1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 4, 2001
REGISTRATION STATEMENT NO. 333-64844
POST-EFFECTIVE AMENDMENT NO. 4 (AS AMENDED) TO REGISTRATION STATEMENT NO.
333-46930
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
PRE-EFFECTIVE AMENDMENT NO. 1 TO
FORM F-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------------
<Table>
UBS AG
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
SWITZERLAND 98-0186363
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
</Table>
BAHNHOFSTRASSE 45, ZURICH,
SWITZERLAND, 011-41-1-234 11 11 AND
AESCHENVORSTADT 1, BASEL,
SWITZERLAND, 011-41-61-288 20 20
(ADDRESS AND TELEPHONE NUMBER OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
ROBERT C. DINERSTEIN, ESQ.
UBS AG
299 PARK AVENUE
NEW YORK, NEW YORK 10171
TELEPHONE: 212-821-3000
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
------------------------
COPIES TO:
ROBERT E. BUCKHOLZ, JR., ESQ.
REBECCA J. SIMMONS, ESQ.
SULLIVAN & CROMWELL
125 BROAD STREET
NEW YORK, NY 10004-2498
212-558-4000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: From time to time after this Registration Statement becomes effective.
If the only securities being registered on this Form are to be offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] ____________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ____________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<Table>
<Caption>
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
AMOUNT TO PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF BE REGISTERED AGGREGATE OFFERING AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED (1)(2)(3)(4) PRICE PER UNIT(5) PRICE(5)(6) REGISTRATION FEE(4)
- ---------------------------------------------------------------------------------------------------------------------------------
Debt Securities...................... 100%
- ---------------------------------------------------------------------------------------------------------------------------------
Warrants............................. 100%
- ---------------------------------------------------------------------------------------------------------------------------------
Total................................ $1,390,000,000 $1,390,000,000 $528,000
100%
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
</Table>
(1) An indeterminate aggregate principal amount or number of the securities is
being registered to be issued from time to time at indeterminate prices,
with an aggregate initial offering price not to exceed $1,390,000,000 or its
equivalent in one or more other currencies, currency units or composite
currencies.
(2) This registration statement also covers an undeterminable amount of the
registered securities that may be reoffered and resold on an ongoing basis
after their initial sale in market-making transactions by the registrant and
its affiliates.
(3) Includes such indeterminate amounts of debt securities and warrants as may
be issued upon exercise, conversion or exchange of any securities that
provide for that issuance.
(4) Pursuant to Rule 429 under the Securities Act, the securities covered by the
prospectus filed as part of this Registration Statement include
$1,390,000,000 aggregate principal amount or offering price of the
registrant's medium-term notes that were previously registered and have not
yet been issued and sold. These securities were registered by the registrant
on a registration statement on Form F-1, as amended on Form F-3, under the
Securities Act (File No. 333-46930). A filing fee of $528,000 associated
with the securities described above was previously paid with such
registration statement.
(5) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(o) under the Securities Act.
(6) Separate consideration may not be received for registered securities that
are issuable on exercise, conversion or exchange of other securities.
Pursuant to Rule 429 under the Securities Act, the prospectus included in
this Registration Statement relates to the unsold debt securities having an
aggregate principal amount of $1,390,000,000 that were previously registered by
the registrant under Registration Statement No. 333-46930 on Form F-1, as
amended on Form F-3 (the most recent post-effective amendment to which was
effective on May 17, 2001). This Registration Statement constitutes
Post-Effective Amendment No. 5 to such prior registration statement. Such
post-effective amendment shall hereafter become effective in accordance with
Section 8(c) of the Securities Act concurrently with the effectiveness of this
Registration Statement.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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2
EXPLANATORY NOTE
This registration statement contains a prospectus relating to both of the
following:
- - the offering of newly issued debt securities and warrants of UBS AG on a
delayed or continuous basis at an aggregate initial offering price of up to
$1,390,000,000; and
- - market-making transactions that may occur on a delayed or continuous basis in
the debt securities and warrants described above, after they are initially
offered and sold.
When the prospectus is delivered to an investor in the initial offering
described above, the investor will be informed of that fact in the confirmation
of sale. When the prospectus is delivered to an investor who is not so informed,
it is delivered in a market-making transaction.
3
THE INFORMATION IN THIS PRELIMINARY PROSPECTUS IS NOT COMPLETE AND MAY BE
CHANGED. THESE SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PRELIMINARY
PROSPECTUS IS NOT AN OFFER TO SELL NOR DOES IT SEEK AN OFFER TO BUY THESE
SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION
PROSPECTUS PRELIMINARY PROSPECTUS DATED SEPTEMBER 4, 2001
- --------------------------------------------------------------------------------
[UBS AG LOGO]
UBS AG
$1,390,000,000
DEBT SECURITIES AND
WARRANTS
- --------------------------------------------------------------------------------
UBS AG from time to time may offer to sell debt securities and warrants. The
total amount of these securities will have an initial aggregate offering price
of up to $1,390,000,000, or the equivalent amount in other currencies, currency
units or composite currencies, although UBS AG may increase this amount in the
future.
UBS AG may offer and sell these securities to or through one or more
underwriters, dealers and agents, including the firms named below, or directly
to purchasers, on a delayed or continuous basis.
This prospectus describes some of the general terms that may apply to these
securities and the general manner in which they may be offered. The specific
terms of any securities to be offered, and the specific manner in which they may
be offered, will be described in a supplement to this prospectus.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY BODY HAS
APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR
ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
The securities are not deposit liabilities of UBS AG and are not insured by the
United States Federal Deposit Insurance Corporation or any other governmental
agency of the United States, Switzerland or any other jurisdiction.
UBS AG may use this prospectus in the initial sale of the securities. In
addition, UBS AG, UBS Warburg LLC, UBS PaineWebber Inc. or any other affiliate
of UBS AG may use this prospectus in a market-making transaction involving the
securities after their initial sale. Unless UBS AG or its agent informs the
purchaser otherwise in the confirmation of sale, this prospectus is being used
in a market-making transaction.
UBS WARBURG UBS PAINEWEBBER INC.
THE DATE OF THIS PROSPECTUS IS --, 2001
4
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<Table>
Prospectus Summary..................... 3
Cautionary Note Regarding Forward-
Looking Information.................. 6
Where You Can Find More Information.... 7
Incorporation of Information About UBS
AG................................... 7
Presentation of Financial
Information.......................... 8
Limitations on Enforcement of U.S. Laws
Against UBS AG, Its Management and
Others............................... 9
Capitalization of UBS.................. 9
UBS.................................... 10
Use of Proceeds........................ 11
Description of Debt Securities We May
Offer................................ 12
Description of Warrants We May Offer... 34
Legal Ownership and Book-Entry
Issuance............................. 51
Considerations Relating to Indexed
Securities........................... 57
Considerations Relating to Securities
Denominated or Payable in or Linked
to a Non-U.S. Dollar Currency........ 60
U.S. Tax Considerations................ 63
Tax Considerations Under the Laws of
Switzerland.......................... 74
ERISA Considerations................... 76
Plan of Distribution................... 77
Validity of the Securities............. 80
Experts................................ 80
Expenses............................... 80
</Table>
5
Prospectus Summary
The following summary does not contain all the information that may be important
to you. You should read the entire prospectus, the relevant prospectus
supplement and the documents incorporated by reference into this prospectus
before making an investment decision.
UBS AG
UBS AG is a global, integrated investment services firm and the leading bank in
Switzerland. UBS AG's business is managed through three main Business Groups and
its Corporate Center. The Business Groups are: UBS Switzerland, UBS Asset
Management and UBS Warburg. UBS AG's clients include international corporations,
small- and medium-sized businesses in Switzerland, governments and other public
bodies, financial institutions, market participants and individuals. UBS AG's
ordinary shares are listed on the New York Stock Exchange under the symbol
UBS.N, on the Zurich Stock Exchange under the symbol UBSNZn.S and on the Tokyo
Stock Exchange under the symbol UBS.T.
The principal executive offices of UBS AG are located at Bahnhofstrasse 45,
Zurich, Switzerland and Aeschenvorstadt 1, Basel, Switzerland. Its telephone
numbers are 011-41-1-234-11-11 and 011-41-61-288-20-20.
THE SECURITIES WE ARE OFFERING
We may offer debt securities and warrants from time to time. When we use the
term "securities" in this prospectus, we mean any of the securities we may offer
with this prospectus, unless we say otherwise. This prospectus, including the
following summary, describes the general terms that may apply to the securities;
the specific terms of any particular securities that we may offer will be
described in a separate supplement to this prospectus. If there are differences
between this prospectus and your prospectus supplement, your prospectus
supplement will control.
DEBT SECURITIES
For any particular debt securities we offer, the applicable prospectus
supplement will describe the specific designation, the aggregate principal or
face amount and the purchase price; the stated maturity; the redemption terms,
if any; the rate or manner of calculating the rate and payment dates for
interest, if any; the amount, or manner of calculating the amount, payable at
maturity and whether that amount may be paid by delivering cash, securities or
other property; the terms on which the debt securities may be convertible into
or exercisable or exchangeable for common stock or other securities of issuers
other than UBS AG, if any; and any other specific terms. The debt securities
will rank equally in right of payment with all other unsecured debt obligations
of UBS AG.
The debt securities are not deposit liabilities of UBS AG and are not insured by
the United States Federal Deposit Insurance Corporation or any other
governmental agency of the United States, Switzerland or any other jurisdiction.
WARRANTS
We may offer two types of warrants:
- - warrants to purchase our debt securities; and
- - warrants to purchase or sell, or whose cash value is determined by reference
to the performance, level or value of, one or more of the following:
- securities of one or more issuers other than UBS AG;
- one or more currencies;
- one or more commodities;
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- any other financial, economic or other measure or instrument, including
the occurrence or non-occurrence of any event or circumstance; and
- one or more indices or baskets of the items described above.
For any particular warrants we offer, the applicable prospectus supplement will
describe the underlying property; the expiration date; the exercise price or the
manner of determining the exercise price; the amount and kind, or the manner of
determining the amount and kind, of property to be delivered by you or us upon
exercise; and any other specific terms. We may issue the warrants under a
warrant indenture to be entered into before the first issuance of warrants under
such indenture between us and a trustee to be named in the applicable prospectus
supplement, or under warrant agreements to be entered into before the first
issuance of warrants under such agreement between us and one or more warrant
agents to be named in the applicable prospectus supplement.
FORM OF SECURITIES
We will issue the securities in book-entry form through one or more
depositaries, such as The Depository Trust Company, Euroclear or Clearstream,
named in the applicable prospectus supplement. Each sale of a security in
book-entry form will settle in immediately available funds through the
depositary, unless otherwise stated. In most cases, we will issue the securities
only in registered form, without coupons, although we may issue the securities
in bearer form if so specified in the applicable prospectus supplement.
PAYMENT CURRENCIES
Amounts payable in respect of the securities, including the purchase price, will
be payable in U.S. dollars, unless the applicable prospectus supplement says
otherwise.
LISTING
If any securities are to be listed or quoted on a securities exchange or
quotation system, the applicable prospectus supplement will say so.
USE OF PROCEEDS
We intend to use the net proceeds from the sales of securities to provide
additional funds for our operations and for other general corporate purposes.
PLAN OF DISTRIBUTION
The securities will be offered in connection with their initial issuance or in
market-making transactions by us or our affiliates after initial issuance.
When we issue new securities, we may offer them for sale to or through
underwriters, dealers and agents, including our affiliates, or directly to
purchasers. The applicable prospectus supplement will include any required
information about the firms we use and the discounts or commissions we may pay
them for their services.
Our affiliates that we refer to above may include UBS AG itself, UBS Warburg LLC
and UBS PaineWebber Inc.
BRANCHES
We expect the securities will be booked through our Jersey branch, our London
branch, or such other branch as is specified in the applicable prospectus
supplement.
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RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth UBS AG's ratio of earnings to fixed charges for
the periods indicated. Ratios of earnings to combined fixed charges and
preferred stock dividends requirements are not presented as there were no
preferred stock dividends in any of the periods indicated.
<Table>
<Caption>
FOR THE PERIOD ENDED 6.30.01 12.31.00 12.31.99 12.31.98 12.31.97
- -----------------------------------------------------------------------------------------------------------
International Accounting Standards
("IAS")(1),(2).................................. 1.14 1.23 1.25 1.11 0.95
U.S. Generally Accepted Accounting Principles
("GAAP")(1),(3)................................. 1.15 1.14 0.80
</Table>
- ------------
1. The ratio is provided using both IAS and U.S. GAAP values, as the ratio is
materially different between the two accounting standards. No U.S. GAAP
information is provided for the year ended December 31, 1997 and the quarter
ended June 30, 2001 as a U.S. GAAP reconciliation was not required for those
periods.
2. The deficiency in the coverage of fixed charges by earnings before fixed
charges at December 31, 1997 was CHF 851 million.
3. The deficiency in the coverage of fixed charges by earnings before fixed
charges at December 31, 1998 was CHF 5,319 million.
5
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- --------------------------------------------------------------------------------
Cautionary Note Regarding Forward-Looking Information
This prospectus contains or incorporates statements that constitute
"forward-looking statements" within the meaning of Section 21E of the Securities
Exchange Act of 1934. The Private Securities Litigation Reform Act of 1995
provides a "safe harbor" for forward-looking information to encourage companies
to provide prospective information about themselves without fear of litigation
so long as the information is identified as forward-looking and is accompanied
by meaningful cautionary statements identifying important factors that could
cause actual results to differ materially from those projected in the
information. The words "anticipate," "believe," "expect," "estimate," "intend,"
"plan," "should," "could," "may" and other similar expressions are used in
connection with forward-looking statements. In this prospectus, forward-looking
statements may, without limitation, relate to:
- - The implementation of strategic initiatives, such as the implementation of the
European wealth management strategy.
- - The development of revenues overall and within specific business areas.
- - The development of operating expenses.
- - The anticipated level of capital expenditures and associated depreciation
expense.
- - The expected impact of the risks that affect UBS's business, including the
risk of loss resulting from the default of an obligor or counterparty.
- - Expected credit losses based upon UBS's credit review.
- - Other statements relating to UBS's future business development and economic
performance, including the expected results of UBS Capital through the balance
of 2001.
There can be no assurance that forward-looking statements will approximate
actual experience. Several important factors exist that could cause UBS's actual
results to differ materially from expected results as described in the
forward-looking statements. Such factors include:
- - General economic conditions, including prevailing interest rates and
performance of financial markets, which may affect demand for products and
services.
- - Changes in UBS's expenses associated with acquisitions and dispositions.
- - UBS's and PaineWebber's ability to achieve anticipated cost savings and
efficiencies from their merger, to integrate their sales and distribution
channels in a timely manner and to retain their key employees.
- - General competitive factors, locally, nationally, regionally and globally.
- - Industry consolidation and competition.
- - Changes affecting the banking industry generally and UBS's banking operations
specifically, including asset quality.
- - Developments in technology.
- - Credit ratings and the financial position of obligors and counterparties.
- - UBS's ability to control risk in its businesses.
- - Changes in federal tax laws, which could adversely affect the tax advantages
of certain of UBS's products and subject it to increased taxation.
- - Changes in currency exchange rates, including the exchange rate for the Swiss
franc into U.S. dollars.
You should also consider other risks and uncertainties discussed in the
documents that are incorporated by reference into this prospectus.
UBS is not under any obligation to (and expressly disclaims any such obligation
to) update or alter its forward-looking statements, whether as a result of new
information, future events or otherwise.
- --------------------------------------------------------------------------------
6
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- --------------------------------------------------------------------------------
Where You Can Find More Information
UBS AG files periodic reports and other information with the Securities and
Exchange Commission. You may read and copy any document that UBS AG files with
the SEC at the SEC's public reference room at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further
information on the operation of its public reference room. The SEC also
maintains an internet site at http://www.sec.gov that contains reports, proxy
and information statements, and other information about issuers like UBS AG that
file electronically with the SEC. You may also inspect UBS AG's SEC reports and
other information at the New York Stock Exchange, Inc., 20 Broad Street, New
York, New York 10005 and at the American Stock Exchange LLC, 86 Trinity Place,
New York, New York 10006.
We have filed a registration statement under the Securities Act of 1933 on Form
F-3 with the SEC covering the securities. For further information on the
securities and UBS, you should review our registration statement, its exhibits
and the documents incorporated by reference into this prospectus. This
prospectus summarizes material provisions of the contracts and other documents
that we refer you to. Since this prospectus may not contain all the information
that you may find important, you should review the full text of these documents.
We have included copies of these documents as exhibits to our registration
statement.
- --------------------------------------------------------------------------------
Incorporation of Information About UBS AG
The SEC allows us to "incorporate by reference" into this prospectus the
information that we file with them, which means that:
- - The incorporated documents are considered part of this prospectus;
- - We can disclose important information to you by referring you to those
documents; and
- - Information that we file with the SEC will automatically be considered to
update and supersede the information in this prospectus.
We incorporate by reference in this prospectus (a) UBS AG's Annual Report on
Form 20-F for the year ended December 31, 2000, which UBS AG filed with the SEC
on 15 March 2001, and (b) UBS AG's Forms 6-K, which UBS AG filed with the SEC on
May 8, May 15, May 15, June 1, July 12, July 16, July 18, July 26 and August 16,
2001.
All subsequent reports that we file on Form 20-F under the Securities Exchange
Act of 1934 prior to the termination of this offering will also be deemed to be
incorporated by reference into this prospectus. We may also incorporate any
other Form 6-K that we submit to the SEC after the date of this prospectus and
prior to the termination of this offering if the Form 6-K filing specifically
states that it is incorporated by reference into this prospectus.
Any statement contained in a document incorporated or deemed to be incorporated
by reference into this prospectus will be deemed to be modified or superseded
for purposes of this prospectus to the extent that it is modified or superseded
by a statement that is in this prospectus or in any later filed document that is
or is deemed to be incorporated by reference. Any statement that is modified or
superseded in this manner will no longer be a part of this prospectus, except as
modified or superseded.
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INCORPORATION OF INFORMATION ABOUT UBS AG
- --------------------------------------------------------------------------------
You may request a copy, at no cost, of any or all of the documents that are
incorporated by reference into this prospectus, excluding exhibits (other than
those that we specifically incorporate by reference into the documents that you
request) by contacting us, orally or in writing, at the following address:
UBS AG
Investor Relations G41B
P.O. Box
CH-8098 Zurich
Phone: 011-41-1-234-41-00
Fax: 011-41-1-234-34-15
E-mail: SH-investorrelations@ubs.com
Internet: www.ubs.com/investor-relations
- --------------------------------------------------------------------------------
Presentation of Financial Information
UBS's financial statements, which are incorporated by reference into this
prospectus, have been prepared in accordance with International Accounting
Standards and are denominated in Swiss francs, or "CHF," the legal tender of
Switzerland.
The tables below set forth, for the periods and dates indicated, information
concerning the noon buying rate for the Swiss franc, expressed in United States
dollars or "USD," per one Swiss franc. The "noon buying rate" is the rate in New
York City for cable transfers in foreign currencies as certified for customs
purposes by the Federal Reserve Bank of New York.
<Table>
<Caption>
AVERAGE RATE(1)
YEAR ENDED DECEMBER 31 HIGH LOW (USD PER 1 CHF) AT PERIOD END
- -------------------------------------------------------------------------------------------------
1996..................................... 0.8641 0.7399 0.8090 0.7468
1997..................................... 0.7446 0.6510 0.6890 0.6845
1998..................................... 0.7731 0.6485 0.6894 0.7281
1999..................................... 0.7361 0.6244 0.6605 0.6277
2000..................................... 0.6441 0.5479 0.5912 0.6172
</Table>
<Table>
<Caption>
AVERAGE RATE(1)
QUARTER ENDED HIGH LOW (USD PER 1 CHF) AT PERIOD END
- -------------------------------------------------------------------------------------------------
March 31, 2001........................... 0.6240 0.5760 0.5938 0.5760
June 30, 2001............................ 0.5908 0.5541 0.5630 0.5565
</Table>
<Table>
<Caption>
MONTH HIGH LOW
- -------------------------------------------------------------
March 2001................................. 0.6073 0.5760
April 2001................................. 0.5908 0.5755
May 2001................................... 0.5795 0.5565
June 2001.................................. 0.5666 0.5541
July 2001.................................. 0.5833 0.5499
August 2001................................ 0.6042 0.5826
</Table>
- ------------
(1) The average of the noon buying rates on the last business day of each full
month during the relevant period.
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Limitations on Enforcement of U.S. Laws Against UBS AG,
Its Management and Others
UBS AG is a Swiss bank. Many of its directors and executive officers, including
the majority of the persons who signed the registration statement of which this
prospectus is a part, and certain experts named in this prospectus, are resident
outside the United States, and all or a substantial portion of our assets and
the assets of such persons are located outside the United States. As a result,
it may be difficult for you to serve legal process on UBS AG or its management
or have any of them appear in a U.S. court. We have been advised by Bar &
Karrer, Swiss counsel to UBS AG, that there is doubt as to enforceability in
Switzerland, in original actions or in actions for enforcement of judgment of
U.S. courts, of liabilities based solely on the federal securities laws of the
United States.
- --------------------------------------------------------------------------------
Capitalization of UBS
The following table sets forth the consolidated capitalization of UBS in
accordance with International Accounting Standards and translated into U.S.
dollars.
<Table>
<Caption>
ACTUAL
FOR THE PERIOD ENDED JULY 31, 2001 CHF USD
- -------------------------------------------------------------------------------
(IN MILLIONS)
Debt
Debt issued(1)............................................ 159,020 92,218
------- -------
Total Debt................................................ 159,020 92,218
Minority Interest........................................... 4,445 2,578
Shareholders' Equity........................................ 43,459 25,202
------- -------
Total capitalization........................................ 206,924 119,998
======= =======
</Table>
- ---------------
(1) Includes Money Market Paper and Medium Term Notes as per Balance Sheet
position.
Swiss franc (CHF) amounts have been translated into U.S. dollars (USD) at the
rate of CHF 1 = USD 0.5799.
- --------------------------------------------------------------------------------
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- --------------------------------------------------------------------------------
UBS
The UBS Group is one of the world's leading financial firms. It combines
financial strength with a reputation for innovation and a global culture that
embraces change.
UBS's global businesses include: UBS Warburg, a premier investment banking and
securities house recently bolstered by the addition of UBS PaineWebber; UBS
Asset Management, one of the largest asset managers globally, which trades in
the U.S. under the Brinson Partners name; and UBS Private Banking, the world's
largest private bank, by assets under management. In Switzerland, UBS is the
market leader in private, retail and commercial banking.
UBS is managed through three Business Groups and its Corporate Center, each of
which is summarized below. Further information about UBS, including more
detailed descriptions of the Business Groups and Corporate Center, is contained
in UBS's Annual Report on Form 20-F for the year ended December 31, 2000 (the
"Form 20-F"), which is incorporated by reference into this prospectus.
UBS SWITZERLAND has the world's largest private banking business, based on
assets under management, with CHF 681 billion in client assets at December 31,
2000. UBS Private Banking provides a comprehensive range of products and
services tailored specifically for wealthy clients from Switzerland and around
the world. UBS Switzerland also provides a complete set of banking and
securities services for some four million individual and corporate clients in
Switzerland.
UBS ASSET MANAGEMENT is a leading institutional asset manager and mutual fund
provider in Europe and elsewhere, based on assets under management, with client
assets of CHF 496 billion at December 31, 2000. It offers a broad range of asset
management services and products to institutional and retail clients across the
world. Its key institutional brands include Brinson Partners and Brinson
Advisors in the U.S. and Phillips & Drew in the U.K.
UBS WARBURG operates globally as a client-driven securities, investment banking
and wealth management firm. For both its own corporate and institutional clients
and the other parts of the UBS Group, UBS Warburg provides product innovation,
high quality research and advice and broad access to the world's capital
markets. UBS PaineWebber, the fourth largest private client firm in the U.S.,
joined UBS Warburg in November 2000. As of December 31, 2000, its 8,900
financial advisors provided a full range of wealth management services to over 2
million affluent households in the U.S., with assets of CHF 794 billion.
CORPORATE CENTER coordinates the activities of the Business Groups, with the
goal of making the whole worth more than the sum of the parts. Its functions
include finance and accounting; risk management and control; communications and
marketing; compliance; legal; and treasury management.
Each of the Business Groups benefits from its place in the UBS Group, with
products from wholesale businesses distributed through the retail businesses,
and the combined resources and expertise of all UBS's businesses available to
its clients.
UBS was formed on June 29, 1998, by the merger of two of Switzerland's leading
financial services groups, Union Bank of Switzerland (founded 1860) and Swiss
Bank Corporation (founded 1854). UBS is incorporated and domiciled in
Switzerland and is a publicly owned company, with its shares listed on the
Swiss, New York and Tokyo stock exchanges.
As of December 31, 2000, UBS employed approximately 71,000 people, 42% in
Switzerland and 40% in the U.S. With headquarters in Zurich, Switzerland and
Basel, Switzerland, UBS has a presence in major financial centers worldwide and
a total of approximately 1,500 offices in over 50 countries. The addresses and
telephone numbers of its headquarters are Bahnhofstrasse 45, Zurich,
Switzerland, telephone 011-41-1-234-11-11; and Aeschenvorstadt 1, Basel,
Switzerland, telephone 011-41-61-288-20-20.
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Use of Proceeds
UBS AG intends to use the proceeds from the sale of the securities to provide
additional funds for our operations and for general corporate purposes outside
of Switzerland. We will receive the net proceeds from sales of the securities
made in connection with their original issuance and in connection with any
market-making resales UBS AG undertakes. We have not received, and do not expect
to receive, any proceeds from resales of the securities by UBS Warburg LLC, UBS
PaineWebber Inc. or any of our other affiliates in market-making transactions.
We expect our affiliates to retain the proceeds of their market-making resales
and not to pay the proceeds to us.
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Description of Debt Securities We May Offer
Please note that in this section entitled "Description of Debt Securities We May
Offer," references to UBS, we, our and us refer only to UBS AG and not to its
consolidated subsidiaries. Also, in this section, references to "holders" mean
those who own debt securities registered in their own names on the books that we
or the trustee maintain for this purpose, and not those who own beneficial
interests in debt securities registered in street name or in debt securities
issued in book-entry form through one or more depositaries. Owners of beneficial
interests in the debt securities should read the section below entitled "Legal
Ownership and Book-Entry Issuance."
THE DEBT INDENTURE
As required by U.S. federal law for publicly offered bonds and notes, the debt
securities are governed by a document called an indenture. The debt indenture is
a contract between us and U.S. Bank Trust National Association, which acts as
trustee. The trustee has two main roles:
- First, the trustee can enforce your rights against us if we default.
There are limitations on the extent to which the trustee acts on your
behalf, which we describe below under "Default, Remedies and Waiver of
Default."
- Second, the trustee performs administrative duties for us, such as
sending you interest payments and notices.
See "--Our Relationship with the Trustee" below for more information about the
trustee.
WE MAY ISSUE MANY SERIES OF DEBT SECURITIES UNDER THE INDENTURE
We may issue as many distinct series of debt securities under the debt indenture
as we wish. This section summarizes terms of the debt securities that apply
generally to all series. The provisions of the debt indenture allow us not only
to issue debt securities with terms different from those of debt securities
previously issued under the debt indenture, but also to "reopen" a previous
issue of a series of debt securities and issue additional debt securities of
that series. Most of the financial and other specific terms of your series will
be described in the prospectus supplement to be attached to the front of this
prospectus. Those terms may vary from the terms described here.
We may issue debt securities separately or together with other debt securities
or with our warrants.
As you read this section, please remember that the specific terms of your debt
security as described in your prospectus supplement will supplement and, if
applicable, may modify or replace the general terms described in this section.
If there are any differences between your prospectus supplement and this
prospectus, your prospectus supplement will control. Thus, the statements we
make in this section may not apply to your debt security.
When we refer to a series of debt securities, we mean a series issued under the
debt indenture. When we refer to your prospectus supplement, we mean the
prospectus supplement describing the specific terms of the debt security you
purchase. The terms used in your prospectus supplement will have the meanings
described in this prospectus, unless otherwise specified.
AMOUNTS THAT WE MAY ISSUE
The debt indenture does not limit the aggregate amount of debt securities that
we may issue, nor does it limit the number of series or the aggregate amount of
any particular series. We may issue debt securities and other securities in
amounts that exceed the total amount specified on the cover of this prospectus
at any time without your consent and without notifying you.
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DESCRIPTION OF DEBT SECURITIES WE MAY OFFER
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The debt indenture and the debt securities do not limit our ability to incur
other indebtedness or to issue other securities. Also, we are not subject to
financial or similar restrictions by the terms of the debt securities.
HOW THE DEBT SECURITIES RANK AGAINST OTHER DEBT
The debt securities will not be secured by any property or assets of UBS or its
subsidiaries. Thus, by owning a debt security, you will be one of our unsecured
creditors.
The debt securities will not be subordinated to any of our other debt
obligations. This means that, in a bankruptcy or liquidation proceeding against
us, the debt securities would rank equally in right of payment with all other
unsecured and unsubordinated debt of UBS, except for debts required to be
preferred by law. The debt securities are not deposit liabilities of UBS and are
not insured by the United States Federal Deposit Insurance Corporation or any
other governmental agency of the United States, Switzerland or any other
jurisdiction.
THIS SECTION IS ONLY A SUMMARY
The debt indenture and its associated documents, including your debt security,
contain the full legal text governing the matters described in this section and
your prospectus supplement. We have filed a copy of the debt indenture with the
SEC as an exhibit to our registration statement. See "Where You Can Find More
Information" above for information on how to obtain a copy.
This section and your prospectus supplement summarize all the material terms of
the debt indenture and your debt security. They do not, however, describe every
aspect of the debt indenture and your debt security. For example, in this
section and your prospectus supplement, we use terms that have been given
special meaning in the debt indenture, but we describe the meaning of only the
more important of those terms.
PRINCIPAL AMOUNT, STATED MATURITY AND MATURITY
The principal amount of a debt security means the principal amount payable at
its stated maturity, unless that amount is not determinable, in which case the
principal amount of a debt security is its face amount.
The term "stated maturity" with respect to any debt security means the day on
which the principal amount of your debt security is scheduled to become due. The
principal may become due sooner, by reason of redemption or acceleration after a
default or otherwise in accordance with the terms of the debt security. The day
on which the principal actually becomes due, whether at the stated maturity or
earlier, is called the maturity of the principal.
We also use the terms "stated maturity" and "maturity" to refer to the days when
other payments become due. For example, we may refer to a regular interest
payment date when an installment of interest is scheduled to become due as the
"stated maturity" of that installment.
When we refer to the "stated maturity" or the "maturity" of a debt security
without specifying a particular payment, we mean the stated maturity or
maturity, as the case may be, of the principal.
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GOVERNING LAW
The debt indenture and the debt securities will be governed by New York law.
CURRENCY OF DEBT SECURITIES
Amounts that become due and payable on your debt security in cash will be
payable in a currency, composite currency, basket of currencies or currency unit
or units specified in your prospectus supplement. We refer to this currency,
composite currency, basket of currencies or currency unit or units as a
"specified currency." The specified currency for your debt security will be U.S.
dollars, unless your prospectus supplement states otherwise. Some debt
securities may have different specified currencies for principal and interest.
You will have to pay for your debt securities by delivering the requisite amount
of the specified currency for the principal to UBS Warburg LLC, UBS PaineWebber
Inc. or another firm that we name in your prospectus supplement, unless other
arrangements have been made between you and us or you and that firm. We will
make payments on your debt securities in the specified currency, except as
described below in "--Payment Mechanics for Debt Securities." See
"Considerations Relating to Securities Denominated or Payable in or Linked to a
Non-U.S. Dollar Currency" below for more information about risks of investing in
this kind of debt securities.
TYPES OF DEBT SECURITIES
We may issue any of the following three types of debt securities:
FIXED RATED DEBT SECURITIES
A debt security of this type will bear interest at a fixed rate described in the
applicable prospectus supplement. This type includes zero coupon debt
securities, which bear no interest and are instead issued at a price lower than
the principal amount. See "--Original Issue Discount Debt Securities" below for
more information about zero coupon and other original issue discount debt
securities.
Each fixed rate debt security, except any zero coupon debt security, will bear
interest from its original issue date or from the most recent date to which
interest on the debt security has been paid or made available for payment.
Interest will accrue on the principal of a fixed rate debt security at the fixed
yearly rate stated in the applicable prospectus supplement, until the principal
is paid or made available for payment or the security has been converted or
exchanged. Each payment of interest due on an interest payment date or the date
of maturity will include interest accrued from and including the last date to
which interest has been paid, or made available for payment, or from the issue
date if none has been paid or made available for payment, to but excluding the
interest payment date or the date of maturity. We will compute interest on fixed
rate debt securities on the basis of a 360-day year of twelve 30-day months. We
will pay interest on each interest payment date and at maturity as described
below under "--Payment Mechanics for Debt Securities."
FLOATING RATE DEBT SECURITIES
INTEREST RATE FORMULAS. A debt security of this type will bear interest at
rates that are determined by reference to an interest rate formula. In some
cases, the rates may also be adjusted by adding or subtracting a spread or
multiplying by a spread multiplier and may be subject to a minimum rate or a
maximum rate. If your debt security is a floating rate debt security, the
formula and any adjustments that apply to the interest rate will be specified in
your prospectus supplement.
Each floating rate debt security will bear interest from its original issue date
or from the most recent date to which interest on the debt security has been
paid or made available for payment. Interest will accrue on the principal of a
floating rate debt security at the yearly rate determined according to the
interest rate formula stated in the applicable prospectus supplement, until the
principal is paid or made
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available for payment. We will pay interest on each interest payment date and at
maturity as described below under "--Payment Mechanics for Debt Securities."
CALCULATION OF INTEREST. Calculations relating to floating rate debt securities
will be made by the calculation agent, an institution that we appoint as our
agent for this purpose. That institution may include any affiliate of ours, such
as UBS Warburg LLC. The prospectus supplement for a particular floating rate
debt security will name the institution that we have appointed to act as the
calculation agent for that debt security as of its original issue date. We may
appoint a different institution to serve as calculation agent from time to time
after the original issue date of the debt security without your consent and
without notifying you of the change.
For each floating rate debt security, the calculation agent will determine, on
the corresponding interest calculation or determination date, as described in
the applicable prospectus supplement, the interest rate that takes effect on
each interest reset date. In addition, the calculation agent will calculate the
amount of interest that has accrued during each interest period--i.e., the
period from and including the original issue date, or the last date to which
interest has been paid or made available for payment, to but excluding the
payment date. For each interest period, the calculation agent will calculate the
amount of accrued interest by multiplying the face or other specified amount of
the floating rate debt security by an accrued interest factor for the interest
period. This factor will equal the sum of the interest factors calculated for
each day during the interest period. The interest factor for each day will be
expressed as a decimal and will be calculated by dividing the interest rate,
also expressed as a decimal, applicable to that day by 360 or by the actual
number of days in the year, as specified in the applicable prospectus
supplement.
Upon the request of the holder of any floating rate debt security, the
calculation agent will provide the interest rate then in effect for that debt
security--and, if determined, the interest rate that will become effective on
the next interest reset date. The calculation agent's determination of any
interest rate, and its calculation of the amount of interest for any interest
period, will be final and binding in the absence of manifest error.
All percentages resulting from any calculation relating to a debt security will
be rounded upward or downward, as appropriate, to the next higher or lower one
hundred-thousandth of a percentage point, e.g., 9.876541% (or .09876541) being
rounded down to 9.87654% (or .0987654) and 9.876545% (or .09876545) being
rounded up to 9.87655% (or .0987655). All amounts used in or resulting from any
calculation relating to a floating rate debt security will be rounded upward or
downward, as appropriate, to the nearest cent, in the case of U.S. dollars, or
to the nearest corresponding hundredth of a unit, in the case of a currency
other than U.S. dollars, with one-half cent or one-half of a corresponding
hundredth of a unit or more being rounded upward.
In determining the base rate that applies to a floating rate debt security
during a particular interest period, the calculation agent may obtain rate
quotes from various banks or dealers active in the relevant market, as described
in the applicable prospectus supplement. Those reference banks and dealers may
include the calculation agent itself and its affiliates, as well as any
underwriter, dealer or agent participating in the distribution of the relevant
floating rate debt securities and its affiliates, and they may include UBS AG or
its affiliates.
INDEXED DEBT SECURITIES
A debt security of this type provides that the principal amount payable at its
maturity, and/or the amount of interest payable on an interest payment date,
will be determined by reference to:
- securities of one or more issuers;
- one or more currencies;
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- one or more commodities;
- any other financial, economic or other measure or instrument, including
the occurrence or non-occurrence of any event or circumstance; and/or
- one or more indices or baskets of the items described above.
If you are a holder of an indexed debt security, you may receive an amount at
maturity that is greater than or less than the face amount of your debt security
depending upon the value of the applicable index at maturity. The value of the
applicable index will fluctuate over time.
An indexed debt security may provide either for cash settlement or for physical
settlement by delivery of the underlying property or another property of the
type listed above. An indexed debt security may also provide that the form of
settlement may be determined at our option or at the holder's option. Some
indexed debt securities may be convertible, exercisable or exchangeable, at our
option or the holder's option, into or for securities of an issuer other than
UBS AG.
If you purchase an indexed debt security, your prospectus supplement will
include information about the relevant index, about how amounts that are to
become payable will be determined by reference to the price or value of that
index and about the terms on which the security may be settled physically or in
cash. The prospectus supplement will also identify the calculation agent that
will calculate the amounts payable with respect to the indexed debt security and
may exercise significant discretion in doing so. The calculation agent may be
UBS Warburg LLC or another of our affiliates. See "Considerations Relating to
Indexed Securities" for more information about risks of investing in debt
securities of this type.
ORIGINAL ISSUE DISCOUNT DEBT SECURITIES
A fixed rate debt security, a floating rate debt security or an indexed debt
security may be an original issue discount debt security. A debt security of
this type is issued at a price lower than its principal amount and provides
that, upon redemption or acceleration of its maturity, an amount less than its
principal amount will be payable. An original issue discount debt security may
be a zero coupon debt security. A debt security issued at a discount to its
principal may, for U.S. federal income tax purposes, be considered an original
issue discount debt security, regardless of the amount payable upon redemption
or acceleration of maturity. See "U.S. Tax Considerations--Taxation of Debt
Securities--Original Issue Discount" below for a brief description of the U.S.
federal income tax consequences of owning an original issue discount debt
security.
INFORMATION IN YOUR PROSPECTUS SUPPLEMENT
Your prospectus supplement will describe the specific terms of your debt
security, which will include some or all of the following:
- any limit on the total principal amount of the debt securities of the
same series;
- the stated maturity;
- the specified currency or currencies for principal and interest, if not
U.S. dollars;
- the price at which we originally issue your debt security, expressed as a
percentage of the principal amount, and the original issue date;
- whether your debt security is a fixed rate debt security, a floating rate
debt security or an indexed debt security;
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- if your debt security is a fixed rate debt security, the yearly rate at
which your debt security will bear interest, if any, and the interest
payment dates;
- if your debt security is a floating rate debt security, the interest rate
basis; any applicable index currency or maturity, spread or spread
multiplier or initial, maximum or minimum rate; the interest reset,
determination, calculation and payment dates; the day count used to
calculate interest payments for any period; and the calculation agent;
- if your debt security is an indexed debt security, the principal amount,
if any, we will pay you at maturity, the amount of interest, if any, we
will pay you on an interest payment date or the formula we will use to
calculate these amounts, if any, and the terms on which your debt
security will be exchangeable for or payable in cash, securities or other
property;
- if your debt security may be converted into or exercised or exchanged for
debt or equity securities of one or more third parties, the terms on which
conversion, exercise or exchange may occur, including whether conversion,
exercise or exchange is mandatory, at the option of the holder or at our
option, the period during which conversion, exercise or exchange may
occur, the initial conversion, exercise or exchange price or rate and the
circumstances or manner in which the amount of securities issuable upon
conversion, exercise or exchange may be adjusted;
- if your debt security is also an original issue discount debt security,
the yield to maturity;
- if applicable, the circumstances under which your debt security may be
redeemed at our option or repaid at the holder's option before the stated
maturity, including any redemption commencement date, repayment date(s),
redemption price(s) and redemption period(s);
- the authorized denominations, if other than $1,000 and integral multiples
of $1,000;
- the depositary for your debt security, if other than DTC, and any
circumstances under which the holder may request securities in non-global
form, if we choose not to issue your debt security in book-entry form
only;
- if your debt security will be issued in bearer form, any special
provisions relating to bearer securities;
- if applicable, the circumstances under which we will pay additional
amounts on any debt securities held by a person who is not a United
States person for tax purposes and under which we can redeem the debt
securities if we have to pay additional amounts;
- the names and duties of any co-trustees, depositaries, authenticating
agents, paying agents, transfer agents or registrars for your debt
security; and
- any other terms of your debt security, which could be different from
those described in this prospectus.
If you purchase your debt security--or any of our other securities we describe
in this prospectus--in a market-making transaction, you will receive information
about the price you pay and your trade and settlement dates in a separate
confirmation of sale. A market-making transaction is one in which we, UBS
Warburg LLC, UBS PaineWebber Inc. or another of our affiliates resells a
security that it has previously acquired from another holder. A market-making
transaction in a particular security occurs after the original issuance and sale
of the security.
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EXTENSION OF MATURITY
If specified in the applicable prospectus supplement, we will have the option to
extend the stated maturity of your debt security for one or more periods of
whole years up to but not beyond the final maturity date specified in the
prospectus supplement. We call a debt security whose maturity we may extend an
extendible debt security. We call the period of time as to which we may extend
the maturity the extension period. The following procedures will apply to
extendible debt securities, unless otherwise indicated in the applicable
prospectus supplement.
We may extend the maturity of an extendible debt security by notifying the
paying agent between 45 and 60 days before the stated maturity then in effect.
The stated maturity may be the original stated maturity, as described in the
prospectus supplement, or a maturity that we previously extended by following
these procedures. If we notify the paying agent that we will extend the
maturity, the paying agent will send a notice to each holder by first class
mail, postage prepaid, or by other means agreed upon between us and the paying
agent, at least 30 days before the stated maturity then in effect. The notice
sent by the paying agent will provide the following information:
- our election to extend the maturity of the extendible debt security.
- the extended maturity date or, if the maturity date had previously been
extended, the new extended maturity date.
- the interest rate that will apply during the extension period or, in the
case of a floating rate debt security, the spread and/or spread
multiplier, if any, applicable during the extension period.
- the provisions, if any, for redemption and repayment during the extension
period.
Once the paying agent has mailed the notice to each holder, the extension of the
maturity date will take place automatically. All of the terms of the debt
security will be the same as the terms of the debt security as originally
issued, except those terms that are described in the notice sent by the paying
agent to each holder and except as described in the following paragraph.
Not later than 10:00 a.m., New York City time, on the twentieth calendar day
before the maturity date then in effect for an extendible debt security or, if
that day is not a business day, on the next succeeding business day, we may
revoke the interest rate set forth in the extension notice sent by the paying
agent to each holder and establish a higher interest rate for the extension
period. If we elect to establish a higher interest rate, the paying agent will
send a notice to each holder by first class mail, postage prepaid, or by other
means agreed between us and the paying agent, of the higher interest rate in the
case of a floating rate debt security, the higher spread and/or spread
multiplier, if any. The notice of the higher rate cannot be revoked. All
extendible debt securities as to which the maturity date has been extended will
bear the higher rate for the extension period, whether or not tendered for
repayment.
If we elect to extend the maturity date of an extendible debt security, each
holder may elect repayment of all or part of its debt security on the maturity
date then in effect at a price equal to the principal amount plus any accrued
and unpaid interest to that date. To elect repayment, a holder must give notice
to the paying agent between 25 and 35 days before the maturity date in effect.
The notice must consist of either:
- the debt security along with the completed form entitled "Option to Elect
Repayment," which will be attached to your debt security.
- a telegram, facsimile transmission or letter from a member of a national
securities exchange, the National Association of Securities Dealers, Inc.
or a commercial bank or trust company in the United States setting forth
the name of the holder, the principal amount of the debt security, the
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principal amount of the debt security to be repaid, the certificate
number or a description of the tenor and terms of the debt security, a
statement that the option to elect repayment is being elected and a
guarantee that the debt security, together with the completed form
entitled "Option to Elect Repayment" will be received by the paying agent
no later than the fifth business day after the date of the telegram,
facsimile transmission or letter. The telegram, facsimile transmission or
letter will become effective upon receipt, by that fifth business day, of
the debt security and complete form.
The holder may revoke the election of repayment by sending to the paying agent
written notice by 3:00 p.m., New York City time, on the twentieth day before the
maturity date then in effect or, if that day is not a business day, on the next
succeeding business day.
If an extendible debt security is represented by a global debt security, the
depositary or its nominee, as the holder, will be the only person that can
exercise the right to elect repayment or revoke such an election. Any indirect
owners who own beneficial interests in the global debt security and wish to make
such an election must give proper and timely instructions to the banks or
brokers through which they hold their interests, requesting that they notify the
depositary to make a repayment election or revoke such an election on their
behalf. Different firms have different deadlines for accepting instructions from
their customers, and you should take care to act promptly enough to ensure that
your request is given effect by the depositary before the applicable deadline
for exercise.
REDEMPTION AND REPAYMENT
Unless otherwise indicated in your prospectus supplement, your debt security
will not be entitled to the benefit of any sinking fund--that is, we will not
deposit money on a regular basis into any separate custodial account to repay
your debt securities. In addition, we will not be entitled to redeem your debt
security before its stated maturity (except for certain tax reasons, as
described below) unless your prospectus supplement specifies a redemption date
or redemption commencement date. You will not be entitled to require us to buy
your debt security from you, before its stated maturity, unless your prospectus
supplement specifies one or more repayment dates.
If your prospectus supplement specifies one or more redemption dates, a
redemption commencement date or a repayment date, it will also specify one or
more redemption prices or repayment prices, which may be expressed as a
percentage of the principal amount of your debt security. It may also specify
one or more redemption periods during which the redemption prices relating to a
redemption of debt securities during those periods will apply.
If your prospectus supplement specifies one or more redemption dates, your debt
security will be redeemable at our option on any of those dates. If your
prospectus supplement specifies a redemption commencement date, your debt
security will be redeemable at our option at any time on or after that date. If
we redeem your debt security, we will do so at the specified redemption price.
If different prices are specified for different redemption periods, the price we
pay will be the price that applies to the redemption period during which your
debt security is redeemed.
If your prospectus supplement specifies a repayment date, your debt security
will be repayable at your option on the specified repayment date at the
specified repayment price, together with interest accrued to the repayment date.
If we exercise an option to redeem any debt security, we will give the trustee
and the holders written notice of the principal amount of the debt security to
be redeemed, not less than 10 days nor more than 60 days before the applicable
redemption date. We will give the notice in the manner described below in
"--Notices."
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If a debt security represented by a global debt security is subject to repayment
at the holder's option, the depositary or its nominee, as the holder, will be
the only person that can exercise the right to repayment. Any indirect holders
who own beneficial interests in the global debt security and wish to exercise a
repayment right must give proper and timely instructions to the banks or brokers
through which they hold their interests, requesting that they notify the
depositary to exercise the repayment right on their behalf. Different firms have
different deadlines for accepting instructions from their customers, and you
should take care to act promptly enough to ensure that your request is given
effect by the depositary before the applicable deadline for exercise.
Street name and other indirect holders should contact their banks or brokers for
information about how to exercise a repayment right in a timely manner.
We or our affiliates may purchase debt securities from investors who are willing
to sell from time to time, either in the open market at prevailing prices or in
private transactions at negotiated prices. Debt securities that we or they
purchase may, at our discretion, be held, resold or cancelled.
OPTIONAL TAX REDEMPTION
In addition to the situations described above under "--Redemption and
Repayment," we also have the option to redeem the debt securities in two
situations described below, unless otherwise indicated in your prospectus
supplement. The redemption price for the debt securities, other than original
issue discount debt securities, will be equal to the principal amount of the
debt securities being redeemed plus accrued interest and any additional amounts
due on the date fixed for redemption. The redemption price for original issue
discount debt securities will be specified in the prospectus supplement for such
debt securities. Furthermore, we must give you between 10 and 60 days' notice
before redeeming the debt securities.
- The first situation is where, as a result of a change in, execution of or
amendment to any laws or treaties or the official application or
interpretation of any laws or treaties, we would be required to pay
additional amounts as described below under "--Payment of Additional
Amounts."
This applies only in the case of changes, executions, amendments,
applications or interpretations that occur on or after the date specified
in the prospectus supplement for the applicable debt securities and in a
relevant jurisdiction, as defined in "--Payment of Additional Amounts"
below. If UBS is succeeded by another entity, the applicable jurisdiction
will be the jurisdiction in which the successor entity is organized, and
the applicable date will be the date the entity became a successor.
We would not have the option to redeem in this case if we could have
avoided the payment of additional amounts or the deduction or withholding
by using reasonable measures available to us.
- The second situation is where a person located outside of a relevant
jurisdiction into which UBS is merged or to whom it has conveyed,
transferred or leased its property is required to pay an additional
amount. We would have the option to redeem the debt securities even if we
are required to pay additional amounts immediately after the merger,
conveyance, transfer or lease. We are not required to use reasonable
measures to avoid the obligation to pay additional amounts in this
situation.
PAYMENT OF ADDITIONAL AMOUNTS
A relevant jurisdiction may require UBS to withhold amounts from payments on the
principal or interest on a debt security for taxes or any other governmental
charges. If the relevant jurisdiction
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requires a withholding of this type, UBS may be required to pay you an
additional amount so that the net amount you receive will be the amount
specified in the debt security to which you are entitled.
By relevant jurisdiction, we mean Switzerland or a jurisdiction in which the UBS
branch through which debt securities are issued is located. UBS will NOT have to
pay additional amounts in respect of taxes or other governmental charges that
are required to be deducted or withheld by any paying agent from a payment on a
debt security, if such payment can be made without such deduction or withholding
by any other paying agent, or in respect of taxes or other governmental charges
that would not have been imposed but for
- the existence of any present or former connection between you and the
relevant jurisdiction, other than the mere holding of the debt security
and the receipt of payments on it;
- your status as an individual resident of a member state of the European
Union;
- a failure to comply with any reasonable certification, documentation,
information or other reporting requirement concerning your nationality,
residence, identity or connection with the relevant jurisdiction, if such
compliance is required as a precondition to relief or exemption from such
taxes or other governmental charges (including, without limitation, a
certification that you are not resident in the relevant jurisdiction or
are not an individual resident of a member state of the European Union);
or
- a change in law that becomes effective more than 30 days after a payment
on the debt security becomes due and payable or on which the payment is
duly provided for, whichever occurs later.
These provisions will also apply to any taxes or governmental charges imposed by
any jurisdiction in which a successor to UBS is organized. The prospectus
supplement relating to the debt security may describe additional circumstances
in which UBS would not be required to pay additional amounts.
MERGERS AND SIMILAR TRANSACTIONS
We are generally permitted to merge or consolidate with another firm. We are
also permitted to sell our assets substantially as an entirety to another firm.
With regard to any series of debt securities, we may not take any of these
actions, however, unless all the following conditions are met:
- If the successor firm in the transaction is not UBS, the successor firm
must be organized as a corporation, partnership or trust and must
expressly assume our obligations under the debt securities of that series
and the debt indenture. The successor firm may be organized under the
laws of any jurisdiction, whether in Switzerland or elsewhere.
- Immediately after the transaction, no default under the debt securities
of that series has occurred and is continuing. For this purpose, "default
under the debt securities of that series" means an event of default with
respect to that series or any event that would be an event of default
with respect to that series if the requirements for giving us default
notice and for our default having to continue for a specific period of
time were disregarded. We describe these matters below under "--Default,
Remedies and Waiver of Default."
If the conditions described above are satisfied with respect to the debt
securities of any series, we will not need to obtain the approval of the holders
of those debt securities in order to merge or consolidate or to sell our assets.
Also, these conditions will apply only if we wish to merge or consolidate with
another firm or sell our assets substantially as an entirety to another firm. We
will not need to satisfy these conditions if we enter into other types of
transactions, including any transaction in which we acquire the stock or assets
of another firm, any transaction that involves a change of control of UBS but in
which we do not merge or consolidate and any transaction in which we sell less
than substantially all our assets.
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DESCRIPTION OF DEBT SECURITIES WE MAY OFFER
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Also, if we merge, consolidate or sell our assets substantially as an entirety
and the successor firm is a non-Swiss entity, neither we nor any successor would
have any obligation to compensate you for any resulting adverse tax consequences
to the debt securities.
DEFEASANCE AND COVENANT DEFEASANCE
Unless we say otherwise in the applicable prospectus supplement, the provisions
for full defeasance and covenant defeasance described below apply to each debt
security. In general, we expect these provisions to apply to each debt security
that has a specified currency of U.S. dollars and is not a floating rate or
indexed debt security.
FULL DEFEASANCE
If there is a change in U.S. federal tax law, as described below, we can legally
release ourselves from all payment and other obligations on your debt security.
This is called full defeasance. To do so, each of the following must occur:
- We must deposit in trust for the benefit of all holders of those debt
securities a combination of money and U.S. government or U.S. government
agency notes or bonds that will generate enough cash to make interest,
principal and any other payments on those debt securities on their
various due dates.
- There must be a change in current U.S. federal tax law or an Internal
Revenue Service ruling that lets us make the above deposit without
causing the holders to be taxed on those debt securities any differently
than if we did not make the deposit and just repaid the debt securities
ourselves. Under current federal tax law, the deposit and our legal
release from your debt securities would be treated as though we took back
your debt security and gave you your share of the cash and notes or bonds
deposited in trust. In that event, you could recognize gain or loss on
your debt security.
- We must deliver to the trustee a legal opinion of our counsel confirming
the tax law change described above.
If we ever fully defease your debt security, you would have to rely solely on
the trust deposit for payments on your debt security. You could not look to us
for payment in the event of any shortfall.
COVENANT DEFEASANCE
Under current U.S. federal tax law, we can make the same type of deposit
described above and be released from any restrictive covenants relating to your
debt security that may be described in your prospectus supplement. This is
called covenant defeasance. In that event, you would lose the protection of
those restrictive covenants. In order to achieve covenant defeasance for any
debt securities, we must do both of the following:
- We must deposit in trust for the benefit of all holders of those debt
securities a combination of money and U.S. government or U.S. government
agency notes or bonds that will generate enough cash to make interest,
principal and any other payments on those debt securities on their
various due dates.
- We must deliver to the trustee a legal opinion of our counsel confirming
that under U.S. federal income tax law as then in effect we may make the
above deposit without causing you to be taxed on those debt securities
any differently than if we did not make the deposit and just repaid those
debt securities ourselves.
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DESCRIPTION OF DEBT SECURITIES WE MAY OFFER
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If we accomplish covenant defeasance with regard to your debt security, the
following provisions of the debt indenture and your debt security would no
longer apply:
- - Any covenants that your prospectus supplement may state are applicable to your
debt security; and
- - The events of default resulting from a breach of covenants, described below in
the fourth bullet point under "--Default, Remedies and Waiver of
Default--Events of Default."
If we accomplish covenant defeasance on your debt security, you can still look
to us for repayment of your debt security in the event of any shortfall in the
trust deposit. You should note, however, that if one of the remaining events of
default occurred, such as our bankruptcy, and your debt security became
immediately due and payable, there may be a shortfall. Depending on the event
causing the default you may not be able to obtain payment of the shortfall.
DEFAULT, REMEDIES AND WAIVER OF DEFAULT
You will have special rights if an event of default with respect to your debt
security occurs and is not cured, as described in this subsection.
EVENTS OF DEFAULT
Unless your prospectus supplement says otherwise, when we refer to an event of
default with respect to any series of debt securities, we mean any of the
following occurs:
- We do not pay the principal or any premium (including delivering any
security or other property deliverable) on any debt securities of that
series at its stated maturity;
- We do not pay interest on any debt securities of that series within 30
days after it becomes due and payable;
- We do not deposit a sinking fund payment with regard to any debt
securities of that series on its due date, but only if the payment is
required in the applicable prospectus supplement;
- We remain in breach of any covenant we make in the debt indenture for the
benefit of the debt securities of that series, for 60 days after we
receive a notice of default stating that we are in breach and requiring
us to remedy the breach. The notice must be sent by the trustee or the
holders of not less than 10% in principal amount of the relevant series
of debt securities;
- We file for bankruptcy or certain other bankruptcy, insolvency or
reorganization events relating to UBS occur; or
- If the applicable prospectus supplement states that any additional event
of default applies to your series, that event of default occurs.
REMEDIES IF AN EVENT OF DEFAULT OCCURS
If an event of default has occurred with respect to any series of debt
securities and has not been cured or waived, the trustee or the holders of not
less than 25% in principal amount of all debt securities of that series may
declare the entire principal amount of the debt securities of that series to be
due immediately. If an event of default occurs because of bankruptcy, insolvency
or reorganization events relating to UBS, the entire principal amount of the
debt securities of that series will be automatically accelerated, without any
action by the trustee or any holder.
Each of the situations described above is called an acceleration of the maturity
of the affected series of debt securities. If the maturity of any series is
accelerated and a judgment for payment has not yet been obtained, the holders of
a majority in principal amount of the debt securities of that series may cancel
the acceleration for the entire series.
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DESCRIPTION OF DEBT SECURITIES WE MAY OFFER
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If an event of default occurs, the trustee will have special duties. The trustee
will be obligated to use those of its rights and powers under the debt
indenture, and to use the same degree of care and skill in doing so, that a
prudent person would use in that situation in conducting his or her own affairs.
Except as described in the prior paragraph, the trustee is not required to take
any action under the debt indenture at the request of any holders unless the
holders offer the trustee reasonable protection from expenses and liability.
This is called an indemnity. If the trustee is provided with an indemnity
reasonably satisfactory to it, the holders of a majority in principal amount of
all debt securities of the relevant series may direct the time, method and place
of conducting any lawsuit or other formal legal action seeking any remedy
available to the trustee. These majority holders may also direct the trustee in
performing any other action under the debt indenture with respect to the debt
securities of that series.
Before you bypass the trustee and bring your own lawsuit or other formal legal
action or take other steps to enforce your rights or protect your interests
relating to any debt security, all of the following must occur:
- The holder of your debt security must give the trustee written notice
that an event of default has occurred, and the event of default must not
have been cured or waived.
- The holders of not less than 25% in principal amount of all debt
securities of your series must make a written request that the trustee
take action because of the default, and they or other holders must offer
to the trustee indemnity reasonably satisfactory to the trustee against
the cost and other liabilities of taking that action.
- The trustee must not have taken action for 60 days after the above steps
have been taken.
- During those 60 days, the holders of a majority in principal amount of
the debt securities of your series must not have given the trustee
directions that are inconsistent with the written request of the holders
of not less than 25% in principal amount of all debt securities of your
series.
You are, however, entitled at any time to bring a lawsuit for the payment of
money due on your debt security on or after its due date.
WAIVER OF DEFAULT
The holders of not less than a majority in principal amount of the debt
securities of any series may waive a default for all debt securities of that
series. If this happens, the default will be treated as if it has not occurred.
No one can waive a payment default on your debt security, however, without the
approval of the particular holder of that debt security.
WE WILL GIVE THE TRUSTEE INFORMATION ABOUT DEFAULTS ANNUALLY
We will furnish to the trustee every year a written statement of two of our
officers certifying that to their knowledge we are in compliance with the debt
indenture and the debt securities, or else specifying any default under the debt
indenture.
Book-entry and other indirect holders should consult their banks or brokers for
information on how to give notice or direction to or make a request of the
trustee and how to declare or cancel an acceleration of the maturity of the debt
securities. Book-entry and other indirect owners are described below under
"Legal Ownership and Book-Entry Issuance."
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MODIFICATION AND WAIVER OF COVENANTS
There are three types of changes we can make to the debt indenture and the debt
securities of any series.
CHANGES REQUIRING EACH HOLDER'S APPROVAL
First, there are changes that cannot be made without the approval of each holder
of a debt security affected by the change. Here is a list of those types of
changes:
- change the stated maturity for any principal or interest payment on a
debt security;
- reduce the principal amount, the amount payable on acceleration of the
maturity after a default, the interest rate or the redemption price for a
debt security;
- permit redemption of a debt security if not previously permitted;
- impair any right a holder may have to require repayment of his or her
debt security;
- impair any right that a holder of an indexed or any other debt security
may have to exchange or convert the debt security for or into securities
or other property;
- change the currency of any payment on a debt security other than as
permitted by the debt security;
- change the place of payment on a debt security, if it is in non-global
form;
- impair a holder's right to sue for payment of any amount due on his or
her debt security;
- reduce the percentage in principal amount of the debt securities of any
one or more affected series, taken separately or together, as applicable,
the approval of whose holders is needed to change the debt indenture or
those debt securities;
- reduce the percentage in principal amount of the debt securities of any
one or more affected series, taken separately or together, as applicable,
the consent of whose holders is needed to waive our compliance with the
debt indenture or to waive defaults; and
- change the provisions of the debt indenture dealing with modification and
waiver in any other respect, except to increase any required percentage
referred to above or to add to the provisions that cannot be changed or
waived without approval.
CHANGES NOT REQUIRING APPROVAL OF HOLDERS
The second type of change does not require any approval by holders of the debt
securities of an affected series. This type of change is limited to
clarifications and changes that would not adversely affect the debt securities
of that series in any material respect. We also do not need any approval to make
changes that affect only debt securities to be issued under the debt indenture
after the changes take effect.
We may also make changes or obtain waivers that do not adversely affect a
particular debt security, even if they affect other debt securities. In those
cases, we do not need to obtain the approval of the holder of the unaffected
debt security; we need only obtain any required approvals from the holders of
the affected debt securities.
CHANGES REQUIRING MAJORITY APPROVAL
Any other change to the debt indenture and the debt securities would require the
following approval:
- If the change affects only the debt securities of a particular series, it
must be approved by the holders of a majority in principal amount of the
debt securities of that series.
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DESCRIPTION OF DEBT SECURITIES WE MAY OFFER
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- If the change affects the debt securities of more than one series of debt
securities issued under the debt indenture, it must be approved by the
holders of a majority in principal amount of all series affected by the
change, with the debt securities of all the affected series voting
together as one class for this purpose.
In each case, the required approval must be given by written consent.
The same majority approval would be required for us to obtain a waiver of any of
our covenants in the debt indenture. If the holders approve a waiver of a
covenant, we will not have to comply with that covenant. The holders, however,
cannot approve a waiver of any provision in a particular debt security, or in
the debt indenture as it affects that debt security, that we cannot change
without the approval of the holder of that debt security as described above
under "--Changes Requiring Each Holder's Approval," unless that holder approves
the waiver.
Book-entry and other indirect holders should consult their banks or brokers for
information on how approval may be granted or denied if we seek to change the
debt indenture or the debt securities or request a waiver.
SPECIAL RULES FOR ACTION BY HOLDERS
When holders take any action under the debt indenture, such as giving a notice
of default, declaring an acceleration, approving any change or waiver or giving
the trustee an instruction, we will apply the following rules.
ONLY OUTSTANDING DEBT SECURITIES ARE ELIGIBLE
Only holders of outstanding debt securities of the applicable series will be
eligible to participate in any action by holders of debt securities of that
series. Also, we will count only outstanding debt securities in determining
whether the various percentage requirements for taking action have been met. For
these purposes, a debt security will not be "outstanding":
- if it has been surrendered for cancellation;
- if we have deposited or set aside, in trust for its holder, money for its
payment or redemption;
- if we have fully defeased it as described above under "--Defeasance and
Covenant Defeasance--Full Defeasance"; or
- if we or one of our affiliates, such as UBS Warburg LLC or UBS
PaineWebber Inc., is the beneficial owner.
In some situations, we may follow special rules in calculating the principal
amount of a debt security that is to be treated as outstanding for the purposes
described above. This may happen, for example, if the principal amount is
payable in a non-U.S. dollar currency, increases over time or is not to be fixed
until maturity. For any debt security of the kind described below, we will
decide how much principal amount to attribute to the debt security as follows:
- For an original issue discount debt security, we will use the principal
amount that would be due and payable on the action date if the maturity
of the debt security were accelerated to that date because of a default.
- For a debt security whose principal amount is not known, we will use any
amount that we indicate in the prospectus supplement for that debt
security. The principal amount of a debt security may not be known, for
example, because it is based on an index that changes from time to time
and the principal amount is not to be determined until a later date.
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DESCRIPTION OF DEBT SECURITIES WE MAY OFFER
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- For debt securities with a principal amount denominated in one or more
non-U.S. dollar currencies or currency units, we will use the U.S. dollar
equivalent, which we will determine.
DETERMINING RECORD DATES FOR ACTION BY HOLDERS
We will generally be entitled to set any day as a record date for the purpose of
determining the holders that are entitled to take action under the debt
indenture. In limited circumstances, only the trustee will be entitled to set a
record date for action by holders. If we or the trustee set a record date for an
approval or other action to be taken by holders, that vote or action may be
taken only by persons or entities who are holders on the record date and must be
taken during the period that we specify for this purpose, or that the trustee
specifies if it sets the record date. We or the trustee, as applicable, may
shorten or lengthen this period from time to time. This period, however, may not
extend beyond the 180th day after the record date for the action. In addition,
record dates for any global debt security may be set in accordance with
procedures established by the depositary from time to time. Accordingly, record
dates for global debt securities may differ from those for other debt
securities.
FORM, EXCHANGE AND TRANSFER OF DEBT SECURITIES
We will issue each debt security in global--i.e., book-entry--form only, unless
we specify otherwise in the applicable prospectus supplement. Debt securities in
book-entry form will be represented by a global security registered in the name
of a depositary, which will be the holder of all the debt securities represented
by the global security. Those who own beneficial interests in a global debt
security will do so through participants in the depositary's securities
clearance system, and the rights of these indirect owners will be governed
solely by the applicable procedures of the depositary and its participants. We
describe book-entry securities below under "Legal Ownership and Book-Entry
Issuance." Unless we specify otherwise in the applicable prospectus supplement,
The Depository Trust Company, New York, New York, known as DTC, will be the
depositary for all debt securities in global form.
In addition, we will generally issue each debt security in registered form,
without coupons, unless we specify otherwise in the applicable prospectus
supplement. If we issue a debt security in bearer form, the applicable
prospectus supplement will describe the provisions that would apply to that
security.
If a debt security is issued as a global debt security, only the
depositary--e.g., DTC, Euroclear and Clearstream--will be entitled to transfer
and exchange the debt security or exercise any other rights of a holder as
described in this subsection, since the depositary will be the sole holder of
the debt security.
If any debt securities cease to be issued in global form, then unless we
indicate otherwise in your prospectus supplement, they will be issued:
- only in fully registered form;
- without interest coupons; and
- in denominations of $1,000 and multiples of $1,000.
Holders may exchange their debt securities for debt securities of smaller
denominations (subject to the limit above) or combined into fewer debt
securities of larger denominations, as long as the total principal amount is not
changed. You may not exchange your debt securities for securities of a different
series or having different terms, unless your prospectus supplement says you
may.
Holders may exchange or transfer their debt securities at the office of the
trustee. They may also replace lost, stolen, destroyed or mutilated debt
securities at that office. We have appointed the trustee to act as our agent for
registering debt securities in the names of holders and transferring and
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DESCRIPTION OF DEBT SECURITIES WE MAY OFFER
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replacing debt securities. We may appoint another entity to perform these
functions or perform them ourselves.
Holders will not be required to pay a service charge to transfer or exchange
their debt securities, but they may be required to pay for any tax or other
governmental charge associated with the exchange or transfer. The transfer or
exchange, and any replacement, will be made only if our transfer agent is
satisfied with the holder's proof of legal ownership. The transfer agent may
require an indemnity before replacing any debt securities.
If we have designated additional transfer agents for your debt security, they
will be named in your prospectus supplement. We may appoint additional transfer
agents or cancel the appointment of any particular transfer agent. We may also
approve a change in the office through which any transfer agent acts.
If the debt securities of any series are redeemable and we redeem less than all
those debt securities, we may block the transfer or exchange of those debt
securities during the period beginning 15 days before the day we mail the notice
of redemption and ending on the day of that mailing or during any other period
specified in the applicable prospectus supplement, in order to freeze the list
of holders who will receive the mailing. We may also refuse to register
transfers of or exchange any debt security selected for redemption, except that
we will continue to permit transfers and exchanges of the unredeemed portion of
any debt security being partially redeemed.
The rules for exchange described above apply to exchanges of debt securities for
other debt securities of the same series and kind. If a debt security is
convertible, exercisable or exchangeable into or for a different kind of
security, such as one that we have not issued, or for other property, the rules
governing that type of conversion, exercise or exchange will be described in the
applicable prospectus supplement.
PAYMENT MECHANICS FOR DEBT SECURITIES
WHO RECEIVES PAYMENTS?
If interest is due on a debt security on an interest payment date, we will pay
the interest to the person in whose name the debt security is registered at the
close of business on the regular record date described below relating to the
interest payment date. If interest is due at maturity but on a day that is not
an interest payment date, we will pay the interest to the person entitled to
receive the principal of the debt security. If principal or another amount
besides interest is due on a debt security at maturity, we will pay the amount
to the holder of the debt security against surrender of the debt security at a
proper place of payment (or, in the case of a global debt security, in
accordance with the applicable policies of the depositary).
PAYMENT DATES AND REGULAR RECORD DATES FOR INTEREST
Unless we specify otherwise in the applicable prospectus supplement, interest on
any fixed rate debt security will be payable semiannually each May 15 and
November 15 and at maturity, and the regular record date relating to an interest
payment date for any fixed rate debt security will be the May 1 or November 1
next preceding that interest payment date. The regular record date relating to
an interest payment date for any floating rate debt security will be the 15th
calendar day before that interest payment date. These record dates will apply
whether or not a particular record date is a business day. For the purpose of
determining the holder at the close of business on a regular record date when
business is not being conducted, the close of business will mean 5:00 P.M., New
York City time, on that day.
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The term "business day" means, for any debt security, a day that meets all the
following applicable requirements:
- - for all debt securities, is a Monday, Tuesday, Wednesday, Thursday or Friday
that is not a day on which banking institutions in New York City generally are
authorized or obligated by law, regulation or executive order to close and
that satisfies any other criteria specified in your prospectus supplement;
- - if the debt security is a floating rate debt security whose interest rate is
based on LIBOR, is also a day on which dealings in the relevant index currency
specified in the applicable prospectus supplement are transacted in the London
interbank market;
- - if the debt security has a specified currency other than U.S. dollars or
euros, is also a day on which banking institutions are not authorized or
obligated by law, regulation or executive order to close in the principal
financial center of the country issuing the specified currency;
- - if the debt security either is a floating rate debt security whose interest
rate is based on EURIBOR or has a specified currency of euros, is also a day
on which the Trans-European Automated Real-time Gross settlement Express
Transfer (TARGET) System, or any successor system, is open for business;
- - if the debt security is held through Euroclear, is also not a day on which
banking institutions in Brussels, Belgium are generally authorized or
obligated by law, regulation or executive order to close; and
- - if the debt security is held through Clearstream, is also not a day on which
banking institutions in Luxembourg are generally authorized or obligated by
law, regulation or executive order to close.
HOW WE WILL MAKE PAYMENTS DUE IN U.S. DOLLARS
We will follow the practices described in this subsection when paying amounts
due in U.S. dollars. Payments of amounts due in other currencies will be made as
described in the next subsection.
PAYMENTS ON GLOBAL DEBT SECURITIES. We will make payments on a global debt
security in accordance with the applicable policies of the depositary as in
effect from time to time. Under those policies, we will pay directly to the
depositary, or its nominee, and not to any indirect owners who own beneficial
interests in the global debt security. An indirect owner's right to receive
those payments will be governed by the rules and practices of the depositary and
its participants, as described under "Legal Ownership and Book-Entry
Issuance--What Is a Global Security?".
PAYMENTS ON NON-GLOBAL DEBT SECURITIES. We will make payments on a debt
security in non-global, registered form as follows. We will pay interest that is
due on an interest payment date by check mailed on the interest payment date to
the holder at his or her address shown on the trustee's records as of the close
of business on the regular record date. We will make all other payments by check
at the paying agent described below, against surrender of the debt security. All
payments by check will be made in next-day funds--that is, in funds that become
available on the day after the check is cashed.
Alternatively, if a non-global debt security has a face amount of at least
$1,000,000 and the holder asks us to do so, we will pay any amount that becomes
due on the debt security by wire transfer of immediately available funds to an
account at a bank in New York City, on the due date. To request wire payment,
the holder must give the paying agent appropriate wire transfer instructions at
least five business days before the requested wire payment is due. In the case
of any interest payment due on an interest payment date, the instructions must
be given by the person who is the holder on the relevant regular record date. In
the case of any other payment, payment will be made only after the debt security
is surrendered to the paying agent. Any wire instructions, once properly given,
will remain in effect unless and until new instructions are given in the manner
described above.
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DESCRIPTION OF DEBT SECURITIES WE MAY OFFER
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Book-entry and other indirect owners should consult their banks or brokers for
information on how they will receive payments on their debt securities.
HOW WE WILL MAKE PAYMENTS DUE IN OTHER CURRENCIES
We will follow the practices described in this subsection when paying amounts
that are due in a specified currency other than U.S. dollars.
PAYMENTS ON GLOBAL DEBT SECURITIES. We will make payments on a global debt
security in accordance with the applicable policies of the depositary as in
effect from time to time. We understand that these policies, as currently in
effect at DTC, are as follows:
Unless otherwise indicated in your prospectus supplement, if you are an indirect
owner of global debt securities denominated in a specified currency other than
U.S. dollars and if you have the right to elect to receive payments in that
other currency and you do make that election, you must notify the participant
through which your interest in the global debt security is held of your
election:
- on or before the applicable regular record date, in the case of a payment
of interest, or
- on or before the 16th day prior to stated maturity, or any redemption or
repayment date, in the case of payment of principal or any premium.
You may elect to receive all or only a portion of any interest, principal or
premium payment in a specified currency other than U.S. dollars.
Your participant must, in turn, notify DTC of your election on or before the
third DTC business day after that regular record date, in the case of a payment
of interest, and on or before the 12th DTC business day prior to stated
maturity, or on the redemption or repayment date if your debt security is
redeemed or repaid earlier, in the case of a payment of principal or any
premium.
DTC, in turn, will notify the paying agent of your election in accordance with
DTC's procedures.
If complete instructions are received by the participant and forwarded by the
participant to DTC, and by DTC to the paying agent, on or before the dates noted
above, the paying agent, in accordance with DTC's instructions, will make the
payments to you or your participant by wire transfer of immediately available
funds to an account maintained by you or your participant with a bank located in
the country issuing the specified currency or in another jurisdiction acceptable
to us and the paying agent.
If the foregoing steps are not properly completed, we expect DTC to inform the
paying agent that payment is to be made in U.S. dollars. In that case, we or our
agent will convert the payment to U.S. dollars in the manner described below
under "--Conversion to U.S. Dollars." We expect that we or our agent will then
make the payment in U.S. dollars to DTC, and that DTC in turn will pass it along
to its participants.
Book-entry and other indirect holders of a global debt security denominated in a
currency other than U.S. dollars should consult their banks or brokers for
information on how to request payment in the specified currency.
PAYMENTS ON NON-GLOBAL DEBT SECURITIES. Except as described in the second to
last paragraph under this heading, we will make payments on debt securities in
non-global form in the applicable specified currency. We will make these
payments by wire transfer of immediately available funds to any account that is
maintained in the applicable specified currency at a bank designated by the
holder and is acceptable to us and the trustee. To designate an account for wire
payment, the holder must give the paying agent appropriate wire instructions at
least five business days before the requested wire payment is due. In the case
of any interest payment due on an interest payment date, the instructions must
be given by the person who is the holder on the regular record date. In the case
of any other
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payment, the payment will be made only after the debt security is surrendered to
the paying agent. Any instructions, once properly given, will remain in effect
unless and until new instructions are properly given in the manner described
above.
If a holder fails to give instructions as described above, we will notify the
holder at the address in the trustee's records and will make the payment within
five business days after the holder provides appropriate instructions. Any late
payment made in these circumstances will be treated under the debt indenture as
if made on the due date, and no interest will accrue on the late payment from
the due date to the date paid.
Although a payment on a debt security in non-global form may be due in a
specified currency other than U.S. dollars, we will make the payment in U.S.
dollars if the holder asks us to do so. To request U.S. dollar payment, the
holder must provide appropriate written notice to the trustee at least five
business days before the next due date for which payment in U.S. dollars is
requested. In the case of any interest payment due on an interest payment date,
the request must be made by the person who is the holder on the regular record
date. Any request, once properly made, will remain in effect unless and until
revoked by notice properly given in the manner described above.
Indirect owners of a non-global debt security with a specified currency other
than U.S. dollars should contact their banks or brokers for information about
how to receive payments in the specified currency or in U.S. dollars.
CONVERSION TO U.S. DOLLARS. When we are asked by a holder to make payments in
U.S. dollars of an amount due in another currency, either on a global debt
security or a non-global debt security as described above, we will determine the
U.S. dollar amount the holder receives as follows. The exchange rate agent
described below will request currency bid quotations expressed in U.S. dollars
from three or, if three are not available, then two, recognized foreign exchange
dealers in New York City, any of which may be the exchange rate agent, which may
be UBS Warburg LLC, an affiliate of UBS, as of 11:00 A.M., New York City time,
on the second business day before the payment date. Currency bid quotations will
be requested on an aggregate basis, for all holders of debt securities
requesting U.S. dollar payments of amounts due on the same date in the same
specified currency. The U.S. dollar amount the holder receives will be based on
the highest acceptable currency bid quotation received by the exchange rate
agent. If the exchange rate agent determines that at least two acceptable
currency bid quotations are not available on that second business day, the
payment will be made in the specified currency.
To be acceptable, a quotation must be given as of 11:00 A.M., New York City
time, on the second business day before the due date and the quoting dealer must
commit to execute a contract at the quotation in the total amount due in that
currency on all series of debt securities. If some but not all of the relevant
debt securities are LIBOR debt securities or EURIBOR debt securities, the second
preceding business day will be determined for this purpose as if none of those
debt securities were LIBOR debt securities or EURIBOR debt securities.
A holder that requests payment in U.S. dollars will bear all associated currency
exchange costs, which will be deducted from the payment.
WHEN THE SPECIFIED CURRENCY IS NOT AVAILABLE. If we are obligated to make any
payment in a specified currency other than U.S. dollars, and the specified
currency or any successor currency is not available to us or cannot be paid to
you due to circumstances beyond our control--such as the imposition of exchange
controls or a disruption in the currency markets--we will be entitled to satisfy
our obligation to make the payment in that specified currency by making the
payment in U.S. dollars, on the basis specified in the applicable prospectus
supplement.
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For a specified currency other than U.S. dollars, the exchange rate will be the
noon buying rate for cable transfers of the specified currency in New York City
as quoted by the Federal Reserve Bank of New York on the then-most recent day on
which that bank has quoted that rate.
The foregoing will apply to any debt security, whether in global or non-global
form, and to any payment, including a payment at maturity. Any payment made
under the circumstances and in a manner described above will not result in a
default under any debt security or the debt indenture.
THE EURO. The euro may be a specified currency for some debt securities. On
January 1, 1999, the euro became the legal currency for the 11 member states
participating in the European Economic and Monetary Union. During a transition
period from January 1, 1999 to December 31, 2001 and for a maximum of six months
thereafter, the former national currencies of these 11 member states will
continue to be legal tender in their country of issue, at rates irrevocably
fixed on December 31, 1998.
EXCHANGE RATE AGENT. If we issue a debt security in a specified currency other
than U.S. dollars, we will appoint a financial institution to act as the
exchange rate agent and will name the institution initially appointed when the
debt security is originally issued in the applicable prospectus supplement. We
may select UBS Warburg LLC or another of our affiliates to perform this role. We
may change the exchange rate agent from time to time after the original issue
date of the debt security without your consent and without notifying you of the
change.
All determinations made by the exchange rate agent will be at its sole
discretion unless we state in your prospectus supplement that any determination
is subject to our approval. In the absence of manifest error, those
determinations will be conclusive for all purposes and binding on you and us,
without any liability on the part of the exchange rate agent.
PAYMENT WHEN OFFICES ARE CLOSED
If any payment is due on a debt security on a day that is not a business day, we
will make the payment on the next day that is a business day. Payments postponed
to the next business day in this situation will be treated under the debt
indenture as if they were made on the original due date. Postponement of this
kind will not result in a default under any debt security or the debt indenture,
and no interest will accrue on the postponed amount from the original due date
to the next day that is a business day. The term business day has a special
meaning, which we describe above under "--Payment and Record Dates for
Interest."
PAYING AGENT
We may appoint one or more financial institutions to act as our paying agents,
at whose designated offices debt securities in non-global entry form may be
surrendered for payment at their maturity. We call each of those offices a
paying agent. We may add, replace or terminate paying agents from time to time.
We may also choose to act as our own paying agent. Initially, we have appointed
the trustee, at its corporate trust office in New York City, as the paying
agent. We must notify the trustee of changes in the paying agents.
SETTLEMENT MECHANICS
The settlement mechanics applicable to debt securities calling for physical
settlement will be described in the applicable prospectus supplement.
UNCLAIMED PAYMENTS
Regardless of who acts as paying agent, all money paid by us to a paying agent
that remains unclaimed at the end of two years after the amount is due to a
holder will be repaid to us. After that two-year period, the holder may look
only to us for payment and not to the trustee, any other paying agent or anyone
else.
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NOTICES
Notices to be given to holders of a global debt security will be given only to
the depositary, in accordance with its applicable policies as in effect from
time to time. Notices to be given to holders of debt securities not in global
form will be sent by mail to the respective addresses of the holders as they
appear in the trustee's records, and will be deemed given when mailed. Neither
the failure to give any notice to a particular holder, nor any defect in a
notice given to a particular holder, will affect the sufficiency of any notice
given to another holder.
Book-entry and other indirect holders should consult their banks or brokers for
information on how they will receive notices.
OUR RELATIONSHIP WITH THE TRUSTEE
U.S. Bank Trust National Association has provided commercial banking and other
services for us and our affiliates in the past and may do so in the future.
Among other things, U.S. Bank Trust National Association provides us with a line
of credit, holds debt securities issued by us and serves as trustee or agent
with regard to other obligations of UBS or its subsidiaries.
U.S. Bank Trust National Association is initially serving as the trustee for the
debt securities. Consequently, if an actual or potential event of default occurs
with respect to any of these securities, the trustee may be considered to have a
conflicting interest for purposes of the Trust Indenture Act of 1939. In that
case, the trustee may be required to resign under the debt indenture, and we
would be required to appoint a successor trustee. For this purpose, a
"potential" event of default means an event that would be an event of default if
the requirements for giving us default notice or for the default having to exist
for a specific period of time were disregarded.
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Description of Warrants We May Offer
Please note that in this section entitled "Description of Warrants We May
Offer," references to UBS AG, we, our and us refer only to UBS AG and not to its
consolidated subsidiaries. Also, in this section, references to "holders" mean
those who own warrants registered in their own names, on the books that we or
the trustee or warrant agent, as applicable, maintain for this purpose, and not
those who own beneficial interests in warrants registered in street name or in
warrants issued in book-entry form through one or more depositaries. Owners of
beneficial interests in the warrants should read the section below entitled
"Legal Ownership and Book-Entry Issuance."
WE MAY ISSUE MANY SERIES OF WARRANTS
We may issue warrants that are debt warrants or universal warrants. We may offer
warrants separately or together with other warrants or with our debt securities.
We may issue warrants in such amounts or in as many distinct series as we wish.
We will issue each series of warrants under either a warrant indenture, to be
entered into before the first issuance of warrants under such indenture, between
UBS and a trustee to be named in the prospectus supplement applicable to the
first series of warrants to be issued pursuant to such an indenture, or a
warrant agreement, to be entered into before the first issuance of warrants
under such warrant agreement, between UBS and a warrant agent to be named in the
prospectus supplement applicable to the first series of warrants to be issued
pursuant to such a warrant agreement. This section summarizes terms of the
warrant indenture and warrant agreements and terms of the warrants that apply
generally to all series of warrants. Most of the financial and other specific
terms of your warrant will be described in the prospectus supplement to be
attached to the front of this prospectus. Those terms may vary from the terms
described here.
As you read this section, please remember that the specific terms of your
warrant as described in your prospectus supplement will supplement and, if
applicable, may modify or replace the general terms described in this section.
If there are differences between your prospectus supplement and this prospectus,
your prospectus supplement will control. Thus, the statements we make in this
section may not apply to your warrant.
When we refer to a series of warrants, we mean all warrants issued as part of
the same series under the applicable warrant indenture or warrant agreement.
When we refer to your prospectus supplement, we mean the prospectus supplement
describing the specific terms of the warrant you purchase. The terms used in
your prospectus supplement will have the meanings described in this prospectus,
unless otherwise specified.
TYPES OF WARRANTS
We may issue any of the following types of warrants:
DEBT WARRANTS
We may issue warrants for the purchase of our debt securities on terms to be
determined at the time of sale. We refer to this type of warrant as a "debt
warrant."
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UNIVERSAL WARRANTS
We may also issue warrants, on terms to be determined at the time of sale, for
the purchase or sale of, or whose cash value is determined by reference to the
performance, level or value of, one or more of the following:
- securities of one or more issuers other than UBS AG;
- one or more currencies;
- one or more commodities;
- any other financial, economic or other measure or instrument, including
the occurrence or non-occurrence of any event or circumstance; and
- one or more indices or baskets of the items described above.
We refer to this type of warrant as a "universal warrant." We refer to each
property described above as a "warrant property."
We may satisfy our obligations, if any, and the holder of a universal warrant
may satisfy its obligations, if any, with respect to any universal warrants by
delivering:
- the warrant property;
- the cash value of the warrant property; or
- the cash value of the warrants determined by reference to the
performance, level or value of the warrant property.
The applicable prospectus supplement will describe what we may deliver to
satisfy our obligations, if any, and what the holder of a universal warrant may
deliver to satisfy its obligations, if any, with respect to any universal
warrants.
INFORMATION IN YOUR PROSPECTUS SUPPLEMENT
ALL WARRANTS
Your prospectus supplement will describe the specific terms of your warrant,
which will include some or all of the following:
- the specific designation and aggregate number of, and the price at which
we will issue, the warrants;
- the currency with which the warrants may be purchased;
- the indenture or warrant agreement under which we will issue the
warrants;
- the date on which the right to exercise the warrants will begin and the
date on which that right will expire or, if you may not continuously
exercise the warrants throughout that period, the specific date or dates
on which you may exercise the warrants;
- whether the warrants will be issued in fully registered form or bearer
form, in global or non-global form or in any combination of these forms;
- the identities of the trustee or warrant agent, any depositaries and any
paying, transfer, calculation or other agents for the warrants;
- any securities exchange or quotation system on which the warrants or any
securities deliverable upon exercise of the warrants may be listed;
- whether the warrants are to be sold separately or with other securities;
and
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DESCRIPTION OF WARRANTS WE MAY OFFER
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- any other terms of the warrants.
If we issue warrants together with any other warrants or any debt securities,
the applicable prospectus supplement will specify whether the warrants will be
separable from the other securities before the warrants' expiration date.
No holder of a warrant will have any rights of a holder of the warrant property
purchasable under the warrant.
An investment in a warrant may involve special risks, including risks associated
with indexed securities and currency-related risks if the warrant or the warrant
property is linked to an index or is payable in or otherwise linked to a
non-U.S. dollar currency. We describe some of these risks below under
"Considerations Relating to Indexed Securities" and "Considerations Relating to
Securities Denominated or Payable in or Linked to a Non-U.S. Dollar Currency."
We and our affiliates may resell warrants in market-making transactions after
their initial issuance. We discuss these transactions above under "Description
of Debt Securities We May Offer--Information in Your Prospectus Supplement."
DEBT WARRANTS
If you purchase debt warrants, your prospectus supplement may contain, where
applicable, the following additional information about your warrants:
- the designation, aggregate principal amount, currency and terms of the
debt securities that may be purchased upon exercise of the debt warrants;
- the exercise price and whether the exercise price may be paid in cash, by
the exchange of any debt warrants or other securities or both and the
method of exercising the debt warrants; and
- the designation, terms and amount of debt securities, if any, to be
issued together with each of the debt warrants and the date, if any,
after which the debt warrants and debt securities will be separately
transferable.
UNIVERSAL WARRANTS
If you purchase universal warrants, your prospectus supplement may contain,
where applicable, the following additional information about your warrants:
- whether the universal warrants are put warrants or call warrants,
including in either case warrants that may be settled by means of net
cash settlement or cashless exercise, or any other type of warrants;
- the money or warrant property, and the amount or method for determining
the amount of money or warrant property, payable or deliverable upon
exercise of each universal warrant;
- the price at which and the currency with which the warrant property may
be purchased or sold upon the exercise of each universal warrant, or the
method of determining that price;
- whether the exercise price may be paid in cash, by the exchange of any
universal warrants or other securities or both, and the method of
exercising the universal warrants; and
- whether the exercise of the universal warrants is to be settled in cash
or by delivery of the warrant property or both and whether settlement
will occur on a net basis or a gross basis.
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THIS SECTION IS ONLY A SUMMARY
The warrant indenture or warrant agreement and its associated documents,
including your warrant, contain the full legal text of the matters described in
this section and your prospectus supplement. We have filed a copy of the form of
warrant indenture with the SEC as an exhibit to our registration statement. See
"Where You Can Find More Information" above for information on how to obtain a
copy of it. We will describe the warrant agreement under which we issue any
warrants in the applicable prospectus supplement, and we will file that
agreement with the SEC as an exhibit to an amendment to the registration
statement of which this prospectus is a part or as an exhibit to a Form 6-K and
incorporated herein by reference. See "Where You Can Find More Information"
above for information on how to obtain a copy of a warrant agreement when it is
filed.
This section and your prospectus supplement summarize all the material terms of
the warrant indenture or warrant agreement and your warrant. They do not,
however, describe every aspect of the warrant indenture or warrant agreement and
your warrant. For example, in this section and in your prospectus supplement, we
use terms that have been given special meaning in the warrant indenture or
warrant agreement, but we describe the meaning for only the more important of
those terms.
THE WARRANT INDENTURE
We may issue universal warrants under the warrant indenture. Warrants of this
kind will not be secured by any property or assets of UBS or its subsidiaries.
Thus, by owning a warrant issued under the warrant indenture, you hold one of
our unsecured obligations.
The warrants issued under the warrant indenture will be contractual obligations
of UBS and will rank equally with all of our other unsecured contractual
obligations and unsecured and unsubordinated debt. The warrant indenture does
not limit our ability to incur additional contractual obligations or debt.
The warrant indenture is a contract between us and a trustee. The trustee has
two main roles:
- First, the trustee can enforce your rights against us if we default.
There are limitations on the extent to which the trustee acts on your
behalf, which we describe later under "--Default, Remedies and Waiver of
Default."
- Second, the trustee performs administrative duties for us, such as
sending you payments and notices.
The trustee for the warrant indenture will be named in the prospectus supplement
applicable to the first series of warrants to be issued pursuant to such an
indenture.
WE MAY ISSUE MANY SERIES OF WARRANTS UNDER THE WARRANT INDENTURE
We may issue as many distinct series of warrants under the warrant indenture as
we wish. This section summarizes terms of the warrants that apply generally to
all series issued under the warrant indenture. The provisions of the warrant
indenture allow us not only to issue warrants with terms different from those of
warrants previously issued under the warrant indenture, but also to "reopen" a
previous issue of a series of warrants and issue additional warrants of that
series.
AMOUNTS THAT WE MAY ISSUE
The warrant indenture does not limit the aggregate number of warrants that we
may issue or the number of series or the aggregate amount of any particular
series. We may issue warrants and other securities in amounts that exceed the
total amount specified on the cover of this prospectus at any time without your
consent and without notifying you.
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The warrant indenture and the warrants do not limit our ability to incur other
contractual obligations or indebtedness or to issue other securities. Also, the
terms of the warrants do not impose financial or similar restrictions on us.
EXPIRATION DATE AND PAYMENT OR SETTLEMENT DATE
The term "expiration date" with respect to any warrant means the date on which
the right to exercise the warrant expires. The term "payment or settlement date"
with respect to any warrant means the date when any money or warrant property
with respect to that warrant becomes payable or deliverable upon exercise or
redemption of that warrant in accordance with its terms.
GOVERNING LAW
The warrant indenture and the warrants issued under it will be governed by New
York law.
CURRENCY OF WARRANTS
Amounts that become due and payable on your warrant will be payable in a
currency, composite currency, basket of currencies or currency unit or units
specified in your prospectus supplement. We refer to this currency, composite
currency, basket of currencies or currency unit or units as a "specified
currency." The specified currency for your warrant will be U.S. dollars, unless
your prospectus supplement states otherwise. You will have to pay for your
warrant by delivering the requisite amount of the specified currency to UBS
Warburg LLC, UBS PaineWebber Inc. or another firm that we name in your
prospectus supplement, unless other arrangements have been made between you and
us or you and that firm. We will make payments on your warrants in the specified
currency, except as described below in "--Payment Mechanics for Warrants." See
"Considerations Relating to Securities Denominated or Payable in or Linked to a
Non-U.S. Dollar Currency" below for more information about risks of investing in
warrants of this kind.
REDEMPTION
We will not be entitled to redeem your warrant before its expiration date unless
your prospectus supplement specifies a redemption commencement date.
If your prospectus supplement specifies a redemption commencement date, it will
also specify one or more redemption prices. It may also specify one or more
redemption periods during which the redemption prices relating to a redemption
of warrants during those periods will apply.
If your prospectus supplement specifies a redemption commencement date, your
warrant will be redeemable at our option at any time on or after that date or at
a specified time or times. If we redeem your warrant, we will do so at the
specified redemption price. If different prices are specified for different
redemption periods, the price we pay will be the price that applies to the
redemption period during which your warrant is redeemed.
If we exercise an option to redeem any warrant, we will give to the trustee and
holders written notice of the redemption price of the warrant to be redeemed,
not less than 10 days nor more than 60 days before the applicable redemption
date or within any other period before the applicable redemption date specified
in the applicable prospectus supplement. We will give the notice in the manner
described below in "--Notices."
We or our affiliates may purchase warrants from investors who are willing to
sell from time to time, either in the open market at prevailing prices or in
private transactions at negotiated prices. Warrants that we or they purchase
may, at our discretion, be held, resold or cancelled.
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MERGERS AND SIMILAR TRANSACTIONS
We are generally permitted to merge or consolidate with another corporation or
other entity. We are also permitted to sell our assets substantially as an
entirety to another corporation or other entity. With regard to any series of
warrants, however, we may not take any of these actions unless all the following
conditions are met:
- If the successor entity in the transaction is not UBS, the successor
entity must be organized as a corporation, partnership or trust and must
expressly assume our obligations under the warrants of that series and the
warrant indenture. The successor entity may be organized under the laws of
any jurisdiction, whether in Switzerland or elsewhere.
- Immediately after the transaction, no default under the warrants of that
series has occurred and is continuing. For this purpose, "default under
the warrants of that series" means an event of default with respect to
that series or any event that would be an event of default with respect to
that series if the requirements for giving us default notice and for our
default having to continue for a specific period of time were disregarded.
We describe these matters below under "--Default, Remedies and Waiver of
Default."
If the conditions described above are satisfied with respect to the warrants of
any series, we will not need to obtain the approval of the holder of those
warrants in order to merge or consolidate or to sell our assets. Also, these
conditions will apply only if we wish to merge or consolidate with another
entity or sell our assets substantially as an entirety to another entity. We
will not need to satisfy these conditions if we enter into other types of
transactions, including any transaction in which we acquire the stock or assets
of another entity, any transaction that involves a change of control of UBS but
in which we do not merge or consolidate and any transaction in which we sell
less than substantially all our assets.
Also, if we merge, consolidate or sell our assets substantially as an entirety
and the successor is a non-Swiss entity, neither we nor any successor would have
any obligation to compensate you for any resulting adverse tax consequences
relating to your warrants.
DEFAULT, REMEDIES AND WAIVER OF DEFAULT
You will have special rights if an event of default with respect to your warrant
occurs and is continuing, as described in this subsection.
EVENTS OF DEFAULT. Unless your prospectus supplement says otherwise, when we
refer to an event of default with respect to any series of warrants issued under
the warrant indenture, we mean that, upon satisfaction by the holder of the
warrant of all conditions precedent to our relevant obligation or covenant to be
satisfied by the holder, any of the following occurs:
- We do not pay any money or deliver any warrant property with respect to
that warrant on the payment or settlement date in accordance with the
terms of that warrant;
- We remain in breach of any covenant we make in the warrant indenture for
the benefit of the holder of that warrant for 60 days after we receive a
notice of default stating that we are in breach and requiring us to remedy
the breach. The notice must be sent by the trustee or the holders of at
least 10% in number of the relevant series of warrants;
- We file for bankruptcy or certain other bankruptcy, insolvency or
reorganization events relating to UBS occur.
- If the applicable prospectus supplement states that any additional event
of default applies to the series, that event of default occurs.
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If we do not pay any money or deliver any warrant property when due with respect
to a particular warrant of a series, as described in the first bullet point
above, that failure to make a payment or delivery will not constitute an event
of default with respect to any other warrant of the same series or any other
series.
REMEDIES IF AN EVENT OF DEFAULT OCCURS. If an event of default occurs with
respect to any series of warrants issued under the warrant indenture, the
trustee will have special duties. In that situation, the trustee will be
obligated to use those of its rights and powers under the warrant indenture, and
to use the same degree of care and skill in doing so, that a prudent person
would use in that situation in conducting his or her own affairs.
Except as described in the prior paragraph, the trustee is not required to take
any action under the warrant indenture at the request of any holders unless the
holders offer the trustee reasonable protection from expenses and liability.
This is called an indemnity. If the trustee is provided with an indemnity
reasonably satisfactory to it, the holders of a majority in number of all
warrants of the relevant series may direct the time, method and place of
conducting any lawsuit or other formal legal action seeking any remedy available
to the trustee. These majority holders may also direct the trustee in performing
any other action under the warrant indenture with respect to the warrants of
that series.
Before you bypass the trustee and bring your own lawsuit or other formal legal
action or take other steps to enforce your rights or protect your interests
relating to any warrant issued under the warrant indenture, all of the following
must occur:
- The holder of your warrant must give the trustee written notice that an
event of default has occurred, and the event of default must not have been
cured or waived.
- The holders of not less than 25% in number of all warrants of your series
must make a written request that the trustee take action because of the
default, and they or other holders must offer to the trustee indemnity
reasonably satisfactory to the trustee against the cost and other
liabilities of taking that action.
- The trustee must not have taken action for 60 days after the above steps
have been taken.
- During those 60 days, the holders of a majority in number of the warrants
of your series must not have given the trustee directions that are
inconsistent with the written request of the holders of not less than 25%
in number of the warrants of your series.
You are, however, entitled at any time to bring a lawsuit for the payment of any
money or delivery of any warrant property due on your warrant on or after its
payment or settlement date.
WAIVER OF DEFAULT. The holders of not less than a majority in number of the
warrants of any series may waive a default for all warrants of that series. If
this happens, the default will be treated as if it has not occurred. No one can
waive a default in payment of any money or delivery of any warrant property due
on any warrant, however, without the approval of the particular holder of that
warrant.
WE WILL GIVE THE TRUSTEE INFORMATION ABOUT DEFAULTS ANNUALLY. We will furnish
to the trustee every year a written statement of two of our officers certifying
that to their knowledge we are in compliance with the warrant indenture and the
warrants issued under it, or else specifying any default under the indenture.
Book-entry and other indirect owners should consult their banks or brokers for
information on how to give notice or direction to or make a request of the
trustee. Book-entry and other indirect owners are described below under "Legal
Ownership and Book-Entry Issuance."
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MODIFICATION AND WAIVER OF COVENANTS
There are three types of changes we can make to the warrant indenture and the
warrants of any series issued under the warrant indenture.
CHANGES REQUIRING EACH HOLDER'S APPROVAL. First, there are changes that cannot
be made without the approval of each holder of a warrant affected by the change.
Here is a list of those types of changes:
- change the exercise price of the warrant;
- change the terms of any warrant with respect to the payment or settlement
date of the warrant;
- reduce the amount of money payable or reduce the amount or change the
kind of warrant property deliverable upon the exercise of the warrant or
any premium payable upon redemption of the warrant;
- change the currency of any payment on a warrant;
- change the place of payment on a warrant;
- permit redemption of a warrant if not previously permitted;
- impair a holder's right to exercise its warrant, or sue for payment of
any money payable or delivery of any warrant property deliverable with
respect to its warrant on or after the payment or settlement date or, in
the case of redemption, the redemption date;
- if any warrant provides that the holder may require us to repurchase the
warrant, impair the holder's right to require repurchase of the warrant;
- reduce the percentage in number of the warrants of any one or more
affected series, taken separately or together, as applicable, the approval
of whose holders is needed to change the indenture or those warrants;
- reduce the percentage in number of the warrants of any one or more
affected series, taken separately or together, as applicable, the consent
of whose holders is needed to waive our compliance with the indenture or
to waive defaults; and
- change the provisions of the indenture dealing with modification and
waiver in any other respect, except to increase any required percentage
referred to above or to add to the provisions that cannot be changed or
waived without approval of the holder of each affected warrant.
CHANGES NOT REQUIRING APPROVAL OF HOLDERS. The second type of change does not
require any approval by holders of the warrants of an affected series. These
changes are limited to clarifications and changes that would not adversely
affect the warrants of that series in any material respect. Nor do we need any
approval to make changes that affect only warrants to be issued under the
warrant indenture after the changes take effect.
We may also make changes or obtain waivers that do not adversely affect a
particular warrant, even if they affect other warrants. In those cases, we do
not need to obtain the approval of the holder of that warrant; we need only
obtain any required approvals from the holders of the affected warrants.
CHANGES REQUIRING MAJORITY APPROVAL. Any other change to the warrant indenture
and the warrants issued under the warrant indenture would require the following
approval:
- If the change affects only the warrants of a particular series, it must
be approved by the holders of a majority in number of the warrants of that
series.
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- If the change affects the warrants of more than one series issued under
the warrant indenture, it must be approved by the holders of a majority in
number of all series affected by the change, with the warrants of all the
affected series voting together as one class for this purpose.
In each case, the required approval must be given by written consent.
The same majority approval would be required for us to obtain a waiver of any of
our covenants in the warrant indenture. If the holders approve a waiver of a
covenant, we will not have to comply with that covenant. The holders, however,
cannot approve a waiver of any provision in a particular warrant, or in the
warrant indenture as it affects that warrant, that we cannot change without the
approval of the holder of that warrant as described above in "--Changes
Requiring Each Holder's Approval," unless that holder approves the waiver.
Book-entry and other indirect owners should consult their banks or brokers for
information on how approval may be granted or denied if we seek to change the
warrant indenture or any warrants or request a waiver.
SPECIAL RULES FOR ACTION BY HOLDERS
When holders take any action under the warrant indenture, such as giving a
notice of default, approving any change or waiver or giving the trustee an
instruction, we will apply the following rules.
ONLY OUTSTANDING WARRANTS ARE ELIGIBLE. Only holders of outstanding warrants of
the applicable series will be eligible to participate in any action by holders
of warrants of that series. Also, we will count only outstanding warrants in
determining whether the various percentage requirements for taking action have
been met. For these purposes, a warrant will not be "outstanding":
- if it has been surrendered for cancellation;
- if it has been called for redemption;
- if we have deposited or set aside, in trust for its holder, money or
warrant property for its payment or settlement; or
- if we or one of our affiliates, such as UBS Warburg LLC or UBS
PaineWebber Inc., is the beneficial owner.
DETERMINING RECORD DATES FOR ACTION BY HOLDERS. We will generally be entitled
to set any day as a record date for the purpose of determining the holders that
are entitled to take action under the warrant indenture. In certain limited
circumstances, only the trustee will be entitled to set a record date for action
by holders. If we or the trustee set a record date for an approval or other
action to be taken by holders, that vote or action may be taken only by persons
or entities who are holders on the record date and must be taken during the
period that we specify for this purpose, or that the trustee specifies if it
sets the record date. We or the trustee, as applicable, may shorten or lengthen
this period from time to time. This period, however, may not extend beyond the
180th day after the record date for the action. In addition, record dates for
any global warrant may be set in accordance with procedures established by the
depositary from time to time. Accordingly, record dates for global warrants may
differ from those for other warrants.
NOTICES
Notices to be given to holders of a global warrant will be given only to the
depositary, in accordance with its applicable policies as in effect from time to
time. Notices to be given to holders of warrants not in global form will be sent
by mail to the respective addresses of the holders as they appear in the
trustee's records, and will be deemed given when mailed. Neither the failure to
give any notice to a
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particular holder, nor any defect in a notice given to a particular holder, will
affect the sufficiency of any notice given to another holder.
Book-entry and other indirect owners should consult their banks or brokers for
information on how they will receive notices.
THE WARRANT AGREEMENTS
We may issue debt warrants and some universal warrants in one or more series and
under one or more warrant agreements, each to be entered into between us and a
bank, trust company or other financial institution as warrant agent. We may add,
replace or terminate warrant agents from time to time. We may also choose to act
as our own warrant agent. We will describe the warrant agreement under which we
issue any warrants in the applicable prospectus supplement, and we will file
that agreement with the SEC as an exhibit to an amendment to the registration
statement of which this prospectus is a part or as an exhibit to a Form 6-K and
incorporated herein by reference. See "Where You Can Find More Information"
above for information on how to obtain a copy of a warrant agreement when it is
filed.
We may also issue universal warrants under the warrant indenture. For these
warrants, the applicable provisions of the warrant indenture described above
would apply instead of the provisions described in this section.
ENFORCEMENT OF RIGHTS
The warrant agent under a warrant agreement will act solely as our agent in
connection with the warrants issued under that agreement. The warrant agent will
not assume any obligation or relationship of agency or trust for or with any
holders of those warrants. Any holder of warrants may, without the consent of
any other person, enforce by appropriate legal action, on its own behalf, its
right to exercise those warrants in accordance with their terms. No holder of
any warrant will be entitled to any rights of a holder of the debt securities or
any other warrant property purchasable upon exercise of the warrant, including
any right to receive payments on those debt securities or other warrant property
or to enforce any covenants or rights in the relevant indenture or any other
agreement.
WARRANT AGREEMENT WILL NOT BE QUALIFIED UNDER TRUST INDENTURE ACT
No warrant agreement will be qualified as an indenture, and no warrant agent
will be required to qualify as a trustee, under the Trust Indenture Act.
Therefore, holders of warrants issued under a warrant agreement will not have
the protection of the Trust Indenture Act with respect to their warrants.
MODIFICATION AND WAIVER OF COVENANTS
There are three types of changes we can make to the warrants of any series and
the related warrant agreement.
CHANGES REQUIRING EACH HOLDER'S APPROVAL. We may not amend any particular
warrant or a warrant agreement with respect to any particular warrant unless we
obtain the consent of the holder of that warrant, if the amendment would:
- change the exercise price of the warrant;
- change the kind or reduce the amount of the warrant property or other
consideration receivable upon exercise, cancellation or expiration of the
warrant, except as permitted by the antidilution or other adjustment
provisions of the warrant;
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- shorten, advance or defer the period of time during which the holder may
exercise the warrant or otherwise impair the holder's right to exercise
the warrant; or
- reduce the percentage of outstanding, unexpired warrants of any series or
class the consent of whose holders is required to amend the series or
class, or the applicable warrant agreement with regard to that series or
class, as described below.
CHANGES NOT REQUIRING APPROVAL OF HOLDERS. We and the applicable warrant agent
may amend any warrant or warrant agreement without the consent of any holder:
- to cure any ambiguity;
- to cure, correct or supplement any defective or inconsistent provision;
or
- to make any other change that we believe is necessary or desirable and
will not adversely affect the interests of the affected holders in any
material respect.
We do not need any approval to make changes that affect only warrants to be
issued after the changes take effect. We may also make changes that do not
adversely affect a particular warrant in any material respect, even if they
adversely affect other warrants in a material respect. In those cases, we do not
need to obtain the approval of the holder of the unaffected warrant; we need
only obtain any required approvals from the holders of the affected warrants.
CHANGES REQUIRING MAJORITY APPROVAL. Any other change to a particular warrant
agreement and the warrants issued under that agreement would require the
following approval:
- If the change affects only the warrants of a particular series issued
under that agreement, the change must be approved by the holders of a
majority of the outstanding, unexpired warrants of that series.
- If the change affects the warrants of more than one series issued under
that agreement, the change must be approved by the holders of a majority
of all outstanding, unexpired warrants of all series affected by the
change, with the warrants of all the affected series voting together as
one class for this purpose.
In each case, the required approval must be given in writing.
MERGERS AND SIMILAR TRANSACTIONS ARE PERMITTED; NO RESTRICTIVE COVENANTS OR
EVENTS OF DEFAULT
The warrant agreements and any warrants issued under the warrant agreements will
not restrict our ability to merge or consolidate with, or sell our assets to,
another corporation or other entity or to engage in any other transactions. If
at any time we merge or consolidate with, or sell our assets substantially as an
entirety to, another corporation or other entity, the successor entity will
succeed to and assume our obligations under the warrants and warrant agreements.
We will then be relieved of any further obligation under the warrants and
warrant agreements.
The warrant agreements and any warrants issued under the warrant agreements will
not include any restrictions on our ability to put liens on our assets,
including our interests in our subsidiaries, nor will they restrict our ability
to sell our assets. The warrant agreements and any warrants issued under the
warrant agreements also will not provide for any events of default or remedies
upon the occurrence of any events of default.
GOVERNING LAW
Each warrant agreement and any warrants issued under the warrant agreement will
be governed by New York law.
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FORM, EXCHANGE AND TRANSFER OF WARRANTS
We will issue each warrant in global--i.e., book-entry--form only, unless we say
otherwise in the applicable prospectus supplement. Warrants in book-entry form
will be represented by a global security registered in the name of a depositary,
which will be the holder of all the warrants represented by the global security.
Those who own beneficial interests in a global warrant will do so through
participants in the depositary's system, and the rights of these indirect owners
will be governed solely by the applicable procedures of the depositary and its
participants. We describe book-entry securities below under "Legal Ownership and
Book-Entry Issuance." Unless we specify otherwise in the applicable prospectus
supplement, The Depository Trust Company, New York, New York, known as DTC, will
be the depositary for all warrants in global form.
If a warrant is issued as a registered global warrant, only the
depositary--e.g., DTC, Euroclear and Clearstream--will be entitled to transfer
and exchange the warrant as described in this subsection, since the depositary
will be the sole holder of the warrant.
In addition, we will issue each warrant in registered form, unless we say
otherwise in the applicable prospectus supplement. If we issue a warrant in
bearer form, the applicable prospectus supplement will describe the provisions
that would apply to that security.
If any warrants cease to be issued in registered global form, then unless we
indicate otherwise in your prospectus supplement, they will be issued:
- only in fully registered form; and
- in denominations of 100 warrants and any multiple of 100 warrants.
Holders may exchange their warrants for warrants of smaller denominations or
combined into fewer warrants of larger denominations, as long as the total
number of warrants is not changed.
Holders of non-global warrants may exchange or transfer their warrants at the
office of the trustee or warrant agent, as applicable. They may also replace
lost, stolen, destroyed or mutilated warrants at that office. We have appointed
the trustee or warrant agent, as applicable, to act as our agent for registering
warrants in the names of holders and transferring and replacing warrants. We may
appoint another entity to perform these functions or perform them ourselves.
Holders will not be required to pay a service charge to transfer or exchange
their warrants, but they may be required to pay for any tax or other
governmental charge associated with the transfer or exchange. The transfer or
exchange, and any replacement, will be made only if our transfer agent is
satisfied with the holder's proof of legal ownership. The transfer agent may
require an indemnity before replacing any warrants.
If we have the right to redeem, accelerate or settle any warrants before their
expiration, and we exercise our right as to less than all those warrants, we may
block the transfer or exchange of those warrants during the period beginning 15
days before the day we mail the notice of exercise and ending on the day of that
mailing or during any other period specified in the applicable prospectus
supplement, in order to freeze the list of holders who will receive the mailing.
We may also refuse to register transfers of or exchange any warrant selected for
early settlement, except that we will continue to permit transfers and exchanges
of the unsettled portion of any warrant being partially settled.
If we have designated additional transfer agents for your warrant, they will be
named in your prospectus supplement. We may appoint additional transfer agents
or cancel the appointment of any particular transfer agent. We may also approve
a change in the office through which any transfer agent acts.
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The rules for exchange described above apply to exchange of warrants for other
warrants of the same series and kind. If a warrant is exercisable for a
different kind of security, such as one that we have not issued, or for other
property, the rules governing that type of exercise will be described in the
applicable prospectus supplement.
PAYMENT MECHANICS FOR WARRANTS
WHO RECEIVES PAYMENT?
If money is due on a warrant at its payment or settlement date, we will pay the
amount to the holder of the warrant against surrender of the warrant at a proper
place of payment or, in the case of a global warrant, in accordance with the
applicable policies of the depositary.
HOW WE WILL MAKE PAYMENTS DUE IN U.S. DOLLARS
We will follow the practices described in this subsection when paying amounts
due in U.S. dollars. Payments of amounts due in other currencies will be made as
described in the next subsection.
PAYMENTS ON GLOBAL WARRANTS. We will make payments on a global warrant in
accordance with the applicable policies of the depositary as in effect from time
to time. Under those policies, we will pay directly to the depositary, or its
nominee, and not to any indirect owners who own beneficial interests in the
global warrant. An indirect owner's right to receive those payments will be
governed by the rules and practices of the depositary and its participants, as
described in the section entitled "Legal Ownership and Book-Entry Issuance--What
Is a Global Security?".
PAYMENTS ON NON-GLOBAL WARRANTS. We will make payments on a warrant in
non-global, registered form as follows. We will make all payments by check at
the paying agent described below, against surrender of the warrant. All payments
by check will be made in next-day funds--that is, in funds that become available
on the day after the check is cashed.
Alternatively, if a non-global warrant has an original issue price of at least
$1,000,000 and the holder asks us to do so, we will pay any amount that becomes
due on the warrant by wire transfer of immediately available funds to an account
at a bank in New York City, on the payment or settlement date. To request wire
payment, the holder must give the paying agent appropriate wire transfer
instructions at least five business days before the requested wire payment is
due. Payment will be made only after the warrant is surrendered to the paying
agent.
Book-entry and other indirect owners should consult their banks or brokers for
information on how they will receive payments on their warrants.
HOW WE WILL MAKE PAYMENTS DUE IN OTHER CURRENCIES
We will follow the practices described in this subsection when paying amounts
that are due in a specified currency other than U.S. dollars.
PAYMENTS ON GLOBAL WARRANTS. We will make payments on a global warrant in
accordance with the applicable policies of the depositary as in effect from time
to time. We understand that these policies, as currently in effect at DTC, are
as follows:
Unless otherwise indicated in your prospectus supplement, if you are an indirect
owner of global warrants denominated in a specified currency other than U.S.
dollars and if you have the right to elect to receive payments in that other
currency and do make that election, you must notify the participant through
which your interest in the global warrant is held of your election on or before
the 16th day before the payment or settlement date. Your participant must, in
turn, notify DTC of your election on or before the 12th DTC business day before
the payment or settlement date.
DTC, in turn, will notify the paying agent of your election in accordance with
DTC's procedures.
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If complete instructions are received by the participant and forwarded by the
participant to DTC, and by DTC to the paying agent, on or before the dates noted
above, the paying agent, in accordance with DTC's instructions, will make the
payment to you or your participant by wire transfer of immediately available
funds to an account maintained by you or your participant with a bank located in
the country issuing the specified currency or in another jurisdiction acceptable
to us and the paying agent.
If the foregoing steps are not properly completed, we expect DTC to inform the
paying agent that payment is to be made in U.S. dollars. In that case, we or our
agent will convert the payment to U.S. dollars in the manner described below
under "--Conversion to U.S. Dollars." We expect that we or our agent will then
make the payment in U.S. dollars to DTC, and that DTC in turn will pass it along
to its participants.
Book-entry and other indirect owners of a global warrant denominated in a
currency other than U.S. dollars should consult their banks or brokers for
information on how to request payment in the specified currency.
PAYMENTS ON NON-GLOBAL WARRANTS. Except as described in the second to last
paragraph under this heading, we will make payments on warrants in non-global
form in the applicable specified currency. We will make these payments by wire
transfer of immediately available funds to any account that is maintained in the
applicable specified currency at a bank designated by the holder and is
acceptable to us and the trustee. To designate an account for wire payment, the
holder must give the paying agent appropriate wire instructions at least five
business days before the requested wire payment is due. The payment will be made
only after the warrant is surrendered to the paying agent.
If a holder fails to give instructions as described above, we will notify the
holder at the address in the records of the trustee or warrant agent, as
applicable, and will make the payment within five business days after the holder
provides appropriate instructions. Any late payment made in these circumstances
will be treated under the warrant indenture or warrant agreement, as applicable,
as if made on the payment or settlement date, and no interest will accrue on the
late payment from the payment or settlement date to the date paid.
Although a payment on a warrant in non-global form may be due in a specified
currency other than U.S. dollars, we will make the payment in U.S. dollars if
the holder asks us to do so. To request U.S. dollar payment, the holder must
provide appropriate written notice to the trustee or warrant agent, as
applicable, at least five business days before the payment or settlement date
for which payment in U.S. dollars is requested.
Indirect owners of a non-global warrant with a specified currency other than
U.S. dollars should contact their banks or brokers for information about how to
receive payments in the specified currency or in U.S. dollars.
CONVERSION TO U.S. DOLLARS. When we are asked by a holder to make payments in
U.S. dollars of an amount due in another currency, either on a global warrant or
a non-global warrant as described above, we will determine the U.S. dollar
amount the holder receives as follows. The exchange rate agent described below
will request currency bid quotations expressed in U.S. dollars from three or, if
three are not available, then two, recognized foreign exchange dealers in New
York City, any of which may be the exchange rate agent, an affiliate of UBS, as
of 11:00 A.M., New York City time, on the second business day before the payment
date. Currency bid quotations will be requested on an aggregate basis, for all
holders of warrants requesting U.S. dollar payments of amounts due on the same
date in the same specified currency. The U.S. dollar amount the holder receives
will be based on the highest acceptable currency bid quotation received by the
exchange rate agent. If the exchange rate agent determines that at least two
acceptable currency bid quotations are not available on that second business
day, the payment will be made in the specified currency.
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To be acceptable, a quotation must be given as of 11:00 A.M., New York City
time, on the second business day before the due date and the quoting dealer must
commit to execute a contract at the quotation in the total amount due in that
currency on all series of warrants. If some but not all of the relevant warrants
are LIBOR warrants or EURIBOR warrants, the second preceding business day will
be determined for this purpose as if none of those warrants were LIBOR warrants
or EURIBOR warrants.
A holder that requests payment in U.S. dollars will bear all associated currency
exchange costs, which will be deducted from the payment.
WHEN THE SPECIFIED CURRENCY IS NOT AVAILABLE. If we are obligated to make any
payment in a specified currency other than U.S. dollars, and the specified
currency or any successor currency is not available to us due to circumstances
beyond our control--such as the imposition of exchange controls or a disruption
in the currency markets--we will be entitled to satisfy our obligation to make
the payment in that specified currency by making the payment in U.S. dollars, on
the basis specified in the applicable prospectus supplement.
For a specified currency other than U.S. dollars, the exchange rate will be the
noon buying rate for cable transfers of the specified currency in New York City
as quoted by the Federal Reserve Bank of New York on the then-most recent day on
which that bank has quoted that rate.
The foregoing will apply to any warrant, whether in global or non-global form,
and to any payment, including a payment at the payment or settlement date. Any
payment made under the circumstances and in a manner described above will not
result in a default under any warrant or the indenture.
THE EURO. The euro may be a specified currency for some warrants. On January 1,
1999, the euro became the legal currency for the 11 member states participating
in the European Economic and Monetary Union. During a transition period from
January 1, 1999 to December 31, 2001 and for a maximum of six months after
December 31, 2001, the former national currencies of these 11 member states will
continue to be legal tender in their country of issue, at rates irrevocably
fixed on December 31, 1998.
EXCHANGE RATE AGENT. If we issue a warrant in a specified currency other than
U.S. dollars, we will appoint a financial institution to act as the exchange
rate agent and will name the institution initially appointed when the warrant is
originally issued in the applicable prospectus supplement. We may select UBS
Warburg LLC or another of our affiliates to perform this role. We may change the
exchange rate agent from time to time after the original issue date of the
warrant without your consent and without notifying you of the change.
All determinations made by the exchange rate agent will be in its sole
discretion unless we state in the applicable prospectus supplement that any
determination requires our approval. In the absence of manifest error, those
determinations will be conclusive for all purposes and binding on you and us,
without any liability on the part of the exchange rate agent.
PAYMENT WHEN OFFICES ARE CLOSED
If any payment or delivery of warrant property is due on a warrant on a day that
is not a business day, we will make the payment or delivery on the next day that
is a business day. Payments or deliveries postponed to the next business day in
this situation will be treated under the indenture as if they were made on the
original payment or settlement date. Postponement of this kind will not result
in a default under any warrant or the indenture, and no interest will accrue on
the postponed amount from the original payment or settlement date to the next
day that is a business day.
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The term "business day" means, for any warrant, a day that meets all the
following applicable requirements:
- for all warrants, is a Monday, Tuesday, Wednesday, Thursday or Friday
that is not a day on which banking institutions in New York City generally
are authorized or obligated by law, regulation or executive order to close
and that satisfies any other criteria specified in your prospectus
supplement;
- if the warrant has a specified currency other than U.S. dollars or euros,
is also a day on which banking institutions are not authorized or
obligated by law, regulation or executive order to close in the principal
financial center of the country issuing the specified currency;
- if the warrant is held through Euroclear, is also not a day on which
banking institutions in Brussels, Belgium are generally authorized or
obligated by law, regulation or executive order to close; and
- if the warrant is held through Clearstream, is also not a day on which
banking institutions in Luxembourg are generally authorized or obligated
by law, regulation or executive order to close.
PAYING AGENT
We may appoint one or more financial institutions to act as our paying agents,
at whose designated offices warrants in non-global form may be surrendered for
payment at their payment or settlement date. We call each of those offices a
paying agent. We may add, replace or terminate paying agents from time to time.
We may also choose to act as our own paying agent. Initially, we have appointed
the trustee, at its corporate trust office in New York City, as the paying agent
for warrants issued under the indenture. We must notify the trustee of changes
in the paying agents for warrants issued under the indenture.
UNCLAIMED PAYMENTS
Regardless of who acts as paying agent, all money paid or warrant property
delivered by us to a paying agent that remains unclaimed at the end of two years
after the amount is due to a holder will be repaid or redelivered to us. After
that two-year period, the holder may look only to us for payment of any money or
delivery of any warrant property, and not to the trustee or warrant agent, as
applicable, any other paying agent or anyone else.
PAYMENT OF ADDITIONAL AMOUNTS
A relevant jurisdiction may require UBS to withhold amounts from payments on a
warrant for taxes or any other governmental charges. If the relevant
jurisdiction requires a withholding of this type, UBS may be required to pay you
an additional amount so that the net amount you receive will be the amount
specified in the warrant to which you are entitled.
By relevant jurisdiction, we mean Switzerland or a jurisdiction in which the UBS
branch through which warrants are issued is located. UBS will NOT have to pay
additional amounts in respect of taxes or other governmental charges that are
required to be deducted or withheld by any paying agent from a payment on a
warrant, if such payment can be made without such deduction or withholding by
any other paying agent, or in respect of taxes or other governmental charges
that would not have been imposed but for
- the existence of any present or former connection between you and the
relevant jurisdiction, other than the mere holding of the warrant and the
receipt of payments on it;
- your status as an individual resident of a member state of the European
Union;
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- a failure to comply with any reasonable certification, documentation,
information or other reporting requirement concerning your nationality,
residence, identity or connection with the relevant jurisdiction, if such
compliance is required as a precondition to relief or exemption from such
taxes or other governmental charges (including, without limitation, a
certification that you are not resident in the relevant jurisdiction or
are not an individual resident of a member state of the European Union);
or
- a change in law that becomes effective more than 30 days after a payment
on the warrant becomes due and payable or on which the payment is duly
provided for, whichever occurs later.
These provisions will also apply to any taxes or governmental charges imposed by
any jurisdiction in which a successor to UBS is organized. The prospectus
supplement relating to the warrant may describe additional circumstances in
which UBS would not be required to pay additional amounts.
CALCULATION AGENT
Calculations relating to warrants will be made by the calculation agent, an
institution that we appoint as our agent for this purpose. That institution may
include any affiliate of ours, such as UBS Warburg LLC. The prospectus
supplement for a particular warrant will name the institution that we have
appointed to act as the calculation agent for that warrant as of its original
issue date. We may appoint a different institution to serve as calculation agent
from time to time after the original issue date of the warrant without your
consent and without notifying you of the change.
The calculation agent's determination of any amount of money payable or warrant
property deliverable with respect to a warrant will be final and binding in the
absence of manifest error.
All percentages resulting from any calculation relating to a warrant will be
rounded upward or downward, as appropriate, to the next higher or lower one
hundred-thousandth of a percentage point, e.g., 9.876541% (or .09876541) being
rounded down to 9.87654% (or .0987654) and 9.876545% (or .09876545) being
rounded up to 9.87655% (or .0987655). All amounts used in or resulting from any
calculation relating to a warrant will be rounded upward or downward, as
appropriate, to the nearest cent, in the case of U.S. dollars, or to the nearest
corresponding hundredth of a unit, in the case of a currency other than U.S.
dollars, with one-half cent or one-half of a corresponding hundredth of a unit
or more being rounded upward.
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Legal Ownership and Book-Entry Issuance
In this section, we describe special considerations that will apply to
registered securities issued in global--i.e., book-entry--form. First we
describe the difference between legal ownership and indirect ownership of
registered securities. Then we describe special provisions that apply to global
securities.
WHO IS THE LEGAL OWNER OF A REGISTERED SECURITY?
Each debt security or warrant in registered form will be represented either by a
certificate issued in definitive form to a particular investor or by one or more
global securities representing the entire issuance of securities. We refer to
those who have securities registered in their own names, on the books that we or
the trustee, warrant agent or other agent maintain for this purpose, as the
"holders" of those securities. These persons are the legal holders of the
securities. We refer to those who, indirectly through others, own beneficial
interests in securities that are not registered in their own names as indirect
owners of those securities. As we discuss below, indirect owners are not legal
holders, and investors in securities issued in book-entry form or in street name
will be indirect owners.
BOOK-ENTRY OWNERS
We will issue each security in book-entry form only. This means securities will
be represented by one or more global securities registered in the name of a
financial institution that holds them as depositary on behalf of other financial
institutions that participate in the depositary's book-entry system. These
participating institutions, in turn, hold beneficial interests in the securities
on behalf of themselves or their customers.
Under each indenture or warrant agreement, only the person in whose name a
security is registered is recognized as the holder of that security.
Consequently, for securities issued in global form, we will recognize only the
depositary as the holder of the securities and we will make all payments on the
securities, including deliveries of any property other than cash, to the
depositary. The depositary passes along the payments it receives to its
participants, which in turn pass the payments along to their customers who are
the beneficial owners. The depositary and its participants do so under
agreements they have made with one another or with their customers; they are not
obligated to do so under the terms of the securities.
As a result, investors will not own securities directly. Instead, they will own
beneficial interests in a global security, through a bank, broker or other
financial institution that participates in the depositary's book-entry system or
holds an interest through a participant. As long as the securities are issued in
global form, investors will be indirect owners, and not holders, of the
securities.
STREET NAME OWNERS
In the future we may terminate a global security or issue securities initially
in non-global form. In these cases, investors may choose to hold their
securities in their own names or in street name. Securities held by an investor
in street name would be registered in the name of a bank, broker or other
financial institution that the investor chooses, and the investor would hold
only a beneficial interest in those securities through an account he or she
maintains at that institution.
For securities held in street name, we will recognize only the intermediary
banks, brokers and other financial institutions in whose names the securities
are registered as the holders of those securities and we will make all payments
on those securities, including deliveries of any property other than cash, to
them. These institutions pass along the payments they receive to their customers
who are the beneficial owners, but only because they agree to do so in their
customer agreements or because they are legally
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required to do so. Investors who hold securities in street name will be indirect
owners, not holders, of those securities.
LEGAL HOLDERS
Our obligations, as well as the obligations of the trustee and the obligations,
if any, of any warrant agents and any other third parties employed by us, the
trustee or any of those agents, run only to the holders of the securities. We do
not have obligations to investors who hold indirect interests in global
securities, in street name or by any other indirect means. This will be the case
whether an investor chooses to be an indirect owner of a security or has no
choice because we are issuing the securities only in global form.
For example, once we make a payment or give a notice to the holder, we have no
further responsibility for that payment or notice even if that holder is
required, under agreements with depositary participants or customers or by law,
to pass it along to the indirect owners but does not do so. Similarly, if we
want to obtain the approval of the holders for any purpose--for example, to
amend the indenture for a series of debt securities or warrants or the warrant
agreement for a series of warrants or to relieve us of the consequences of a
default or of our obligation to comply with a particular provision of the
indenture--we would seek the approval only from the holders, and not the
indirect owners, of the relevant securities. Whether and how the holders contact
the indirect owners is up to the holders.
When we refer to "you" in this prospectus, we mean those who invest in the
securities being offered by this prospectus, whether they are the holders or
only indirect owners of those securities. When we refer to "your securities" in
this prospectus, we mean the securities in which you will hold a direct or
indirect interest.
SPECIAL CONSIDERATIONS FOR INDIRECT OWNERS
If you hold securities through a bank, broker or other financial institution,
either in book-entry form or in street name, you should check with your own
institution to find out:
- how it handles securities payments and notices;
- whether it imposes fees or charges;
- whether and how you can instruct it to exercise any rights to purchase or
sell warrant property under a warrant or to exchange or convert a
security for or into other property;
- how it would handle a request for the holders' consent, if ever required;
- whether and how you can instruct it to send you securities registered in
your own name so you can be a holder, if that is permitted in the future;
- how it would exercise rights under the securities if there were a default
or other event triggering the need for holders to act to protect their
interests; and
- if the securities are in book-entry form, how the depositary's rules and
procedures will affect these matters.
WHAT IS A GLOBAL SECURITY?
We will issue each security in book-entry form only. Each security issued in
book-entry form will be represented by a global security that we deposit with
and register in the name of one or more financial institutions or clearing
systems, or their nominees, which we select. A financial institution or clearing
system that we select for any security for this purpose is called the
"depositary" for that security. A security will usually have only one depositary
but it may have more.
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Each series of securities will have one or more of the following as the
depositaries:
- The Depository Trust Company, New York, New York, which is known as
"DTC";
- a financial institution holding the securities on behalf of Morgan
Guaranty Trust Company of New York, acting out of its Brussels, Belgium,
office, as operator of the Euroclear system, which is known as
"Euroclear";
- a financial institution holding the securities on behalf of Clearstream
Banking, societe anonyme, Luxembourg, which is known as "Clearstream";
and
- any other clearing system or financial institution named in the
applicable prospectus supplement. The depositaries named above may also
be participants in one another's systems. Thus, for example, if DTC is
the depositary for a global security, investors may hold beneficial
interests in that security through Euroclear or Clearstream, as DTC
participants.
The depositary or depositaries for your securities will be named in your
prospectus supplement; if none is named, the depositary will be DTC.
A global security may represent one or any other number of individual
securities. Generally, all securities represented by the same global security
will have the same terms. We may, however, issue a global security that
represents multiple securities of the same kind, such as debt securities, that
have different terms and are issued at different times. We call this kind of
global security a master global security. Your prospectus supplement will not
indicate whether your securities are represented by a master global security.
A global security may not be transferred to or registered in the name of anyone
other than the depositary or its nominee, unless special termination situations
arise. We describe those situations below under "--Holder's Option to Obtain a
Non-Global Security; Special Situations When a Global Security Will Be
Terminated." As a result of these arrangements, the depositary, or its nominee,
will be the sole registered owner and holder of all securities represented by a
global security, and investors will be permitted to own only indirect interests
in a global security. Indirect interests must be held by means of an account
with a broker, bank or other financial institution that in turn has an account
with the depositary or with another institution that does. Thus, an investor
whose security is represented by a global security will not be a holder of the
security, but only an indirect owner of an interest in the global security.
If the prospectus supplement for a particular security indicates that the
security will be issued in global form only, then the security will be
represented by a global security at all times unless and until the global
security is terminated. We describe the situations in which this can occur below
under "--Holder's Option to Obtain a Non-Global Security; Special Situations
When a Global Security Will Be Terminated." If termination occurs, we may issue
the securities through another book-entry clearing system or decide that the
securities may no longer be held through any book-entry clearing system.
SPECIAL CONSIDERATIONS FOR GLOBAL SECURITIES
As an indirect owner, an investor's rights relating to a global security will be
governed by the account rules of the depositary and those of the investor's
financial institution or other intermediary through which it holds its interest
(such as Euroclear or Clearstream, if DTC is the depositary), as well as general
laws relating to securities transfers. We do not recognize this type of investor
or any intermediary as a holder of securities and instead deal only with the
depositary that holds the global security.
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If securities are issued only in the form of a global security, an investor
should be aware of the following:
- An investor cannot require the securities to be registered in his or her
own name, and cannot obtain non-global certificates for his or her
interest in the securities, except in the special situations we describe
below.
- An investor will be an indirect holder and must look to his or her own
bank or broker for payments on the securities and protection of his or
her legal rights relating to the securities, as we describe above under
"--Who Is the Legal Owner of a Registered Security?"
- An investor may not be able to sell interests in the securities to some
insurance companies and other institutions that are required by law to
own their securities in non-book-entry form.
- An investor may not be able to pledge his or her interest in a global
security in circumstances where certificates representing the securities
must be delivered to the lender or other beneficiary of the pledge in
order for the pledge to be effective.
- The depositary's policies will govern payments, deliveries, transfers,
exchanges, notices and other matters relating to an investor's interest
in a global security, and those policies may change from time to time.
We, the trustee and any warrant agents will have no responsibility for
any aspect of the depositary's policies, actions or records of ownership
interests in a global security. We, the trustee and any warrant agents
also do not supervise the depositary in any way.
- The depositary will require that those who purchase and sell interests in
a global security within its book-entry system use immediately available
funds and your broker or bank may require you to do so as well.
- Financial institutions that participate in the depositary's book-entry
system and through which an investor holds its interest in the global
securities, directly or indirectly, may also have their own policies
affecting payments, deliveries, transfers, exchanges, notices and other
matters relating to the securities, and those policies may change from
time to time. For example, if you hold an interest in a global security
through Euroclear or Clearstream, when DTC is the depositary, Euroclear
or Clearstream, as applicable, will require those who purchase and sell
interests in that security through them to use immediately available
funds and comply with other policies and procedures, including deadlines
for giving instructions as to transactions that are to be effected on a
particular day. There may be more than one financial intermediary in the
chain of ownership for an investor. We do not monitor and are not
responsible for the policies or actions or records of ownership interests
of any of those intermediaries.
HOLDER'S OPTION TO OBTAIN A NON-GLOBAL SECURITY; SPECIAL SITUATIONS WHEN A
GLOBAL SECURITY WILL BE TERMINATED
If we issue any series of securities in book-entry form but we choose to give
the beneficial owners of that series the right to obtain non-global securities,
any beneficial owner entitled to obtain non-global securities may do so by
following the applicable procedures of the depositary, any transfer agent or
registrar for that series and that owner's bank, broker or other financial
institution through which that owner holds its beneficial interest in the
securities. If you are entitled to request a non-global certificate and wish to
do so, you will need to allow sufficient lead time to enable us or our agent to
prepare the requested certificate.
In addition, in a few special situations described below, a global security will
be terminated and interests in it will be exchanged for certificates in
non-global form representing the securities it
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represented. After that exchange, the choice of whether to hold the securities
directly or in street name will be up to the investor. Investors must consult
their own banks or brokers to find out how to have their interests in a global
security transferred on termination to their own names, so that they will be
holders. We have described the rights of holders and street name investors above
under "--Who Is the Legal Owner of a Registered Security?".
The special situations for termination of a global security are as follows:
- if the depositary notifies us that it is unwilling, unable or no longer
qualified to continue as depositary for that global security and we do
not appoint another institution to act as depositary within 60 days;
- if we notify the trustee or warrant agent, as applicable, that we wish to
terminate that global security; or
- in the case of a global security representing debt securities or warrants
issued under an indenture, if an event of default has occurred with
regard to these debt securities or warrants and has not been cured or
waived.
If a global security is terminated, only the depositary, and not we, the trustee
for any debt securities or warrants or the warrant agent for any warrants, is
responsible for deciding the names of the institutions in whose names the
securities represented by the global security will be registered and, therefore,
who will be the holders of those securities.
CONSIDERATIONS RELATING TO EUROCLEAR AND CLEARSTREAM
Euroclear and Clearstream are securities clearance systems in Europe. Both
systems clear and settle securities transactions between their participants
through electronic, book-entry delivery of securities against payment.
Euroclear and Clearstream may be depositaries for a global security. In
addition, if DTC is the depositary for a global security, Euroclear and
Clearstream may hold interests in the global security as participants in DTC.
As long as any global security is held by Euroclear or Clearstream as
depositary, you may hold an interest in the global security only through an
organization that participates, directly or indirectly, in Euroclear or
Clearstream. If Euroclear or Clearstream is the depositary for a global security
and there is no depositary in the United States, you will not be able to hold
interests in that global security through any securities clearance system in the
United States.
Payments, deliveries, transfers, exchanges, notices and other matters relating
to the securities made through Euroclear or Clearstream must comply with the
rules and procedures of those systems. Those systems could change their rules
and procedures at any time. We have no control over those systems or their
participants and we take no responsibility for their activities. Transactions
between participants in Euroclear or Clearstream, on one hand, and participants
in DTC, on the other hand, when DTC is the depositary, would also be subject to
DTC's rules and procedures.
SPECIAL TIMING CONSIDERATIONS FOR TRANSACTIONS IN EUROCLEAR AND CLEARSTREAM
Investors will be able to make and receive through Euroclear and Clearstream
payments, deliveries, transfers, exchanges, notices and other transactions
involving any securities held through those systems only on days when those
systems are open for business. Those systems may not be open for business on
days when banks, brokers and other institutions are open for business in the
United States.
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In addition, because of time-zone differences, U.S. investors who hold their
interests in the securities through these systems and wish to transfer their
interests, or to receive or make a payment or delivery or exercise any other
right with respect to their interests, on a particular day may find that the
transaction will not be effected until the next business day in Luxembourg or
Brussels, as applicable. Thus, investors who wish to exercise rights that expire
on a particular day may need to act before the expiration date. In addition,
investors who hold their interests through both DTC and Euroclear or Clearstream
may need to make special arrangements to finance any purchases or sales of their
interests between the U.S. and European clearing systems, and those transactions
may settle later than would be the case for transactions within one clearing
system.
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Considerations Relating to Indexed Securities
We use the term "indexed securities" to mean debt securities and warrants whose
value is linked to an underlying property or index, including equity and credit
indexed securities and credit linked securities. Indexed securities may present
a high level of risk, and those who invest in some indexed securities may lose
their entire investment. In addition, the treatment of indexed securities for
U.S. federal income tax purposes is often unclear due to the absence of any
authority specifically addressing the issues presented by any particular indexed
security. Thus, if you propose to invest in indexed securities, you should
independently evaluate the federal income tax consequences of purchasing an
indexed security that apply in your particular circumstances. You should also
read "U.S. Tax Considerations" for a discussion of U.S. tax matters.
INVESTORS IN INDEXED SECURITIES COULD LOSE THEIR INVESTMENT
The amount of principal and/or interest payable on an indexed debt security and
the cash value or physical settlement value of a physically settled debt
security and the cash value or physical settlement value of an indexed warrant
will be determined by reference to the price, value or level of one or more
securities, currencies, commodities or other properties, any other financial,
economic or other measure or instrument, including the occurrence or
non-occurrence of any event or circumstance, and/or one or more indices or
baskets of any of these items. We refer to each of these as an "index." The
direction and magnitude of the change in the price, value or level of the
relevant index will determine the amount of principal and/or interest payable on
an indexed debt security and the cash value or physical settlement value of a
physically settled debt security and the cash value or physical settlement value
of an indexed warrant. The terms of a particular indexed debt security may or
may not include a guaranteed return of a percentage of the face amount at
maturity or a minimum interest rate. An indexed warrant generally will not
provide for any guaranteed minimum settlement value. Thus, if you purchase an
indexed security, you may lose all or a portion of the principal or other amount
you invest and may receive no interest on your investment.
THE ISSUER OF A SECURITY OR CURRENCY THAT SERVES AS AN INDEX COULD TAKE ACTIONS
THAT MAY ADVERSELY AFFECT AN INDEXED SECURITY
The issuer of a security that serves as an index or part of an index for an
indexed security will have no involvement in the offer and sale of the indexed
security and no obligations to the holder of the indexed security. The issuer
may take actions, such as a merger or sale of assets, without regard to the
interests of the holder. Any of these actions could adversely affect the value
of a security indexed to that security or to an index of which that security is
a component.
If the index for an indexed security includes a non-U.S. dollar currency or
other asset denominated in a non-U.S. dollar currency, the government that
issues that currency will also have no involvement in the offer and sale of the
indexed security and no obligations to the holder of the indexed security. That
government may take actions that could adversely affect the value of the
security. See "Considerations Relating to Securities Denominated or Payable in
or Linked to a Non-U.S. Dollar Currency--Government Policy Can Adversely Affect
Currency Exchange Rates and an Investment in a Non-U.S. Dollar Security" below
for more information about these kinds of government actions.
AN INDEXED SECURITY MAY BE LINKED TO A VOLATILE INDEX, WHICH COULD HURT YOUR
INVESTMENT
Some indices are highly volatile, which means that their value may change
significantly, up or down, over a short period of time. The amount of principal
or interest that can be expected to become payable on an indexed debt security
or the expected settlement value of an indexed warrant may vary
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substantially from time to time. Because the amounts payable with respect to an
indexed security are generally calculated based on the value or level of the
relevant index on a specified date or over a limited period of time, volatility
in the index increases the risk that the return on the indexed security may be
adversely affected by a fluctuation in the level of the relevant index.
The volatility of an index may be affected by political or economic events,
including governmental actions, or by the activities of participants in the
relevant markets. Any of these events or activities could adversely affect the
value of an indexed security.
AN INDEX TO WHICH A SECURITY IS LINKED COULD BE CHANGED OR BECOME UNAVAILABLE
Some indices compiled by us or our affiliates or third parties may consist of or
refer to several or many different securities, commodities or currencies or
other instruments or measures. The compiler of such an index typically reserves
the right to alter the composition of the index and the manner in which the
value or level of the index is calculated. An alteration may result in a
decrease in the value of or return on an indexed security that is linked to the
index. The indices for our indexed securities may include published indices of
this kind or customized indices developed by us or our affiliates in connection
with particular issues of indexed securities.
A published index may become unavailable, or a customized index may become
impossible to calculate in the normal manner, due to events such as war, natural
disasters, cessation of publication of the index or a suspension or disruption
of trading in one or more securities, commodities or currencies or other
instruments or measures on which the index is based. If an index becomes
unavailable or impossible to calculate in the normal manner, the terms of a
particular indexed security may allow us to delay determining the amount payable
as principal or interest on a debt security or the settlement value of an
indexed warrant, or we may use an alternative method to determine the value of
the unavailable index. Alternative methods of valuation are generally intended
to produce a value similar to the value resulting from reference to the relevant
index. However, it is unlikely that any alternative method of valuation we use
will produce a value identical to the value that the actual index would produce.
If we use an alternative method of valuation for a security linked to an index
of this kind, the value of the security, or the rate of return on it, may be
lower than it otherwise would be.
Some indexed securities are linked to indices that are not commonly used or that
have been developed only recently. The lack of a trading history may make it
difficult to anticipate the volatility or other risks associated with an indexed
security of this kind. In addition, trading in these indices or their underlying
stocks, commodities or currencies or other instruments or measures, or options
or futures contracts on these stocks, commodities or currencies or other
instruments or measures, may be limited, which could increase their volatility
and decrease the value of the related indexed securities or their rates of
return.
WE MAY ENGAGE IN HEDGING ACTIVITIES THAT COULD ADVERSELY AFFECT AN INDEXED
SECURITY
In order to hedge an exposure on a particular indexed security, we may, directly
or through our affiliates, enter into transactions involving the securities,
commodities or currencies or other instruments or measures that underlie the
index for that security, or involving derivative instruments, such as swaps,
options or futures, on the index or any of its component items. By engaging in
transactions of this kind, we could adversely affect the value of an indexed
security. It is possible that we could achieve substantial returns from our
hedging transactions while the value of the indexed security may decline.
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INFORMATION ABOUT INDICES MAY NOT BE INDICATIVE OF FUTURE PERFORMANCE
If we issue an indexed security, we may include historical information about the
relevant index in the applicable prospectus supplement. Any information about
indices that we may provide will be furnished as a matter of information only,
and you should not regard the information as indicative of the range of, or
trends in, fluctuations in the relevant index that may occur in the future.
WE MAY HAVE CONFLICTS OF INTEREST REGARDING AN INDEXED SECURITY
UBS Warburg LLC, UBS PaineWebber Inc. and our other affiliates may have
conflicts of interest with respect to some indexed securities. UBS Warburg LLC,
UBS PaineWebber Inc. and our other affiliates may engage in trading, including
trading for hedging purposes, for their proprietary accounts or for other
accounts under their management, in indexed securities and in the securities,
commodities or currencies or other instruments or measures on which the index is
based or in other derivative instruments related to the index or its component
items. These trading activities could adversely affect the value of indexed
securities. We and our affiliates may also issue or underwrite securities or
derivative instruments that are linked to the same index as one or more indexed
securities. By introducing competing products into the marketplace in this
manner, we could adversely affect the value of an indexed security.
UBS Warburg LLC, UBS PaineWebber Inc. or another of our affiliates may serve as
calculation agent for the indexed securities and may have considerable
discretion in calculating the amounts payable in respect of the securities. To
the extent that UBS Warburg LLC, UBS PaineWebber Inc. or another of our
affiliates calculates or compiles a particular index, it may also have
considerable discretion in performing the calculation or compilation of the
index. Exercising discretion in this manner could adversely affect the value of
an indexed security based on the index or the rate of return on the security.
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Considerations Relating to Securities Denominated or Payable in or Linked to a
Non-U.S. Dollar Currency
If you intend to invest in a non-U.S. dollar security--e.g., a security whose
principal and/or interest is payable in a currency other than U.S. dollars or
that may be settled by delivery of or reference to a non-U.S. dollar currency or
property denominated in or otherwise linked to a non-U.S. dollar currency--you
should consult your own financial and legal advisors as to the currency risks
entailed by your investment. Securities of this kind may not be an appropriate
investment for investors who are unsophisticated with respect to non-U.S. dollar
currency transactions.
The information in this prospectus is directed primarily to investors who are
U.S. residents. Investors who are not U.S. residents should consult their own
financial and legal advisors about currency-related risks particular to their
investment.
AN INVESTMENT IN A NON-U.S. DOLLAR SECURITY INVOLVES CURRENCY-RELATED RISKS
An investment in a non-U.S. dollar security entails significant risks that are
not associated with a similar investment in a security that is payable solely in
U.S. dollars and where settlement value is not otherwise based on a non-U.S.
dollar currency. These risks include the possibility of significant changes in
rates of exchange between the U.S. dollar and the various non-U.S. dollar
currencies or composite currencies and the possibility of the imposition or
modification of foreign exchange controls or other conditions by either the
United States or non-U.S. governments. These risks generally depend on factors
over which we have no control, such as economic and political events and the
supply of and demand for the relevant currencies in the global markets.
CHANGES IN CURRENCY EXCHANGE RATES CAN BE VOLATILE AND UNPREDICTABLE
Rates of exchange between the U.S. dollar and many other currencies have been
highly volatile, and this volatility may continue and perhaps spread to other
currencies in the future. Fluctuations in currency exchange rates could
adversely affect an investment in a security denominated in, or where value is
otherwise linked to, a specified currency other than U.S. dollars. Depreciation
of the specified currency against the U.S. dollar could result in a decrease in
the U.S. dollar-equivalent value of payments on the security, including the
principal payable at maturity or settlement value payable upon exercise. That in
turn could cause the market value of the security to fall. Depreciation of the
specified currency against the U.S. dollar could result in a loss to the
investor on a U.S. dollar basis.
GOVERNMENT POLICY CAN ADVERSELY AFFECT CURRENCY EXCHANGE RATES AND AN INVESTMENT
IN A NON-U.S. DOLLAR SECURITY
Currency exchange rates can either float or be fixed by sovereign governments.
From time to time, governments use a variety of techniques, such as intervention
by a country's central bank or imposition of regulatory controls or taxes, to
affect the exchange rate of their currencies. Governments may also issue a new
currency to replace an existing currency or alter the exchange rate or exchange
characteristics by devaluation or revaluation of a currency. Thus, a special
risk in purchasing non-U.S. dollar securities is that their yields or payouts
could be significantly and unpredictably affected by governmental actions. Even
in the absence of governmental action directly affecting currency exchange
rates, political or economic developments in the country issuing the specified
currency for a non-U.S. dollar security or elsewhere could lead to significant
and sudden changes in the exchange rate between the U.S. dollar and the
specified currency. These changes could affect the value of the security as
participants in the global currency markets move to buy or sell the specified
currency or U.S. dollars in reaction to these developments.
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NON-U.S. DOLLAR CURRENCY
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Governments have imposed from time to time and may in the future impose exchange
controls or other conditions, including taxes, with respect to the exchange or
transfer of a specified currency that could affect exchange rates as well as the
availability of a specified currency for a security at its maturity or on any
other payment date. In addition, the ability of a holder to move currency freely
out of the country in which payment in the currency is received or to convert
the currency at a freely determined market rate could be limited by governmental
actions.
NON-U.S. DOLLAR SECURITIES MAY PERMIT US TO MAKE PAYMENTS IN U.S. DOLLARS OR
DELAY PAYMENT IF WE ARE UNABLE TO OBTAIN THE SPECIFIED CURRENCY
Securities payable in a currency other than U.S. dollars may provide that, if
the other currency is subject to convertibility, transferability, market
disruption or other conditions affecting its availability at or about the time
when a payment on the securities comes due because of circumstances beyond our
control, we will be entitled to make the payment in U.S. dollars or delay making
the payment. These circumstances could include the imposition of exchange
controls or our inability to obtain the other currency because of a disruption
in the currency markets. If we made payment in U.S. dollars, the exchange rate
we would use would be determined in the manner described above under
"Description of Debt Securities We May Offer--Payment Mechanics for Debt
Securities--How We Will Make Payments Due in Other Currencies--When the
Specified Currency Is Not Available" and "Description of Warrants We May
Offer--Payment Mechanics for Warrants--How We Will Make Payments Due in Other
Currencies--When the Specified Currency Is Not Available." A determination of
this kind may be based on limited information and would involve significant
discretion on the part of our foreign exchange agent. As a result, the value of
the payment in U.S. dollars an investor would receive on the payment date may be
less than the value of the payment the investor would have received in the other
currency if it had been available, or may be zero. In addition, a government may
impose extraordinary taxes on transfers of a currency. If that happens, we will
be entitled to deduct these taxes from any payment on notes payable in that
currency.
WE WILL NOT ADJUST NON-U.S. DOLLAR SECURITIES TO COMPENSATE FOR CHANGES IN
CURRENCY EXCHANGE RATES
Except as described above, we will not make any adjustment or change in the
terms of a non-U.S. dollar security in the event of any change in exchange rates
for the relevant currency, whether in the event of any devaluation, revaluation
or imposition of exchange or other regulatory controls or taxes or in the event
of other developments affecting that currency, the U.S. dollar or any other
currency. Consequently, investors in non-U.S. dollar securities will bear the
risk that their investment may be adversely affected by these types of events.
IN A LAWSUIT FOR PAYMENT ON A NON-U.S. DOLLAR SECURITY, AN INVESTOR MAY BEAR
CURRENCY EXCHANGE RISK
Our securities will be governed by New York law. Under Section 27 of the New
York Judiciary Law, a state court in the State of New York rendering a judgment
on a security denominated in a currency other than U.S. dollars would be
required to render the judgment in the specified currency; however, the judgment
would be converted into U.S. dollars at the exchange rate prevailing on the date
of entry of the judgment. Consequently, in a lawsuit for payment on a security
denominated in a currency other than U.S. dollars, investors would bear currency
exchange risk until judgment is entered, which could be a long time.
In courts outside of New York, investors may not be able to obtain judgment in a
specified currency other than U.S. dollars. For example, a judgment for money in
an action based on a non-U.S. dollar security in many other U.S. federal or
state courts ordinarily would be enforced in the United States only in U.S.
dollars. The date used to determine the rate of conversion of the currency in
which any
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NON-U.S. DOLLAR CURRENCY
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particular security is denominated into U.S. dollars will depend upon various
factors, including which court renders the judgment.
INFORMATION ABOUT EXCHANGE RATES MAY NOT BE INDICATIVE OF FUTURE PERFORMANCE
If we issue a non-U.S. dollar security, we may include in the applicable
prospectus supplement currency disclosure that provides information about
historical exchange rates for the relevant non-U.S. dollar currency or
currencies. Any information about exchange rates that we may provide will be
furnished as a matter of information only, and you should not regard the
information as indicative of the range of, or trends in, fluctuations in
currency exchange rates that may occur in the future. That rate will likely
differ from the exchange rate used under the terms that apply to a particular
security.
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U.S. Tax Considerations
This section describes the material United States federal income tax
consequences to United States holders, as defined below, of owning the debt
securities. It is the opinion of Sullivan & Cromwell, United States tax counsel
to UBS. It applies to you only if you hold your securities as capital assets for
tax purposes. This section does not apply to you if you are a member of a class
of holders subject to special rules, such as:
- - a dealer in securities or currencies;
- - a trader in securities that elects to use a mark-to-market method of
accounting for your securities holdings;
- - a bank;
- - a life insurance company;
- - a tax-exempt organization;
- - a person that owns debt securities that are a hedge or that are hedged
against interest rate or currency risks;
- - a person that owns debt securities as part of a straddle or conversion
transaction for tax purposes;
- - a person whose functional currency for tax purposes is not the U.S. dollar;
or
- - except as otherwise noted under "Backup Withholding and Information
Reporting," a person that is not a United States holder, as defined below.
This section deals only with debt securities that are due to mature 30 years or
less from the date on which they are issued. The United States federal income
tax consequences of owning debt securities that are due to mature more than 30
years from their date of issue and the tax consequences of owning warrants will
be discussed in an applicable prospectus supplement. This section is based on
the Internal Revenue Code of 1986, as amended, its legislative history, existing
and proposed regulations under the Internal Revenue Code, and published rulings
and court decisions, all as currently in effect. These laws are subject to
change, possibly on a retroactive basis.
Please consult your own tax advisor concerning the consequences of owning these
debt securities in your particular circumstances under the Internal Revenue Code
and the laws of any other taxing jurisdiction.
You are a United States holder if you are a beneficial owner of a debt security
and you are:
- - a citizen or resident of the United States;
- - a domestic corporation;
- - an estate whose income is subject to United States federal income tax
regardless of its source; or
- - a trust if a United States court can exercise primary supervision over the
trust's administration and one or more United States persons are authorized
to control all substantial decisions of the trust.
TAXATION OF DEBT SECURITIES
This subsection describes the material United States federal income tax
consequences of owning, selling and disposing of the debt securities we are
offering.
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PAYMENTS OF INTEREST
Except as described below in the case of interest on a discount debt security
that is not qualified stated interest, each as defined below under "Original
Issue Discount--General," you will be taxed on any interest on your debt
security, whether payable in U.S. dollars or a foreign currency, including a
composite currency or basket of currencies other than U.S. dollars, as ordinary
income at the time you receive the interest or it accrues, depending on your
method of accounting for tax purposes. Interest we pay on the debt securities
and original issue discount, if any, accrued with respect to the debt securities
(as described below under "--Original Issue Discount") constitutes income from
sources outside the United States, but, with certain exceptions, will be
"passive" or "financial services income," which is treated separately from other
types of income for purposes of computing the foreign tax credit limitation.
CASH BASIS TAXPAYERS. If you are a taxpayer that uses the cash receipts and
disbursements method of accounting for tax purposes and you receive an interest
payment that is denominated in, or determined by reference to, a foreign
currency, you must recognize income equal to the U.S. dollar value of the
interest payment, based on the exchange rate in effect on the date of receipt,
regardless of whether you actually convert the payment into U.S. dollars.
ACCRUAL BASIS TAXPAYERS. If you are a taxpayer who uses an accrual method of
accounting for tax purposes, you may determine the amount of income that you
recognize with respect to an interest payment denominated in, or determined by
reference to, a foreign currency by using one of two methods. Under the first
method, you will determine the amount of income accrued based on the average
exchange rate in effect during the interest accrual period or, with respect to
an accrual period that spans two taxable years, that part of the period within
the taxable year.
If you elect the second method, you would determine the amount of income accrued
on the basis of the exchange rate in effect on the last day of the accrual
period or, in the case of an accrual period that spans two taxable years, the
exchange rate in effect on the last day of the part of the period within the
taxable year. Additionally, under this second method, if you receive a payment
of interest within five business days of the last day of your accrual period or
taxable year, you may instead translate the interest accrued into U.S. dollars
at the exchange rate in effect on the day that you actually receive the interest
payment. If you elect the second method, it will apply to all debt instruments
that you hold at the beginning of the first taxable year to which the election
applies and to all debt instruments that you subsequently acquire. You may not
revoke this election without the consent of the Internal Revenue Service.
When you actually receive an interest payment, including a payment attributable
to accrued but unpaid interest upon the sale or retirement of your debt
security, denominated in, or determined by reference to, a foreign currency for
which you accrued an amount of income, you will recognize ordinary income or
loss measured by the difference, if any, between the exchange rate that you used
to accrue interest income and the exchange rate in effect on the date of
receipt, regardless of whether you actually convert the payment into U.S.
dollars. However, you may not treat this ordinary income gain or loss as an
adjustment to the interest income you receive.
ORIGINAL ISSUE DISCOUNT
GENERAL. If you own a debt security, other than a short-term debt security with
a term of one year or less, it will be treated as a discount debt security
issued at an original issue discount if the amount by which the debt security's
stated redemption price at maturity exceeds its issue price is more than a de
minimis amount. Generally, a debt security's issue price will be the first price
at which a substantial amount of debt securities included in the issue of which
the debt security is a part is sold to persons other than bond houses, brokers,
or similar persons or organizations acting in the capacity of underwriters,
placement agents, or wholesalers. A debt security's stated redemption price at
maturity is
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the total of all payments provided by the debt security that are not payments of
qualified stated interest. Generally, an interest payment on a debt security is
qualified stated interest if it is one of a series of stated interest payments
on a debt security that are unconditionally payable at least annually at a
single fixed rate, with certain exceptions for lower rates paid during some
periods, applied to the outstanding principal amount of the debt security. There
are special rules for variable rate debt securities that are discussed under
"--Variable Rate Debt Securities."
In general, your debt security is not a discount debt security if the amount by
which its stated redemption price at maturity exceeds its issue price is less
than the de minimis amount of 1/4 of 1% of its stated redemption price at
maturity multiplied by the number of complete years to its maturity. Your debt
security will have de minimis original issue discount if the amount of the
excess is less than the de minimis amount. If your debt security has de minimis
original issue discount, you must include the de minimis amount in income as
stated principal payments are made on the debt security, unless you make the
election described below under "--Election to Treat All Interest as Original
Issue Discount." You can determine the includible amount with respect to each
such payment by multiplying the total amount of your debt security's de minimis
original issue discount by a fraction equal to:
- - the amount of the principal payment made
divided by
- - the stated principal amount of the debt security.
Generally, if your discount debt security matures more than one year from its
date of issue, you must include original issue discount in income before you
receive cash attributable to that income. The amount of OID that you must
include in income is calculated using a constant-yield method, and generally you
will include increasingly greater amounts of OID in income over the life of your
debt security. More specifically, you can calculate the amount of accrued OID
that you must include in income by adding the daily portions of OID with respect
to your discount debt security for each day during the taxable year or portion
of the taxable year that you hold your discount debt security. You can determine
the daily portion by allocating to each day in any accrual period a pro rata
portion of the OID allocable to that accrual period. You may select an accrual
period of any length with respect to your debt security and you may vary the
length of each accrual period over the term of your debt security. However, no
accrual period may be longer than one year and each scheduled payment of
interest or principal on the debt security must occur on either the first or
final day of an accrual period.
You can determine the amount of OID allocable to an accrual period by:
- - multiplying your discount debt security's adjusted issue price at the
beginning of the accrual period by your debt security's yield to maturity;
and then
- - subtracting from this figure the sum of the payments of qualified stated
interest on your debt security allocable to the accrual period.
You must determine the debt security's yield to maturity on the basis of
compounding at the close of each accrual period and adjusting for the length of
each accrual period. Further, you can determine your discount debt security's
adjusted issue price at the beginning of any accrual period by:
- - adding your debt security's issue price and any accrued OID for each prior
accrual period; and then
- - subtracting any payments previously made on your debt security that were not
qualified stated interest payments.
If an interval between payments of qualified stated interest on your debt
security contains more than one accrual period, then, when you determine the
amount of OID allocable to an accrual period, you
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U.S. TAX CONSIDERATIONS
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must allocate the amount of qualified stated interest payable at the end of the
interval, including any qualified stated interest that is payable on the first
day of the accrual period immediately following the interval, pro rata to each
accrual period in the interval based on their relative lengths. In addition, you
must increase the adjusted issue price at the beginning of each accrual period
in the interval by the amount of any qualified stated interest that has accrued
prior to the first day of the accrual period but that is not payable until the
end of the interval. You may compute the amount of OID allocable to an initial
short accrual period by using any reasonable method if all other accrual
periods, other than a final short accrual period, are of equal length.
The amount of OID allocable to the final accrual period is equal to the
difference between:
- - the amount payable at the maturity of your debt security, other than any
payment of qualified stated interest; and
- - your debt security's adjusted issue price as of the beginning of the final
accrual period.
ACQUISITION PREMIUM. If you purchase your debt security for an amount that is
less than or equal to the sum of all amounts, other than qualified stated
interest, payable on your debt security after the purchase date but is greater
than the amount of your debt security's adjusted issue price, as determined
above under "General," the excess is acquisition premium. If you do not make the
election described below under "Election to Treat All Interest as Original Issue
Discount," then you must reduce the daily portions of OID by an amount equal to:
- - the excess of your adjusted basis in the debt security immediately after
purchase over
- - the adjusted issue price of the debt security
divided by
- - the excess of the sum of all amounts payable (other than qualified stated
interest) on the debt security after the purchase date
over
- - the debt security's adjusted issue price.
MARKET DISCOUNT. You will be treated as if you purchased your debt security,
other than a short-term debt security, at a market discount, and your debt
security will be a market discount note if:
- - in the case of an initial purchaser, you purchase your debt security for less
than its issue price as determined above under "General"; and
- - in the case of all purchasers, the debt security's stated redemption price at
maturity or, in the case of a discount debt security, the debt security's
revised issue price, exceeds the price you paid for your debt security by at
least 1/4 of 1% of your debt security's stated redemption price at maturity
or revised issue price, respectively, multiplied by the number of complete
years to the debt security's maturity. To determine the revised issue price
of your debt security for these purposes, you generally add any OID that has
accrued on your debt security to its issue price.
If your debt security's stated redemption price at maturity or, in the case of a
discount debt security, its revised issue price, exceeds the price you paid for
the debt security by less than 1/4 of 1% multiplied by the number of complete
years to the debt security's maturity, the excess constitutes de minimis market
discount, and the rules discussed below are not applicable to you.
You must treat any gain you recognize on the maturity or disposition of your
market discount debt security as ordinary income to the extent of the accrued
market discount on your debt security. Alternatively, you may elect to include
market discount in income currently over the life of your debt
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security. If you make this election, it will apply to all debt instruments with
market discount that you acquire on or after the first day of the first taxable
year to which the election applies. You may not revoke this election without the
consent of the Internal Revenue Service. If you own a market discount debt
security and do not make this election, you will generally be required to defer
deductions for interest on borrowings allocable to your debt security in an
amount not exceeding the accrued market discount on your debt security until the
maturity or disposition of your debt security.
You will accrue market discount on your market discount debt security on a
straight-line basis unless you elect to accrue market discount using a
constant-yield method. If you make this election, it will apply only to the debt
security with respect to which it is made and you may not revoke it.
PRE-ISSUANCE ACCRUED INTEREST. An election may be made to decrease the issue
price of your debt security by the amount of pre-issuance accrued interest if:
- - a portion of the initial purchase price of your debt security is attributable
to pre-issuance accrued interest;
- - the first stated interest payment on your debt security is to be made within
one year of your debt security's issue date; and
- - the payment will equal or exceed the amount of pre-issuance accrued interest.
If this election is made, a portion of the first stated interest payment will be
treated as a return of the excluded pre-issuance accrued interest and not as an
amount payable on your debt security.
DEBT SECURITIES SUBJECT TO CONTINGENCIES INCLUDING OPTIONAL REDEMPTION. Your
debt security is subject to a contingency if it provides for an alternative
payment schedule or schedules applicable upon the occurrence of a contingency or
contingencies, other than a remote or incidental contingency, whether such
contingency relates to payments of interest or of principal. In such a case, you
must determine the yield and maturity of your debt security by assuming that the
payments will be made according to the payment schedule most likely to occur if:
- - the timing and amounts of the payments that comprise each payment schedule
are known as of the issue date; and
- - one of such schedules is significantly more likely than not to occur.
If there is no single payment schedule that is significantly more likely than
not to occur, other than because of a mandatory sinking fund, you must include
income on your debt security in accordance with the general rules that govern
contingent payment obligations. These rules will be discussed in the applicable
prospectus supplement.
Notwithstanding the general rules for determining yield and maturity, if your
debt security is subject to contingencies, and either you or we have an
unconditional option or options that, if exercised, would require payments to be
made on the debt security under an alternative payment schedule or schedules,
then in the case of an option or options of ours, we will be deemed to exercise
or not exercise an option or combination of options in the manner that minimizes
the yield on your debt security and, in the case of an option or options that
you hold, you will be deemed to exercise or not exercise an option or
combination of options in the manner that maximizes the yield on your debt
security. If both you and we hold options described in the preceding sentence,
those rules will apply to each option in the order in which they may be
exercised. You may determine the yield on your debt security for the purposes of
those calculations by using any date on which your debt security may be redeemed
or repurchased as the maturity date and the amount payable on the date that you
chose in accordance with the terms of your debt security as the principal amount
payable at maturity.
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If a contingency, including the exercise of an option, actually occurs or does
not occur contrary to an assumption made according to the above rules then,
except to the extent that a portion of your debt security is repaid as a result
of this change in circumstances and solely to determine the amount and accrual
of OID, you must redetermine the yield and maturity of your note by treating
your debt security as having been retired and reissued on the date of the change
in circumstances for an amount equal to your debt security's adjusted issue
price on that date.
ELECTION TO TREAT ALL INTEREST AS ORIGINAL ISSUE DISCOUNT. You may elect to
include in gross income all interest that accrues on your debt security using
the constant-yield method described above under "General," with the
modifications described below. For purposes of this election, interest will
include stated interest, OID, de minimis original issue discount, market
discount, de minimis market discount and unstated interest, as adjusted by any
amortizable bond premium, described below under "Debt Securities Purchased at a
Premium," or acquisition premium.
If you make this election for your debt security, then, when you apply the
constant-yield method:
- - the issue price of your debt security will equal your cost;
- - the issue date of your debt security will be the date you acquired it; and
- - no payments on your debt security will be treated as payments of qualified
stated interest.
Generally, this election will apply only to the debt security for which you make
it; however, if the debt security for which this election is made has
amortizable bond premium, you will be deemed to have made an election to apply
amortizable bond premium against interest for all debt instruments with
amortizable bond premium, other than debt instruments the interest on which is
excludible from gross income, that you hold as of the beginning of the taxable
year to which the election applies or any taxable year thereafter. Additionally,
if you make this election for a market discount debt security, you will be
treated as having made the election discussed above under "Market Discount" to
include market discount in income currently over the life of all debt
instruments that you currently hold or later acquire. You may not revoke any
election to apply the constant-yield method to all interest on a debt security
or the deemed elections with respect to amortizable bond premium or market
discount debt securities without the consent of the Internal Revenue Service.
VARIABLE RATE DEBT SECURITIES. Your debt security will be a variable rate debt
security if:
- - your debt security's issue price does not exceed the total noncontingent
principal payments by more than the lesser of:
1. .015 multiplied by the product of the total noncontingent principal
payments and the number of complete years to maturity from the issue
date, or
2. 15 percent of the total noncontingent principal payments; and
- - your debt security provides for stated interest, compounded or paid at least
annually, only at:
1. one or more qualified floating rates,
2. a single fixed rate and one or more qualified floating rates,
3. a single objective rate, or
4. a single fixed rate and a single objective rate that is a qualified
inverse floating rate.
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Your debt security will have a variable rate that is a qualified floating rate
if:
- - variations in the value of the rate can reasonably be expected to measure
contemporaneous variations in the cost of newly borrowed funds in the
currency in which your debt security is denominated; or
- - the rate is equal to such a rate multiplied by either:
1. a fixed multiple that is greater than 0.65 but not more than 1.35, or
2. a fixed multiple that is greater than 0.65 but not more than 1.35,
increased or decreased by a fixed rate; and
- - the value of the rate on any date during the term of your debt security is
set no earlier than three months prior to the first day on which that value
is in effect and no later than one year following that first day.
If your debt security provides for two or more qualified floating rates that are
within 0.25 percentage points of each other on the issue date or can reasonably
be expected to have approximately the same values throughout the term of the
debt security, the qualified floating rates together constitute a single
qualified floating rate.
Your debt security will not have a qualified floating rate, however, if the rate
is subject to certain restrictions (including caps, floors, governors, or other
similar restrictions) unless such restrictions are fixed throughout the term of
the debt security or are not reasonably expected to significantly affect the
yield on the debt security.
Your debt security will have a variable rate that is a single objective rate if:
- - the rate is not a qualified floating rate;
- - the rate is determined using a single, fixed formula that is based on
objective financial or economic information that is not within the control of
or unique to the circumstances of the issuer or a related party; and
- - the value of the rate on any date during the term of your debt security is
set no earlier than three months prior to the first day on which that value
is in effect and no later than one year following that first day.
Your debt security will not have a variable rate that is an objective rate,
however, if it is reasonably expected that the average value of the rate during
the first half of your debt security's term will be either significantly less
than or significantly greater than the average value of the rate during the
final half of your debt security's term.
An objective rate as described above is a qualified inverse floating rate if:
- - the rate is equal to a fixed rate minus a qualified floating rate; and
- - the variations in the rate can reasonably be expected to inversely reflect
contemporaneous variations in the cost of newly borrowed funds.
Your debt security will also have a single qualified floating rate or an
objective rate if interest on your debt security is stated at a fixed rate for
an initial period of one year or less followed by either a qualified floating
rate or an objective rate for a subsequent period, and either:
- - the fixed rate and the qualified floating rate or objective rate have values
on the issue date of the note that do not differ by more than 0.25 percentage
points; or
- - the value of the qualified floating rate or objective rate is intended to
approximate the fixed rate.
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In general, if your variable rate debt security provides for stated interest at
a single qualified floating rate or objective rate (or one of those rates after
a single fixed rate for an initial period), all stated interest on your debt
security is qualified stated interest. In this case, the amount of OID, if any,
is determined by using, for a qualified floating rate or qualified inverse
floating rate, the value as of the issue date of the qualified floating rate or
qualified inverse floating rate, or, for any other objective rate, a fixed rate
that reflects the yield reasonably expected for your debt security.
If your variable rate debt security does not provide for stated interest at a
single qualified floating rate or a single objective rate, and also does not
provide for interest payable at a fixed rate other than a single fixed rate for
an initial period, you generally must determine the interest and OID accruals on
your debt security by:
- - determining a fixed rate substitute for each variable rate provided under
your variable rate debt security;
- - constructing the equivalent fixed rate debt instrument (using the fixed rate
substitute described above);
- - determining the amount of qualified stated interest and OID with respect to
the equivalent fixed rate debt instrument; and
- - adjusting for actual variable rates during the applicable accrual period.
When you determine the fixed rate substitute for each variable rate provided
under the variable rate note, you generally will use the value of each variable
rate as of the issue date or, for an objective rate that is not a qualified
inverse floating rate, a rate that reflects the reasonably expected yield on
your debt security.
If your variable rate debt security provides for stated interest either at one
or more qualified floating rates or at a qualified inverse floating rate, and
also provides for stated interest at a single fixed rate other than a single
fixed rate for an initial period, you generally must determine interest and OID
accruals by using the method described in the previous paragraph. However, your
variable rate debt security will be treated, for purposes of the first three
steps of the determination, as if your debt security had provided for a
qualified floating rate, or a qualified inverse floating rate, rather than the
fixed rate. The qualified floating rate, or qualified inverse floating rate,
that replaces the fixed rate must be such that the fair market value of your
variable rate debt security as of the issue date approximates the fair market
value of an otherwise identical debt instrument that provides for the qualified
floating rate, or qualified inverse floating rate, rather than the fixed rate.
SHORT-TERM DEBT SECURITIES. In general, if you are an individual or other cash
basis United States holder of a short-term debt security, you are not required
to accrue OID, as specially defined below for the purposes of this paragraph,
for United States federal income tax purposes unless you elect to do so.
However, you may be required to include any stated interest in income as you
receive it. If you are an accrual basis taxpayer, a taxpayer in a special class,
including, but not limited to, a regulated investment company, common trust
fund, or a certain type of pass-through entity, or a cash basis taxpayer who so
elects, you will be required to accrue OID on short-term debt securities on
either a straight-line basis or under the constant-yield method, based on daily
compounding. If you are not required and do not elect to include OID in income
currently, any gain you realize on the sale or retirement of your short-term
debt security will be ordinary income to the extent of the accrued OID, which
will be determined on a straight-line basis unless you make an election to
accrue the OID under the constant-yield method, through the date of sale or
retirement. However, if you are not required and do not elect to accrue OID on
your short-term debt securities, you will be required to defer deductions for
interest on borrowings allocable to your short-term debt securities in an amount
not exceeding the deferred income until the deferred income is realized.
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When you determine the amount of OID subject to these rules, you must include
all interest payments on your short-term debt security, including stated
interest, in your short-term debt security's stated redemption price at
maturity.
FOREIGN CURRENCY DISCOUNT DEBT SECURITIES. If your discount debt security is
denominated in, or determined by reference to, a foreign currency, you must
determine OID for any accrual period on your discount debt security in the
foreign currency and then translate the amount of OID into U.S. dollars in the
same manner as stated interest accrued by an accrual basis United States holder,
as described under "-- United States Holders -- Payments of Interest." You may
recognize ordinary income or loss when you receive an amount attributable to OID
in connection with a payment of interest or the sale or retirement of your debt
security.
DEBT SECURITIES PURCHASED AT A PREMIUM
If you purchase your debt security for an amount in excess of its principal
amount, you may elect to treat the excess as amortizable bond premium. If you
make this election, you will reduce the amount required to be included in your
income each year with respect to interest on your debt security by the amount of
amortizable bond premium allocable to that year, based on your debt security's
yield to maturity. If your debt security is denominated in, or determined by
reference to, a foreign currency, you will compute your amortizable bond premium
in units of the foreign currency and your amortizable bond premium will reduce
your interest income in units of the foreign currency. Gain or loss recognized
that is attributable to changes in exchange rates between the time your
amortized bond premium offsets interest income and the time of the acquisition
of your debt security is generally taxable as ordinary income or loss. If you
make an election to amortize bond premium, it will apply to all debt
instruments, other than debt instruments the interest on which is excludible
from gross income, that you hold at the beginning of the first taxable year to
which the election applies or thereafter acquire, and you may not revoke it
without the consent of the Internal Revenue Service. See also "--Original Issue
Discount--Election to Treat All Interest as Original Issue Discount."
PURCHASE, SALE AND RETIREMENT OF THE DEBT SECURITIES
Your tax basis in your debt security will generally be the U.S. dollar cost, as
defined below, of your debt security, adjusted by:
- - adding any OID or market discount, de minimis original issue discount and de
minimis market discount; and then
- - subtracting any payments on your debt security that are not qualified stated
interest payments and any amortizable bond premium applied to reduce the
interest on your debt security.
If you purchase your debt security with foreign currency, the U.S. dollar cost
of your debt security will generally be the U.S. dollar value of the purchase
price on the date of purchase. However, if you are a cash basis taxpayer, or an
accrual basis taxpayer if you so elect, and your debt security is traded on an
established securities market, as defined in the applicable Treasury
regulations, the U.S. dollar cost of your debt security will be the U.S. dollar
value of the purchase price on the settlement date of your purchase.
You will generally recognize gain or loss on the sale or retirement of your debt
security equal to the difference between the amount you realize on the sale or
retirement and your tax basis in your debt security. If your debt security is
sold or retired for an amount in foreign currency, the amount you realize will
be the U.S. dollar value of such amount on:
- - the date payment is received, if you are a cash basis taxpayer and the debt
securities are not traded on an established securities market, as defined in
the applicable Treasury regulations;
- - the date of disposition, if you are an accrual basis taxpayer; or
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U.S. TAX CONSIDERATIONS
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- - the settlement date for the sale, if you are a cash basis taxpayer, or an
accrual basis United States holder that so elects, and the debt securities are
traded on an established securities market, as defined in the applicable
Treasury regulations.
You will recognize capital gain or loss when you sell or retire your debt
security, except to the extent:
- - described above under "-- Original Issue Discount -- Short-Term Debt
Securities" or "-- Market Discount,"
- - attributable to accrued but unpaid interest,
- - the rules governing contingent payment obligations apply, or
- - attributable to changes in exchange rates as described below.
Capital gain of a noncorporate United States holder is generally taxed at a
maximum rate of 20% where the property is held more than one year, and 18% where
the property is held for more than five years.
You must treat any portion of the gain or loss that you recognize on the sale or
retirement of a debt security as ordinary income or loss to the extent
attributable to changes in exchange rates. However, you only take exchange gain
or loss into account to the extent of the total gain or loss you realize on the
transaction.
EXCHANGE OF AMOUNTS IN OTHER THAN U.S. DOLLARS
If you receive foreign currency as interest on your debt security or on the sale
or retirement of your debt security, your tax basis in the foreign currency will
equal its U.S. dollar value when the interest is received or at the time of the
sale or retirement. If you purchase foreign currency, you generally will have a
tax basis equal to the U.S. dollar value of the foreign currency on the date of
your purchase. If you sell or dispose of a foreign currency, including if you
use it to purchase debt securities or exchange it for U.S. dollars, any gain or
loss recognized generally will be ordinary income or loss.
INDEXED AND OTHER DEBT SECURITIES
The applicable prospectus supplement will discuss any special United States
federal income tax rules with respect to contingent foreign currency debt
securities, debt securities the payments on which are determined by reference to
the value of any index or stock and other debt securities that are subject to
the rules governing contingent payment obligations which are not subject to the
rules governing variable rate debt securities.
BACKUP WITHHOLDING AND INFORMATION REPORTING
In general, if you are a noncorporate United States holder, we and other payors
are required to report to the Internal Revenue Service all payments of
principal, any premium and interest on your debt security, and the accrual of
OID on a discount debt security. In addition, we and other payors are required
to report to the Internal Revenue Service any payment of proceeds of the sale of
your debt security before maturity within the United States. Additionally,
backup withholding will apply to any payments, including payments of OID, if you
fail to provide an accurate taxpayer identification number, or you are notified
by the Internal Revenue Service that you have failed to report all interest and
dividends required to be shown on your federal income tax returns.
In general, payment of the proceeds from the sale of debt securities effected at
a foreign office of a broker will not be subject to information reporting or
backup withholding. However, a sale effected at a foreign office of a broker
will be subject to information reporting and backup withholding if:
- - the proceeds are transferred to an account maintained by you in the United
States,
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U.S. TAX CONSIDERATIONS
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- - the payment of proceeds or the confirmation of the sale is mailed to you at a
United States address, or
- - the sale has some other specified connection with the United States as
provided in U.S. Treasury regulations,
unless the broker does not have actual knowledge or reason to know that you are
a United States person and you provide certification as to your non-United
States status or you otherwise establish an exemption.
In addition, payment of the proceeds from the sale of debt securities effected
at a foreign office of a broker will be subject to information reporting if the
broker is:
- - a United States person,
- - a controlled foreign corporation for United States tax purposes,
- - a foreign person 50% or more of whose gross income is effectively connected
with the conduct of a United States trade or business for a specified
three-year period, or
- - a foreign partnership, if at any time during its tax year:
- one or more of its partners are "U.S. persons," as defined in U.S.
Treasury regulations, who in the aggregate hold more than 50% of the
income or capital interest in the partnership, or
- such foreign partnership is engaged in the conduct of a United States
trade or business,
unless the broker does not have actual knowledge or reason to know that you are
a United States person and you provide certification as to your non-United
States status or you otherwise establish an exemption. Backup withholding will
apply if the sale is subject to information reporting and the broker has actual
knowledge that you are a United States person.
TAXATION OF WARRANTS
U.S. tax considerations with respect to warrants will be discussed in an
applicable prospectus supplement.
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Tax Considerations Under the Laws of Switzerland
The tax information set forth below is based on the opinion of Ernst & Young,
Ltd., Switzerland, and has been approved by them for its accuracy.
DEBT SECURITIES
The following is a summary of Swiss tax consequences related to the acquisition,
ownership and the disposition of unsecured debt securities and is based on
legislation as of the date of this prospectus and does not aim to be a
comprehensive description of all the tax considerations that may be relevant to
a decision to invest in unsecured debt securities. The tax treatment for each
debt-holder depends on the particular situation; therefore, prospective
investors are advised to consult with their professional tax advisors as to the
respective tax consequences of the purchase, ownership and disposition of
unsecured debt securities.
We have summarized below the principal tax consequences under the laws of
Switzerland for non-Swiss investors (i.e., for investors not resident in
Switzerland for Swiss tax purposes) of owning unsecured debt securities issued
by a non Swiss-branch of UBS AG.
This summary does not address the tax treatment of holders of the debt
securities subject to special tax rules.
Finally it is assumed that the issuer of the unsecured debt securities is not
resident in Switzerland for Swiss tax purposes.
SWISS INCOME AND CAPITAL TAX
Holders of unsecured debt securities who are not residents or domiciliaries of
Switzerland and have no permanent establishment or permanent representative in
Switzerland to which or to whom the unsecured debt securities are attributable
or to which or to whom the unsecured debt securities belong, will not be subject
to any Swiss Federal, Cantonal or Municipal corporate or individual income and
capital tax or capital gains tax on the holding and disposition of the unsecured
debt securities. Furthermore, there will be no inheritance or gift tax imposed
in Switzerland on the unsecured debt securities if the holder is an individual
who is not domiciled in Switzerland.
ISSUANCE STAMP TAX
Under the condition that UBS AG will book the unsecured debt securities in its
Jersey branch, London branch or any other branch not resident in Switzerland and
under the condition that UBS AG does not plan to use the proceeds of the sale of
the unsecured debt securities in Switzerland, the issuance of the unsecured debt
securities will not be a taxable event for Swiss issuance stamp tax purposes.
WITHHOLDING TAX
Under the condition that UBS AG will book the unsecured debt securities in its
Jersey branch, London branch or any other branch not resident in Switzerland and
under the condition that UBS AG does not plan to use the proceeds of the sale of
the unsecured debt securities in Switzerland, the payment of interest on and the
redemption of unsecured debt securities is not subject to Swiss withholding tax
(Swiss Anticipatory Tax).
SECURITIES TURNOVER TAX
In case the duration of the unsecured debt securities is less than one year, a
sale or purchase of unsecured debt securities is out of scope of Swiss turnover
tax.
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TAX CONSIDERATIONS UNDER THE LAWS OF SWITZERLAND
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In case the duration of the unsecured debt securities is more than one year, a
sale or purchase of such unsecured debt securities is subject to Swiss turnover
tax if carried out through a registered Swiss securities dealer. The Swiss
securities dealer is required to impose half of the turnover tax of 0.3 % on
every contractual partner that is not a domestic securities dealer unless the
counterparties qualify for a special exemption from Swiss turnover tax (such as
foreign investment funds, foreign pension institutions etc.).
However, no securities turnover tax will be imposed on transactions that are not
carried out through a registered Swiss securities dealer.
WARRANTS
Tax considerations under the laws of Switzerland with respect to warrants will
be discussed in an applicable prospectus supplement.
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ERISA Considerations
We, UBS Warburg LLC, UBS PaineWebber Inc. and other of our affiliates may each
be considered a "party in interest" within the meaning of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") or a "disqualified
person" (within the meaning of Section 4975 of the Internal Revenue Code of
1986, as amended (the "Code")) with respect to an employee benefits plan that is
subject to ERISA and/or an individual retirement account or Keogh plan that is
subject to the Code ("Plan"). The purchase of debt securities by a Plan with
respect to which UBS Warburg LLC, UBS PaineWebber Inc. or any of our affiliates
acts as a fiduciary as defined in Section 3(21) of ERISA and/or Section 4975 of
the Code ("Fiduciary") would constitute a prohibited transaction under ERISA or
the Code unless acquired pursuant to and in accordance with an applicable
exemption. The purchase of debt securities by a Plan with respect to which UBS
Warburg LLC, UBS PaineWebber Inc. or any of our affiliates does not act as a
Fiduciary but for which any of the above entities does provide services could
also be prohibited, but one or more exemptions may be applicable. Any person
proposing to acquire any debt security on behalf of a Plan should consult with
counsel regarding the applicability of the prohibited transaction rules and the
applicable exemptions thereto.
ERISA considerations with respect to warrants will be discussed in an applicable
prospectus supplement.
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Plan of Distribution
PLAN OF DISTRIBUTION FOR THE INITIAL OFFER AND SALE OF SECURITIES.
We plan to issue the securities under a distribution agreement with UBS Warburg
LLC and UBS PaineWebber Inc., as the agents. Subject to certain conditions, the
agents would agree to use their reasonable efforts to solicit purchases of the
securities. We would have the right to accept offers to purchase securities and
may reject any proposed purchase of the securities. The agents may also reject
any offer to purchase securities. We would pay the agents a commission on any
securities sold through the agents. The commission would range from 0.100% to an
estimated maximum of 2.0% of the principal amount of the securities, depending
on the stated maturity of the securities.
We may also sell securities to the agents who will purchase the securities as
principal for their own accounts. In that case, the agents will purchase the
securities at a price equal to the issue price specified in the applicable
prospectus supplement, less a discount. The discount will equal the applicable
commission on an agency sale of securities with the same stated maturity.
The agents may resell any securities they purchase as principal to other brokers
or dealers at a discount, which may include all or part of the discount the
agents received from us. If all the securities are not sold at the initial
offering price, the agents may change the offering price and the other selling
terms.
We may also sell securities directly to investors. We will not pay commissions
on securities we sell directly.
The agents, whether acting as agent or principal, may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933. We have agreed
to indemnify the agents against certain liabilities, including liabilities under
the Securities Act.
If the agents sell securities to dealers who resell to investors and the agents
pay the dealers all or part of the discount or commission they receive from us,
those dealers may also be deemed to be "underwriters" within the meaning of the
Securities Act.
In connection with an offering, the agents may purchase and sell securities in
the open market. These transactions may include short sales, stabilizing
transactions and purchases to cover positions created by short sales. Short
sales involve the sale by an agent of a greater number of securities than they
are required to purchase in an offering. Stabilizing transactions consist of
certain bids or purchases made for the purpose of preventing or retarding a
decline in the market price of the securities while an offering is in progress.
The agents may also impose a penalty bid. This occurs when a particular agent
repays to the agents a portion of the discount received by it because the agents
have repurchased securities sold by or for the account of that agent in
stabilizing or short-covering transactions.
These activities by the agents may stabilize, maintain or otherwise affect the
market price of the securities. As a result, the price of the securities may be
higher than the price that otherwise might exist in the open market. If these
activities are commenced, they may be discontinued by the agents at any time.
These transactions may be effected on an exchange or automated quotation system,
if the securities are listed on that exchange or admitted for trading on that
automated quotation system, or in the over-the-counter market or otherwise.
The purchase price of the securities will be required to be paid in immediately
available funds in New York City, unless otherwise indicated in your prospectus
supplement.
We may appoint agents other than or in addition to UBS Warburg LLC and UBS
PaineWebber Inc. with respect to the securities. Any other agents will be named
in the applicable prospectus supplements
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PLAN OF DISTRIBUTION
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and those agents will enter into the distribution agreement referred to above.
The other agents may be affiliates or customers of UBS and may engage in
transactions with and perform services for UBS in the ordinary course of
business. UBS Warburg LLC and UBS PaineWebber Inc. may resell securities to or
through another of our affiliates, as selling agents.
The securities are a new issue of securities, and there will be no established
trading market for any security before its original issue date. We may or may
not list the securities on a securities exchange or quotation system. We have
been advised by UBS Warburg LLC and UBS PaineWebber Inc. that they intend to
make a market in the securities. However, neither UBS Warburg LLC, UBS
PaineWebber Inc. nor any of our other affiliates nor any other agent named in
your prospectus supplement that makes a market is obligated to do so and any of
them may stop doing so at any time without notice. No assurance can be given as
to the liquidity or trading market for the securities.
UBS Warburg LLC and UBS PaineWebber Inc. are affiliates of UBS. Rule 2720 of the
Conduct Rules of the National Association of Securities Dealers, Inc. imposes
certain requirements when an NASD member such as UBS Warburg LLC or UBS
PaineWebber Inc. distributes an affiliated company's debt securities. UBS
Warburg LLC and UBS PaineWebber Inc. have advised UBS that this offering will
comply with the applicable requirements of Rule 2720.
UBS Warburg LLC and UBS PaineWebber Inc. will not confirm initial sales to
accounts over which it exercises discretionary authority without the prior
written approval of the customer.
MARKET-MAKING RESALES BY AFFILIATES
This prospectus may be used by UBS, UBS Warburg LLC, UBS PaineWebber Inc. or any
other affiliate of UBS in connection with offers and sales of the securities in
market-making transactions. In a market-making transaction, each of UBS, UBS
Warburg LLC, UBS PaineWebber Inc. or any other affiliate of UBS may resell a
security it acquires from other holders, after the original offering and sale of
the security. Resales of this kind may occur in the open market or may be
privately negotiated at prevailing market prices at the time of resale or at
related or negotiated prices. In these transactions, UBS, UBS Warburg LLC, UBS
PaineWebber Inc. or any other affiliate of UBS may act as principal or agent,
including as agent for the counterparty in a transaction in which it acts as
principal, or as agent for both counterparties in a transaction in which it does
not act as principal. UBS, UBS Warburg LLC, UBS PaineWebber Inc. or any other
affiliate of UBS may receive compensation in the form of discounts and
commissions, including from both counterparties in some cases.
UBS does not expect to receive any proceeds from market-making transactions
other than those it undertakes on its own. UBS does not expect that UBS Warburg
LLC, UBS PaineWebber Inc. or any other affiliate that engages in these
transactions will pay any proceeds from its market-making resales to UBS.
Information about the trade and settlement dates, as well as the purchase price,
for a market-making transaction will be provided to the purchaser in a separate
confirmation of sale.
Unless UBS or an agent informs you in your confirmation of sale that your
security is being purchased in its original offering and sale, you may assume
that you are purchasing your security in a market-making transaction.
MATTERS RELATING TO INITIAL OFFERING AND MARKET-MAKING RESALES
UBS Warburg LLC and UBS PaineWebber Inc. do not expect the amount of securities
held, as a result of market-making resales, by accounts over which it exercises
discretionary authority to exceed, at any time, five percent of the aggregate
initial offering price (that is, $69,500,000) of all of the securities. In
compliance with NASD guidelines, the maximum commission or discount to be
received by any NASD member or independent broker dealer may not exceed 8% of
the aggregate principal amount of the securities offered pursuant to this
prospectus; however, it is anticipated that the maximum commission
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PLAN OF DISTRIBUTION
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or discount to be received in any particular offering of securities will be
significantly less than this amount.
In this prospectus, the term "this offering" means the initial offering of the
securities made in connection with their original issuance. This term does not
refer to any subsequent resales of securities in market-making transactions.
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Validity of the Securities
In connection with particular offerings of the securities in the future, and if
stated in the applicable prospectus supplements, the validity of those
securities may be passed upon for UBS AG by Sullivan & Cromwell as to matters of
New York law and by Bar & Karrer as to matters of Swiss law, and for any
underwriters or agents by Sullivan & Cromwell or other counsel named in the
applicable prospectus supplement.
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Experts
The consolidated balance sheets of UBS at December 31, 2000 and 1999 and the
related consolidated statements of income, cash flows and changes in
shareholders' equity for each of the three years in the period ended December
31, 2000 incorporated by reference into this prospectus have been audited by
Ernst & Young Ltd., independent auditors, as set forth in their report thereon
incorporated by reference into this prospectus, and are included in reliance
upon such report given upon the authority of such firm as experts in accounting
and auditing. The consolidated statements of financial condition of Paine Webber
Group Inc. at December 31, 1999 and 1998 and the related consolidated statements
of income, cash flows and changes in shareholders' equity for each of the three
years in the period ended December 31, 1999 incorporated by reference into this
prospectus have been audited by Ernst & Young LLP, independent auditors, as set
forth in their report thereon incorporated by reference into this prospectus,
and are included in reliance upon such report given upon the authority of such
firm as experts in accounting and auditing.
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Expenses
The following are the estimated expenses to be incurred in connection with the
issuance and distribution of the securities registered under this Registration
Statement:
<Table>
Securities and Exchange Commission registration fee......... $ 0(1)
Printing and engraving expenses............................. 600,000
Legal fees and expenses..................................... 600,000
Accounting fees and expenses................................ 50,000
Indenture trustee fees and expenses......................... 60,000
Listing fees................................................ 150,000
----------
Total.................................................. $1,460,000
==========
</Table>
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(1) Pursuant to Rule 429 under the Securities Act, the securities covered by
this prospectus, filed as part of a Registration Statement on Form F-3 under
the Securities Act (File No. 333-65444) include $1,390,000,000 aggregate
principal amount or offering price of the registrant's medium-term notes
that were previously registered and have not yet been issued and sold. These
securities were registered by the registrant on a registration statement on
Form F-1, as amended on Form F-3, under the Securities Act (File No.
333-46930). A filing fee of $528,000 associated with the securities
described above was previously paid with such registration statement.
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Part II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 8. INDEMNIFICATION OF DIRECTORS AND OFFICERS
UBS AG
Under Swiss law, directors and senior officers acting in violation of their
statutory duties -- whether dealing with bona fide third parties or performing
any other acts on behalf of the corporation -- may become liable to the
corporation, its shareholders and (in bankruptcy) its creditors for damages. The
directors' liability is joint and several but only to the extent the damage is
attributable to each director based on willful or negligent violation of duty.
If the board of directors lawfully delegated the power to carry out day-to-day
management to a different corporate body, e.g., the executive board, the board
of directors is not vicariously liable for the acts of the members of the
executive board. Instead, the directors can be held liable for their failure to
properly select, instruct or supervise the executive board members. If directors
and officers enter into a transaction on behalf of the corporation with bona
fide third parties in violation of their statutory duties, the transaction is
nevertheless valid as long as it is not excluded by the corporation's business
purpose.
Under Swiss law, a corporation may indemnify a director or officer of the
corporation against losses and expenses (unless arising from his gross
negligence or willful misconduct), including attorney's fees, judgments, fines
and settlement amounts actually and reasonably incurred in a civil or criminal
action, suit or proceeding by reason of having been the representative of or
serving at the request of the corporation.
Because UBS AG is a Swiss company headquartered in Switzerland, many of the
directors and officers of UBS AG are residents of Switzerland and not the U.S.
As a result, U.S. investors may find it difficult in a lawsuit based on the
civil liability provisions of the U.S. federal securities laws to:
- effect service within the U.S. upon UBS AG and the directors and officers
of UBS AG located outside the U.S.,
- enforce in U.S. courts or outside the U.S. judgments obtained against
those persons in U.S. courts,
- enforce in U.S. courts judgments obtained against those persons in courts
in jurisdictions outside the U.S., and
- enforce against those persons in Switzerland, whether in original actions
or in actions for the enforcement of judgments of U.S. courts, civil
liabilities based solely upon the U.S. federal securities laws.
Neither the UBS AG articles of association nor Swiss statutory law contain
provisions regarding the indemnification of directors and officers.
According to general principles of Swiss employment law, an employer may, under
certain circumstances, be required to indemnify an employee against losses and
expenses incurred by him in the execution of his duties under the employment
agreement, unless the losses and expenses arise from the employee's gross
negligence or willful misconduct.
UBS AG maintains directors' and officers' insurance for its directors and
officers.
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ITEM 9. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION
- ----------------------------------------------------------------------
1.1 Form of Distribution Agreement*
4.1 Debt Indenture, dated as of November 21, 2000, between UBS
AG and U.S. Bank Trust National Association, as debt
trustee, including form of debt securities
4.2 Form of Warrant Agreement for debt warrants, including form
of debt warrant*
4.3 Form of Warrant Agreement for universal warrants, including
form of universal warrant*
4.4 Form of Warrant Indenture, including form of put warrant and
form of call warrant
5.1 Opinion of Sullivan & Cromwell as to the validity of the
securities (New York law)
5.2 Opinion of Bar & Karrer as to the validity of the securities
(Swiss law)
8.1 Opinion of Sullivan & Cromwell as to United States tax
matters
8.2 Opinion of Ernst & Young Ltd. as to Swiss tax matters
12.1 Statement regarding ratio of earnings to fixed charges
23.1 Consent of Sullivan & Cromwell (included in Exhibit 5.1)
23.2 Consent of Bar & Karrer (included in Exhibit 5.2)
23.3 Consent of Sullivan & Cromwell (included in Exhibit 8.1)
23.4 Consent of Ernst & Young Ltd.
23.5 Consent of Ernst & Young Ltd.
23.6 Consent of Ernst & Young LLP
24.1 Power of Attorney**
25.1 Statement of Eligibility of Debt Trustee
</Table>
- ------------
* To be filed by amendment or as an exhibit to Form 6-K and incorporated herein
by reference.
** Previously filed.
ITEM 10. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
UBS AG hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of
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PART II
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prospectus filed with the Commission pursuant to Rule 424(b) if,
in the aggregate, the changes in volume and price represent no
more than a 20% change in the maximum aggregate offering price
set forth in the "Calculation of Registration Fee" table in the
effective registration statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
provided, however, that paragraphs (1)(i) and (1)(ii) above do not
apply if the registration statement is on Form S-3, Form S-8 or Form
F-3, and the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed
with or furnished to the Commission by UBS AG pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in the registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof;
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering;
(4) To file a post-effective amendment to the registration statement to
include any financial statements required by Item 8.A. of Form 20-F at
the start of any delayed offering or throughout a continuous offering.
Financial statements and information otherwise required by Section
10(a)(3) of the Act need not be furnished, provided, that the
registrant includes in the prospectus, by means of a post-effective
amendment, financial statements required pursuant to this paragraph (4)
and other information necessary to ensure that all other information in
the prospectus is at least as current as the date of those financial
statements. Notwithstanding the foregoing, a post-effective amendment
need not be filed to include financial statements and information
required by Section 10(a)(3) of the Act or Rule 3-19 of Regulation S-X
if such financial statements and information are contained in periodic
reports filed with or furnished to the Commission by the registrant
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act
of 1934 that are incorporated by reference in this registration
statement.
(5) For purposes of determining any liability under the Securities Act of
1933, each filing of UBS AG's annual report pursuant to Section 13(a)
or 15(d) of the Securities Exchange Act of 1934 that is incorporated by
reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(6) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained
in a form of prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act will be deemed to
be part of this registration statement as of the time it was declared
effective;
(7) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of
prospectus will be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities
at that time will be deemed to be the initial bona fide offering
thereof; and
(8)To file an application for the purpose of determining the eligibility of
the warrant trustee to act under subsection (a) of Section 310 of the
Trust Indenture Act in accordance with the rules and regulations
prescribed by the Commission under Section 305(b)(2) of the Act.
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II- 3
86
PART II
- --------------------------------------------------------------------------------
Signatures
Pursuant to the requirements of the Securities Act of 1933, UBS AG certifies
that it has reasonable grounds to believe that it meets all of the requirements
for filing on Form F-3 and has duly caused this registration statement or
amendment thereto to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, in the State of New York, on September 4,
2001.
UBS AG
By: /s/ ROBERT B. MILLS
------------------------------------
Name: Robert B. Mills
Title: Chief Financial
Officer -- Americas and
Regional Chief Operating
Officer
Pursuant to the requirements of the Securities Act of 1933, this registration
statement or amendment thereto has been signed by the following persons in the
capacities and on the dates indicated.
<Table>
<Caption>
NAME TITLE DATE
- ------------------------------------------------------------------------------------------------------
* President of Group Executive September 4, 2001
- ------------------------------------------------ Board (principal executive
Luqman Arnold officer and principal financial
officer)
* Group Controller (principal September 4, 2001
- ------------------------------------------------ accounting officer)
Hugo Schaub
* Chairman and Member of Board of September 4, 2001
- ------------------------------------------------ Directors
Marcel Ospel
* Vice Chairman and Member of September 4, 2001
- ------------------------------------------------ Board of Directors
Alberto Togni
* Vice Chairman and Member of September 4, 2001
- ------------------------------------------------ Board of Directors
Markus Kundig
* Vice Chairman and Member of September 4, 2001
- ------------------------------------------------ Board of Directors
Johannes Antonie de Gier
* Member of Board of Directors September 4, 2001
- ------------------------------------------------
Peter Bockli
* Member of Board of Directors September 4, 2001
- ------------------------------------------------
Sir Peter Davis
* Member of Board of Directors September 4, 2001
- ------------------------------------------------
Eric Honegger
</Table>
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II- 4
87
PART II
- --------------------------------------------------------------------------------
<Table>
<Caption>
NAME TITLE DATE
- ------------------------------------------------------------------------------------------------------
* Member of Board of Directors September 4, 2001
- ------------------------------------------------
Rolf A. Meyer
* Member of Board of Directors September 4, 2001
- ------------------------------------------------
Hans Peter Ming
* Member of Board of Directors September 4, 2001
- ------------------------------------------------
Lawrence Allen Weinbach
</Table>
*By: /s/ ROBERT B. MILLS
------------------------------
Robert B. Mills, as
attorney-in-fact
Pursuant to the requirements of Section 6(a) of the Securities Act of 1933, the
Authorized Representative has duly caused this registration statement or
amendment thereto to be signed on its behalf by the undersigned, solely in his
capacity as the duly authorized representative of UBS AG in the United States,
in the City of New York, State of New York, on September 4, 2001.
UBS AG
By: /s/ ROBERT B. MILLS
------------------------------------
Name: Robert B. Mills
Title: Senior Managing Director
- --------------------------------------------------------------------------------
II- 5
88
- --------------------------------------------------------------------------------
Index to Exhibits
<Table>
<Caption>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------------------------------------------------------------------------------------
1.1 Form of Distribution Agreement*
4.1 Debt Indenture, dated as of November 21, 2000, between UBS
AG and U.S. Bank Trust National Association, as debt
trustee, including form of debt securities
4.2 Form of Warrant Agreement for debt warrants, including form
of debt warrant*
4.3 Form of Warrant Agreement for universal warrants, including
form of universal warrant*
4.4 Form of Warrant Indenture, including form of put warrant and
form of call warrant
5.1 Opinion of Sullivan & Cromwell as to the validity of the
securities (New York law)
5.2 Opinion of Bar & Karrer as to the validity of the securities
(Swiss law)
8.1 Opinion of Sullivan & Cromwell as to United States tax
matters
8.2 Opinion of Ernst & Young Ltd. as to Swiss tax matters
12.1 Statement regarding ratio of earnings to fixed charges
23.1 Consent of Sullivan & Cromwell (included in Exhibit 5.1)
23.2 Consent of Bar & Karrer (included in Exhibit 5.2)
23.3 Consent of Sullivan & Cromwell (included in Exhibit 8.1)
23.4 Consent of Ernst & Young Ltd.
23.5 Consent of Ernst & Young Ltd.
23.6 Consent of Ernst & Young LLP
24.1 Power of Attorney**
25.1 Statement of Eligibility of Debt Trustee
</Table>
- ------------
* To be filed by amendment or as an exhibit to Form 6-K and incorporated herein
by reference.
** Previously filed.
- --------------------------------------------------------------------------------