Extraordinary General Meeting 2008

Item 3: Capital increase Proposal by the Board of Directors: Mandatory convertible note Creation of conditional capital Approval of Article 4a para. 3 of the Articles of Association

UBS plans to issue a mandatory convertible note worth CHF 13 billion to two long-term investors, who are obliged to subscribe to CHF 11 billion and CHF 2 billion respectively. The proceeds from the issue will be assigned to UBS's Tier 1 capital. The Chairman explained in detail the options considered for strengthening UBS's capital base and the considerations involved in the Board of Directors' proposal.

So that sufficient equity can be delivered to the two investors at the time the note is converted into shares, the Board of Directors proposed the creation of conditional capital totaling no more than CHF 27,775,000.

As an alternative to the creation of conditional capital, Profond proposed that UBS carry out an ordinary capital increase that would give existing shareholders subscription rights (a rights issue), which would provide proceeds of some CHF 13 billion.

The Board of Directors recommended that Profond’s proposal be rejected and opened the discussion on item 3 by giving the floor to the representatives from the pension fund Profond. Herbert Brändli complained that the capital increase was being made without giving subscription rights to all shareholders. He did not accept the argument put forward by the Board of Directors that the timeframe, the scope of the capital increase and the firm commitment of the two investors were the key factors in deciding upon its chosen course.

In the lengthy discussion that followed, it was repeatedly highlighted that Société Générale was able to carry out a capital increase with subscription rights for all shareholders within a shorter timeframe. The Board of Directors stated that this was because Société Générale is supervised by the French stock market regulator, which imposes other, less strict conditions than those which apply to UBS. Another issue that was discussed again was the identity of the second long-term investor. Finally, a number of participants in the discussion noted that at the current share price, the terms of the MCN were beneficial for existing shareholders. As points were increasingly being repeated, a shareholder proposed that the discussion be terminated. On a show of hands this proposal was overwhelmingly accepted.

The General Meeting then voted on the Board of Directors’ proposal to issue the mandatory convertible note and the creation of conditional capital and approved this proposal, with the voting being as follows:

Following this resolution Article 4a para. 3 (new) of the Articles of Association is as follows:

Mandatory Convertible Note
The share capital will be increased by a maximum of CHF 27,775,000 through the issuance of a maximum of 277,750,000 fully paid registered shares with a par value of CHF 0.10 each upon voluntary and mandatory of the 9% mandatory convertible notes due 2010 (“MCN”) to be issued by the Corporation or one of its subsidiaries to one or several long-term financial investors. The conditions of the conversion rights under the MCN shall be determined by the Board of Directors.
The advance subscription right and the pre-emptive right of the shareholders shall be excluded in connection with the issuance of the MCN and upon voluntary or mandatory conversion of the MCN in favor of the MCN holders. The issue price of the registered shares to be issued upon voluntary or mandatory conversion of the MCN will be determined by reference to the respective market price of the registered shares at the time of (i) the public announcement of the MCN, (ii) the shareholders’ approval of this Article 4a para. 3, and (iii) the conversion of the MCN. The voluntary or mandatory conversion of the MCN is to occur within a period of two years after the issuance of the MCN.
The acquisition of shares upon voluntary or mandatory conversion of the MCN as well as any subsequent transfer of the shares are subject to the registration requirements set out in Article 5 of these Articles of Association.
The notary, Dr Matthias Staehelin, Münchenstein, will certify this resolution to amend the Articles of Association.

As the General Meeting approved the Board of Directors' proposal, the alternative proposal by Profond was not voted upon given the two proposals are mutually exclusive.