Swiss Simplified Prospectus. Swiss Simplified Prospectus

Transcription

1 Swiss Simplified Prospectus VIS Finance S.A. USD Secured Extendible Floating Rate Notes Linked to the 3 month USD LIBOR Rate Linked to the credit risk of UBS (1 st order risk) and the Charged Assets (2 nd order risk) Issued by VIS Finance S.A. under the Limited Recourse Secured Securities Programme 6-Month extendible security ISIN: XS Swiss Simplified Prospectus These Notes do not represent a participation in any of the collective investment schemes pursuant to Art. 7 ff of the Swiss Federal Act on Collective Investment Schemes (CISA) and thus do not require an authorisation of the Swiss Financial Market Supervisory Authority (FINMA). Moreover, Investors in these Notes bear the issuer risk. These Notes are not issued, guaranteed or under equivalent legal protection by a supervised financial intermediary as per Art. 5 para. 1 CISA. This document constitutes the Swiss Simplified Prospectus for the Notes described herein; it can be obtained free of charge from UBS AG, P.O. Box, CH-8098 Zurich (Switzerland), via telephone (+41-(0) ), fax (+41-(0) ) or via (swiss-prospectus@ubs.com). The relevant version of this document is stated in English; any translations are for convenience only. It will not be translated to or made available in a Swiss official language. For further information please refer to paragraph "Product Documentation" under section 1 of this document. This document should be read in conjunction with the Registered Securities Base Conditions Module and the General Definitions Module set out in the Base Prospectus in respect of the VIS Finance SA Limited Recourse Secured Securities Programme dated 22 July 2013 and the Base Prospectus in respect of the VIS Finance SA Limited Recourse Secured Securities Programme dated 23 September 2016 (other than the Registered Securities Base Conditions Module and the General Definitions Module set out therein) (together the "Base Prospectus"). Capitalised terms not otherwise defined will be defined in the Base Prospectus. If there is any discrepancy between this Swiss Simplified Prospectus and the Base Prospectus, the Base Prospectus will prevail. The Notes have been issued in five classes (Classes A-E) and each Class of Notes has been issued on the same terms. The Notes are secured by, among other things, the Charged Assets and the Swap Agreement (each as defined below). Principal is at risk on the Notes if an Early Redemption occurs which would result in the Notes becoming due and payable early and Noteholders will (subject to any prior claims) be paid the Early Redemption Amount (defined below) which may be less than the Principal Amount of the Notes, subject to a minimum of zero. These Notes offer investors quarterly Interest payments, based on the 3-month USD LIBOR. At maturity, they will be redeemed at their Specified Denomination, subject to an Early Redemption. The Maturity Date of the Notes is 28 March 2018, however, such Maturity Date may be extended pursuant to the Extension Provision detailed below up to 28 March The Calculation Agent will arrange for the delivery of an Extension Request Notice to Noteholders and the Counterparty not later than 45 calendar days prior to the then existing Maturity Date asking whether the Counterparty and each Noteholder would like to extend the Maturity Date of the Class B Notes for a further 6 months. IF THE COUNTERPARTY OR ANY NOTEHOLDER FAILS TO RESPOND TO AN EXTENSION REQUEST NOTICE BY THE DATE FALLING 31 CALENDAR DAYS PRIOR TO THE THEN EXISTING MATURITY DATE, SUCH PARTY SHALL BE DEEMED TO HAVE CONSENTED TO SUCH EXTENSION AND ACCORDINGLY THE MATURITY DATE MAY BE EXTENDED FOR A FURTHER 6 MONTHS. It is the responsibility of Noteholders to monitor their account with the clearing systems for the receipt of an Extension Request Notice. The Notes may not be extended beyond the Final Maturity Date (as defined herein). 1 Contact: UBS AG, P.O. Box, 8098 Zurich Internet: Bank and Intermediaries: * Private Investors: Please contact your client advisor or send an to derivatives@ubs.com Please note that calls made to the numbers marked with an asterisk (*) may be recorded. Should you call on these numbers, we shall assume that you consent to this business practice.

2 2 1. Description of the Product Product Structure The USD 27,431,000 Floating Rate Extendible Secured Notes offer Investors quarterly Interest payments. The Interest Rate is linked to the 3 month USD LIBOR Rate. Investors will receive the Redemption Amount per Note at the Maturity Date, subject to adjustment in accordance with the Business Day Convention and subject to adjustment in accordance with the Extension Provision below. Information on Underlying Underlying 3 month USD LIBOR Rate determined as set out in the section Interest below. Product Details Series Number This Series have been issued in five classes (each, a "Class"). The Notes of each Class will rank pari passu and without any preference among themselves and the Notes of each other Class. Class: B Security Numbers: / ISIN: XS SVSP-Categorisation: Principal Amount USD 27,431,000 Capital Protection Certificate with Participation (no of the Swiss Derivative Map of the Swiss Structured Products Association, Specified Denomination USD 1,000 subject to a Minimum Investment of USD 10,000 Issue Price Currency 100 per cent. U.S. Dollars ("USD") Dates Subscription Period [] 2017 until 13 September 2017 Trade Date 19 September 2017 Issue Date 28 September 2017 Maturity Date Interest Payment Dates General Information In respect of the Class B Notes, 28 March 2018 (the "Initial Maturity Date"), subject to adjustment in accordance with the Business Day Convention and subject to adjustment in accordance with the Extension Provision below. The Maturity Date of the Notes shall not be extended beyond 28 March 2024 (the "Final Maturity Date"). 28 March, 28 June, 28 September and 28 December in each year commencing on (and including) 28 December 2017 and ending on (and including) the relevant Maturity Date. Issuer/ Security Provider VIS Finance S.A., a special purpose vehicle incorporated in the Grand Duchy of Luxembourg with its registered seat at 2, boulevard Konrad Adenauer, L-1115 Luxembourg. Issuer Supervisory Authority The Issuer is not a regulated entity under prudential supervision pursuant to article 5 of the CISA. The Issuer has been approved by the Luxembourg Commission de Surveillance du Secteur Financier (the "CSSF") as a regulated securitisation undertaking within the meaning of articles 19 et seq. of the Securitisation Act 2004 and is as such supervised by the CSSF. Rating The Issuer is not rated. It is not intended for the Notes to be rated. Arranger UBS Limited, 5 Broadgate, London EC2M 2QS, United Kingdom Trustee Issue Agent Deutsche Trustee Company Limited, Winchester House, 1 Great Winchester Street, London EC2N 2DB, United Kingdom UBS AG, London Branch, 5 Broadgate, London, EC2M 2QS Custodian Deutsche Bank Luxembourg S.A., 2, boulevard Konrad Adenauer, L-1115 Luxembourg 2

3 3 Calculation Agent Principal Paying Agent Programme Listing Secondary Market Business Days Business Day Convention UBS AG, acting through its London Branch (5 Broadgate, London, EC2M 2QS), or any successor thereof. All determinations by the Calculation Agent hereunder in the absence of manifest error, wilful default or bad faith, will be final and conclusive, and the Calculation Agent and the Issuer have no liability to the Noteholders or any third party in relation to such determinations Deutsche Bank AG, London Branch, Winchester House, 1 Great Winchester Street, London EC2N 2DB, United Kingdom Registered Securities Base Conditions Module and the General Definitions Module set out in the Base Prospectus in respect of the VIS Finance SA Limited Recourse Secured Securities Programme dated 22 July 2013 and the Base Prospectus in respect of the VIS Finance SA Limited Recourse Secured Securities Programme dated 23 September 2016 (other than the Registered Securities Base Conditions Module and the General Definitions Module set out therein) The Issuer may at its option list the Notes on any stock exchange. None New York City, London Modified Following Business Day Convention Minimum Investment Minimum Trading Lot USD 10,000 USD 10,000 (subject to Selling Restrictions) Clearing System Form of Securities Form of Notes Status of the Notes Delivery Net Settlement Governing Law/Jurisdiction Public Offering Distribution Fee Euroclear and Clearstream Banking Notes Unrestricted Registered Global Security The Notes are secured and limited recourse obligations of the Issuer, ranking pari passu without any preference among themselves. Delivery free of payment The Dealer agrees to subscribe for the Notes in consideration for the Dealer procuring (i) the delivery of the Collateral Assets to the Issuer on the Issue Date and (ii) the entry by the Counterparty into the Swap Agreement on the Issue Date English law/the courts of England and Wales Switzerland 0.125%, included in the Issue Price Interest Rate of Interest In respect of the Class B Notes and in respect of the Interest Periods running from, and including, the Issue Date to, but excluding, the Initial Maturity Date, 3 month USD LIBOR % In respect of all Interest Periods running from, and including, the Initial Maturity Date to, but excluding, the next applicable Maturity Date, 3 month USD LIBOR plus or minus an amount expressed as a percentage as shall be determined by the Calculation Agent (in consultation with the Counterparty) and notified to Noteholders in the relevant Extension Request Notice. 3 month USD LIBOR is fixed at 11:00am London time two London Business Days prior to the start of each Interest Period by reference to the Reuters Page 'LIBOR01' or any successor page as determined by the Calculation Agent. There will be no interpolation in respect of the first Interest Period. Interest Periods Day Count Fraction Interest payments shall be made on each Interest Payment Date and shall accrue at the Rate of Interest from, and including, each Interest Payment Date (or, in respect of the initial Interest Period, the Issue Date) to, but excluding, the following Interest Payment Date (or, in respect of the initial Interest Period, the first Interest Payment Date) in each Interest Period (together, the "Interest Periods"), subject to adjustment in accordance with the Business Day Convention. Actual/360, adjusted 3

4 4 Extension Extension Provision Not later than 45 calendar days prior to the then existing Maturity Date, the Calculation Agent shall arrange for the delivery of a notice to the Counterparty and the Noteholders (via the clearing systems) asking whether the Counterparty and each Noteholder would like to extend the Maturity Date of the Class B Notes for a further 6 months (such notice, an "Extension Request Notice"). The Counterparty and the Noteholders shall have until the day falling 31 calendar days prior to the then existing Maturity Date (the "Extension Request Cut-off Date") to either consent to or reject the extension. If the Counterparty consents to the extension, those Noteholders who consent (via the clearing systems) to the extension set out in an Extension Request Notice shall have the then existing Maturity Date in their respective Class B Note(s) extended to the date falling 6 months after the then existing Maturity Date, subject to adjustment in accordance with the Business Day Convention. In the event that the Counterparty rejects the extension, then notwithstanding that one or more Noteholders have consented (via the clearing systems) to the extension, the outstanding Class B Notes shall be redeemed on the then existing Maturity Date. In the event that any of the Noteholders respond to the Extension Request Notice by electing to reject the extension, then their respective Class B Notes shall be redeemed on the then existing Maturity Date at the Final Redemption Amount and the Principal Amount of the Series will be reduced accordingly. If the Counterparty or any Noteholder fails to respond to the Extension Request Notice by the Extension Request Cut-off Date, this shall be deemed to be a consent. For the avoidance of doubt, the then existing Maturity Date of the outstanding Class B Notes can be extended by 6 months more than once, pursuant to the Extension Provision. No Class B Notes shall be redeemed earlier than the Initial Maturity Date, save in instances where an Early Redemption is applicable. No Class B Notes shall be redeemed later than the Final Maturity Date. Extension Payment Extension Payment Amount In the event that some or all of the Noteholders have consented to an Extension Request Notice (or have failed to respond to the Extension Request Notice and so are deemed to have consented), regardless of whether or not the Counterparty has consented, the Issuer shall pay the pro rata share of the Extension Payment Amount to each such consenting Noteholder on the relevant Extension Payment Date. 1. In respect of the Class B Notes and in relation to the Extension Request Notice (relating to the first extension to the Maturity Date) sent prior to the Initial Maturity Date, the product of 0.00% and the aggregate Principal Amount held by the consenting Noteholders, as determined by the Calculation Agent in its sole and absolute discretion. 2. In respect of the Class B Notes and in relation to any request to extend the then existing Maturity Date subsequent to the extensions to the Initial Maturity Date, an amount determined by the Calculation Agent (in consultation with the Counterparty) in its sole and absolute discretion. Each Extension Request Notice sent to Noteholders shall specify the Extension Payment Amount relating to the next Maturity Date immediately following the then existing Maturity Date which such Extension Request Notice relates to. Extension Payment Date The then existing Maturity Date immediately prior to the relevant extension. Redemption Redemption Amount at Maturity Early Redemption i. Redemption for taxation and other reasons The final redemption amount in respect of each Class B Note payable on the relevant Maturity Date is an amount equal to its outstanding principal amount (the "Final Redemption Amount"). The circumstances in which the Notes may become subject to redemption prior to the Maturity Date are as follows: The Notes shall become due and payable at their Early Redemption Amount (subject as provided under "Early Redemption Amount" below) if (a) the Issuer, on the occasion of the next payment due in respect of the Notes, would be required by law to withhold or account for tax or would suffer tax in respect of its income so that it would be unable to make payment of the full amount due (subject to the Issuer first attempting to substitute itself as principal obligor under the Notes with a company incorporated in another jurisdiction wherein such withholding would not be applicable or such tax would not be accountable or suffered) 4

5 5 or (b) the Swap Agreement (as defined below) is terminated (in whole but not in part) for any reason other than as a consequence of a repurchase and cancellation of the Notes or as a consequence of the novation of the Swap Transaction referred to in the Counterparty Replacement provisions below or unless the Notes have already fallen due for redemption or by reason of the termination of the Swap Agreement as a consequence of an Event of Default with respect to the Counterparty) or (c) there has been an Event of Default under the Swap Agreement with respect to the Counterparty and the Noteholders instruct the Issuer to terminate the Swap Agreement and redeem the Notes. ii. Events of Default Customary events of default in respect of the Issuer, including payment default, failure to perform or observe other obligations and certain bankruptcy events. If the Notes are accelerated following the occurrence of an Event of Default, the Notes shall become due and payable at their Early Redemption Amount. iii. Redemption following Breach of Selling Restrictions Early Redemption Amount If the Notes are sold or otherwise transferred to any person in breach of any applicable restrictions on sale of securities or to any person other than a Non-US Person, as defined by the United States Commodity Futures Trading Commission, ("Breach of Selling Restrictions"), the Issuer shall, if instructed to do so by the Arranger, redeem the Notes sold or otherwise transferred to that person at the Early Redemption Amount at any time upon notice to the relevant Noteholders (the "Sale Restriction Redemption Date") and no further amounts will be due to such Noteholders after payment of the Early Redemption Amount. With respect to each Note, the early redemption amount (the "Early Redemption Amount") is the lesser of (i) the outstanding principal amount of such Note and (ii) the amount available by applying the portion available to such Note of the net proceeds of enforcement of security (in respect of which see "Order of Priority on Enforcement of Security" below) or the liquidation proceeds of the Charged Assets, as the case may be. All such amounts shall be determined by the Calculation Agent in its sole and absolute discretion and acting in good faith and in a commercially reasonable manner. Charged Assets and Swap Agreement Charged Assets As at the Issue Date, the Charged Assets shall comprise Collateral Assets, with an aggregate Market Value equal to at least the Principal Amount as at the Issue Date, as determined by the Counterparty pursuant to the terms of the Swap Confirmation, and credited to the Custodian Account (as defined below) on the Issue Date. At any time after the Issue Date, the Charged Assets may be subject to Substitution or Release as set out below. All Eligible Cash Collateral received by the Issuer (including on the Issue Date) and all amounts in respect of principal received by the Issuer in respect of any Collateral Obligations (as defined below) shall be credited to the Custodian Account (as defined below) and shall, upon receipt and to the extent not transferred by the Issuer as described in this Swiss Simplified Prospectus and/or pursuant to the Swap Agreement, comprise "Cash Collateral". All Eligible Collateral Obligations received by the Issuer (including on the Issue Date) shall be credited to the Custodian Account (as defined below) and shall, upon receipt and to the extent not transferred by the Issuer as described in this Swiss Simplified Prospectus and/or pursuant to the Swap Agreement, comprise "Collateral Obligations". The Cash Collateral and the Collateral Obligations shall together comprise the "Collateral Assets". For the avoidance of doubt, no Collateral Obligations shall be required to be removed from the Custodian Account or otherwise replaced in the event that such Collateral Obligations (and/or, as the case may be, the obligor in respect of such Collateral Obligations) have been downgraded below their rating at the time they first formed part of the Charged Assets or have had one or more ratings withdrawn. Whereby: "Eligible Cash Collateral" means cash; and "Eligible Collateral Obligations" means an instrument that is a fixed income security, a loan, an equity or a share such that at the time such instrument is initially credited to the Custodian Account, its delivery, transfer or assignment thereof to the Issuer, or by the Issuer to a third party, or the holding thereof by or on behalf of the Issuer would not require or cause the Issuer to assume, and would not subject the Issuer to, any obligation or liability (other than immaterial, non-payment obligations). 5

6 6 Custodian Account Collateral Agent Rebalancing of Charged Assets A segregated securities and cash account opened on behalf and held in the name of the Issuer with the Custodian and which shall record the Issuer's holding of Collateral Assets from time to time. Any Collateral Obligations in the form of book entry securities will be held by the Custodian on behalf of the Issuer in an account of the Custodian with the relevant clearing system, which account shall be segregated from any account in which the Custodian holds book entry securities for itself. UBS AG, London Branch On each Business Day (such date, a "Daily Valuation Date") from and including the Daily Valuation Date following the Issue Date to and including the Daily Valuation Date prior to the Initial Maturity Date or, in the case of Notes extended pursuant to the Extension Provision, the Maturity Date, the Calculation Agent shall determine the aggregate Market Value of the Charged Assets and notify the Issuer, the Collateral Agent and the Counterparty if the aggregate Market Value of the Charged Assets is less than the outstanding Principal Amount of the Notes on such date (such date being the "Rebalancing Date"). "Market Value" means: (i) in relation to Cash Collateral in the currency of the Notes, such amount of cash, and in relation to Cash Collateral in any other currency, the amount of such currency converted into the currency of the Notes at the prevailing applicable spot exchange rate, as determined by the Calculation Agent in its sole and absolute discretion; and (ii) in relation to Collateral Obligations, the market value of such Collateral Obligations determined by the Calculation Agent in a commercially reasonable manner and converted, if necessary, into the currency of the Notes at the prevailing applicable spot exchange rate as determined by the Calculation Agent in its sole and absolute discretion. If the aggregate Market Value of the Charged Assets is equal to or greater than the Principal Amount of the Notes, the Collateral Agent shall effect a Substitution and/or a Release if and to the extent that the Issuer is instructed by the Counterparty to do so pursuant to the Swap Confirmation on or prior to the second Business Day following the date of instruction by the Counterparty, provided that following any such Substitution and/or Release, the aggregate Market Value of the Charged Assets is equal to or greater than the outstanding Principal Amount of the Notes. For the avoidance of doubt, the aggregate Market Value of the Charged Assets immediately following such Substitution and/or Release may be less than the aggregate Market Value of the Charged Assets on the date of instruction. If the aggregate Market Value of the Charged Assets is less than the outstanding Principal Amount of the Notes, the Collateral Agent shall effect a Substitution in accordance with the instructions of the Counterparty pursuant to the Swap Confirmation on or prior to the second Business Day following the Rebalancing Date, so that following such Substitution, the aggregate Market Value of Charged Assets is equal to or greater than the outstanding Principal Amount of the Notes. For the purpose of determining whether any adjustment to the Charged Assets is required or permitted pursuant to the foregoing, the aggregate Market Value of Charged Assets as of the Rebalancing Date shall be calculated taking into account any prior Substitution or Release which is due to be effected but for which the relevant settlement date falls on or after such Rebalancing Date, as the case may be. Substitution of Charged Assets The Collateral Agent shall (acting as agent for the Issuer) effect each Substitution in accordance with the instructions of the Counterparty given pursuant to the Swap Confirmation. A Substitution may be effected on any Business Day. A "Substitution" shall comprise: (a) (b) (c) (d) a sale of any of the Collateral Obligations comprising the Charged Assets to any party (including the Counterparty); and/or the transfer of any of the Cash Collateral comprising the Charged Assets to any party (including the Counterparty); and/or a purchase of any Eligible Collateral Obligations from any party (including the Counterparty) and subsequent transfer of such Eligible Collateral Obligations to (or to the order of) the Issuer; and/or the transfer of any Eligible Cash Collateral to (or to the order of) the Issuer, provided that in each case, the effect of the foregoing shall not cause the aggregate Market Value of the Charged Assets to be less than the outstanding Principal Amount of the Notes. The Collateral Obligations and/or Cash Collateral comprising the Charged Assets referred to in (a) and (b) above are "Substituted Collateral Assets" and the Eligible Collateral Obligations and the Eligible Cash Collateral referred to in (c) and (d) above are "Substitute Collateral Assets". The date on which a Substitution is effected is the "Substitution Effective Date". The 6

7 7 Substitution Effective Date shall be specified by the Counterparty pursuant to the Swap Confirmation. The Collateral Agent shall arrange that upon any release of the Substituted Collateral Assets from the security created by or pursuant to the Trust Instrument (as defined in the Base Prospectus), any Substitute Collateral Assets being substituted for the Substituted Collateral Assets shall be delivered, transferred or assigned to the Custodian (on behalf of the Issuer) with full title guarantee and subject to the charge or other security interest created by or pursuant to the Trust Instrument. The Collateral Agent shall also arrange that the delivery, transfer or assignment of the Substitute Collateral Assets to the Custodian (on behalf of the Issuer), or of the Substituted Collateral Assets by the Custodian (on behalf of the Issuer) to any party would not require or cause the Issuer to assume, and would not subject the Issuer to, any obligation or liability (other than immaterial, non-payment obligations). Notwithstanding the foregoing, any Substitution shall be subject (i) to compliance with all relevant laws, regulations and directives, (ii) to the terms of the Substituted Collateral Assets and the Substitute Collateral Assets and (iii) to the Counterparty paying any costs and expenses (including, without limitation, any stamp duty or other tax) payable in connection with such Substitution. The Trustee shall not be liable to the Issuer, the Noteholders or any other person nor shall the Issuer be liable to the Trustee, any Noteholder or any other person for any loss arising from any arrangement referred to or otherwise from the operation of the foregoing. Release of Charged Assets Authorisation Swap Agreement Counterparty The Collateral Agent shall (acting as agent for the Issuer) effect each Release in accordance with the instructions of the Counterparty given pursuant to the Swap Confirmation. A Release may be effected on any Business Day. A "Release" shall comprise: (a) (b) a transfer of any of the Collateral Obligations comprising the Charged Assets to any party (including the Counterparty); and/or the transfer of any of the Cash Collateral comprising the Charged Assets to any party (including the Counterparty), provided that in each case, the effect of the foregoing shall not cause the aggregate Market Value of the Charged Assets to be less than the outstanding Principal Amount of the Notes. The Collateral Obligations and/or the Cash Collateral comprising the Charged Assets referred to in (a) and (b) above are "Released Collateral Assets". The date on which a Release is effected is the "Release Date". The Release Date shall be specified by the Counterparty pursuant to the Swap Confirmation. The Collateral Agent shall arrange that the delivery, transfer or assignment of the Released Collateral Assets by the Custodian (on behalf of the Issuer) to any party would not require or cause the Issuer to assume, and would not subject the Issuer to, any obligation or liability (other than immaterial, non-payment obligations). Notwithstanding the foregoing, any Release shall be subject (i) to compliance with all relevant laws, regulations and directives, (ii) to the terms of the Released Collateral Assets and (iii) to the Counterparty paying any costs and expenses (including, without limitation, any stamp duty or other tax) payable in connection with such Release. The Trustee shall not be liable to the Issuer, the Noteholders or any other person nor shall the Issuer be liable to the Trustee, any Noteholder or any other person for any loss arising from any arrangement referred to or otherwise from the operation of the foregoing. The Issuer will undertake that, for as long as an Event of Default (as defined in the Swap Agreement) with respect to the Counterparty has not occurred and is continuing, not to exercise any rights in its capacity as holder of the Charged Assets unless directed to do so by the Counterparty, and if such direction is given, only in accordance with such direction. The Counterparty may direct the Custodian to, and the Custodian shall, exercise any such rights (at the cost of the Counterparty) in such manner as the Counterparty may direct. The Issuer will undertake that, in the event that an Event of Default (as defined in the Swap Agreement) with respect to the Counterparty has occurred and is continuing, not to exercise any rights in its capacity as holder of the Charged Assets unless directed to do so by the Trustee, acting on the instructions of the Noteholders, and if such direction is given, only in accordance with such direction. In respect of the Class B Notes, an agreement under the Swap Schedule Terms Module (as defined in the Base Prospectus) made between the Counterparty and the Issuer and dated [ ] together with a confirmation thereunder in respect of a swap transaction (the "Swap Transaction") between the same parties dated as of the same date (such confirmation, the "Swap Confirmation"). UBS AG, London Branch 7

8 8 Description of Swap Transaction The principal terms of the Swap Transaction will be as follows: (a) (b) (c) The Issuer shall be entitled to receive sums in such amounts and at such times from the Counterparty as are sufficient to meet the scheduled interest and principal payments in respect of the Notes. The Counterparty shall only be entitled to receive sums expressed to be interest payments or coupon amounts and at such times as are due and payable pursuant to the terms of the Charged Assets. If, in relation to any Substitution or Release, any Collateral Obligations comprising the Charged Assets are required to be sold, the Issuer shall, or shall procure that the Collateral Agent shall, arrange for an amount equal to the relevant sale proceeds to be transferred to the Counterparty or a third party as directed by the Collateral Agent on the Substitution Effective Date. If, in relation to any Substitution or any Release, any Cash Collateral comprising the Charged Assets is required to be transferred by the Issuer, the Issuer shall on the Substitution Effective Date or, as the case may be, the Release Date, transfer the relevant Cash Collateral to the Counterparty or a third party, as directed by the Collateral Agent. If, in relation to any Release, any Collateral Obligations comprising the Charged Assets are required to be transferred to the Counterparty or a third party, the Issuer shall on the Release Date transfer such Collateral Obligations (provided that it is not impossible, illegal or impracticable for the Issuer to deliver the same, and subject to all applicable laws, regulations and directives and to the terms of the relevant Collateral Obligations). (d) (e) (f) If, in relation to any Substitution, any Eligible Collateral Obligations are required to be purchased, the Counterparty or a third party shall on the Substitution Effective Date transfer to or to the order of the Collateral Agent an amount equal to the purchase price therefor. If, in relation to any Substitution, any Eligible Cash Collateral is required to be transferred to the Issuer, the Counterparty shall on the Substitution Effective Date transfer an amount equal to such Eligible Cash Collateral to (or to the order of) the Issuer. Pursuant to the Swap Confirmation, the Counterparty has the right to give instructions to the Collateral Agent with respect to effecting Substitutions and Releases from time to time and has the obligation to give instructions with respect to effecting a Substitution if the Charged Assets are required to be rebalanced in accordance with the terms of the Notes. One Business Day prior to the Initial Maturity Date or, in the case of Notes extended pursuant to the Extension Provision, the Maturity Date, the Issuer shall deliver a proportion of the Charged Assets corresponding to the amount of Notes scheduled to be redeemed on the Initial Maturity Date or the Maturity Date (as the case may be) to the Counterparty or a third party as directed by the Collateral Agent and the Counterparty or a third party shall pay to the Issuer an amount equal to the aggregate Final Redemption Amount in respect of such Notes scheduled to be redeemed. Counterparty replacement: The Counterparty has the option to require the novation of the Swap Transaction to UBS Limited (the "Replacement Counterparty") so that the Swap Agreement between the Counterparty and the Issuer shall terminate and a new swap agreement substantially on the same terms as the Swap Agreement will be entered into between the Replacement Counterparty and the Issuer.In the event that a Swap Termination Amount is due and payable to/from the Issuer to/from the Counterparty such amount will be paid to/from the Counterparty to/from the Replacement Counterparty. "Swap Termination Amount", in respect of the Class B Notes, means the sum of the cost to the Counterparty (as a positive number) in relation to the termination of any Swap Agreement, or the benefit to the Counterparty (as a negative number) in relation to the termination of any Swap Agreement in respect of the Class B Notes as determined by the Calculation Agent acting in good faith and in a commercially reasonable manner. Security and Priority Security The Notes will be secured by way of fixed charge on, and/or an assignment by way of fixed security governed by English law over: (i) the rights of the Issuer under the Agency Agreement; 8

9 (ii) (iii) (iv) the rights of the Issuer to the Charged Assets; the rights of the Issuer under the Swap Agreement; 9 the rights of the Issuer to any of its bank accounts in respect of the Notes (excluding the Issuer s bank account containing the paid up ordinary share capital of the Issuer),; subject to the Order of Priorities on Enforcement of Security. The Rights under the Transaction Documents referred to above together with the Charged Assets comprise the Mortgaged Property. Claims in respect of this Series of Notes are limited to the Mortgaged Property. The Security referred to above is granted pursuant to a Trust Instrument entered into on the Issue Date of the Notes. If the security for this issue of Notes becomes enforceable and the net proceeds of the Security are insufficient to meet all payments due by the Issuer in respect of the Notes, no other assets of the Issuer shall be available to meet such payment shortfall. Order of Priority on Enforcement of Security Counterparty/Securityholder Priority Basis (as defined in the Base Prospectus). On enforcement of the security in respect of the Notes (unless the Counterparty is the Defaulting Party in respect of and as defined in the Swap Agreement), the Trustee will apply the Realisation Amount (as defined in the Base Prospectus) in accordance with the following order of priority (as fully described in the terms and conditions of the Notes and the Trust Instrument): 1. payment of the fees, costs, charges, expenses, liabilities and legal fees of the Trustee; 2. payment of any amount due to the Counterparty under the Swap Agreement, including, for the avoidance of doubt, any breakage or unwind costs for the Counterparty; 3. payment of the amounts due to the holders of the Notes pari passu and rateably; 4. payment of the balance (if any) to the Issuer. If the Counterparty is the Defaulting Party (in respect of and as defined in the Swap Agreement), the Trustee will apply the Realisation Amount (as defined in the Base Prospectus) in accordance with the following order of priority (as fully described in the terms and conditions of the Notes and the Trust Instrument): 1. payment of the fees, costs, charges, expenses, liabilities and legal fees of the Trustee or other transaction parties; 2. payment of the amounts due to the holders of the Notes pari passu and rateably; 3. payment of any amount due to the Counterparty under the Swap Agreement; and 4. payment of the balance (if any) to the Issuer. Tax Treatment Swiss Federal Stamp Duty Swiss Federal Income Tax Swiss Withholding Tax The Product qualifies as a taxable security (bond). In principle secondary market transactions are subject to Swiss Stamp Duty. For private investors resident in Switzerland, the coupon payment (if any) as well as a discount on the Issue Price and a premium on the repayment (if any) amount are taxable. The issue discount and the repayment premium are taxable at redemption. This Product is not subject to the Swiss Issuer Withholding Tax. It depends on the jurisdiction of the paying agent and of the issuer whether a foreign issuer withholding tax applies. The tax information provides only a general overview of the potential tax consequences linked to these Notes at the time of issue. Tax laws and tax doctrine may change, possible with retroactive effect. Product Documentation This document fulfils the requirements of a 'Simplified Prospectus' in accordance with Art. 5 CISA. This document together with the Base Prospectus shall form the documentation for these Notes (the "Product Documentation") and accordingly this Swiss Simplified Prospectus should always be read in conjunction with the aforementioned documents. Definitions used in this document, but not defined herein shall have the meaning given to them in the Base Prospectus. In case of any inconsistency between the terms set out in the Base Prospectus and this Swiss Simplified Prospectus, the Base Prospectus shall prevail. 9

10 10 During the whole term of these Notes, the Product Documentation (including the Trust Instrument),, the Swap Agreement and the Series Memorandum can be ordered free of charge from UBS AG at P.O. Box, CH-8098 Zurich (Switzerland), via telephone (+41-(0) ), fax (+41-(0) ) or via In addition, the Product Documentation is available on the internet at Notices in connection with these Notes shall be validly given by publication in electronic media such as Reuters and/or Investdata. In addition, any changes with regard to the terms of these Notes shall be published on the internet at Classification These Notes do not represent a participation in any of the collective investment schemes pursuant to Art. 7ff of the Swiss Federal Act on Collective Investment Schemes (CISA) and thus does not require an authorisation of the Swiss Financial Market Supervisory Authority (FIN- MA). Furthermore, this Product does not benefit from any depositor protection under Art. 37b under the Swiss Federal Law on Banks and Savings Banks (Banking Act) or other forms of deposit insurance under any other law as might be applicable to this Product. 2. Prospects of Profits and Losses Market Expectation Investors in these Class B Notes expect that the Underlying increases. Effect of the performance of the Underlying on redemption amount: Positive performance Investor earns interest equivalent to the performance of the 3 month USD LIBOR Sideways to negative slightly negative performance Pronounced negative performance Maximum Return Investors earn interest in environment where credit spreads are widening, unless the 3 month USD LIBOR is zero or negative In the case of an Early Redemption Event, including a default by UBS as Counterparty, the Investors risk losing a significant part (if not all) of the invested capital The prospective gain is limited to the Interest. Maximum Loss Risk Tolerance 3. Significant Risks for Investors General risk warning Investors are primarily exposed to the credit risk of the Collateral Obligations and the Counterparty. In the case of an Early Redemption Event, including a default by UBS as Counterparty, the investors risk losing a significant part (if not all) of the invested capital. Investors in these Class B Notes should be familiar with interest rate markets. Although Investors benefit from regular coupon payments, they must be aware that the Interest is exposed to the performance of the Underlying which could be worse than the performance expected at the time of the purchase of these Class B Notes. The Class B Notes are suitable for Investors that require capital protection on the Maturity Date. Potential Investors should understand the risks associated with an investment in the Notes and shall only reach an investment decision after careful considerations with their legal, tax, financial and other advisors of (i) the suitability of an investment in the Notes in the light of their own particular financial, fiscal and other circumstances; (ii) the information set out in this document and (iii) the Underlying. The following is a summary of the most significant risks. Further risks are set out in the Product Documentation and the Base Prospectus. References in this section of this Swiss Simplified Prospectus to "UBS" shall be deemed to be references to UBS AG, London Branch and any relevant affiliate, whether acting in any capacity in relation to the Notes or otherwise. Prospective purchasers of the Notes should ensure that they: (a) (b) (c) Understand the nature of the Notes and the extent of their exposure to risk; Have sufficient knowledge, experience and access to professional advisers to make their own legal, tax, accounting and financial evaluation of the merits and risks of investment in the Notes; and Consider the suitability of the Notes as an investment in the light of their own circumstances and financial condition. Each prospective purchaser of Notes must determine, based on its own independent review and such legal, business and tax advice as it deems appropriate under the 10

11 11 circumstances, that its acquisition of the Notes (i) is fully consistent with its financial needs, objectives and condition, (ii) complies and is fully consistent with all investment policies, guidelines, authorisations and restrictions (including as to its capacity) applicable to it, (iii) has been duly approved in accordance with all applicable laws and procedures and (iv) is a fit, proper and suitable investment for it, undertaken for a proper purpose. Product Specific Risks Credit Risk The Notes will constitute secured, limited recourse obligations of the Issuer, recourse in respect of which will, in effect, be limited to the proceeds of the Mortgaged Property (as defined in the Base Prospectus) relating to the Notes and no other assets of the Issuer will be available to satisfy claims of Noteholders. Investors bear the issuer risk. The investment instrument s value is dependent not only on the development of the Underlying, but also on the creditworthiness of the Issuer and/or the Counterparty, which may vary over the term of the Notes. None of the Issuer, the Trustee, UBS nor any other person on their behalf has made any investigation of, or makes any representation or warranty, express or implied, as to (i) the existence or financial or other condition of the Mortgaged Property or (ii) whether the Swap Agreement constitutes legal, valid and binding obligations of the Counterparty. None of the Issuer, the Trustee, UBS nor any other person acting on their behalf has, in connection with the Notes, made any investigation of, or makes any representation or warranty, express or implied, whether the Collateral Obligations constitute legal, valid and binding obligations of their obligors. The Issuer and its affiliates are not responsible for the public disclosure of information by any obligor in respect of Collateral Obligations. Investment in the Notes may involve a loss of principal by virtue of the terms of the Notes even where there is no default by the Issuer. Noteholders, and prospective purchasers of Notes, will at all times be solely responsible for making their own independent appraisal of, and investigation into, the business, financial condition, prospects, creditworthiness, status and affairs of the obligor(s) in respect of the Collateral Obligations and the Counterparty. None of the Issuer, the Trustee, UBS nor any other acting person on their behalf will have any responsibility or duty to make any such investigations, to keep any such matters under review, to provide the Noteholders, or prospective purchasers of the Notes, with any information in relation to such matters or to advise as to the attendant risks. Exposure to UBS / Credit Risk of the Counterparty Investors are taking full exposure to the credit risk of UBS as the Counterparty. The Notes do not represent a claim against the Counterparty or any affiliate of the Counterparty and, in the event of any loss, Noteholders will have recourse to the proceeds of the Mortgaged Property and not to the Counterparty or any affiliate thereof. Investors should be aware that the financial situation of UBS could deteriorate during the term of the Notes and the general assessment of UBS' creditworthiness may affect the value of the Notes. Charged Assets comprised of cash Investors should note that any Eligible Cash Collateral comprised in the Charged Assets will be credited to the Custodian Account, and any cash proceeds received by the Custodian on behalf of the Issuer in respect of its holding of Charged Assets will be credited to the Custodian Account pending any payment of such amounts in accordance with the Custody Agreement. Any money credited to the Custodian Account (whether Eligible Cash Collateral or cash proceeds in respect of the Charged Assets) is held by the Custodian as banker and not as trustee and as a result such money will not be held in accordance with the Financial Services Authority s client money rules. This means that any such money may be used by Deutsche Bank Luxembourg S.A. in the course of its own business and the Issuer will rank only as a general creditor of the Custodian as regards such money. Accordingly, insofar as the Charged Assets comprise cash, any investor in the Notes will be exposed to the credit risk of the Custodian and, if the security for the Notes is enforced, the balance of the Custodian Account will only be available to satisfy the liabilities of the Issuer to the extent that such amount is available to the Issuer as a general creditor of the Custodian. Order of Priority on enforcement of security On enforcement of the security in respect of the Notes (other than in instances where the Notes fall due for redemption by reason of the termination of the Swap Agreement as a consequence of an Event of Default (as defined in the Swap Agreement) with respect to the Counterparty), the Trustee will apply the realisation proceeds of the Mortgaged Property (as defined in the Base Prospectus) in accordance with Counterparty Priority (as fully described in the Base Prospectus and as amended by the Series Memorandum) which provides for the following order of priority: 1. payment of the fees, costs, charges, expenses, liabilities and legal fees of the Trustee; 2. payment of any amount due to the Counterparty under the Swap Agreement; 3. payment of the amounts due to the holders of the Notes pari passu and rateably; and 4. payment of the balance (if any) to the Issuer. The ability of Noteholders to recover an amount at least equal to the Principal Amount of the Notes and accrued but unpaid interest is therefore dependent on the termination payment (if any) payable to the Counterparty under the Swap Agreement. In the event that the Notes fall due for redemption by reason of the termination of the Swap Agreement as a consequence of an Event of Default (as defined in the Swap Agreement) with respect to the Counterparty, the Trustee will apply the realisation proceeds of the Mortgaged Property (as defined in the Base Prospectus) in accordance with Securityholder Priority (as fully described in the Base Prospectus and as amended by the 11

12 12 Series Memorandum). Extension Provision The Calculation Agent will arrange for the delivery of an Extension Request Notice to Noteholders and the Counterparty not later than 45 calendar days prior to the then existing Maturity Date asking whether the Counterparty and each Noteholder would like to extend the Maturity Date of the Class B Notes for a further 6 months. IF THE COUNTERPARTY OR ANY NOTEHOLDER FAILS TO RESPOND TO AN EXTENSION REQUEST NOTICE BY THE DATE FALLING 31 CALENDAR DAYS PRIOR TO THE THEN EXISTING MATURITY DATE, SUCH PARTY SHALL BE DEEMED TO HAVE CONSENTED TO SUCH EXTENSION AND ACCORDINGLY THE MATURITY DATE MAY BE EXTENDED FOR A FURTHER 6 MONTHS. It is the responsibility of Noteholders to monitor their account with the clearing systems for the receipt of an Extension Request Notice. The Notes may not be extended beyond the Final Maturity Date (as defined herein). Rebalancing of Charged Assets The Charged Assets (being the assets comprised in the Charged Assets for this Series of Notes) may or, in certain circumstances, shall be substituted (a "Substitution") or released (a "Release") from time to time in whole or in part. A Substitution or a Release is subject to the satisfaction of certain conditions relating to the market value (determined by the Calculation Agent in a commercially reasonable manner) of the Charged Assets relative to the Principal Amount of the Notes and the satisfaction of certain eligibility criteria with respect to any assets to be included in the Charged Assets. Those conditions and criteria (which apply to the initial Charged Assets as well as to any Substitution or Release at any time during the life of the Notes) are more particularly set out in this Swiss Simplified Prospectus. The selection of assets to be comprised in or to be removed from the Charged Assets shall be made by UBS in its capacity as Counterparty. Subject to the compliance with the conditions and criteria mentioned above, any such selection shall be made by the Counterparty in its sole and absolute discretion and the Counterparty is not required to, and will not, take into account the interests of the Noteholders in so doing. Foreign Exchange Risk The Charged Assets may be denominated in a different currency from the Class B Notes. In the event of an Early Redemption, the Noteholders may be exposed to foreign exchange risk of the currency of the Charged Assets as against USD. Exercise of rights The Counterparty is the sole party entitled to give instructions as to the exercise of rights arising under the terms and conditions of the Charged Assets and the Issuer and/or Custodian will act upon such instructions, unless an Event of Default (as defined in the Swap Agreement) has occurred and is continuing. In such circumstances, the Issuer and/or Custodian will act upon the directions of the Trustee, as instructed by the Noteholders. Accordingly, the ability of the Noteholders to give instructions as to the exercise of rights arising under the terms and conditions of the Charged Assets are very limited. The Counterparty is not required to take into account the interests of any of the Noteholders when exercising any of the rights arising under the terms and conditions of the Charged Assets. Limited Recourse The Notes constitute limited recourse obligations of the Issuer. If the security for the Notes becomes enforceable and the net proceeds of the enforcement of the security are insufficient to meet all payments due by the Issuer in respect of the Notes, no other assets of the Issuer shall be available to meet such payment shortfall, and the claims of Noteholders in respect of any such payment shortfall shall be extinguished. Secondary Market There may not be a secondary market for the Notes, and there is no assurance that a secondary market for the Notes will develop, and accordingly, investors should have the ability and appetite to hold the Notes until Maturity. If a secondary market for the Notes exists, prices in the market may be lower than the Issue Price of the Notes. U.S. Foreign Account Tax Compliance Withholding The Issuer and other non-u.s. financial institutions through which payments on the Notes are made may be required to withhold U.S. tax at a rate of 30 per cent. on all, or a portion of, payments made on or after 1 January 2017 in respect of (i) any Notes which are treated as debt for U.S. federal tax purposes that are issued (or materially modified) on or after the later of (a) the date (the "grandfathering date") that is six months after the date on which final U.S. Treasury regulations that define the term "foreign passthru payment" are filed with the Federal Register and (b) 1 July 2014 and (ii) any Notes which are treated as equity for U.S. federal tax purposes (whenever issued) pursuant to the U.S. Foreign Account Tax Compliance Act ("FATCA"). For further disclosure on the application of FATCA, investors should read and fully understand the risk factors set out in the Base Prospectus. Impact on payments on Charged Assets and Swap Agreement If the Issuer is considered a Foreign Financial Institution ("FFI") under FATCA and fails to comply with its obligations arising therefrom the Issuer would be considered nonparticipating and would from certain dates starting from 1 July 2014 be subject to 30 per cent. withholding tax on all, or a portion of, payments received from U.S. sources and from participating FFIs. This might result in payments to the Issuer in respect of the assets of the Issuer, which includes the Charged Assets and the Swap Agreement, being subject to U.S. 12