G. Plaskett, American national, in Irving (US), Member

·Franciso Castañer, Spanish national, in Pully, Vice President (nominated by Nestlé)

·Cary Rayment, American national, in Colleyville (US), President

·Paul Bulcke, Belgian national, in Montreux, Member (nominated by Nestlé)

·James Singh, Canadian national, in St-Légier-La Chiésaz, Member (nominated by Nestlé)

·Dr. Daniel Vasella, from Poschiavo, in Risch, Member (nominated by Novartis)

·Kevin Jay Buehler, American national, in Mansfied (US), Delegate of the board

·Joan Whitten Miller, Canadian national, in Winchester (US), Member

·Hermann Arnold Wirz, from Lucerne, in Pully, Member (nominated by Nestlé)

25.On August 16, 2010, an extraordinary general shareholder meeting of Alcon will be held (according to the Shareholders Agreement, cipher 2.1 (f)). The purpose of the meeting is to hold a shareholder vote on the conditional election of directors nominated by Novartis to replace directors nominated by Nestlé if and when Novartis acquires Nestlé’s remaining 52 percent of Alcon shares. The election will only become unconditional once Novartis acquires the remaining Alcon shares held by Nestlé. The following five directors have been nominated by Novartis and are standing for election:

9

·Dr. Enrico Vanni

·Norman Walker

·Dr. Paul Choffat

·Dr. Urs Baerlocher

·Dr. Jacques Seydoux

26.These five persons were nominated by Novartis to be members of the Alcon board of directors: they shall replace five other persons that were previously nominated by Nestlé (namely Werner Bauer, Franciso Castañer, Paul Bulcke, James Singh and Hermann Arnold Wirz). Such replacement of Nestlé Designees by Novartis Designees was also concluded in cipher 2.1 (f) of the Shareholders Agreement. All five nominated candidates have management experience in the medical sector and/or in other fields.

E.Organizational Regulation and Independent Director Committee

27.At the time of the IPO in 2002 and every following year since then, Alcon’s annual reports have referenced the OrgReg. The most recent version of the OrgReg is dated February 2009. The Board Committees are regulated in Article V. Article V Section 1 and Section 5 read as follows:

ARTICLE V Organizational Regulations

Board Committees

Section 1. General. The Board may appoint Board Committees for specific areas from among its members. Together with their appointment, the Board shall establish the appropriate rules with respect to the mission, the authority and the reporting of the pertinent Board Committee.

All members of the Board are invited to attend any meetings of any of the Board Committees and, upon request of the chairman of such Board Committee, will receive all material distributed to such Board Committee members.

Notwithstanding the generality of the above, the following permanent Board Committees shall be appointed.

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Section 5. Independent Director Committee. If any of the following transactions is proposed to be taken by the Company, the Board shall form a special committee of no less than three independent directors as defined under the NYSE Rules who shall be responsible for protecting the interests of the minority shareholders of the Company. The Board shall only resolve such matters if a majority of the members of Independent Director Committee so recommends. Such matters are

(a) a proposed merger, takeover, business combination or related party transaction of the Company with the Majority Shareholder or any group company of the Majority Shareholder;

(b) a proposed bid for the shares of the Company by any entity owning a majority of the Company’s outstanding voting rights;

(c) a proposed repurchase by the Company of all the shares not owned by an entity owning a majority of the outstanding voting rights of the Company; or

(d) any change to the powers and duties of the Independent Director Committee.

28.In December 2008, shortly after the purchase by Novartis of the 25 percent of the Alcon shares, the Alcon board created a formal standing committee of independent directors, consisting of Thomas G. Plaskett, Lodewijk de Vink and Joan Miller (collectively: “Independent Director Committee” or “IDC”). According to the Independent Director Committee Charter dated December 9, 2008 (hereinafter: “Charter”) “each member of the Committee shall be “independent” under the listing standards of the New York Stock Exchange.” The New York Stock Exchange Rules provide for a certain number of independent directors for listed companies(6) (see 303A.01). An independent director is one w ho is “affirmatively” found, via a board determination, to have “no material relationship with the listed company (either directly or as a partner, shareholder or officer of an organization that has a relationship with the company).”(7)

(6)Prior to November 25, 2009, three independent directors were required. As of November 25, 2009, listed companies must have a majority of independent directors.

(7)NYSE Listed Company Manual, http://nysemanual.nyse.com/lcm/help/lcm-rules-map.html; as of November 25, 2009, the NYSE Listed Company Manual, section 303A.01 provides that listed Companies “must have a majority of independent directors” The definition of an independent director is elaborated in section 303A.02 of the Manual with commentary thereto.

11

29.The purpose of the IDC is set forth in its Charter. It extends the scope given under the OrgReg and reads as follows:

“The purpose of the Independent Director Committee (the “Committee”) of the Board of Directors (the “Board”) of Alcon, Inc. (the “Company”) is to serve as a disinterested body with respect to transactions involving one or more major shareholders of the Company (such transactions hereinafter referred to as “Special Transaction”) with a view to protect the interests of both the Company and the minority shareholders of the Company.”

30.According to the Charter the IDC has, inter alia, the following authority and responsibilities:

“2. The Committee shall have authority and responsibility for evaluating any proposed Special Transaction. The Committee shall report its evaluation to the Board. In particular, it shall:

·evaluate and advise on Special Transactions as to feasibility, compliance with applicable laws and regulations, structuring and protection of the interests of both the Company and the minority shareholders;

·give its views as to any significant issues relating to a Special Transaction;

·provide a recommendation to the Board as to the position it should take with respect to a Special Transaction;

·oversee, as appropriate, the implementation of a Special Transaction.

3. The Committee shall make recommendations for approval by the Board as to measures to be taken for the safeguard of interests of both the Company and the minority shareholders with respect to a Special Transaction.”

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31.Furthermore, the Organizational Regulations of February 2009 regulate in Article VIII the Conflict of Interest. The article reads as follows:

ARTICLE VIII Organizational Regulations

Conflict of Interest

Section 1. Definitions. For purposes of Articles VIII [see hereinafter] and IX [Interests in Shares and Options(8)]

(a) Conflicting Interest shall mean any interest a Board member may have with respect to a matter due to the fact such Board member or a Related Person (as hereinafter defined) has a financial or non-financial interest (including but not limited to an interest with respect to such matter for a Related Person that is detrimental to the Company or at conflict with the interests of the Company (Competitive Interest)) in, or is otherwise closely linked to, the matter, and such interest is of such significance to the Board member or a Related Person that the interest would reasonably be expected to interfere with the Board member’s judgement if he were called upon to participate in discussions of the Board or any Board Committee relating to, or vote on, the matter.

Concerning this wording, the question arises as to whether board members nominated by Nestlé and/or Novartis are “designees” of these corporations.

(b) Related Person of a Board member means

(i) the spouse (or a parent or sibling thereof) of the Board member, or a child, grandchild, sibling, parent (or spouse of any thereof) of the Board member, or an individual having the same home as the Board member, or trust or estate of which an individual specified in this clause (i) is a substantial beneficiary;

(ii) a trust, estate, incompetent or minor of which the Board member is a trustee, administrator or guardian; or

(iii) one of the following persons or entities: (A) an entity of which the Board member is a director, general partner, agent, major shareholder, employee or designee of such person or entity to the Board; (B) a person that controls one or more of the

(8)This article deals amongst others with the obligation of a board member to disclose his/and any Related Person’s shareholdings in the Company and holding of options to purchase shares of the Company.

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entities specified in subclause (A) or an entity that is controlled by, or is under common control with, one or more of the entities specified in subclause (A); or (C) an individual who is a general partner, principal or employer of the Board member.

Section 2. General. A Board member who believes that he may have a Conflicting Interest (Conflicting Director) which involves the Company shall inform the Chairman of the fact and the nature of the Conflicting Interest as soon as he becomes aware of such Conflicting Interest. In the event that the Chairman becomes aware of a Board member’s potential Conflicting Interest, the Chairman shall promptly contact the potentially Conflicting Director and discuss with the Conflicting Director the nature and extent of such Conflicting Interest. Upon receipt of the notice that a Board member has a Conflicting Interest, or upon the Chairman becoming aware of a Conflicting Interest of a Board member, the Chairman will implement the appropriate measures to ensure that the interests of th e Company are adequately protected. The Chairman will resolve to what extent the Conflicting Director shall be excluded from information and deliberations relating to the matter giving rise to the Conflicting Interest. At the next meeting of the Board, the Chairman shall inform the Board about the Conflicting Interest and the measures taken in order to adequately protect the Company. To the extent that a Board member disagrees with the conclusion that a Conflicting Interest exists or with the measures taken to address such Conflicting Interest, he may request that the Board consisting of non-Conflicted Directors only shall resolve as to the issue of the existence of a Conflicting Interest and the measures to be taken. In the event that the Chairman is the Conflicting Director, the Chairman or any Board member who becomes aware of the Conflicting Interest shall inform the Board about the Conflicting Interest and, following a discussion with the Chairman, the members of the Board other than the Chairman shall determine the appropriate measures to take to protect the Company’s interests and determine to what extent the Chairman shall be excluded from pertinent information, the deliberations and the voting relating to the matter giving rise to the Conflicting Interest. Subject to any applicable statutory provisions to the contrary, a Board member shall not be disqualified by his office from entering into any contract with the Company (either with regard to his tenure of any office or position with the Company, or as vendor, purchaser or otherwise).

Section 3. Duty to Abstain. Members of the Board shall abstain from exercising their voting rights in matters involving a Conflicting Interest; it being understood that they shall abstain from participating in, or receiving any information in respect of, any item

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or matter brought before the Board or any Board Committee in which they may have a Competitive Interest. If a Board member is required to abstain from voting in a matter, he shall not be counted in the quorum of the meeting in question. In addition, such Board member, as well as the other members of the Board, shall use their respective best efforts to ensure that the Board member with the Conflicting Interest does not receive any non-public, proprietary and/or confidential information with respect to such matter. In particular, and without limitation to the foregoing, a Board member shall not vote or be counted in the quorum of the meeting in respect of any resolution concerning the following matters:

(a) his own appointment, including fixing and varying its terms;

(b) the termination of his own appointment as the holder of any office with the Company or any other company in which the Company holds an equity interest;

(c) any transaction in which he or any Related Person is an interested party.

Notwithstanding the provisions of the foregoing paragraph, a director shall be entitled to vote and be counted in the quorum on:

(a) any issue or offer of securities of the Company in respect of which the director or any Related Party is or may be entitled to participate in their capacity as holder of any such securities;

(b) any contract in which he or any Related Party is interested only by virtue of his interest in securities of the Company;

(c) any contract concerning pension fund or retirement, death or disability benefits schemes under which he may benefit and which affords to directors only those privileges and advantages which are generally afforded to the employees to whom the fund or scheme relates;

(d) on any proposal regarding the stock incentive plan which relates both to directors and employees and affords to any directors only those privileges and advantages which are generally afforded to the employees to which the scheme relates; and

(e) any contract concerning the purchase or maintenance of insurance for any director or officer of the Company against any liability.

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32.It must be stressed that the Organizational Regulations and the Charter are subject to Swiss law, since they regulate the organization of Alcon (a Swiss company). As a consequence thereof, the Swiss Code of Obligations is applicable.

F.Alcon Litigation Trust

33.By resolution of July 7, 2010, Alcon’s board duly authorized the creation of a trust. The trust shall allegedly facilitate the performance of the mandate of IDC, particularly in connection with any transaction between Alcon and, inter alia, a shareholder that, immediately prior to such transaction, holds a majority of Alcon’s shares (“Protected Transaction”). In the present case the merger proposal announced by Novartis on January 4, 2010, is affected.(9)

34.On July 7, 2010, the Alcon Litigation Trust Agreement (hereinafter “Trust Agreement”) was concluded between Alcon, as Grantor, and Thomas G. Plaskett, Joan W. Miller and Lodewijk J.R. de Vink, as “Trustees” (hereinafter “Trustees”). The Trustees are currently members of the board of Alcon as well as members of the IDC.

35.The trust has been funded with USD 50 million that has been contributed by Alcon (“Trust Property” ).(10) Article 2.1. of the Trust Agreement determines who the beneficiaries of the Alcon Litigation Trust are (hereinafter “Litigation Trust”) and states as follows:

“ARTICLE II Beneficiaries

2.1 Beneficiaries. The Trust Property shall be held solely for the benefit of the Public Minority Stockholders (the “Beneficiaries”).”

36.The purpose and operation of the Litigation Trust is regulated in article 3 of the Litigation Trust Agreement. This article reads as follows:

(9)See Preamble of the Alcon Litigation Trust Agreeement dated as of July 7, 2010, by and between Alcon, Inc. (as Grantor) and Thomas G. Plaskett, Joan W. Miller and Lodewijk J.R. de Vink (as Trusteees).

(10)See article 1.1 of the Trust Agreement in connection with Schedule A.

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ARTICLE III

Purposes and Operation

3.1 Purposes of Trust. This Trust is established to protect the interests of the Company and the Public Minority Stockholders in connection with a Protected Transaction by providing (by a cash payment, a bank guarantee or otherwise) the financial means to pay any and all costs, fees, expenses and liabilities incurred in connection with the initiation (including, without limitation, the preparation and submission of any anticipatory statement of defense or any other similar protective measures), defense or maintenance of any Litigation (such costs, fees, expenses and liabilities, the “Appropriate Litigation Expenditures”).

“Litigation” means any litigation involving the Trustees, the Company, one or more members of the Board and/or the IDC, one or more stockholders of the Company or any other person in a court of competent jurisdiction and that is in connection with a Protected Transaction and related matters.

Appropriate Litigation Expenditures may include (i) any amount that a competent court requires a claimant to post or pay prior to initiating, or while defending or maintaining, any Litigation, including, without limitation, (a) any advancement for judicial costs, (b) any bond or other security for the counterparty’s indemnity and (c) any security for counterparty’s theoretical financial prejudice if any interim relief granted ultimately proves unjustified (clause (i), collectively, “Court Costs”) and (ii) (a) any costs that are paid to initiate, defend or maintain any Litigation (other than Court Costs), (b) any legal fees or other fees and expenses, including, without limitation, fees of expert witnesses, incurred by the claimant or defendant in connection with any Litigation and (c) any disbursements incurred in connection with any L itigation, including, without limitation, any fees payable to Novartis or any other third party pursuant to a court award or decision rendered in favor of Novartis or such other third party in connection with any Litigation (clause (ii), collectively, “Fees, Expenses and Liabilities”).

3.2 (...)”

37.Furthermore, the Trust Agreement is subject to the exclusive jurisdiction of the State of New York and governed by and construed in accordance with the laws of the State of New York.(11)

(11) See article 12.2 of the Trust Agreement.

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III.Legal Considerations

A.The Duties and the Organization of the Board of Directors in General

38.According to article 716 para. 1 CO, the board of directors is authorized to make decisions on all matters which are not allocated to the general meeting of shareholders. According to article 717 para. 1 CO, board members have to carry out their duties with due care (“duty of care”) and must duly safeguard the interests of the company (“duty of loyalty”).

39.The interest of the company defines a board member’s duty of loyalty. It has to be stressed that while a clear and all encompassing definition of the interests of the company in the sense of article 717 para. 1 CO does not exist, opinions concur that the interests of the company are not equivalent to the interests of its shareholders.(12) The corporation is an entity itself; the shareholders are third parties. A corporation is by no means a “flow-type heater” for shareholders.(13) The disadvantage of the very general provision on fiduciary duties regulated in article 717 para. 1 CO is that, on the one hand, it could lead to inflated expectations and, on the other hand, the concrete diversifications of this important d uty can hardly be extrapolated from the dry phrase providing that one “must duly safeguard the interest of the company”. Thus, Swiss Company law has not embraced the concept of a “fiduciary duty” between the board of directors and the shareholders.(14) The board of directors is mandated with the ultimate management of the long term interests of the company and not with the maximization of short-

(12)See LAMBERT, Das Gesellschaftsinteresse als Verhaltensmaxime des Verwaltungsrates der Aktiengesellschaft, Diss. Berne 1992, p. 52, 219.

(13)BÖCKLI, Schweizer Aktienrecht, Zurich 2009, p. 1779.

(14)BÖCKLI, op.cit., p. 1803; PETER, Ausgewählte Aspekte des Übernahmerechts: sneaking tactics, level playing field und Auktionspflicht, SZW 82 (2010), p. 184.

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term shareholder gains.(15) As a consequence of this fundamental principle, there is also no duty to auction during takeover procedures.(16)

40.Article 716a CO stipulates the non-transferable and inalienable duties of the board of directors. The provision reads as follows:

“Article 716a CO

1 The board of directors has the following non-transferable and inalienable duties:

1. the ultimate management of the Company and the giving of the necessary directives;

2.the establishment of the organization;

3.the structuring of the accounting system and of the financial controls as well as the financial planning insofar as this is necessary to manage the Company;

4.the appointment and removal of the persons entrusted with the management and the representation;

5.the ultimate supervision of the persons entrusted with the management, in particular, in view of compliance with the law, the articles of incorporation, regulations, and directives;

6.the preparation of the business report as well as the preparation of the general meeting of shareholders, and the implementing of its resolutions;

7.the notification of the judge in the case of overindebtedness.

2 The board of directors may assign the preparation and the implementation of its resolutions or the supervision of business transactions to committees or individual members. It shall provide for adequate reporting to its members.”

41.Non-transferable and inalienable duties have to be fulfilled by the entire board of directors. Only the preparation and the implementation of non-transferable duties may be assigned to a committee (article 716a para. 2 CO). The duty to decide in such matters rests with the board of directors as an institution. It cannot transfer or assign its duty to decide with respect to non-transferable and inalienable issues.(17) With respect to transferable duties, delegation is possible in accordance with organizational regulations (article 716b para. 1 CO). The board may

(15)PETER, op.cit., p. 184.

(16)PETER, op.cit., p. 184 with further references in footnote 60.

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thus delegate its powers to manage the company to a management body consisting either of board members or third persons (management). For such a delegation, the law requires organizational regulations, which are described in article 716b para. 2 CO. The original idea with regard to such rules had the aim to identify the right persons in cases of a violation of respective duties. (Therefore, such organizational rules — even though they comprise an internal document — are accessible to shareholders and creditors upon request). Swiss practice has developed these organizational regulations further and uses them, at same time, to organize the board and its functions. However, these rules remain internal documents, and do constitute part of the bylaws. They do not convey any rights to shareholders and creditors.

42.A committee that is established on the basis of the organizational regulations is an internal sub-body; it has no right and no legal possibility to act externally and represent the company. It has no powers to negotiate on behalf of the company. A committee is not entitled to control, block or challenge the steps of a merger. It may simply recommend for or against the merger terms. The organizational regulations, as an internal document, can be changed by the board of directors at any time; the board is even obliged to constantly amend the organizational regulations.(18) This holds true in all cases, and it applies in particular where regulations that are in conflict with Swiss Company law have been issued. The board is also not bou nd in the issuance of rules by the committee itself. Furthermore, there is no provision that prohibits a board to change the rules during a transaction. We are concerned with Company law and not with a sporting event.

43.Finally, it should be noted that shareholders have no duty of loyalty vis-à-vis the company.(19) As an extension of this principle, majority shareholders do not have to consider the interests of minority shareholders when voting at the general meeting, and vice versa. They can also not be forced to abstain from voting for

(17) Basle Commentary-CO II-WATTER/ROTH PELLANDA, Basle 2010, article 716a margin no. 37.

(18) BÖCKLI, op.cit., p. 1667.

(19) BÖCKLI, op.cit., p. 30, 1802.

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the same reasons. The minority protection against decisions of the general meeting shall be achieved via the right to challenge resolutions according to article 706 CO.

B.Competences and Remedies in the Swiss Merger law of 2003

1.The Duties of the Board of Directors and the General Meeting of Shareholders in View of a Merger

44.The planned transaction qualifies as a Swiss national legal merger, more specifically as a merger by absorption (article 3 para. 1 lit. a Merger Act), under chapter 2 (articles 3-28) of the Merger Act. In conducting a merger, it is required that the shares and membership rights are safeguarded. Article 7 para. 1 Merger Act reads as follows:

“Article 7 Merger Act Protection of Equity and Membership Rights

1 Members of the transferring legal entity are entitled to equity and membership rights in the acquiring legal entity, which correspond to their former equity or membership rights, having regard to the net assets of the legal entities involved in the merger, the allotment of voting rights, as well as all other relevant circumstances.

(...)”

45.The Boards of Directors of the legal entities involved in the merger have to conclude a Merger Agreement (article 12 para. 1 Merger Act).

“Article 12 Merger Act Conclusion of Merger Agreement

1  A merger agreement shall be entered into by the supreme administrative or management bodies of the legal entities involved in the merger.

2  The merger agreement shall be in writing and approved by a general meeting or the members respectively of the legal entities involved (Article 18).”

46.The preparation of a merger agreement can be delegated to committees or external persons (see article 716a CO), but the conclusion of the merger agreement and the respective decision are, already by the wording of Art. 12 of the Merger

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Act, non-transferable and inalienable duties of the entire board of directors.(20) Therefore, the decision to conclude a merger agreement cannot be delegated to a committee and, as a consequence, provisions requiring the ultimate approval of a committee with regard to the approval of a merger are invalid. The boards of directors of the involved companies also have to prepare a merger report that describes the essential legal and business elements of the merger (article 14 Merger Act). Furthermore, a special auditor has to audit the merger agreement, the merger report and the underlying balance sheets (article 15 Merger Act). The audit includes an opinion on “whether the share exchange ratio is reasonable” (article 15 para. 4 lit. b Merger Act).

47.The merger must then be submitted to the general meeting of shareholders of the involved corporations (article 12 para. 2 Merger Act): An affirmative vote of two-thirds of votes represented at the meeting and the absolute majority of the par value of shares represented at each shareholder meeting is required for approval. All shareholders are entitled to vote their respective shares at the shareholders meetings (article 18 para. 1 lit. a Merger Act). The general meeting of shareholders thus holds the competence of approval.(21) This competence corresponds with the general rules of Swiss Company law. As the Merger leads to the eventual dissolution of the transferring entity, it has to be approved by the general meeting of shareh olders.

48.It must be pointed out that the interests of the minority shareholders were considered when issuing the Merger Act. Article 1 para. 2 Merger Act reads as follows:

“Article 1 Merger Act Purpose

1 (...)

2 [This Act] ensures predictability and transparency and protects creditors, employees and minority shareholders.

3 (...)”

(20)SCHNELLER, Die Organe einer Aktiengesellschaft bei einer ordentlichen Fusion, Diss. St. Gallen 2006, p. 63 et seq. with further references in footnote 359.

(21)AMSTUTZ/MABILLARD, Fusionsgesetz (FusG) Kommentar, Basle 2008, article 12 margin no. 13.

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49.However, the legislature did not provide for privileged votes. Instead, it consciously decided to protect the minority shareholders by providing them with the appraisal claim remedy within the meaning of article 105 of the Merger Act (see below). Such remedy ensures that the principle of the continuity of the membership is protected.

50.Thus, the Merger Act assigns specific competences to the supreme administrative or management bodies of a company and leaves no room for divergent internal regulations when it comes to the principal decisions concerning a merger. In addition, the Merger Act provides for transparency in order to give shareholders the full picture, not only with respect to their vote in the general meeting but also as a basis for their decisions regarding the remedies provided by the Merger Act, in particular by article 105 of the Merger Act.(22)

51.The problem of minority protection with respect to mergers is tackled by the Merger Act on the level of the exchange ratio and gives the final word to the judge. This approach is dogmatically very different from the one followed by US law, where committees of independent directors who negotiate the merger with the major shareholder are common and where the approval of the merger often depends on the “majority of the minority” in the general meeting of shareholders.(23) However, the Swiss approach, as stipulated by the Merger Act, is consistent with the general principles of the organization of a company that are regulated in the CO. As previously mentioned, these principles are, to a great extent, mandatory, and, therefore , a Swiss company cannot switch to the American system through the internal regulation of the board.

(22)MÖHRLE, Delisting — Kapitalmarktrechtliche, gesellschaftsrechtliche und umstrukturierungsrechtliche Aspekte, Diss. Zurich 2006, p. 249.

(23)MAUERHOFER, Squeeze-Out Merger, Diss. Berne 2009, p. 93.

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2.The Remedies of the Swiss Merger Act

a.General Remarks

52.The Swiss Merger Act contains a full range of legal remedies for minority shareholders in chapter 9 of the Merger Act; these include the examination of the fairness of an exchange ratio (article 105 of the Merger Act), the objection against a merger (articles 106 and 107 of the Merger Act) and the pecuniary sanctions against directors not fulfilling their duties of loyalty and care (article 108 of the Merger Act). The articles read as follows:

“Article 105 Merger Act

1  If, in case of a merger, a demerger or a transformation, equity rights or membership rights are not adequately preserved or the compensation payment is inadequate, each partner shall be entitled to request the court, within two months from the publication of the resolution on the merger, demerger or transformation, to fix an adequate compensation payment. With respect to the fixing of the compensation payment, Article 7, paragraph 2 does not apply.

2  The court judgment shall be binding for all the partners of the legal entity involved provided they find themselves in the same legal position as the plaintiff.

3 The costs of the proceedings shall be borne by the acquiring legal entity. If justified by special circumstances, the court may impose the costs, in full or in part, on the plaintiffs.

4  The action for the examination of whether equity rights and membership rights are preserved does not prevent the resolution on the merger, demerger or transformation from becoming legally effective.”

“Article 106 Merger Act Principle

1  If the provisions of this law have been violated, partners of the legal entities involved who have not approved the resolution on the merger, demerger or transformation are entitled to challenge the resolution within two months from the publication in the Swiss Official Commercial Gazette. If no publication is necessary, the time period begins on the adoption of the resolution.

2  Partners may challenge the resolution also if it has been adopted by the supreme managing or administrative body.”

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“Article 107 Merger Act Consequences of Defects

1  If a defect can be remedied, the court grants the legal entities involved a time period to do so.

2  If the defect is not remedied within the granted time period or if it cannot be remedied, the court sets aside the resolution and orders the necessary measures.”

“Article 108 Merger Act

1  All parties involved in the merger, the demerger, the transformation or the transfer of assets and liabilities shall be liable to the legal entities, the individual partners and to the creditors for the damage they caused by intentional or negligent breach of their duties. The responsibility of the founders remains reserved.

2  All parties involved in the audit of the merger, the demerger or the transformation shall be liable to the legal entities, to the individual partners and to the creditors for the damage they caused by intentional or negligent breach of their duties.

3  Articles 756, 759 and 760 of the Code of Obligations apply. In the case of bankruptcy of a joint stock company or a cooperative society, Articles 757, 764, paragraph 2, 827 and 920 of the Code of Obligations apply by analogy.

4 The liability of persons acting for a public law institution is governed by public law.”

b.Article 105 Merger Act

aa.General Remarks

53.Article 105 of the Merger Act is the appropriate remedy for the violation of the principle of the continuity of the membership that is provided for in article 7 of the Merger Act and is applicable to all types of mergers.(24)

54.The appraisal claim remedy under Article 105 of the Merger Act provides that shareholders of entities participating in a merger who believe they were treated unfairly by the terms of the exchange may institute a lawsuit and therewith request a Court to examine the membership and equity rights as well as any compensatory payment allocated to them; further, they may ask for a determination

(24)AMSTUTZ/MABILLARD, op.cit., article 105 margin no 15; BAHAR, Commentaire LFus, Geneva 2005, article 105 margin no 1.

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as to whether these correspond to the rights of the shareholders prior to the transaction, in particular, whether the consideration received in the merger is fair.

55.When determining the share exchange ratio, the net assets of the legal entities involved in the merger, the allotment of voting rights, as well as the other relevant circumstances have to be considered (see Article 7 of the Merger Act). The statute specifically provides that the net assets of the legal entities must be considered. There are different methods of assessing the value of a share or of a company. Swiss Corporate law generally assumes that the value of a share may be determined objectively. If the company that has to be evaluated is listed, then the appraisal can be made based on the stock market price (often in connection with other valuation methods).

56.It must therefore be noted that Swiss law assumes that the true value for a company and hence a fair share value might be assessed (see also article 685b CO).

57.If the suit is founded, the judge will determine the amount of the additional compensatory payment that is necessary to offset the shareholders’ losses.

bb.Costs

58.According to article 105 para. 3 of the Merger Act, the costs of proceedings shall be borne by the acquiring entity. This includes the court costs and the compensation for the winning party.(25) This rule constitutes an exception to the principle of Swiss Civil Procedure law, according to which the costs are to be paid by the losing party (see § 38 and 40 para. 1 of the Code of Civil Procedure of the Canton Zug (ZCCP) and article 106 in connection with article 95 para. 1 of the future Swiss Code of Civil Procedure(26)). The exception is intended to remove thresholds for reasons of social protection, and it takes into account that the

(25)EMCH, System des Rechtsschutzes im Fusionsgesetz, Diss. Berne 2006, p. 166.

(26)The unified Swiss Code of Civil Procedure (SCCP) will enter into force on January 1, 2011, and will replace the cantonal codes of civil procedure.

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claimant pursues the rights of other shareholders.(27) However, as an exception to the exception, the Court may decide that the claimant shall bear all or part of the costs if particular circumstances justify it (article 105 para. 3 of the Merger Act). This is notably the case if the complaint is obviously unfounded and if the claimant was aware of the unfoundedness.(28)

59.It should be noted that, regarding the attorney’s fees, Art. 12 lit. e of the Federal Act on Attorneys-at-Law prohibits contingency fees or similar arrangements. While a client and an attorney can agree to a premium, in the event of a successful outcome of a lawsuit, in addition to the agreed basic fee (up to 10% as the practice now stands), agreements in which the compensation of the attorney “depends on the success of the service” are prohibited.(29) In any case, a conventional lawyer’s fee must be charged. Conventional lawyer’s fees are assessed by the court and they generally must be borne by the same party that bears the court costs. For the litigation of a case having an amount in dispute of CHF 200 mi o., the total costs of the proceedings (court costs and assessed lawyer’s fees for the first instance, the cantonal appeal and the appeal to the Federal Court) would not exceed CHF 10 mio.

c.Article 106 Merger Act

aa.General Remarks

60.The challenge to resolutions under article 106 of the Merger Act provides that shareholders who did not vote for a reorganization decision can sue to have it annulled by the judge if they can prove that it breached the provisions of the Merger Law. The consequences are regulated in article 107 of the Merger Act, which stipulates that the resolution is only set aside if the defect cannot be remedied. An action under article 106 of the Merger Act is possible if the disputed

(27) EMCH, op.cit., p. 166.

(28) EMCH, op.cit., p. 166.

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resolution (i.) violates the law (merger law, corporation law, etc.) or the articles of incorporation and (ii.) if the plaintiff shareholder has not voted for the decision.

61.The relationship between article 105 and 106 of the Merger Act has not been regulated in the Merger Act. The question must therefore be resolved according to the general principles of law in particular the principle of lex specialis derogat legi generali.(30) In case the alleged breach is a violation of article 7 of the Merger Act (equity rights or membership rights are not adequately preserved or the compensation payment is not adequate), the appraisal claim remedy is a lex specialis in comparison to article 106 of the Merger Act.(31) Consequently, the challenge to resolutions is excluded by the appraisal claim remedy. In contrast, if the contentious resolution does not concern the exchange ratio or the compensatory p ayment, the challenge of the resolution under 106 of the Merger Act will again be possible.(32)

bb.Costs

62.The Merger Act does not provide for a specific regulation concerning the costs of proceedings with respect to the challenge claims of article 106 of the Merger Act. However, Swiss doctrine holds that article 706a para. 3 CO should apply per analogiam.(33) Article 706a para. 3 CO provides for another exception of the above-mentioned “loser pays-rule”. The provision reads as follows:

(29) FELLMANN/ZINDEL, Anwaltsgesetz, Zurich/Basle/Geneva 2005, p. 175.

(30) BAHAR, op.cit., article 105 margin no. 5. The principle of lex specialis derogates generalis basically holds that when two or more laws contradict, the more specific law has precedence over the general law. It is often shortened to lex specialis.

(31) Basle Commentary MA-DUBS, Basle 2004, article 106 margin no 7 et seq.; EMCH, op.cit., p. 167 et seq.; Handkommentar zum Schweizer Privatrecht, KURTH, article 105 margin no 2; Zurich Commentary MA-MEIER-DIETERLE, Zurich 2004, Vor Art. 105 — 108 margin no 4; BAHAR, op.cit., article 105 margin no 6 Gozzi, Schutz der Aktionäre bei Fusion and Spaltung gemäss Fusionsgesetz, Diss. Zurich 2009, p. 256, with further references; AMSTUTZ/MABILLARD, op.cit., article 105 margin no 6.

(32) AMSTUTZ/MABILLARD, op.cit., article 105 margin no 6; BAHAR, op.cit., article 105 margin no 6.

(33) EMCH, op.cit., p. 219.

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“Article 706a CO, Procedure

1-2 (...)

3 If the suit is dismissed, the judge shall allocate the costs in his own discretion between the Company and the plaintiff.”

63.Accordingly, the judge renders a decision concerning the costs of the proceedings if the claimant loses the suit. He will take into consideration, inter alia, the chances of success at the time of the filing of the suit, the behavior of the company and the information available to the claimant.(34)

d.Article 108 Merger Act

aa.General Remarks

64.Article 108 of the Merger Act stipulates a responsibility regime for the individuals involved in reorganizations and those who verify them, towards the subjects, the partners and the creditors. It requires the realization of four conditions: (i.) a breach of a duty; (ii.) a fault, (iii.) a damage and (iv.) a causal connection between the breach of duty and the damage.(35)

65.Again, the Merger Act does not regulate the relationship between articles 105 and 108 of the Merger Act. As claims based upon these provisions are brought against different defendants (the corporation under article 105 of the Merger Act, respectively the officers and directors under article 108 of the Merger Act) and as the provisions have different purposes (avoidance of a resolution and reparation of damage), claims based on articles 105 and 108 can, in principle, be brought in parallel.(36) But, if the alleged breach is a violation of article 7 of the Merger Act, the damage can, in principle, be fully repaired under the appraisal claim remedy. Thus, an action under article 108 of the Merger Act will be

(34) Basle Commentary-CO II-DuBs/TRuFFER, op.cit., article 706a margin no 10.

(35) Zurich Commentary MA-BERETTA, op.cit., article 108 margin no 29-42; TRIGO TRINDADE, Commentaire LFus, Geneva/Zurich/Basle 2005, article 108 margin no 89.

(36) JUCHLI, Die Verantwortlichkeit bei Unternehmensumstrukturierungen, p. 83.

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rejected due to a lack of damage.(37) Therefore, if the alleged breach concerns the equity rights and membership rights, article 108 of the Merger Act is subsidiary in relation to article 105 of the Merger Act and applies only if there is a remaining damage.(38)

bb.Costs

66.In principle, the “loser pays-rule” applies to lawsuits based on article 108 of the Merger Act. However, if the shareholder, based upon the factual and legal situation, had sufficient cause to file the lawsuit, the judge may divide the costs, in his discretion, between the claimant and the company (article 105 para. 3 of the Merger Act in connection with article 756 para. 2 CO).

C.Conflict of Interests Situations of Board Members

1.Conflict of Interest

67.With regard to potential conflict of interest situations of members of the board of directors, it has to be stressed that the interests a board member is obliged to observe and which can conflict with or affect personal interests of the board member are the interests of the company.(39) As mentioned above, the interests of the company are not the same as and shall not be confused with the interests of the shareholders or specific shareholders. A conflict between minority and majority shareholders, for example, does not by itself result in a conflict of interest within the board, and such conflicts are not conflicts of interest within the meaning of Swiss Company law. Therefore, a clear distinction must be drawn between the in terest of a company concerning a merger and the interest of a minority share-

(37) BAHAR, op.cit., article 105 margin no 11.

(38) BÖCKLI, op.cit., p. 432 et seq.; JUCHLI, Die Verantwortlichkeit bei Unternehmensumstrukturierungen, p. 83-84.

(39) See FCD 130 III 213, 219.

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holder to obtain an adequate exchange ratio. It is true that there are aspects of interlinkage. These may, however, work both ways. An exchange ratio that is too high might render a merger project economically unviable.

68.Furthermore, a distinction must be made, in a second step, between true conflict situations and situations where a board member is merely affected by the consequences of a decision.(40) With respect to the latter, a board member cannot be absolved from his duty to vote by internal regulations, pursuant to which board members affected by a decision should abstain from the vote. As a general principle, every board member can (and must) vote even in matters in which he has personal interests, which might more or less contradict the interests of the company.(41) By intentionally or negligently abstaining from his vote, a board member can be held liable for eventual damages caused by the abstention. The duty to vote in a case of a mere c ontact of interest is accentuated in cases where the decision concerns a non-transferable duty of the board as the board cannot delegate the decision to third persons who do not have such contacts of interests.

69.The question of whether or not a board member has a conflict of interest (as opposed to a mere consequence bearing) in a specific situation is often difficult, and neither the law, nor court decisions, doctrine, self regulation or international standards have established a definitive answer to this question.(42) BÖCKLI cites three criteria concerning collisions of interests(43): (1) the direction of the collision (in true conflict of interests, the involved interests are antipodal(44)), (2) the pressure (based on how strong the personal interest is expected to influence the

(40)BÖCKLI, op.cit., p. 1793 et seq.

(41)BÖCKLI, op.cit., p. 1795.

(42)Neither the Swiss Code of Best Practice for Corporate Governance nor the draft of December 21, 2007, for a revised Company and Accounting law contain a definition of “conflicts of interest”.

(43)BÖCKLI, op.cit., p. 1795 et seq.

(44)See also HANDSCHIN, Treuepflicht des Verwaltungsrates bei der gesellschaftsinternen Entscheidfindung in von der Crone/Weber/Zäch/Zobl (Ed.), Neuere Tendenzen im Gesellschaftsrecht, Festschrift für Peter Forstmoser zum 60. Geburtstag, Zurich 2003, p. 175.

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board member’s decision(45)) and (3) whether or not a collision of legal duties exists. It is evident that such a criteria-based approach calls for case-by-case evaluations rather than overarching regulations.(46) This approach is also accounted for in margin 16 of the Swiss Code of Best Practice of Corporate Governance according to which the “Chairman, or Vice Chairman, should request a decision of the Board which reflects the seriousness of the conflict of interest”.

2.Solutions for Conflict of Interest Situations

70.If a conflict of interest is manifest, there are different solutions proposed by jurisprudence and doctrine to overcome it. The Swiss Federal Court, in FCD 130 III 213, 219, requires that the board takes the “appropriate measures” to secure the interests of the company. Such appropriate measures can be, e.g.,(47) disclosure of the conflict, use of an objective evaluation (fairness opinion)(48), abstention from voting (even from the discussion), approval of a body of the same or a higher level (“neben- oder übergeordnetes Organ”)(49) , appointment of an external counsel or demission. Based on the aforementioned considerations, the appropriateness of any of these measures has to be evaluated whil e taking into account the specifics of each case, and in particular the criteria concerning the gravity of the conflict of interest.

71.The aforementioned measures are also in line with the prerequisites elaborated by the Swiss Federal Court in the event of self-dealing or double representation.

(45)See HANDSCHIN, op.cit., p. 177 et seq., who focuses on the board member’s economic dependence on his mandate. Only if a voting out would lead to severe financial losses and thus creating an economic dependency is the possibility of being deselected to be considered as a conflict of interest.

(46)See HOPT, Erwartungen an den Verwaltungsrat in Aktiengesellschaften und Banken. Bemerkungen aus deutscher und europäischer Sicht, SZW 2008. p. 242, who demands that the subtleties of each case has to be taken in consideration,

(47)ROTH PELLANDA, Organisation des Verwaltungsrates, Diss. Zurich 2007, p. 171 et seq.

(48) See margin 16 para. 3 of the Swiss Code of Best Practice for Corporate Governance which states as follows: “Transactions between the company and members of corporate bodies or related persons should be carried out at arm’s length’ and should be approved without participation of the party concerned. If necessamy, a neutral opinion should be obtained”.

(49)See FCD 126 III 361, 363.

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In general, self-dealing is forbidden, unless there is proof that there is no danger of damage to the represented party due to the nature of the business (e.g., the proof can be established by a fairness opinion) or the approval for such self-dealing is either given by non-conflicted persons or by a higher organ, e.g., the general assembly.(50)

72.With respect to the abstention, there is a broad agreement that it often does not constitute the appropriate measure in a conflict of interest situation.(51) DRUEY correctly states that independence requires expertise and expertise requires connections. As conflicts of interest are inherent to connections, a perfectly independent director is, therefore, a perfectly clueless director, and, consequentially, also a perfectly dependent director.(52) As a result, abstention can not only constitute a breach of the board member’s legal duties, but can also be inappropriate and detrimental to the goal of finding the ideal solution in the interests of the company. It is merely a procedural measure and does not lead (as opposed to the us e of a fairness opinion) to a control of the correctness of a decision with regard to its content.(53)

73.The approval of a body of the same or a higher level (neben- oder übergeordnetes Organ”) is a measure suggested by the Swiss Federal Court.(54) BÖCKLI notes that there is a deeply rooted tradition in Switzerland to resolve conflicts of interest within the board by bringing the affair before the general meeting of the shareholders.(55) The problem with this procedure lies in the fact that the general meeting of the shareholders is normally not competent to decide the matters brought before it for such an approval, notably matters concerning management

(50)FCD 127 III 332, 333 et seq.; BÖCKLI, op. cit., p. 1780 et seq.; STUTZ/VON DER CRONE, Kontrolle von Interessenkonflikten im Aktienrecht, SZW 2003, p. 106.

(51)ROTH PELLANDA, op.cit., p. 175; BÖCKLI, op.cit., p. 1795.; FORSTMOSER, Interessenskonflikte von Verwaltungsratsmitgliedern, in Vogt/Zobl (Ed.), Der Allgemeine Teil und das Ganze, Liber Amicorum für Hermann Schulin, Basle 2002, p. 21; DRUEY, Interessenskonflikte, in Charlotte Baer (Ed.), Verwaltungsrat und Geschäftsleitung, Berne/Stuttgart/Vienna 2006, p. 70.

(52)DRUEY, op.cit., p. 70.

(53)ROTH PELLANDA, op.cit., p. 177.

(54)FCD 126 III 361, 363.

(55)BÖCKLI, op.cit., p. 1798 with further references (footnote 1659).

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and administration.(56) The board of directors and the general meeting of shareholders have clear material competences and the occurrence of a conflict of interest in one of the bodies should not violate this legal order too much.

74.However, whether or not the approval of the general meeting is able to cure a decision of the board if Company law or the Merger Act explicitly assigns the authority for such approval to the general meeting, is a different question. In this case, a violation of the legal order of competences does not occur, as the law demands the approval. However, the question as to whether or not the resolution of the general meeting — as a superior body within the meaning of the cited court jurisprudence — can effectively cure a board decision tainted with a conflict of interest has to be decided in consideration of the specific circumstances and of the interests of the company.

75.Often, the production of a fairness opinion is sufficient to mitigate a conflict of interest. If a decision of the board concerns an element that is objectively measurable, a damage to the company can be avoided by a professional and competent assessment. Therefore, fairness opinions have gained importance in takeover proceedings; if a conflict of interest arises within the board of directors, the board can base its decision concerning the adequacy of the offer price on an external evaluation.(57)

3.Consequences of a Decision Made by a Conflicted Board

76.According to the von der Crone-Opinion, a decision of a conflicted board of directors may be deemed void under Swiss law. According to article 714 CO, the grounds for voidness of resolutions of the general meeting of shareholders (article 706b CO) apply by analogy to resolutions of the board of directors. In this respect, the Swiss Federal Court has declared that voidness can only be assumed in exceptional cases and restrainedly: “The implication of the rule for

(56)BÖCKLI, op.cit., p. 1798.

(57)ROTH PELLANDA, op.cit., p. 174.

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decisions of the board of directors is contested, however it is undisputed that voidness is only considered in exceptional cases, e.g. in cases of serious and permanent violations against mandatory and fundamental legal provisions. ”(58) This is only the case in the event that mandatory provisions, which were established for the benefit of the public, were seriously and continuously violated or if other provisions that are essential for the structure of corporate law and fundamental principles of corporate law were violated.(59)

77.The consequences of void board resolutions have a huge impact on the legal certainty and clarity of the business process of a company,(60) which is one reason, among others, why high standards are set for declaring board resolutions void. It is for instance not sufficient to declare a resolution of the board as void just because a provision of the articles of incorporation was breached, unless of course this provision is mandatory and was established on the basis pf public interests.(61) Board members are responsible for representing the company and they often have to make difficult decisions concerning the management, which do not tolerate any delay. Otherwise, damage to the company can be expected.

78.Consequentially, Swiss doctrine holds that a board decision tainted by a conflict of interest is not void, but it can lead to personal liability of the members of the board of directors, according to article 754 CO, if the requirements (violation of a duty, damage, fault, causal connection) are given.(62)

79.This view is also consistent with the practice of the Swiss Federal Court concerning conflicts of interest, which requires the application of appropriate measures to secure the interests of the company and allows mitigating measures after the fact. This practice reflects a pragmatic view focusing on the interests of the

(58)FCD 133 III 77, 79: “La portée de la règle pour les décisions du conseil d’administration est discutée, mais il n’est pas contesté que la nullité ne sera admise qu’exceptionnellement, par exemple en cas de violation grave et durable de régles lègales impératives et fondamentales”.

(59)Basle Commentary CO II-WERNLI, op.cit., article 714 margin note 10 with further references.

(60)Basle Commentary CO II-WERNLI, op.cit., article 714 margin note 10.

(61)Basle Commentary CO II-WERNLI, op.cit., article 714 margin note 10.

(62)BÖCKLI, op.cit., p. 1643; RHEIN, Die Nichtigkeit von VR-Beschlüssen, Diss. Zurich 2001, p. 239; DRUEY, op.cit., p. 75.

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company. The legal concept of voidness (see article 20 para. 1 CO) is incompatible with this view, as it implies a strict dichotomy creating uncertainty and, most likely, would cause results that would be detrimental to the interests of the company.

4.Independent and Dependent (“Fiduciary”) Board Members

a.Definition and General Remarks

80.There are no statutory rules on independence. The question of if and to what extent a board member who is affiliated with a shareholder or a third party is in a conflict of interest situation concerns the concept of the “fiduciary” or “dependent” board member.

81.The term fiduciary board member has already been coined a long time ago by GAUTSCHI and JÄGGI.(63) Accordingly, a fiduciary board member is a board member who executes his mandate in his own name but in the interests and upon the instructions of a third party.(64)

82.There are different subcategories of fiduciary board membership, namely the “dependent” board member (a term that originated from the law of corporations and describes the board member of a dependent company who acts upon instructions of the parent company(65)), the representative of a legal entity according to article 707 para. 3 CO and a representative of the state.(66) They all share the characteristics described in the aforementioned definition, notably they all act upon instructions of and in the interest of a third party.

(63)GAUTSCHI, Fiduziarische Rechtsverhältnisse besonderer Art, SJZ 45 (1949) p. 301 et seq.; JÄGGI, Ein Gerichtsurteil über den „abhängigen“ (fiduziarischer) Verwaltungsrat, SJZ 56 (1960), p. 1 et seq.

(64)See LAZOPOULOS, Interessenskonflikte und Verantwortlichkeit des fiduziarischen Verwaltungsrates, Diss. Zurich 2005, p. 10.; see also LIPS-RAUBER, Die Rechtsbeziehungen zwischen dem beauftragten fiduziarischen Verwaltungsrat und dem Fiduzianten, Diss. Zurich 2005, p. 16.

(65)See already JÄGGI, op.cit., p. 3.

(66)LAZOPOULOS, op.cit., p. 11 et seq.

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83.It emanates from the definition of the fiduciary board member that the question as to whether or not a person qualifies as a fiduciary board member is to be answered by the examination of the relationship between the said board member and the third party. The most relevant questions are whether the board member is obliged to follow instructions of a third party and whether he generally acts in the interests of the third party. Such duties are of a contractual nature and typically derive from a mandate agreement, an employment agreement or a shareholder’s agreement.(67) The fiduciary board member is — by definition — in a contractual relationship with the third party.(68)

b.Specific Definitions of Independence

84.As mentioned above, there are no statutory rules on independence. However, the Swiss Code of Best Practice for Corporate Governance (hereinafter: “Swiss Code of Best Practice”) as well as the New York Stock Exchange Rules contain provisions on independence. Furthermore, some bylaws or organizational regulations of companies may also contain provisions on independence.

85.The Swiss Code of Best Practice states that particular rules on independence should be applied with regard to committee members. Therefore, it is recommended that a majority of the members of certain committees be independent. Independent members shall mean non-executive members of the board who were never members of the executive management (or were members more than three years ago) and who have no, or comparatively minor, business relations with the company (margin 22 of the Swiss Code of Best Practice).

86.The criteria for independence set out in the current Swiss Code of Best Practice are vaguely formulated but, nevertheless, they have proven to be workable. Each company may provide stricter criteria if it considers this to be a desirable course

(67)LAZOPOULOS, op.cit., p. 21 et seq.; LIPS-RAUBER, op.cit., p. 33 et seq.

(68)see LIPS-RAUBER, op.cit., 37 et seq., who denies that such fiduciary relationship can solely derive from Company law.

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of action, especially in relation to the more strict requirements of foreign stock exchanges.

87.Furthermore, the New York Stock Exchange Rules provide for a certain number of independent directors for listed companies(69) (see 303A.01). An independent director is one who has “no material relationship with the listed company (either directly or as a partner, shareholder or officer of an organization that has a relationship with the company)”. The materiality element requires a board determination that “broadly considers all facts and circumstances (...) not only from the standpoint of the director but also from that of persons or organizations” with which the director is affiliated.(70)

c.The Impact of the Nomination of a Board Member by a Shareholder

88.As a consequence of the contractual nature of the dependency of a fiduciary board member, the mere fact that a board member had been nominated by a specific shareholder does not in itself make this board member a fiduciary or a dependent board member. The nomination of candidates by a shareholder is a standard procedure. Thereby, the shareholder may have various reasons as to why he chooses a particular candidate. He may value his expertise or experience, or he may follow corporate governance principles that demand a well-balanced membership of the board of directors.(71) The candidacy may also be the result of a compromise (explicit or implicit) between different shareholders and not represent the first choice of any of the involve d parties.

89.In order to determine whether or not a nominee has ties to the nominating shareholder that will make future conflicts of interest likely, only the intra partes

(69)Prior to November 25, 2009, three independent directors were required. As of November 25, 2009, listed companies must have a majority of independent directors.

(70)NYSE Listed Company Manual, http://nysemanual.nyse.com/lcm/help/lcm-rules-map.html; as of November 25, 2009, the NYSE Listed Company Manual, section 303A.01 provides that listed Companies “must have a majority of independent directors” The definition of an independent director is elaborated in section 303A.02 of the Manual with commentary thereto.

(71)See for example margin 12 of the Swiss Code of Best Practice for Corporate Governance.

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relationship between the nominee and the nominating shareholder is of relevance. Perceptions may, in some cases, allow conclusions with regard to the existence of contractual ties, but these perceptions should not be confused with the contract itself and, for the above-stated reasons, the nomination of a candidate does not qualify as a fact that would allow such conclusion.

90.In the present case, the question arises whether board members may be regarded as “designees” of a related person. “Designee” comes from “designate”, which means “to indicate, select, appoint, nominate or set apart for a purpose or duty, as to designate an officer for a command.”(72) This implies a certain closeness between shareholder and board member, whereas a mere nomination under Swiss Company law does not imply any closer relationship. It may not be said that directors nominated by a major shareholder are barred from voting.

IV.Conclusions

A.The Limitation the Competences of Independent Director Committee and the Duties of Its Members under Swiss Law

91.In this case, a lot of dust must be blown away and it does not help to just put on goggles in order to avoid blindness.

92.As the conclusion of the eventual merger agreement is a non-transferable and inalienable duty of the entire board of directors, the competence to conclude cannot be assigned to the Independent Director Committee. Article 5 Section 5 para. 1 of the OrgReg provides that “the Board shall only resolve such matters if a majority of the members of Independent Director Committee so recommends”, this could be interpreted as a veto right. This seems to be the von der Crone-Opinion’s interpretation as well because it states that “the board cannot validly

(72)Black’s Law Dictionary, 6. Ed., St. Paul/Minnesota 1990, p. 447.

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decide alone [due to the conflict of interest](73)”. Such a view, however, is incompatible with the order of article 716a CO. Special committees can be of great value for a company, and its members may indeed have “more time and skills to deal with the topic in depth (...) and therefore will be able to reduce the risk of mistakes.”(74) This, however, does not change the fact that non-transferable duties, such as the conclusion of the merger agreement and the respective decisions, have to be fulfilled by the entire board. The IDC can and — pursuant to the OrgReg — should have a part in the decision making process, but its power cannot extend to a veto right. In order to be compatible with the applicable Swiss law, article 5 Section 5 of the OrgReg has to be interpreted as a mere recommendation to follow the IDC’s recommendation. This view is also consistent with the rules& nbsp;that the IDC has itself adopted in its Charter. With regard to “Special Transactions” (transactions that relate to Alcon, to the shares of Alcon or to related party transactions involving one ore more major shareholders of Alcon), the Charter gives the IDC merely the authority for evaluating and advising “as to feasibility, compliance (...), structuring and protection of the interests of both the Company and the minority shareholders”. The Charter, which is the more special (lex specialis) codification compared to the OrgReg, is therefore in line with the requirements set forth by mandatory Swiss company law: While the IDC is authorized to recommend and advise, the competence to decide remains with the board of directors. The IDC cannot block a merger proposal, and the minority in a board decision may not try to block a merger on behalf of the company.

93.We do not share the view expressed in the von der Crone-Opinion that once a transaction is envisaged, the rules established must be maintained. It is obvious that the protection of minority interests is a legal duty, but the modalities may be changed and the ultimate legal protection is provided by statutory law, namely article 105 of the Merger Act.

(73)Von der Crone-Opinion, p. 9.

(74)Von der Crone-Opinion, p. 9.

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94.Furthermore, it has to be stressed that the members of the IDC have the same obligations as all the other board members. They have a duty of care and a duty of loyalty. As all board members, they have to act in the interests of the company. With respect to the merger proposal, the members of the IDC (as well as the other board members) are obliged by law to answer the question as to whether or not the merger is in the interests of Alcon. The members of the IDC are not the advocates of specific shareholders and auctioning such shareholders’ shares in a merger is not their duty. Their duty is to act in the long term interests of the company. In this respect, the von der Crone-Opinion lacks any reference to the most importa nt question, namely, whether or not the merger is in the interest of the company. In its interpretation of Alcon’s Organizational Regulations, the company interest is abandoned in favor of a contradictory process between the interests of specific shareholder groups. However, despite the contradictory approach the von der Crone-Opinion seems to embrace, it argues that board members who were nominated by the majority shareholder are conflicted, and the IDC, which “is meant to protect the minority shareholders,”(75) shall have the final say. With this argument, the von der Crone-Opinion ultimately replaces the interests of the company with the interests of the minority shareholders. Such an interpretation of the OrgReg is inconsistent with the applicable Swiss law. The members of the IDC — as well as the other members of the board — have a duty to protect the interests of the company. All in all, the IDC goes beyond the law and, as a result, they could become liable for da mages resulting therefrom.

B.The Status of Board Members Nominated by Novartis Under Swiss Law

95.The von der Crone-Opinion is based on the premise that the board members nominated by Novartis would automatically be conflicted with regard to the Novartis merger proposal.(76)

(75)Von der Crone-Opinion, p. 19.

(76)Von der Crone-Opinion, p. 6.

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96.This view is wrong. First, a conflict between minority and majority shareholders does not by itself result in a conflict of interest within the board. Instead, tackling such conflicts in consideration of the (long term) interests of the company is part of the mandate and the duties of a board and the board members, and the board cannot avoid this duty by stipulating internal organizational rules to the contrary.

97.Second, the question as to whether or not a conflict of interest exists in a certain situation has to be evaluated by a criteria-based approach in consideration of the specific circumstances in the specific case, not by abstract and overarching regulations. With respect to the relationship between a shareholder and a board of director, a conflict of interest situation may arise if “fiduciary board members” are involved. However, the question as to whether or not a person qualifies as a fiduciary board member is to be answered by the examination of the relationship between the said board member and the shareholder. The relevant question is whether a board member nominated by Novartis is contractually obliged to follow Novar tis’ instructions and will generally act in Novartis’ interest. The von der Crone-Opinion does not deal with this important question.

98.Third, based on the definitions and descriptions of independence regulated in the Swiss Code of Best Practice, the New York Stock Exchange Rules, the Organizational Regulations of the board of Alcon and the Charter, there are no reasons for excluding board members from voting on the merger agreement merely due to the single fact that they were nominated by a major shareholder. The Swiss Code of Best Practice does not mention this nomination as a requirement for independence. Also, pursuant to the rules of the NYSE and its regulatory commentary, the ownership of a significant amount of stock does not lead to the conclusion that the owner is not independent. Therefore, the same applies to a member of the board that was nominated by a major shareholder. The reasons for choosing a specific person can be diverse. What matters is the specific relationship between the nominated board member and the shareholder.

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99.In addition, the Organization Regulations of the board of Alcon also provide for independent directors, as defined under the NYSE Rules, who shall act as members of the IDC. As mentioned, members of the board nominated by Novartis may qualify as independent members.

100.Furthermore, the Organizational Regulations also specify the situation of conflicting interests. According to the OrgReg, a conflicting interest is given if a board member or a Related Person has any financial or non-financial interest in a matter, and this interest is of such significance to the board member or to the Related Person that it is expected that the board member’s judgment may be interfered with. In this context, it must be pointed out that a Related Person is defined as an entity or a person (namely a third party) of which the board member of Alcon is acting as a member of a board or is otherwise financially or personally involved. Put in other words, only the relationship to the outside is affected and not the relationship within Alcon. This is consistent with the established principles concerning fiduciary board members. Therefore, the term “designee” in article 8 section 1 lit. (b) (iii) OrgReg is to be interpreted under the applicable Swiss law in this sense. It can only mean a person who, due to a contractual relationship, executes his mandate in his own name but in the interests and upon the instructions of a different entity. As long as a board member is merely nominated by a shareholder but not contractually obliged to follow his instructions and safeguard his interests, he cannot be described as a conflicted designee.

101.The statement that a majority shareholder nominated candidate is eo ipso conflicted for any transaction with this majority shareholder is wrong under Swiss law and under the OrgReg.

102.Furthermore, attention should be drawn to the following: Although the situation is obfuscated, it is clear that the actual board is not conflicted with respect to the merger and its circumstances. The question concerning possible conflicts within a future board is a separate question, which, as has been posed above, depends on the position of the persons nominated.

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C.Consequences of a Hypothetical Conflict of Interest or Inadequate Compensation under Swiss Law

103.The von der Crone-Opinion’s suggestion(77) that a decision taken by a board with a conflicted majority would be void is wrong. The view of the Opinion is not only contrary to the Swiss doctrine but also to the practice of the Swiss Federal Court, which reflects a pragmatic view focusing on the interests of the company. The legal concept of voidness would be incompatible with this view as it implies a strict dichotomy creating uncertainty and, most likely, would cause results that would be detrimental to the interests of the company.

104.The von der Crone-Opinion further mentions different possibilities as to how to mitigate a conflict of interest. In the end, it comes to the conclusion that a three-step approval process must be followed, which includes the approval of the IDC. Thereby, the Opinion effectively disempowers the board of directors via a veto right of the IDC.

105.For the reasons outlined above, the disempowerment of the supposedly conflicted board members is not a preferable — and often an illegal — way to proceed under the applicable Swiss law to overcome a conflict of interest; it contradicts the board members’ duties to ultimately lead the company and, thereby, to vote. With respect to the question of adequate compensation in takeover proceedings, the usual way to overcome conflicts is to produce fairness opinions. As a fair compensation is objectively measurable, the risk of an unfair result due to the votes of conflicted board members can be excluded.

106.As has been demonstrated, the Swiss Merger Act already provides for solutions to eliminate negative effects for shareholders, combining the elements of approval by the supreme body and objective assessment. Article 12 assigns the power of final approval to the general meeting of shareholders. In this respect, every major decision made by the board concerning the merger agreement, including the exchange ratio, is subject to approval by a superior body. The notion

(77)Von der Crone-Opinion, p. 12 et seq.

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of the von der Crone-Opinion that the shareholders directly interested in the decision must abstain in this voting(78) is wrong. Again, the Opinion seems to see Company law as a matter of conflicting shareholder interests. However, Swiss law and practice considers the natural tensions between majority and minority shareholders mainly as a matter of contract law, typically to be resolved in shareholders’ agreements, which regulate the duties and rights of the specific parties without directly interfering in the legal order of the company structure. With respect to the shareholders’ approval of a merger, the law requires an affirmative vote of two-thirds of votes represented at the meeting and the absolute majority of the par value of shares represented at each shareholder meeting for approval. There are no specifications with respect to minority or majority shareholders.

107.Instead, the Merger Act provides for a sophisticated assortment of legal remedies to protect minority shareholders in particular. Article 105 of the Merger Act specifically addresses the problem of a possible inadequate compensation. Thus, the solution of the legislature in this respect was to give the ultimate word to the judge. It would therefore be contrary to the intentions of the legislature to arbitrarily introduce minority protection mechanisms with respect to adequate compensation. This is particularly true if such mechanisms contradict the legal order concerning the supreme administrative or management bodies and basic principles such as the shareholder’s right to vote.

108.If the minority shareholders only wish to challenge the unfair exchange ratio by requesting the judge to examine the membership and equity rights as well as any compensatory payment allocated to them, then only article 105 of the Merger Act is applicable. The appraisal claim remedy is also a lex specialis in comparison to article 106 of the Merger Act if a shareholder intends to attack the alleged unfairness of an exchange ratio. The suggestion that a shareholder could challenge the general meeting of shareholder’s resolution against this background is untrue. Article 108 of the Merger Act is also subsidiary in relation to article 105

(78)Von der Crone-Opinion, p. 7.

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of the Merger Act as it applies only if there is a remaining damage, which article 105 of the Merger Act intends to obviate.

D.The Litigation Trust

109.The shift away from the primacy of the company interest, as mandated by Swiss Company law, towards a US contradictory style of process between the interests of specific shareholder groups is further accentuated by the establishment of the Litigation Trust. Here, the funds of the company are allocated from a Swiss point of view in an illegal way for the purpose of financially supporting specific shareholders with respect to possible lawsuits against the majority shareholder, board member and/or management, or even the company itself. It must be stressed that, within the meaning of Swiss Company law, the beneficiaries of the trust agreement are third parties. They are not a part of the company and their interests are not the interests of the com pany. Therefore, board members are not allowed to use company funds in order to support the interests of minority shareholders.

110.The fact that the Litigation Trust has been concluded under US law does not alter the fact that Alcon is a Swiss Company - that its bylaws, internal regulations, powers of the board, and its committees and members are all governed by Swiss law, and that the eventual lawsuits filed by minority shareholders will be based on the remedies provided by the Swiss Merger Act, namely articles 105, 106 and 108. As has been demonstrated, all of these remedies, and article 105 of the Merger Act in particular, provide for regulations concerning the costs of the proceedings; these differ from the generally applicable “loser pays-rule” and, therefore, favor potential claimants. With regard to article 105 of the Merger Act, under normal circumstance s, a losing claimant does not have to bear the costs of the proceedings. Summed up, considering the remedies it offers, the Swiss Merger Act already protects minority shareholders from

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potential financial burdens; there is no room for the preemptive use of company funds for this purpose.

111.In light of the foregoing, the Litigation Trust is incompatible with both Swiss Company law and the procedural provisions of the Swiss Merger Act. By taking the decision to create the Litigation Trust and by becoming Trustees of misappropriated funds in order to develop a litigation strategy against the company, the IDC members are not acting in conformity with the fiduciary duties of board members.

Please feel free to contact me in case of any further questions.

Yours sincerely,

/s/ Peter Nobel

Prof. Dr. Peter Nobel

Attorney-at-law

About the author of the opinion:

Professor Dr. Peter Nobel is Professor Emeritus at the University of St. Gallen and Professor in ordinary ad personam for Swiss and International Trade and Commercial Law at the University of Zurich. He has taught several courses in Corporate Law, and has had numerous publications in this area of law. He is also the Editor-in-chief of the “Schweizerische Zeitschrift für Wirtschaftsrecht” (Swiss Commercial Law Review). Prof. Dr. Nobel has practiced as an Attorney at Law in Zurich since 1980, and he has served as a Substitute Judge and a Specialized Judge at the Court of Commerce of the Canton of Zurich for the last 25 years. He was a member of the Swiss Federal Banking Commission (now FINMA) for 13 years, during which time he also participated as a member of the Commission’s takeover chamber.

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