Item 4

Creation of conditional capital
Approval of Article 4a para. 5 of the Articles of Association

A. Motion
The Board of Directors proposes the creation of conditional capital in a maximum amount of CHF 10,000,000 by means of the following addition to the Articles of Association.

Article 4a para. 5 (new)
Conditional Capital

The share capital may be increased by a maximum of CHF 10,000,000 through the issuance of a maximum of 100,000,000 fully paid registered shares with a par value of CHF 0.10 per share through the exercise of warrants granted to the Swiss National Bank in connection with the loan granted by the Swiss National Bank to SNB StabFund Limited Partnership for Collective Investment.

The advance subscription right and the pre-emptive right of the shareholders shall be excluded in connection with the grant of the warrants to the Swiss National Bank. The Swiss National Bank as owner of the warrants shall be entitled to subscribe for the new shares. The conditions of the warrants shall be determined by the Board of Directors. The warrants shall be exercisable within a period of 12 years and may only be exercised if the Swiss National Bank incurs a loss under the loan to the SNB StabFund Limited Partnership for Collective Investment. The exercise price of the warrants shall be at least the par value of the newly issued shares.

The acquisition of shares through the exercise of the warrants and each subsequent transfer of the shares shall be subject to the registration requirements set forth in Article 5 of the Articles of Association.

B. Explanations
As announced on 16 October 2008, the Swiss National Bank (SNB) and UBS AG reached an agreement under which UBS AG sold certain illiquid securities and other assets to a newly formed fund controlled by the SNB (SNB StabFund Limited Partnership for Collective Investment). The purchase of the securities and other assets was financed, inter alia, through a loan provided to the fund by the SNB.

Under the transaction agreement with the SNB, UBS AG is required to issue a warrant to the SNB which is exercisable only if the SNB incurs a loss on its loan to the fund. The number of shares to be issued upon exercise of the warrant is 100 million, subject to adjustments for dilutive events. Even though UBS AG does not have a reason to believe that the fund will incur such loss, UBS AG wishes to hedge its obligation to deliver shares under the warrant. For this purpose, the Board of Directors proposes to create conditional capital in the maximum amount of CHF 10 million.