Final
Terms
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Issuer:
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UBS AG London
Branch
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Principal Amount:
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$1,000 per Note
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Term:
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Approximately 3 years, unless subject to an automatic
call.
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Underlying Assets:
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The common stock of American Tower
Corporation and the common stock of AT&T Inc.
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Contingent Coupon and Contingent Coupon Rate:
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If the closing level of each underlying
asset is equal to or greater than its coupon barrier on any observation date (including the final valuation date), UBS will
pay you the contingent coupon applicable to such observation date on the related coupon payment date.
If the closing level of any underlying asset is less than its
coupon barrier on any observation date (including the final valuation date), the contingent coupon applicable to such
observation date will not accrue or be payable and UBS will not make any payment to you on the relevant coupon payment date.
The contingent coupon is a fixed
amount based upon equal periodic installments at a per annum rate (“the contingent
coupon rate”). The table below sets forth the contingent coupon rate and contingent coupon for each Note that would be applicable
to each observation date on which the closing level of each underlying asset is greater than or equal to its coupon barrier.
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Contingent Coupon Rate
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10.25%
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Contingent Coupon
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$25.625
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Contingent
coupons on the Notes are not guaranteed. UBS will not pay you the contingent coupon for any observation date on which the closing
level of any underlying asset is less than its coupon barrier.
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Automatic Call
Feature:
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UBS will automatically call the Notes if the closing level of
each underlying asset on any observation date (quarterly, beginning after 6 months) prior to the final valuation date is
equal to or greater than its initial level.
If the Notes are subject to an automatic call, UBS will pay you
on the corresponding coupon payment date (which will be the “call settlement date”) a cash payment per Note equal to
your principal amount plus the contingent coupon otherwise due on such date. Following an automatic call, no further payments will
be made on the Notes.
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Payment at Maturity
(per Note):
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If the Notes are not subject to an
automatic call and the final level of each underlying asset is equal to or greater than its downside threshold, UBS will pay
you a cash payment equal to:
Principal Amount of $1,000
If the Notes are not subject to an automatic call and the
final level of any underlying asset is less than its downside threshold, UBS will pay you a cash payment that is less than the
principal amount, if anything, equal to:
$1,000 x (1+ Underlying Return of the Least Performing Underlying
Asset)
In such a case, you will suffer a percentage loss on your
initial investment equal to the underlying return of the least performing underlying asset regardless of the underlying return of
any other underlying asset and, in extreme situations, you could lose all of your initial investment.
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Least Performing Underlying
Asset:
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The underlying asset with the
lowest underlying return as compared to the other underlying asset(s).
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Underlying Return:
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For each underlying asset, the quotient, expressed as a
percentage, of the following formula:
Final Level – Initial Level
Initial Level
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Downside
Threshold:(1)
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For each underlying
asset, a specified level of the underlying asset that is less than its initial level, equal to a percentage of its initial level, as
indicated on the cover hereof.
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Coupon
Barrier:(1)
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For each underlying asset, a
specified level of the underlying asset that is less than its initial level, equal to a percentage of its initial level, as
indicated on the cover hereof.
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Initial Level:(1)
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The closing level of each
underlying asset on the trade date, as indicated on the cover hereof.
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Final Level:(1)
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The closing level
of each underlying asset on the final valuation date.
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(1)
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As determined by the calculation agent and as may be adjusted in the
case of certain adjustment events as described under “General Terms of the Securities
— Antidilution Adjustments for Securities Linked to an Underlying Equity or Equity Basket Asset” and “—Reorganization
Events for Securities Linked to an Underlying Equity or Equity Basket Asset” in the accompanying product supplement.
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Investment
Timeline
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Trade Date
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The initial level of each underlying asset is observed and the final terms of the Notes are set.
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Observation
Dates (quarterly, callable after 6 months)
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If the closing level of each underlying asset is equal to or greater than
its coupon barrier on any observation date (including the final valuation date), UBS will pay you a contingent coupon on the applicable
coupon payment date.
The Notes will be subject to an automatic call if the
closing level of each underlying asset on any observation date (quarterly, beginning after 6 months) prior to the
final valuation date is equal to or greater than its initial level.
If the Notes are subject to an automatic call, UBS will pay you a
cash payment per Note equal to $1,000 plus the contingent coupon otherwise due on such date. Following an automatic call, no further
payments will be made on the Notes.
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Maturity Date
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The final level of each underlying asset is observed on the final valuation
date.
If the Notes are not subject to an automatic call and the final level
of each underlying asset is equal to or greater than its downside threshold, UBS will pay you a cash payment per Note equal
to:
Principal Amount of $1,000
If the Notes are not subject to an automatic call and the final level
of any underlying asset is less than its downside threshold, UBS will pay you a cash payment per Note that is less than the
principal amount, if anything, equal to:
$1,000 ´
(1 + Underlying Return of the Least Performing Underlying Asset)
In such a case, you will suffer a percentage loss on your initial investment
equal to the underlying return of the least performing underlying asset regardless of the underlying return of any other underlying asset and, in extreme situations, you
could lose all of your initial investment.
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Investing in the Notes involves significant
risks. You may lose a significant portion or all of your initial investment. Any payment on the Notes, including any repayment
of principal, is subject to the creditworthiness of UBS. If UBS were to default on its payment obligations, you may not receive
any amounts owed to you under the Notes and you could lose all of your initial investment.
If the Notes are not subject to an
automatic call, you may lose a significant portion or all of your initial investment. Specifically, if the Notes are not subject
to an automatic call and the final level of any underlying asset is less than its downside threshold, you will lose a percentage
of your principal amount equal to the underlying return of the least performing underlying asset and, in extreme situations, you
could lose all of your initial investment. You will be exposed to the market risk of each underlying asset on each observation
date and on the final valuation date and any decline in the level of one underlying asset may negatively affect your return and
will not be offset or mitigated by a lesser decline or any potential increase in the level of any other underlying asset.
Observation
Dates and Coupon Payment Dates
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Observation Dates(1)
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Coupon Payment Dates(1)(2)
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August 27, 2020*
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September 1, 2020*
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November 27, 2020*
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December 2, 2020
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March 1, 2021
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March 4, 2021
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May 27, 2021
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June 2, 2021
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August 27, 2021
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September 1, 2021
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November 29, 2021
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December 2, 2021
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February 28, 2022
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March 3, 2022
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May 27, 2022
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June 2, 2022
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August 29, 2022
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September 1, 2022
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November 28, 2022
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December 1, 2022
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February 27, 2023
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March 2, 2023
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Final Valuation Date
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Maturity Date
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*
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The Notes are not callable until the first potential call settlement date, which is December 2,
2020.
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(1)
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Subject to the market disruption event provisions set forth in the accompanying product supplement.
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(2)
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3 business days following each observation date, except that the coupon payment date for the final valuation
date is the maturity date.
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Key Risks
An investment in the Notes involves significant risks.
Investing in the Notes is not equivalent to investing directly in the least performing underlying asset. Some of the risks that
apply to the Notes are summarized below, but we urge you to read the more detailed explanation of risks relating to the Notes in the
“Risk Factors” section of the accompanying product supplement. We also urge you to consult your investment, legal, tax,
accounting and other advisors before you invest in the Notes.
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Risk of loss at maturity — The Notes differ from ordinary debt securities in that
UBS will not necessarily make periodic coupon payments or repay the principal amount of the Notes at maturity. If the Notes are
not subject to an automatic call and the final level of any underlying asset is less than its downside threshold, you will lose
a percentage of your principal amount equal to the underlying return of the least performing underlying asset and, in extreme
situations, you could lose all of your initial investment.
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The contingent repayment of principal applies only at maturity — You should be willing
to hold your Notes to maturity. If you are able to sell your Notes prior to an automatic call or maturity in the secondary market,
you may have to sell them at a loss relative to your initial investment even if the level of each underlying asset is equal to
or greater than its downside threshold. All payments on the Notes are subject to the creditworthiness of UBS.
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You may not receive any contingent coupons with respect to your Notes — UBS will
not necessarily make periodic coupon payments on the Notes. UBS will pay a contingent coupon for each observation date on which
the closing level of each underlying asset is equal to or greater than its coupon barrier. If the closing level of any underlying
asset is less than its coupon barrier on any observation date, UBS will not pay you the contingent coupon applicable to such observation
date. If the closing level of any underlying asset is less than its coupon barrier on each of the observation dates, UBS will
not pay you any contingent coupons during the term of, and you will not receive a positive return on, your Notes. Generally, this
non-payment of the contingent coupon coincides with a period of greater risk of principal loss on your Notes.
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Your potential return on the Notes is limited to the contingent coupons and you will not participate
in any appreciation of any underlying asset — The return potential of the Notes is limited to the pre-specified contingent
coupon rate, regardless of any appreciation of any underlying asset. In addition, your return on the Notes will vary based on
the number of observation dates, if any, on which the requirements of the contingent coupon have been met prior to maturity or
an automatic call. Further, if the Notes are subject to an automatic call, you will not receive any contingent coupons or any
other payment in respect of any observation dates after the applicable call settlement date. Because the Notes may be subject
to an automatic call as early as the first potential call settlement date, the total return on the Notes could be less than if
the Notes remained outstanding until maturity. Furthermore, if the Notes are not subject to an automatic call, you may be subject
to the decline of the least performing underlying asset even though you cannot participate in any appreciation of any underlying
asset. As a result, the return on an investment in the Notes could be less than the return on a direct investment in any or all
of the underlying assets. In addition, as an owner of the Notes, you will not have voting rights or any other rights of a holder
of any underlying asset.
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A higher contingent coupon rate or lower downside thresholds or coupon barriers may reflect
greater expected volatility of the underlying assets, and greater expected volatility generally indicates an increased risk of
loss at maturity — The economic terms for the Notes, including the contingent coupon rate, coupon barriers and downside
thresholds, are based, in part, on the expected volatility of each underlying asset at the time the terms of the Notes are set.
“Volatility” refers to the frequency and magnitude of changes in the level of each underlying asset. The greater the
expected volatility of each underlying asset as of the trade date, the greater the expectation is as of that date that the closing
level of each underlying asset could be less than its coupon barrier on any observation date and that the final level of each
underlying asset could be less than its downside threshold on the final valuation date and, as a consequence, indicates an increased
risk of not receiving a contingent coupon and an increased risk of loss, respectively. All things being equal, this greater expected
volatility will generally be reflected in a higher contingent coupon rate than the yield payable on our conventional debt securities
with a similar maturity or on otherwise comparable securities, and/or lower downside thresholds and/or coupon barriers than those
terms on otherwise comparable securities. Therefore, a relatively higher contingent coupon rate may indicate an increased risk
of loss. Further, relatively lower downside threshold(s) and/or coupon barrier(s) may not necessarily indicate that the Notes
have a greater likelihood of a return of principal at maturity and/or paying contingent coupons. You should be willing to accept
the downside market risk of the least performing underlying asset and the potential to lose a significant portion or all of your
initial investment.
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Reinvestment risk — The Notes will be subject to an automatic call if the closing
level of each underlying asset is equal to or greater than its initial level on certain observation dates prior to the final valuation
date as set forth under “Observation Dates and Coupon Payment Dates” above. Because the Notes could be subject to
an automatic call, the term of your investment may be limited. In the event that the Notes are subject to an automatic call, there
is no guarantee that you would be able to reinvest the proceeds at a comparable return and/or with a comparable contingent coupon
rate for a similar level of risk. In addition, to the extent you are able to reinvest such proceeds in an investment comparable
to the Notes, you may incur transaction costs such as dealer discounts and hedging costs built into the price of the new securities.
Generally, however, the longer the Notes remain outstanding, the less likely the Notes will be subject to an automatic call due
to the decline in the level of an underlying asset and the shorter time remaining for the level of any such underlying asset to
recover. Such periods generally coincide with a period of greater risk of principal loss on your Notes.
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You are exposed to the market risk of each underlying asset — Your return on the
Notes is not linked to a basket consisting of the underlying assets. Rather, it will be contingent upon the performance of each
individual underlying asset. Unlike an instrument with a return linked to a basket of common stocks or other underlying securities,
in which risk is mitigated and diversified among all of the components of the basket, you will be exposed equally to the risks
related to each underlying asset. Poor performance by any underlying asset over the term of the Notes will negatively affect your
return and will not be offset or mitigated by a positive performance by any other underlying asset. For instance, you may receive
a negative return equal to the underlying return of the least performing underlying asset if the closing level of one underlying
asset is less than its downside threshold on the final valuation date, even if the underlying return of any other underlying asset
is positive or has not declined as much. Accordingly, your investment is subject to the market risk of each underlying asset.
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Because the Notes are linked to the least performing underlying asset, you are exposed to a
greater risk of no contingent coupons and losing a significant portion or all of your initial investment at maturity than if the
Notes were linked to a single underlying asset or fewer underlying assets, as applicable — The risk that you will not
receive any contingent coupons and lose a significant portion or all of your initial investment in the Notes is greater if you
invest in the Notes than the risk of investing in substantially similar securities that are linked to the performance of a single
underlying asset or fewer underlying assets, as applicable. With more underlying assets, it is more likely that the closing level
of any underlying asset will be less than its coupon barrier on any observation date or decline to a closing level that is less
than its downside threshold than if the Notes were linked to a single underlying asset or fewer underlying assets, as applicable.
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In addition, the lower the correlation is between the performance
of a pair of underlying assets, the more likely it is that one of the underlying assets will decline in value to a closing level
or final level, as applicable, that is less than its coupon barrier or downside threshold on any observation date or on a final
valuation date, respectively. Although the correlation of the underlying assets’ performance may change over the term of
the Notes, the economic terms of the Notes, including the contingent coupon rate, downside threshold and coupon barrier are determined,
in part, based on the correlation of the underlying assets’ performance calculated using our internal models at the time
when the terms of the Notes are finalized. All things being equal, a higher contingent coupon rate and lower downside threshold
and coupon barrier is generally associated with lower correlation of the underlying assets. Therefore, if the performance of a
pair of underlying assets is not correlated to each other or is negatively correlated, the risk that you will not receive any contingent
coupons or that the final level of any underlying asset will be less than its downside threshold is even greater despite a lower
downside threshold and coupon barrier. Therefore, it is more likely that you will not receive any contingent coupons and that you
will lose a significant portion or all of your initial investment at maturity.
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Credit risk of UBS — The Notes are unsubordinated, unsecured debt obligations of
UBS and are not, either directly or indirectly, an obligation of any third-party. Any payment to be made on the Notes, including
any repayment of principal, depends on the ability of UBS to satisfy its obligations as they come due. As a result, UBS’s
actual and perceived creditworthiness may affect the market value of the Notes. If UBS were to default on its obligations, you
may not receive any amounts owed to you under the terms of the Notes and you could lose all of your initial investment.
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Single equity risk — The return on the Notes, which may be negative, is directly
linked to the performance of the underlying assets. The levels of the underlying assets can rise or fall sharply due to factors
specific to each underlying asset and their issuers (each, an "underlying asset issuer"), such as stock price volatility,
earnings, financial conditions, corporate, industry and regulatory developments, management changes and decisions and other events,
as well as general market factors, such as general stock and commodity market volatility and levels, interest rates and economic
and political conditions. Recently, the coronavirus infection has caused volatility in the global financial markets and a slowdown
in the global economy. Coronavirus or any other communicable disease or infection may adversely affect the underlying asset issuers
and, therefore, the underlying assets. You, as an investor in the Notes, should conduct your own investigation into the underlying
asset issuers and the underlying assets for your Notes. For additional information regarding the underlying asset issuers, please
see “Information about the Underlying Assets” herein and the underlying asset issuers' SEC filings referred to in
that section. We urge you to review financial and other information filed periodically by the underlying asset issuers with the
SEC.
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Fair value considerations.
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The issue price you pay for the Notes exceeds their estimated initial value — The
issue price you pay for the Notes exceeds their estimated initial value as of the trade date due to the inclusion in the issue
price of the underwriting discount, hedging costs, issuance and other costs and projected profits. As of the close of the relevant
markets on the trade date, we have determined the estimated initial value of the Notes by reference to our internal pricing models
and it is set forth in this pricing supplement. The pricing models used to determine the estimated initial value of the Notes
incorporate certain variables, including the levels and volatility of the underlying assets, the correlation of the underlying
assets, any expected dividends of the underlying assets, prevailing interest rates, the term of the Notes and our internal funding
rate. Our internal funding rate is typically lower than the rate we would pay to issue conventional fixed or floating rate debt
securities of a similar term. The underwriting discount, hedging costs, issuance and other costs, projected profits and the difference
in rates will reduce the economic value of the Notes to you. Due to these factors, the estimated initial value of the Notes as
of the trade date is less than the issue price you pay for the Notes.
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The estimated initial value is a theoretical price; the actual price that you may be able to
sell your Notes in any secondary market (if any) at any time after the trade date may differ from the estimated initial value
— The value of your Notes at any time will vary based on many factors, including the factors described above and in
“—Single equity risk” above and is impossible to predict. Furthermore, the pricing models that we use are proprietary
and rely in part on certain assumptions about future events, which may prove to be incorrect. As a result, after the trade date,
if you attempt to sell the Notes in the secondary market, the actual value you would receive may differ, perhaps materially, from
the estimated initial value of the Notes determined by reference to our internal pricing models. The estimated initial value of
the Notes does not represent a minimum or maximum price at which we or any of our affiliates would be willing to purchase your
Notes in any secondary market at any time.
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Our actual profits may be greater or less than the differential between the estimated initial
value and the issue price of the Notes as of the trade date — We may determine the economic terms of the Notes, as well
as hedge our obligations, at least in part, prior to the trade date. In addition, there may be ongoing costs to us to maintain
and/or adjust any hedges and such hedges are often imperfect. Therefore, our actual profits (or potentially, losses) in issuing
the Notes cannot be determined as of the trade date and any such differential between the estimated initial value and the issue
price of the Notes as of the trade date does not reflect our actual profits. Ultimately, our actual profits will be known only
at the maturity of the Notes.
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Limited or no secondary market and secondary market price considerations.
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There may be little or no secondary market for the Notes — The Notes will not be
listed or displayed on any securities exchange or any electronic communications network. UBS Securities LLC and its affiliates
intend, but are not required, to make a market for the Notes and may stop making a market at any time. If you are able to sell
your Notes prior to maturity, you may have to sell them at a substantial loss. Furthermore, there can be no assurance that a secondary
market for the Notes will develop. The estimated initial value of the Notes does not represent a minimum or maximum price at which
we or any of our affiliates would be willing to purchase your Notes in any secondary market at any time.
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The price at which UBS Securities LLC and its affiliates may offer to buy the Notes in the
secondary market (if any) may be greater than UBS’ valuation of the Notes at that time, greater than any other secondary
market prices provided by unaffiliated dealers (if any) and, depending on your broker, greater than the valuation provided on
your customer account statement — For a limited period of time following the issuance of the Notes, UBS Securities LLC
or its affiliates may offer to buy or sell such Notes at a price that exceeds (i) our valuation of the Notes at that time based
on our internal pricing models, (ii) any secondary market prices provided by unaffiliated dealers (if any) and (iii) depending
on your broker, the valuation provided on customer account statements. The price that UBS Securities LLC may initially offer to
buy such Notes following issuance will exceed the valuations indicated by our internal pricing models due to the inclusion for
a limited period of time of the aggregate value of the underwriting discount, hedging costs, issuance costs and theoretical projected
trading profit. The portion of such amounts included in our price will decline to zero on a straight line basis over a period
ending no later than the date specified under “Supplemental Plan of Distribution (Conflicts of Interest); Secondary Markets
(if any)”. Thereafter, if UBS Securities LLC or an affiliate makes secondary markets in the Notes, it will do so at prices
that reflect our estimated value determined by reference to our internal pricing models at that time. The temporary positive differential
relative to our internal pricing models arises from requests from and arrangements made by UBS Securities LLC with the selling
agents of structured debt securities such as the Notes. As described above, UBS Securities LLC and its affiliates intend, but
are not required, to make a market for the Notes and may stop making a market at any time. The price at which UBS Securities LLC
or an affiliate may make secondary markets at any time (if at all) will also reflect its then current bid-ask spread for similar
sized trades of structured debt securities. UBS Securities LLC reflects this temporary positive differential on its customer statements.
Investors should inquire as to the valuation provided on customer account statements provided by unaffiliated dealers.
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Economic and market factors affecting the terms and market price of Notes prior to maturity
— Because structured notes, including the Notes, can be thought of as having a debt component and a derivative component,
factors that influence the values of debt instruments and options and other derivatives will also affect the terms and features
of the Notes at issuance and the market price of the Notes prior to maturity. These factors include the levels of the underlying
assets; the volatility of the underlying assets; the correlation of the underlying assets; the dividend rate paid on the underlying
assets, if applicable; the time remaining to the maturity of the Notes; interest rates in the markets; geopolitical conditions
and economic, financial, political, force majeure and regulatory or judicial events; whether each of the underlying assets is
currently or has been less than its coupon barrier; the availability of comparable instruments; the creditworthiness of UBS; the
then current bid-ask spread for the Notes and the factors discussed under “— Potential conflict of interest”
below. These and other factors are unpredictable and interrelated and may offset or magnify each other.
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Impact of fees and the use of internal funding rates rather than secondary market credit spreads
on secondary market prices — All other things being equal, the use of the internal funding rates described above under
“— Fair value considerations” as well as the inclusion in the issue price of the underwriting discount, hedging
costs, issuance and other costs and any projected profits are, subject to the temporary mitigating effect of UBS Securities LLC’s
and its affiliates’ market making premium, expected to reduce the price at which you may be able to sell the Notes in any
secondary market.
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There can be no assurance that the investment view implicit in the Notes will be successful
— It is impossible to predict whether and the extent to which the levels of the underlying assets will rise or fall
and there can be no assurance that the closing level of each underlying asset will be equal to or greater than its coupon barrier
on any observation date, or, if the Notes are not subject to an automatic call, that the final level of each underlying asset
will be equal to or greater than its downside threshold. The level of each underlying asset will be influenced by complex and
interrelated political, economic, financial and other factors that affect the underlying asset issuers. You should be willing
to accept the downside risks of owning equities in general and the underlying assets in particular, and the risk of losing a significant
portion or all of your initial investment.
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The calculation agent can make antidilution and reorganization adjustments that affect the
payment to you at maturity — For antidilution and reorganization events affecting an underlying asset, the calculation
agent may make adjustments to its initial level, coupon barrier, downside threshold and/or final level, as applicable, and any
other term of the Notes. However, the calculation agent will not make an adjustment in response to every corporate event that
could affect an underlying asset. If an event occurs that does not require the calculation agent to make an adjustment, the market
value of the Notes and the payment at maturity may be materially and adversely affected. In addition, all determinations and calculations
concerning any such adjustments will be made by the calculation agent. You should be aware that the calculation agent may make
any such adjustment, determination or calculation in a manner that
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differs from that discussed in the accompanying product supplement
or herein as necessary to achieve an equitable result. Following certain reorganization events relating to an underlying asset
issuer where such issuer is not the surviving entity, the determination as to whether
the contingent coupon is payable to you on any coupon payment date, whether the Notes are subject to an automatic call or the amount
you receive at maturity may be based on the equity security of a successor to such underlying asset issuer in combination with
any cash or any other assets distributed to holders of such underlying asset in such reorganization event. If an underlying asset
issuer becomes subject to (i) a reorganization event whereby such underlying asset is exchanged solely for cash, (ii) a merger
or consolidation with UBS or any of its affiliates, or (iii) such underlying asset is delisted or otherwise suspended from trading,
the determination as to whether the contingent coupon is payable to you on any coupon payment date, whether the Notes are subject
to an automatic call or the amount you receive at maturity may be based on a substitute security. The occurrence of any antidilution
or reorganization event and the consequent adjustments may materially and adversely affect the value of the Notes and your payment
at maturity, if any. For more information, see the sections “General Terms of the Securities — Antidilution Adjustments
for Securities Linked to an Underlying Equity or Equity Basket Asset” and “—Reorganization Events for Securities
Linked to an Underlying Equity or Equity Basket Asset” in the accompanying product supplement.
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There is no affiliation between the underlying asset issuers and UBS, and UBS is not responsible
for any disclosure by such issuers — We are not affiliated with the underlying asset issuers. However, we and our affiliates
may currently, or from time to time in the future engage in business with the underlying asset issuers. However, we are not affiliated
with the underlying asset issuers and are not responsible for such issuers' public disclosure of information, whether contained
in SEC filings or otherwise. You, as an investor in the Notes, should conduct your own investigation into the underlying assets
and the underlying asset issuers. The underlying asset issuers are not involved in the Notes offered hereby in any way and have
no obligation of any sort with respect to your Notes. The underlying asset issuers have no obligation to take your interests into
consideration for any reason, including when taking any corporate actions that might affect the market value of, or any amounts
payable on, your Notes.
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Potential UBS impact on the underlying assets — Trading or
transactions by UBS or its affiliates in the underlying assets, listed and/or over-the-counter options, futures, exchange-traded
funds or other instruments with returns linked to the performance of the underlying assets, may adversely affect the levels of
the underlying assets and, therefore, the market value of, or any amounts payable on, the Notes.
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Potential conflicts of interest — UBS and its affiliates may engage in business with
an underlying asset issuer, which may present a conflict between the obligations of UBS and you, as a holder of the Notes. There
are also potential conflicts of interest between you and the calculation agent, which will be an affiliate of UBS and which will
make potentially subjective judgments. The calculation agent will determine whether the contingent coupon is payable to you on
any coupon payment date, whether the Notes are subject to an automatic call and the payment at maturity of the Notes, if any,
based on observed levels of the underlying assets. The calculation agent can postpone the determination of the initial level,
closing level or final level of any underlying asset (and therefore the settlement date, the related coupon payment date or the
maturity date, as applicable), on the trade date, any observation date or the final valuation date, respectively, if a market
disruption event occurs and is continuing on such date. As UBS determines the economic terms of the Notes, including the contingent
coupon rate, downside threshold and coupon barrier, and such terms include the underwriting discount, hedging costs, issuance
and other costs and projected profits, the Notes represent a package of economic terms. There are other potential conflicts of
interest insofar as an investor could potentially get better economic terms if that investor entered into exchange-traded and/or
OTC derivatives or other instruments with third parties, assuming that such instruments were available and the investor had the
ability to assemble and enter into such instruments.
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Additionally, UBS and its affiliates act in various capacities with respect to the Notes, including as a principal, agent or
dealer in connection with the sale of the Notes. Such affiliates, and any other third-party dealers, will derive compensation from
the distribution of the Notes and such compensation may serve as an incentive to sell these Notes instead of other investments.
Furthermore, given that UBS Securities LLC and its affiliates temporarily maintain a market making premium, it may have the effect
of discouraging UBS Securities LLC and its affiliates from recommending sale of your Notes in the secondary market.
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Potentially inconsistent research, opinions or recommendations by UBS — UBS and its
affiliates publish research from time to time on financial markets and other matters that may influence the market value of, and
any amounts payable on, the Notes, or express opinions or provide recommendations that are inconsistent with purchasing or holding
the Notes. Any research, opinions or recommendations expressed by UBS or its affiliates may not be consistent with each other
and may be modified from time to time without notice. Investors should make their own independent investigation of the merits
of investing in the Notes and the underlying assets to which the Notes are linked.
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The Notes are not bank deposits — An investment in the Notes carries risks which
are very different from the risk profile of a bank deposit placed with UBS or its affiliates. The Notes have different yield and/or
return, liquidity and risk profiles and would not benefit from any protection provided to deposits.
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If UBS experiences financial difficulties, FINMA has the power to open restructuring or liquidation
proceedings in respect of, and/or impose protective measures in relation to, UBS, which proceedings or measures may have a material
adverse effect on the terms and market value of the Notes and/or the ability of UBS to make payments thereunder — The
Swiss Financial Market Supervisory Authority (“FINMA”) has broad statutory powers to take measures and actions in
relation to UBS if (i) it concludes that there is justified concern that UBS is over-indebted or has serious liquidity problems
or (ii) UBS fails to fulfill the applicable capital adequacy requirements (whether on a standalone or consolidated basis) after
expiry of a deadline set by FINMA. If one of these pre-requisites is met, FINMA is authorized to open restructuring proceedings
or liquidation (bankruptcy) proceedings in respect of, and/or impose protective measures in relation to, UBS. The Swiss Banking
Act grants significant discretion to FINMA in connection with the aforementioned proceedings and measures. In particular, a broad
variety of protective measures may be imposed by FINMA, including a bank moratorium or a maturity postponement, which measures
may be ordered by FINMA either on a stand-alone basis or in connection with restructuring or liquidation proceedings. The resolution
regime of the Swiss Banking Act is further detailed in the FINMA Banking Insolvency Ordinance (“BIO-FINMA”). In a
restructuring proceeding, FINMA, as resolution authority, is competent to approve the resolution plan. The resolution plan may,
among other things, provide for (a) the transfer of all or a portion of UBS’ assets, debts, other liabilities and contracts
(which may or may not include the contractual relationship between UBS and the holders of Notes) to another entity, (b) a stay
(for a maximum of two business days) on the termination of contracts to which UBS is a party, and/or the exercise of (w) rights
to terminate, (x) netting rights, (y) rights to enforce or dispose of collateral or (z) rights to transfer claims, liabilities
or collateral under contracts to which UBS is a party, (c) the conversion of UBS’ debt and/or other obligations, including
its obligations under the Notes, into equity (a “debt-to-equity” swap), and/or (d) the partial or full write-off of
obligations owed by UBS (a “write-off”), including its obligations under the Notes. The BIO-FINMA provides that a
debt-to-equity swap and/or a write-off of debt and other obligations (including the Notes) may only take place after (i) all debt
instruments issued by UBS qualifying as additional tier 1 capital or tier 2 capital have been converted into equity or written-off,
as applicable, and (ii) the existing equity of UBS has been fully cancelled. While the BIO-FINMA does not expressly address the
order in which a write-off of debt instruments other than debt instruments qualifying as additional tier 1 capital or tier 2 capital
should occur, it states that debt-to-equity swaps should occur in the following order: first, all subordinated claims not qualifying
as regulatory capital; second, all other claims not excluded by law from a debt-to-equity swap (other than deposits); and third,
deposits (in excess of the amount privileged by law). However, given the broad discretion granted to FINMA as the resolution authority,
any restructuring plan in respect of UBS could provide that the claims under or in connection with the Notes will be partially
or fully converted into equity or written-off, while preserving other obligations of UBS that rank pari passu with, or even junior
to, UBS’ obligations under the Notes. Consequently, holders of Notes may lose all or some of their investment in the Notes.
In the case of restructuring proceedings with respect to a systemically important Swiss bank (such as UBS), the creditors whose
claims are affected by the restructuring plan will not have a right to vote on, reject, or seek the suspension of the restructuring
plan. In addition, if a restructuring plan has been approved by FINMA, the rights of a creditor to seek judicial review of the
restructuring plan (e.g., on the grounds that the plan would unduly prejudice the rights of holders of Notes or otherwise be in
violation of the Swiss Banking Act) are very limited. In particular, a court may not suspend the implementation of the restructuring
plan. Furthermore, even if a creditor successfully challenges the restructuring plan, the court can only require the relevant
creditor to be compensated ex post and there is currently no guidance as to on what basis such compensation would be calculated
or how it would be funded.
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Uncertain tax treatment — Significant aspects of the tax treatment of the Notes are
uncertain. You should consult your tax advisor about your tax situation. See “What Are the Tax Consequences of the Notes?”
herein and “Material U.S. Federal Income Tax Consequences”, including the section “— Securities Treated
as Prepaid Derivatives or Prepaid Forwards with Associated Contingent Coupons”, in the accompanying product supplement.
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Hypothetical
Examples of How the Notes Might Perform
The below examples are based on hypothetical terms. The actual terms
are indicated on the cover hereof. The examples below illustrate the payment upon a call or at maturity for a $1,000 Note on a
hypothetical offering of the Notes, with the following assumptions (amounts may have been rounded for ease of reference):
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Principal Amount:
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$1,000
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Term:
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Approximately
3 years
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Contingent Coupon Rate:
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8.00% per annum (or 2.00% per quarter)
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Contingent Coupon:
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$20.00 per quarter
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Observation Dates:
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Quarterly
(callable after 6 months)
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Initial Level:
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Underlying Asset A
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$200.00
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Underlying Asset B
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$30.00
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Downside Threshold:
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Underlying Asset A
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$110.00 (which is 55.00% of its initial level)
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Underlying Asset B
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$16.50
(which is 55.00% of its initial level)
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Coupon Barrier:
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Underlying Asset A
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$110.00 (which is 55.00% of its initial level)
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Underlying Asset B
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$16.50
(which is 55.00% of its initial level)
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Example 1 — The Closing Level
of each Underlying Asset is equal to or greater than its Initial Level on the Observation Date corresponding to the first potential
Call Settlement Date
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Date
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Closing Level
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Payment (per Note)
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First Observation Date
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Underlying Asset A: $210.00 (equal to or greater than
Initial Level)
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$20.00 (Contingent Coupon – Not Callable)
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Underlying Asset B: $35.00 (equal to or greater than
Initial Level)
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Second Observation Date
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Underlying Asset A: $220.00 (equal to or greater than
Initial Level)
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$1,020.00 (Call Settlement Amount)
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Underlying Asset B: $32.00 (equal to or greater than
Initial Level)
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Total Payment:
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$1,040.00 (a 4.00% total return)
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Because the Notes are subject to an
automatic call on the first potential call settlement date (which is approximately 6 months after the trade date and is the
first observation date on which the Notes are callable), UBS will pay you on the call settlement date a total of $1,020.00 per Note,
reflecting your principal amount plus the applicable contingent coupon. When added to the contingent coupon of $20.00
received in respect of the prior observation date, UBS will have paid you a total of $1,040.00 per Note for a 4.00% total
return on the Notes. No further amount will be owed to you under the Notes.
Example 2 — The Notes are NOT
subject to an Automatic Call and the Final Level of each Underlying Asset is equal to or greater than its Downside Threshold
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Date
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Closing Level
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Payment (per Note)
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First Observation Date
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Underlying Asset A: $208.00 (equal to or greater than
Initial Level)
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$20.00 (Contingent Coupon – Not Callable)
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Underlying Asset B: $36.00 (equal to or greater than
Initial Level)
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Second Observation Date through Eleventh
Observation Date
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Underlying Asset A: Various (all less than
Coupon Barrier)
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$0.00
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Underlying Asset B: Various (all equal to or greater than Initial Level)
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Final Valuation Date
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Underlying Asset A: $185.00 (equal to or greater than Downside Threshold and Coupon Barrier; less than
Initial Level)
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$1,020.00 (Payment at Maturity)
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Underlying Asset B: $25.00 (equal to or greater than Downside Threshold and Coupon Barrier; less than
Initial Level)
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Total Payment:
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$1,040.00 (a 4.00% total return)
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Because the Notes are not subject to an automatic call and the final
level of each underlying asset is equal to or greater than its downside threshold, at maturity, UBS will pay you a total of $1,020.00
per Note, reflecting your principal amount plus the applicable contingent coupon. When added to the contingent coupon of $20.00
received in respect of the prior observation dates, UBS will have paid you a total of $1,040.00 per Note for a 4.00% total return
on the Notes.
Example 3 — The Notes are NOT
subject to an Automatic Call and the Final Level of an Underlying Asset is less than its Downside Threshold
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Date
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Closing Level
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Payment (per Note)
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First Observation Date
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Underlying Asset A: $140.00 (equal to or greater than Coupon Barrier; less than Initial Level)
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$20.00 (Contingent Coupon)
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Underlying Asset B: $20.00 (equal
to or greater than Coupon Barrier; less than Initial Level)
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Second Observation Date through Eleventh
Observation Date
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Underlying Asset A: Various (all less than Coupon
Barrier)
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$0.00
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Underlying Asset B: Various (all equal to or greater than
Initial Level)
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Final Valuation Date
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Underlying Asset A: $80.00 (less than Downside Threshold and Coupon Barrier)
Underlying Asset B: $40.00 (equal to or greater
than Initial Level)
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$1,000.00 × [1 + Underlying Return of the Least Performing Underlying Asset] =
$1,000.00 × [1+(-60.00)%] =
$1,000.00 × 0.40 =
$400.00 (Payment at Maturity)
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Total Payment:
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$420.00 (a 58.00% loss)
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Because the Notes are not subject to an automatic call and the final
level of Underlying Asset A is less than its Coupon Barrier and Downside Threshold, at maturity UBS will pay you $400.00 per Note.
When added to the contingent coupon of $20.00 received in respect of the prior observation dates, UBS will have paid you $420.00
per Note for a loss on the Notes of 58.00%.
We make no representation or warranty
as to which of the underlying assets will be the least performing underlying asset for the purposes of calculating your actual
payment at maturity.
Investing in the Notes involves significant
risks. The Notes differ from ordinary debt securities in that UBS is not necessarily obligated to repay the full amount of your
initial investment. If the Notes are not subject to an automatic call, you may lose a significant portion or all of your initial
investment. Specifically, if the Notes are not subject to an automatic call and the final level of any underlying asset is less
than its Downside Threshold, you will lose a percentage of your principal amount equal to the underlying return of the least performing
underlying asset and, in extreme situations, you could lose all of your initial investment.
You will be exposed to the market risk
of each underlying asset on each observation date and on the final valuation date and any decline in the level of one underlying
asset may negatively affect your return and will not be offset or mitigated by a lesser decline or any potential increase in the
level of any other underlying asset. Any payment on the Notes, including any payments in respect of an automatic call, contingent
coupon or any repayment of principal, is subject to the creditworthiness of UBS. If UBS were to default on its payment obligations,
you may not receive any amounts owed to you under the Notes and you could lose all of your initial investment.
Information About the Underlying Assets
All disclosures contained in this document regarding each
underlying asset are derived from publicly available information. UBS has not conducted any independent review or due diligence of
any publicly available information with respect to any underlying asset. You should make your own investigation in to each
underlying asset.
Included on the following pages
is a brief description of each underlying asset issuer. This information has been obtained from publicly available sources. Set
forth below are graphs that illustrate the past performance for each underlying asset. We obtained the past performance information
set forth below from the Bloomberg Professional® service (“Bloomberg”) without independent verification.
You should not take the historical prices of each underlying asset as an indication
of future performance.
Each underlying asset is registered under Securities Act of 1933,
the Securities Exchange Act of 1934 and/or the Investment Company Act of 1940, each as amended. Companies with securities registered
with the SEC are required to file financial and other information specified by the SEC periodically. Information filed by the
underlying asset issuer with the SEC can be reviewed electronically through a website maintained by the SEC. The address of the
SEC’s website is http://www.sec.gov. Information filed with the SEC by each underlying asset issuer can be located by
reference to its SEC file number provided below. In addition, information filed with the SEC can be inspected and copied at the
Public Reference Section of the SEC, 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Copies of this material can also be
obtained from the Public Reference Section, at prescribed rates.
American Tower Corporation
According to publicly available information, American Tower Corporation
(“American Tower”) is a real estate investment trust and owner, operator and developer of multitenant communications
real estate primarily engaged in the leasing of space on communications sites to wireless service providers, radio and television
broadcast companies, wireless data providers, government agencies and municipalities and tenants in a number of other industries.
Information filed by American Tower with the SEC can be located by reference to its SEC file number: 001-14195, or its CIK Code:
0001053507. American Tower’s website is americantower.com. American Tower’s common stock is listed on the New York
Stock Exchange under the ticker symbol “AMT”.
Information from outside sources is not incorporated by reference
in, and should not be considered part of, this document or any document incorporated herein by reference. UBS has not conducted
any independent review or due diligence of any publicly available information with respect to the underlying asset.
Historical Information
The graph below illustrates the performance of American Tower's common
stock from January 1, 2010 through May 27, 2020, based on the daily closing levels as reported by Bloomberg, without independent
verification. UBS has not conducted any independent review or due diligence of publicly available information obtained from Bloomberg.
The closing level of American Tower’s common stock on May 27, 2020 was $252.01. The dotted line represents its downside threshold
and its coupon barrier of $138.61, which is equal to 55.00% of its
initial level. Past performance of the underlying asset is not indicative of the future performance of the underlying
asset during the term of the Notes.
AT&T Inc.
According to publicly available information, AT&T Inc. (“AT&T”)
is a provider of communications and digital entertainment services, including wireless and wireline communications services, data/broadband
and voice; digital video services, telecommunications equipment; managed networking; and wholesale services, to consumers, businesses
and other providers of telecommunications services. On June 14, 2018, AT&T completed its acquisition of Time Warner Inc. (“Time
Warner”), with Time Warner shareholders receiving shares of AT&T common stock and cash for each share of Time Warner
stock. Information filed by AT&T with the SEC can be located by reference to its SEC file number: 001-08610, or its CIK Code:
0000732717. AT&T’s website is att.com. AT&T’s common stock is listed on the New York Stock Exchange under the
ticker symbol “T”.
Information from outside sources is not incorporated by reference
in, and should not be considered part of, this document or any document incorporated herein by reference. UBS has not conducted
any independent review or due diligence of any publicly available information with respect to the underlying asset.
Historical Information
The graph below illustrates the performance of AT&T’s common
stock from January 1, 2010 through May 27, 2020, based on the daily closing levels as reported by Bloomberg, without independent
verification. UBS has not conducted any independent review or due diligence of publicly available information obtained from Bloomberg.
The closing level of AT&T’s common stock on May 27, 2020 was $31.85. The dotted line represents its downside threshold
and its coupon barrier of $17.52, which is equal to 55.00% of its
initial level. Past performance of the underlying asset is not indicative of the future performance of the underlying
asset during the term of the Notes.
Correlation of the Underlying Assets
The graph below illustrates the daily
performance of the underlying assets from January 1, 2010 through May 27, 2020. For comparison purposes, each underlying asset
has been normalized to have a closing level of 100 on January 1, 2010 by dividing the closing level of that underlying asset on
each trading day by the closing level of that underlying asset on January 1, 2010 and multiplying by 100. We obtained the closing
levels used to determine the normalized closing levels set forth below from Bloomberg, without independent verification.
The closer the relationship of the
daily returns of the underlying assets over a given period, the more positively correlated those underlying assets are. The
lower (or more negative) the correlation among the underlying assets, the less likely it is that those underlying assets will
move in the same direction and therefore, the greater the potential for one of those underlying assets to close below its
coupon barrier or downside threshold on an observation date or on the final valuation date, respectively. This is because the
less positively correlated the underlying assets are, the greater the likelihood that at least one of the underlying assets
will decrease in value. However, even if the underlying assets have a higher positive correlation, one or more of the
underlying assets might close below its coupon barrier or downside threshold on an observation date or the final valuation
date, respectively, as the underlying assets may decrease in value together. Although the correlation of the underlying
assets’ performance may change over the term of the Notes, the correlations referenced in setting the terms of the
Notes are calculated using UBS’ internal models at the time when the terms of the Notes are set and are not derived
from the daily returns of the underlying assets over the period set forth below. A higher contingent coupon rate is generally
associated with lower correlation of the underlying assets, which reflects a greater potential for missed contingent coupons
and for a loss on your investment at maturity. See “Key Risks — A higher contingent coupon rate or lower downside
thresholds or coupon barriers may reflect greater expected volatility of the underlying assets, and greater expected
volatility generally indicates an increased risk of loss at maturity”, “— You are exposed to the market
risk of each underlying asset” and “— Because the Notes are linked to the least performing underlying
asset, you are exposed to a greater risk of no contingent coupons and losing a significant portion or all of your initial
investment at maturity than if the Notes were linked to a single underlying asset or fewer underlying assets, as applicable”
herein.
Past performance of the underlying assets is not indicative of
the future performance of the underlying assets.
What Are the Tax Consequences of the Notes?
The U.S. federal income tax consequences of your investment
in the Notes are uncertain. There are no statutory provisions, regulations, published rulings or judicial decisions addressing
the characterization for U.S. federal income tax purposes of securities with terms that are substantially the same as the Notes.
Some of these tax consequences are summarized below, but we urge you to read the more detailed discussion in “Material U.S.
Federal Income Tax Consequences”, including the section “— Securities Treated as Prepaid Derivatives or Prepaid
Forwards with Associated Contingent Coupons”, in the accompanying product supplement and to discuss the tax consequences
of your particular situation with your tax advisor. This discussion is based upon the Internal Revenue Code of 1986, as amended
(the “Code”), final, temporary and proposed U.S. Treasury Department (the “Treasury”) regulations, rulings
and decisions, in each case, as available and in effect as of the date hereof, all of which are subject to change, possibly with
retroactive effect. Tax consequences under state, local and non-U.S. laws are not addressed herein. No ruling from the U.S. Internal
Revenue Service (the “IRS”) has been sought as to the U.S. federal income tax consequences of your investment in the
Notes, and the following discussion is not binding on the IRS.
U.S. Tax Treatment. Pursuant to the terms of the Notes, UBS
and you agree, in the absence of a statutory or regulatory change or an administrative determination or judicial ruling to the
contrary, to characterize the Notes as prepaid derivative contracts with respect to the underlying assets. If your Notes are so
treated, any contingent coupon that is paid by UBS (including on the maturity date or upon an automatic call) should be included in
your income as ordinary income in accordance with your regular method of accounting for U.S. federal income tax purposes. In
determining our information reporting obligations, if any, we intend to treat the contingent coupons as ordinary income.
In addition, excluding amounts or proceeds attributable to any contingent
coupons, you should generally recognize gain or loss upon the taxable disposition of your Notes in an amount equal to the difference
between the amount you receive at such time (other than amounts or proceeds attributable to a contingent coupon or any amount attributable
to any accrued but unpaid contingent coupons) and the amount you paid for your Notes. Subject to the “constructive ownership”
rules, discussed below, such gain or loss should generally be long-term capital gain or loss if you have held your Notes for more
than one year (otherwise such gain or loss would be short-term capital gain or loss). The deductibility of capital losses is subject
to limitations. Although uncertain, it is possible that proceeds received from the taxable disposition of your Notes prior to an
observation date that are attributable to an expected contingent coupon, could be treated as ordinary income. You
should consult your tax advisor regarding this risk.
Based on certain factual representations received from us, our counsel,
Cadwalader, Wickersham & Taft LLP, is of the opinion that it would be reasonable to treat your Notes in the manner described
above. However, because there is no authority that specifically addresses the tax treatment of the Notes, it is possible that your
Notes could alternatively be treated for tax purposes as a single contingent payment debt instrument, or pursuant to some other
characterization (such as “constructive ownership” transaction under Section 1260 of the Code), such that the timing
and character of your income from the Notes could differ materially and adversely from the treatment described above, as described
further under “Material U.S. Federal Income Tax Consequences”, including the section “— Securities Treated
as Prepaid Derivatives or Prepaid Forwards with Associated Contingent Coupons”, in the accompanying product supplement unless
and until such time as the IRS and the Treasury determine that some other treatment is more appropriate.
Section 1260. Because American Tower Corporation would
be treated as a "pass-thru entity" for purposes of Section 1260 of the Code, it is possible that the Notes could be treated as
a constructive ownership transaction under Section 1260 of the Code. If the Notes were treated as a constructive ownership transaction,
certain adverse U.S. federal income tax consequences could apply (i.e., all or a portion of any long-term capital gain that you
recognize upon the taxable disposition of your Notes could be recharacterized as ordinary income and you could be subject to an
interest charge on any deferred tax liability with respect to such recharacterized gain). We urge you to read the discussion concerning
the possible treatment of the Notes as a constructive ownership transaction under "Material U.S. Federal Income Tax Consequences
- Securities Treated as Prepaid Derivatives or Prepaid Forwards - Section 1260" in the accompanying product supplement.
Except to the extent otherwise required by law, UBS intends
to treat your Notes for U.S. federal income tax purposes in accordance with the treatment described above and under "Material
U.S. Federal Income Tax Consequences" in the accompanying product supplement unless and until such time as the IRS and the Treasury
determine that some other treatment is more appropriate.
Notice 2008-2. In 2007, the IRS
released a notice that may affect the taxation of holders of the Notes. According to Notice 2008-2, the IRS and the Treasury are
actively considering whether the holder of an instrument such as the Notes should be required to accrue ordinary income on a current
basis. It is not possible to determine what guidance they will ultimately issue, if any. It is possible, however, that under such
guidance, holders of the Notes will ultimately be required to accrue income currently in excess of any receipt of contingent coupons
and this could be applied on a retroactive basis. The IRS and the Treasury are also considering other relevant issues, including
whether additional gain or loss from such instruments should be treated as ordinary or capital, whether non-U.S. holders of such
instruments should be subject to withholding tax on any deemed income accruals, and whether the special “constructive ownership
rules” of Section 1260 of the Code (discussed above) should be applied to such instruments. Both U.S. and non-U.S. holders
are urged to consult their tax advisors concerning the significance, and potential impact, of the above considerations. Except
to the extent otherwise required by law, UBS intends to treat your Notes for U.S. federal income tax purposes in accordance with
the treatment described above and under “Material U.S. Federal Income Tax Consequences — Securities Treated as Prepaid
Derivatives or Prepaid Forwards with Associated Contingent Coupons” in the accompanying product supplement unless and until
such time as the IRS and the Treasury determine that some other treatment is more appropriate.
Medicare Tax
on Net Investment Income. U.S. holders that are individuals, estates or certain trusts are subject to an additional
3.8% tax on all or a portion of their “net investment income,” which may include any income or gain realized with
respect to the Notes, to the extent of their net investment income that when added to their other modified adjusted gross income,
exceeds $200,000 for an unmarried individual, $250,000 for a married taxpayer filing a joint return (or a surviving spouse), $125,000
for a married individual filing a separate return or the dollar amount at which the highest tax bracket begins for an estate or
trust. The 3.8% Medicare tax is determined in a different manner than the income tax. U.S. holders should consult their tax advisors
as to the consequences of the 3.8% Medicare tax.
Specified Foreign Financial
Assets. U.S. holders may be subject to reporting obligations with respect to their Notes if they do not hold their Notes in
an account maintained by a financial institution and the aggregate value of their Notes and certain other “specified foreign
financial assets” (applying certain attribution rules) exceeds an applicable threshold. Significant penalties can apply if
a U.S. holder is required to disclose its Notes and fails to do so.
Non-U.S. Holders. The U.S. federal
income tax treatment of the contingent coupons is unclear. Subject to the discussions below with respect to Section 871(m) of
the Code and FATCA, discussed below, our counsel is of the opinion that contingent
coupons paid to a non-U.S. holder that provides us (and/or the applicable withholding agent) with a fully completed and validly
executed applicable IRS Form W-8 should not be subject to U.S. withholding tax and we do not intend to withhold any tax on contingent
coupons. However, it is possible that the IRS could assert that such payments are subject to U.S. withholding tax, or that another
withholding agent may otherwise determine that withholding is required, in which case the other withholding agent may withhold
up to 30% on such payments (subject to reduction or elimination of such withholding tax pursuant to an applicable income tax treaty).
We will not pay any additional amounts in respect of such withholding. Subject to Section 871(m) of the Code, discussed below,
gain realized from the taxable disposition of a Note generally should not be subject to U.S. tax unless (i) such gain is effectively
connected with a trade or business conducted by the non-U.S. holder in the U.S., (ii) the non-U.S. holder is a non-resident alien
individual and is present in the U.S. for 183 days or more during the taxable year of such taxable disposition and certain other
conditions are satisfied or (iii) the non-U.S. holder has certain other present or former connections with the U.S.
Section 897. Except as to American
Tower Corporation, which is a “United States real property holding corporation” (a “USRPHC”) within the
meaning of Section 897 of the Code, we will not attempt to ascertain whether any other underlying asset issuer would be treated
as a USRPHC within the meaning of Section 897 of the Code. We also have not attempted to determine whether the Notes should be
treated as “United States real property interests” (“USRPI”) as defined in Section 897 of the Code. Because
American Tower Corporation is a USRPHC and AT&T Inc. may be so, and the Notes were so treated, certain adverse U.S. federal
income tax consequences could possibly apply, including subjecting any gain to a non-U.S. holder in respect of a Note upon a taxable
disposition of the Note to U.S. federal income tax on a net basis, and the proceeds from such a taxable disposition to a 15% withholding
tax. Non-U.S. holders should consult their tax advisors regarding the potential treatment of any such entity as a USRPHC and the
Notes as USRPI.
Section 871(m). A 30% withholding tax (which may be
reduced by an applicable income tax treaty) is imposed under Section 871(m) of the Code on certain “dividend
equivalents” paid or deemed paid to a non-U.S. holder with respect to a “specified equity-linked instrument” that
references one or more dividend-paying U.S. equity securities. The withholding tax can apply even if the instrument does not provide
for payments that reference dividends. Treasury regulations provide that the withholding tax applies to all dividend equivalents
paid or deemed paid on specified equity-linked instruments that have a delta of one (“delta-one specified equity-linked
instruments”) issued after 2016 and to all dividend equivalents paid or deemed paid on all other specified equity-linked
instruments issued after 2018. However, the IRS has issued guidance that states that the Treasury and the IRS intend to amend the
effective dates of the Treasury regulations to provide that withholding on dividend equivalents paid or deemed paid will not apply
to specified equity-linked instruments that are not delta-one specified equity-linked instruments and are issued before January 1,
2023.
Based on our determination that the Notes are not
“delta-one” with respect to any underlying asset, our counsel is of the opinion that the Notes should not be delta-one
specified equity-linked instruments and thus should not be subject to withholding on dividend equivalents. Our determination is not
binding on the IRS, and the IRS may disagree with this determination. Furthermore, the application of Section 871(m) of the Code
will depend on our determinations made upon issuance of the Notes. If withholding is required, we will not make payments of any
additional amounts.
Nevertheless, after issuance, it is possible that your Notes could
be deemed to be reissued for tax purposes upon the occurrence of certain events affecting an underlying asset, or your Notes, and
following such occurrence your Notes could be treated as delta-one specified equity-linked instruments that are subject to withholding
on dividend equivalents. It is also possible that withholding tax or other tax under Section 871(m) of the Code could apply to
the Notes under these rules if a non-U.S. holder enters, or has entered, into certain other transactions in respect of an underlying
asset or the Notes. If you enter, or have entered, into other transactions in respect of an underlying asset or the Notes, you
should consult your tax advisor regarding the application of Section 871(m) of the Code to your Notes in the context of your other
transactions.
Because of the uncertainty regarding the application of
the 30% withholding tax on dividend equivalents to the Notes, you are urged to consult your tax advisor regarding the potential
application of Section 871(m) of the Code and the 30% withholding tax to an investment in the Notes.
Foreign Account Tax Compliance Act. The Foreign Account
Tax Compliance Act (“FATCA”) was enacted on March 18, 2010, and imposes a 30% U.S. withholding tax on
“withholdable payments” (i.e., certain U.S.-source payments, including interest (and original issue discount),
dividends, other fixed or determinable annual or periodical gain, profits, and income, and on the gross proceeds from a disposition
of property of a type which can produce U.S.-source interest or dividends) and “passthru payments” (i.e., certain
payments attributable to withholdable payments) made to certain foreign financial institutions (and certain of their affiliates)
unless the payee foreign financial institution agrees (or is required), among other things, to disclose the identity of any U.S.
individual with an account of the institution (or the relevant affiliate) and to annually report certain information about such
account. FATCA also requires withholding agents making withholdable payments to certain foreign entities that do not disclose the
name, address, and taxpayer identification number of any substantial U.S. owners (or do not certify that they do not have any
substantial U.S. owners) to withhold tax at a rate of 30%. Under certain circumstances, a holder may be eligible for refunds or
credits of such taxes.
Pursuant to final and temporary Treasury regulations and other IRS guidance, the withholding and reporting
requirements under FATCA will generally apply to certain “withholdable payments”, will not apply to gross proceeds
on a sale or disposition, and will apply to certain foreign passthru payments only to the extent that such payments are made after
the date that is two years after final regulations defining the term “foreign passthru payment” are published. If withholding
is required, we (or the applicable paying agent) will not be required to pay additional amounts with respect to the amounts so
withheld. Foreign financial institutions and non-financial foreign entities located in jurisdictions that have an intergovernmental
agreement with the U.S. governing FATCA may be subject to different rules.
Investors should consult their tax advisors about the application
of FATCA, in particular if they may be classified as financial institutions (or if they hold their Notes through a foreign entity)
under the FATCA rules.
Proposed Legislation. In 2007, legislation was introduced in Congress that, if it had been enacted, would have required holders
of Notes purchased after the bill was enacted to accrue interest income over the term of the Notes despite the fact that there
may be no interest payments over the term of the Notes.
Furthermore, in 2013, the House Ways and Means Committee released
in draft form certain proposed legislation relating to financial instruments. If it had been enacted, the effect of this legislation
generally would have been to require instruments such as the Notes to be marked to market on an annual basis with all gains and
losses to be treated as ordinary, subject to certain exceptions.
It is not possible to predict whether any similar or identical
bills will be enacted in the future, or whether any such bill would affect the tax treatment of your Notes. You are urged to consult
your tax advisor regarding the possible changes in law and their possible impact on the tax treatment of your Notes.
Both U.S. and non-U.S. holders are urged to consult their
tax advisors concerning the application of U.S. federal income tax laws to their particular situations, as well as any tax consequences
of the purchase, beneficial ownership and disposition of the Notes arising under the laws of any state, local, non-U.S. or other
taxing jurisdiction.
Supplemental Plan of Distribution (Conflicts of Interest); Secondary Markets (if any)
We have agreed to sell to UBS Securities LLC, and UBS Securities LLC
has agreed to purchase, all of the Notes at the issue price to the public less the underwriting discount indicated on the cover
hereof. UBS Securities LLC has agreed to resell the Notes to one or more third-party dealers at a discount from the issue price
to public equal to the underwriting discount indicated on the cover hereof. Certain of such other third-party dealers may resell
the Notes to other securities dealers at the issue price to the public less an underwriting discount up to the underwriting discount
indicated in the table on the cover hereof. Certain unaffiliated registered investment advisers or fee-based advisory accounts
may have agreed to purchase Notes from a third-party dealer at a purchase price of at least $975.00 per principal amount of the
Notes, and such third-party dealer, with respect to such sales, may have agreed to forgo some or all of the underwriting discount.
Additionally, we or one of our affiliates will pay a fee to an unaffiliated broker-dealer for providing certain electronic platform
services with respect to this offering.
Conflicts of Interest — UBS
Securities LLC is an affiliate of UBS and, as such, has a “conflict of interest” in this offering within the meaning
of Financial Industry Regulatory Authority, Inc. (“FINRA”) Rule 5121. In addition, UBS will receive the net proceeds
(excluding the underwriting discount) from the initial public offering of the Notes, thus creating an additional conflict of interest
within the meaning of FINRA Rule 5121. Consequently, the offering is being conducted in compliance with the provisions of FINRA
Rule 5121. UBS Securities LLC is not permitted to sell Notes in this offering to an account over which it exercises discretionary
authority without the prior specific written approval of the account holder.
UBS Securities LLC and its affiliates
may offer to buy or sell the Notes in the secondary market (if any) at prices greater than UBS’ internal valuation —
The value of the Notes at any time will vary based on many factors that cannot be predicted. However, the price (not including
UBS Securities LLC’s or any affiliate’s customary bid-ask spreads) at which UBS Securities LLC or any affiliate would
offer to buy or sell the Notes immediately after the trade date in the secondary market is expected to exceed the estimated initial
value of the Notes as determined by reference to our internal pricing models. The amount of the excess will decline to zero on
a straight line basis over a period ending no later than 6 months after the trade date, provided that UBS Securities LLC may shorten
the period based on various factors, including the magnitude of purchases and other negotiated provisions with selling agents.
Notwithstanding the foregoing, UBS Securities LLC and its affiliates intend, but are not required to make a market for the Notes
and may stop making a market at any time. For more information about secondary market offers and the estimated initial value of
the Notes, see “Key Risks — Fair value considerations” and “Key Risks — Limited or no secondary
market and secondary market price considerations” in this document.
Prohibition of Sales to EEA Retail
Investors — The Notes are not intended to be offered, sold or otherwise made available to and should not be offered,
sold or otherwise made available to any retail investor in the European Economic Area ("EEA"). For these purposes, a
retail investor means a person who is one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) of Directive
2014/65/EU, as amended ("MiFID II"); (ii) a customer within the meaning of Directive 2002/92/EC, as amended, where that
customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II; or (iii) not a qualified
investor as defined in Directive 2003/71/EC, as amended. Consequently no key information document required by Regulation (EU)
No 1286/2014, as amended (the "PRIIPs Regulation"), for offering or selling the Notes or otherwise making them available
to retail investors in the EEA has been prepared and therefore offering or selling the Notes or otherwise making them available
to any retail investor in the EEA may be unlawful under the PRIIPs Regulation.