Annual General Meeting 2001

Item 6: Adjustment of capital after completion of the PaineWebber transaction

A. Proposal
6.1. Elimination of authorized capital The Board of Directors proposes that Article 4b be deleted from the Articles of Association.

6.2. Reduction of conditional capital The Board of Directors proposes that the conditional capital created for employee stock ownership plans of Paine Webber Group Inc., New York, (Article 4a) be reduced to reflect the amount finally required as well as the new par value of the shares as proposed under Item 2. Instead of the previous 16,317,935 registered shares, a maximum of 5,643,205 shares (pre-split) are now required.

B. Explanations
The Extraordinary General Meeting on 7 September 2000 approved the creation of a maximum of CHF 380 million in authorized capital for the PaineWebber merger transaction. The Board of Directors exercised this authority and increased the share capital by CHF 120 million on 3 November 2000. Further increases in capital proved to be unnecessary. The remaining CHF 260 million in authorized capital (Article 4b) can therefore be deleted from the Articles of Association as the transaction has been completed.

The Extraordinary General Meeting also approved the creation of a maximum of CHF 170 million (17 million shares) in conditional capital for PaineWebber employee stock owner-ship plans. At that time, the maximum number of shares had to be made available. As a result of options being exercised prior to completion of the transaction and between completion of the transaction and year-end, the total number of shares finally required fell to 5,643,205 at the end of December 2000. The conditional capital can be reduced accordingly. It will also be reduced in line with the capital payout proposed under Item 2.