UBS has filed a registration statement
(including a prospectus, as supplemented by a product supplement for the Notes) with the Securities and Exchange Commission (the
“SEC”) for the Notes to which this document relates. Before you invest, you should read these documents and
any other documents related to the Notes that UBS has filed with the SEC for more complete information about UBS and the Notes.
You may obtain these documents for free from the SEC website at www.sec.gov. Our Central Index Key, or CIK, on the SEC website
is 0001114446.
This document, together with the documents listed above, contains
the terms of the Notes and supersedes all other prior or contemporaneous oral statements as well as any other written materials
including all other prior pricing terms, correspondence, trade ideas, structures for implementation, sample structures, brochures
or other educational materials of ours. You should carefully consider, among other things, the matters set forth in “Key
Risks” herein and in “Risk Factors” in the accompanying product supplement, as the Notes involve risks not associated
with conventional debt securities. We urge you to consult your investment, legal, tax, accounting and other advisors before deciding
to invest in the Notes.
If there is any inconsistency
between the terms of the Notes described in the accompanying prospectus, the accompanying product supplement and this document,
the following hierarchy will govern: first, this document; second, the accompanying product supplement; and last, the accompanying
prospectus.
UBS
reserves the right to change the terms of, or reject any offer to purchase, the Notes prior to their issuance. In the event of
any changes to the terms of the Notes, UBS will notify you and you will be asked to accept such changes in connection with your
purchase. You may also choose to reject such changes in which case UBS may reject your offer to purchase.
Preliminary Terms
|
Issuer
|
UBS
AG London Branch
|
|
Term
|
Approximately
12 months, unless subject to an automatic call. In the event that
we make any change to the expected strike date, the calculation agent may adjust the trade date, settlement date, observation dates
(including the final valuation date) and coupon payment dates (including the maturity date) to ensure that the stated term of the
Notes remains the same.
|
|
Underlying
Asset
|
The common stock of Zoom Video Communications, Inc.
|
|
Automatic
Call Feature
|
UBS
will automatically call the Notes if the closing level of the underlying asset on any observation date prior to the final
valuation date is equal to or greater than the initial level. If the Notes are subject to an automatic call, UBS will pay
you on the coupon payment date following such observation date (the “call settlement date”) a cash payment per Note equal
to the principal amount plus the coupon otherwise due on such date. Following an automatic call, no further payments will
be owed to you under the Notes.
|
|
Coupon
Payments
|
UBS
will pay interest on the principal amount of the Notes in arrears in equal installments on each coupon payment date
(including the maturity date) regardless of the performance of the underlying asset, unless the Notes have been subject to an
automatic call.
The coupon is a fixed amount based upon equal installments at a per annum
rate (the “coupon rate”). The table below sets forth the coupon rate and the coupon for each Note that would be paid
on each coupon payment date on which the Notes are still outstanding; the total coupon payable will be based on the duration of
the Notes.
|
|
|
Coupon
Rate
|
11.50% per annum
|
|
|
|
Coupon
|
$28.75
|
|
|
Conversion
Level(1)
|
A
specified level of the underlying asset that is less than the initial level, equal to a percentage of the initial level as
specified on the cover hereof.
|
|
Share
Delivery Amount (per Note)(1)
|
A number of
shares of the underlying asset equal to the quotient, of (i) the principal amount divided
by (ii) the conversion level, rounded to the nearest ten thousandth of one share.
Any fractional share included
in the share delivery amount will be paid in cash at an amount equal to the product of the fractional share and the
final level.
|
|
Payment at Maturity (per Note)
|
If
the Notes are not subject to an automatic call and the final level is equal to or greater
than the conversion level, 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 is less than the conversion
level, UBS will deliver to you a number of shares of the underlying asset equal to:
|
|
|
Share
Delivery Amount
|
|
|
In
this scenario, you will receive the share delivery amount, which is expected to be worth less than the principal amount and,
in extreme situations, you could lose all of your initial investment.
|
|
Initial
Level(1)
|
The
closing level of the underlying asset on the strike date, and not the closing level on the trade date.
|
|
Final Level(1)
|
The
closing level of the underlying asset on the final valuation date.
|
|
|
(1) As determined by the calculation agent and as may
be adjusted in the case of certain antidilution and reorganization 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.
Investment Timeline
|
Strike Date:
|
|
The initial level is observed and the final terms of the Notes are set.
|
|
|
¯
|
|
|
|
|
Coupon
Payment Dates (if not previously subject to an automatic call):
|
|
UBS pays the applicable coupon.
|
|
|
¯
|
|
|
|
Observation Dates (prior to the Final Valuation Date):
|
|
UBS will automatically call the Notes if the closing level is equal to
or greater than the initial level.
If the Notes are subject to an automatic call, UBS will pay you on the call settlement date a cash payment per Note equal to the principal amount plus the coupon otherwise due. Following an automatic call, no further payments will be owed to you under the Notes.
|
|
|
¯
|
|
|
|
|
Maturity Date:
|
|
The final level is observed on the final
valuation date.
If the Notes are not subject to an
automatic call and the final level is equal to or greater than the conversion level, 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 is less than the conversion level, UBS will deliver to you a number of shares of the underlying
asset per Note equal to:
Share Delivery Amount
In this scenario, you will receive
the share delivery amount, which is expected to be worth less than your principal amount and, in extreme situations, you could
lose all of your initial investment.
Any fractional share included in the
share delivery amount will be paid in cash at an amount equal to the product of the fractional share and the final level.
|
|
Investing in the Notes involves significant risks.
In exchange for receiving a coupon on the Notes, you are accepting the risk of receiving, at maturity, a number of shares of the
underlying asset converted at the conversion level, which is expected to be worth less than your principal amount and, in extreme
situations, you could lose all of your initial investment. Any payment or delivery 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 some or all of your initial investment. Specifically, if the Notes are not subject to an automatic call and the final
level is less than the conversion level, UBS will deliver to you a number of shares of the underlying asset per Note equal to
the share delivery amount, which is expected to be worth less than your principal amount and, in extreme situations, you could
lose all of your initial investment.
|
Observation Dates(1) and Coupon Payment Dates(1)
|
|
Observation Dates
|
Coupon Payment Dates*
|
|
September 8, 2020
|
September 10, 2020
|
|
December 8, 2020
|
December 10, 2020
|
|
March 8, 2021
|
March 10, 2021
|
|
Final Valuation Date**
|
Maturity Date
|
|
|
(1)
|
Subject to the
market disruption event provisions set forth under “General Terms of the Securities – Market Disruption Events”
in the accompanying product supplement.
|
|
|
*
|
If the Notes are subject to an automatic call on any observation date, the call settlement date will be the corresponding coupon
payment date.
|
|
|
**
|
The final valuation date is not
an observation date for purposes of determining an automatic call.
|
Key Risks
An investment in the Notes involves significant risks.
Some of the key 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 generally 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.
|
|
¨
|
Risk
of loss at maturity — The Notes differ from ordinary debt securities in that the UBS will not necessarily repay the principal
amount of the Notes at maturity. If the Notes are not subject to an automatic call and the final level is less than the conversion
level, UBS will deliver to you the share delivery amount at maturity for each Note that you own, which is expected to be worth
less than your principal amount and could be worthless. If you receive the share delivery amount, then, as of the final valuation
date, the percentage decline in the value of the share delivery amount will be at a proportionately higher percentage relative
to any percentage decline in the level of the underlying asset below the conversion level from the strike date to the final valuation
date. Therefore, the further the final level has declined from the conversion level, the closer your loss of principal will be
to the decline of the underlying asset from the initial level and, in extreme situations, you could lose all of your initial investment.
For example, if the conversion level is 80.00% of the initial level and the final level is 70.00% of the initial level, you will
lose 12.50% of your initial investment (based on the value of the share delivery amount on the final valuation date), which is
greater than the 10.00% additional decline of the underlying asset from the conversion level, but less than the 30.00% total decline
from the initial level. Additionally, in the event that the final level is less than the conversion level, any decline in the level
of the underlying asset during the period between the final valuation date and the maturity date will cause your return on the
Notes to be less than the return you would have received had UBS instead paid you an amount in cash equal to the share delivery
amount.
|
|
|
¨
|
A
higher coupon rate or lower conversion level may reflect greater expected volatility
of the underlying asset, and greater expected volatility generally indicates an increased
risk of loss at maturity — The economic terms for the Notes, including the
coupon rate and conversion level, are based, in part, on the expected volatility of the
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 the underlying asset.
The greater the expected volatility of the underlying asset as of the strike date, the
greater the expectation is as of that date that the final level of the underlying asset
could be less than the conversion level on the final valuation date and, as a consequence,
indicates an increased risk of loss. All things being equal, this greater expected volatility
will generally be reflected in a higher coupon rate than the yield payable on our conventional
debt securities with a similar maturity or on otherwise comparable securities, and/or
a lower conversion level than that on otherwise comparable securities. Therefore, a relatively
higher coupon rate may indicate an increased risk of loss. Further, a relatively lower
conversion level may not necessarily indicate that the Notes have a greater likelihood
of a return of principal at maturity. You should be willing to accept the downside market
risk of the underlying asset and the potential to lose some or, in extreme situations,
all of your initial investment at maturity.
|
|
|
¨
|
The
contingent repayment of principal applies only if you hold the Notes to 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 the underlying
asset at such time is equal to or greater than the conversion level.
|
|
|
¨
|
Your
potential return on the Notes is limited to the coupon payments and you will not receive
dividend payments on any underlying asset or have the same rights as holders of the underlying
asset — Your return on the Notes is limited to the coupons paid and you will
not participate in any appreciation of the underlying asset, even though you will be
exposed to the downside market risk of the underlying asset if the final level is less
than the conversion level. If the Notes are subject to an automatic call, you will not
receive any coupons or any other payment in respect of any coupon payment 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. Further, you will
not receive or be entitled to receive any dividend payments or other distributions on
the underlying asset during the term of the Notes, and any such dividends or distributions
will not be factored into the calculation of the payment at maturity on your Notes. In
addition, as an owner of the Notes, you will not have voting rights or any other rights
that a holder of the underlying asset.
|
|
|
¨
|
The
Notes may be subject to an automatic call early and are subject to reinvestment risk — The Notes will be subject to
an automatic call if the closing level of the underlying asset is equal to or greater than the initial level on any
observation date prior to the final valuation date. In the event that the Notes are subject to an automatic call, the term of
your investment may be limited and there is no guarantee that you will be able to reinvest the proceeds from an investment in
the Notes at a comparable rate of return 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 and the original issue price for such
an investment is likely to include certain built-in costs such as dealer discounts and hedging costs. Conversely, the Notes
will not be subject to an automatic call when the closing level of the underlying asset is less than the initial level on any
observation date. Generally the longer the Notes are outstanding, the less likely it is that they will be automatically
called (as compared to at the strike date) due to the decline in the level of the underlying asset and the shorter time
remaining for the level of the underlying asset to recover. Such periods generally coincide with a period of greater risk of
principal loss on your Notes.
|
|
|
¨
|
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
or delivery to be made on the Notes, including payments in respect of an automatic call
or any repayment of principal, depends on the ability of UBS to satisfy its obligations
as they come due. As a result, UBS’ 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 payment or delivery owed to you under the terms of the Notes and you could
lose all of your initial investment.
|
|
|
¨
|
Single
equity risk — The return on the Notes, which may be negative, is directly linked to the performance of the underlying
asset. The level of the underlying asset can rise or fall sharply due to factors specific to that underlying asset and the issuer
of such underlying asset (the “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 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 issuer and, therefore, the underlying asset. You, as an investor
in the Notes, should make your own investigation into the underlying asset issuer and the underlying asset. For additional information
regarding the underlying asset issuer, please see “Information about the Underlying Asset” in this document and the
underlying asset issuer’s SEC filings referred to in that section. We urge you to review financial and other information
filed periodically by the underlying asset issuer with the SEC.
|
|
|
¨
|
Fair
value considerations
|
|
|
¨
|
The
issue price you pay for the Notes will exceed their estimated initial value —
The issue price you pay for the Notes will exceed their estimated initial value as of
the trade date due to the inclusion in the issue price of the underwriting discount,
hedging costs, issuance costs and projected profits. As of the close of the relevant
markets on the trade date, we will determine the estimated initial value of the Notes
by reference to our internal pricing models and it will be set forth in the final pricing
supplement. The pricing models used to determine the estimated initial value of the Notes
incorporate certain variables, including the price, volatility and any expected dividends
on the underlying asset, 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 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 will be less than the issue price you
pay for the Notes.
|
|
|
¨
|
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.
|
|
|
¨
|
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.
|
|
|
¨
|
Limited
or no secondary market and secondary market price considerations.
|
|
|
¨
|
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.
|
|
|
¨
|
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 statements — 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 Financial
Services Inc. and UBS Securities LLC reflect this temporary positive differential on
their
|
|
|
|
customer statements. Investors should inquire as to the valuation provided on customer account
statements provided by unaffiliated dealers.
|
|
|
¨
|
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 price of the underlying asset; the volatility of the underlying asset; any dividends
paid on the underlying asset, 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; 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.
|
|
|
¨
|
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 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.
|
|
|
¨
|
The
underlying asset has a limited trading history — The underlying asset only recently commenced trading on its current
primary exchange and, therefore, has limited historical performance. Because the underlying asset has a very limited trading history,
your investment linked to the underlying asset may involve greater risks than an investment linked to the common stock of a company
with a more established record of performance. For additional information about the underlying asset, see the section “Information
about the Underlying Asset" herein. Past performance of the underlying asset should not be considered indicative of future
performance of the underlying asset.
|
|
|
¨
|
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 level of
the underlying asset will rise or fall and there can be no assurance that the closing
level of the underlying asset will be equal to or greater than the initial level on any
observation date prior to the final valuation date, or, if the Notes are not subject
to an automatic call, that the final level of the underlying asset will be equal to or
greater than the conversion level. The final level of the underlying asset will be influenced
by complex and interrelated political, economic, financial and other factors that affect
the underlying asset issuer. You should be willing to accept the risks of owning equities
in general and the underlying asset in particular, and the risk of losing some or all
of your initial investment.
|
|
|
¨
|
There
is no affiliation between the underlying asset issuer and UBS, and UBS is not responsible
for any disclosure by such issuer — We and our affiliates may currently,
or from time to time in the future engage in business with the underlying asset issuer.
However, we are not affiliated with the underlying asset issuer and are not responsible
for such underlying asset issuer’s 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 asset and the underlying asset issuer.
The underlying asset issuer is not involved in the Notes offered hereby in any way and
has no obligation of any sort with respect to your Notes. The underlying asset issuer
has no obligation to take your interests into consideration for any reason, including
when taking any corporate actions that might affect the market value of, and the return
on, your Notes.
|
|
|
¨
|
The
calculation agent can make antidilution and reorganization adjustments that affect the
payment to you at maturity — For antidilution and reorganization events affecting
the underlying asset, the calculation agent may make adjustments to the initial level,
share delivery amount, conversion level 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 the 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 differs from that discussed in the accompanying product supplement or this document as necessary to achieve an equitable result. Following
certain reorganization events relating to the underlying asset issuer where such issuer
is not the surviving entity, the amount of cash or shares you receive at maturity may
be based on the equity security of a successor issuer to the underlying asset issuer
in combination with any cash or any other assets distributed to holders of the underlying
asset in such reorganization event. If the underlying asset issuer becomes subject to
(i) a reorganization event whereby the underlying asset is exchanged solely for cash,
(ii) a merger or consolidation with UBS or any of its affiliates or (iii) the underlying
asset is delisted or otherwise suspended from trading, the amount of cash or shares you
receive at maturity may be based on a substitute security. If any underlying asset is
replaced or substituted by a security issued by a non-U.S. company that is traded on
a non-U.S. exchange, we will pay, in lieu of delivery of any such security, an amount
in cash (payable in U.S. dollars) equal to the value thereof, as determined by the calculation
agent. 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.
|
|
|
¨
|
Potential
UBS impact on the market price of the underlying asset — Trading or transactions
by UBS and/or its affiliates in the underlying asset, listed and/or over-the-counter
options, futures, exchange-traded funds or other instruments with returns linked to the
performance of the underlying asset may adversely affect the market price of the underlying
asset and, therefore, the market value of the Notes and the payment at maturity.
|
|
|
¨
|
Potential
conflict of interest — UBS and its affiliates may engage in business with the 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 Notes are subject to an automatic call and if not, the payment at
maturity of the Notes, if any, based on observed levels of the underlying asset. The calculation agent can postpone the
determination of the terms of the Notes on any observation date or final valuation date. As UBS determines the economic terms
of the Notes, including the coupon rate and conversion level, and such terms include the underwriting discount, hedging
costs, issuance 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.
|
|
|
¨
|
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 value of 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 asset to which the Notes are
linked.
|
|
|
¨
|
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.
|
|
|
¨
|
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.
|
|
|
¨
|
Dealer
incentives — UBS and its affiliates act in various capacities with respect
to the Notes. We and our affiliates may act as a principal, agent or dealer in connection
with the sale of the Notes. Such affiliates, including the sales representatives, 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. We will pay total underwriting
compensation in an amount equal to the underwriting discount indicated on the cover hereof
per Note to any of our affiliates acting as agents or dealers in connection with the
distribution of the Notes. 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.
|
|
|
¨
|
Uncertain
tax treatment — Significant aspects of the tax treatment of the Notes are uncertain.
You should read the section below entitled “What Are the Tax Consequences of the
Notes?” and the section entitled “Material U.S. Federal Income Tax Consequences”,
including the section “— Securities Treated as Investment Units Containing
a Debt Instrument and a Put Option Contract", in the accompanying product supplement
and consult your tax advisor about your tax situation.
|
Hypothetical Examples of How the Notes Might Perform and Return Table
The below examples and hypothetical
return at maturity table are based on hypothetical terms. The actual terms will be set on the strike date and will be indicated
on the cover of the final pricing supplement.
The examples below illustrate the payment upon an automatic 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 analysis):
|
Term:
|
Approximately
12 months (callable quarterly)
|
|
Principal
Amount:
|
$1,000
per Note
|
|
Coupon
Rate*:
|
6.00% per annum (or $15.00 per quarterly period)
|
|
Observation Dates:
|
Quarterly
|
|
Initial
Level:
|
$50.00
|
|
Conversion
Level:
|
$45.00 (which is 90.00% of the Initial Level)
|
|
Share
Delivery Amount**:
|
22.2222 shares per Note (principal amount/conversion level)
|
|
Dividend
Yield on the Underlying Asset***:
|
1%
|
|
|
*
|
Coupon
payment will be paid in arrears in equal installments during the term of the Notes on
an unadjusted basis, unless previously subject to an automatic call. The total coupons
paid will be based on the duration of the Notes.
|
|
|
**
|
Equal
to the quotient of (i) the principal amount divided by (ii) the conversion level, which
is expected to be worth less than your principal amount and, in extreme situations, you
could lose all of your initial investment. If you receive the share delivery amount at
maturity, any fractional share included in the share delivery amount will be paid in
cash at an amount equal to the product of the fractional share and the final level.
|
|
|
***
|
Hypothetical
dividend yield holders of the underlying asset might receive over the term of the Notes.
The assumed dividend yield represents a hypothetical dividend return that may vary from
the actual dividend yield for the underlying asset. Regardless, investors in the Notes
will not receive any dividends paid on the underlying asset.
|
Example
1 — The Closing Level of the Underlying Asset is equal to or greater than the Initial Level on the first Observation Date.
|
Closing
Level at First Observation Date:
|
$50.00 (equal to or greater than
Initial Level, Notes are called)
|
|
|
|
|
Payment
on Call Date:
|
$1,015.00
|
|
Total
Return on the Notes:
|
1.50%
|
Because the Notes are
subject to an automatic call following the first observation date (which is approximately 3 months after the trade date), UBS will
pay on the call settlement date a cash payment equal to the principal amount plus the coupon for the corresponding coupon payment
date for a total of $1,015.00 per Note, a 1.50% total return on the Notes. No further amount will be owed to you under the Notes.
Example
2 — The Closing Level of the Underlying Asset is equal to or greater than the Initial Level on the third Observation Date.
|
Closing
Level at First Observation Date:
|
$45.00 (less than Initial Level,
Notes NOT called)
|
|
Closing
Level at Second Observation Date:
|
$47.00 (less than Initial Level, Notes NOT
called)
|
|
Closing
Level at Third Observation Date:
|
$50.00 (equal to or greater than Initial Level,
Notes are called)
|
|
Payment
on Call Date:
|
$1,015.00
|
|
Coupons
Previously Paid:
|
$ 30.00
|
|
Total:
|
$1,045.00
|
|
Total
Return on the Notes:
|
4.50%
|
Because the Notes are
subject to an automatic call following the third observation date (which is approximately 9 months after the trade date), UBS will
pay on the call settlement date a cash payment equal to the principal amount plus the coupon for the corresponding coupon payment
date. When added to the coupon payments of $30.00 received in respect of the prior coupon payment dates, UBS will have paid you
a total of $1,045.00 per Note for a 4.50% total return on the Notes. No further amount will be owed to you under the Notes.
Example
3 — Notes are NOT subject to an automatic call and the Final Level is equal to or greater
than the Conversion Level.
|
Closing Level at First Observation Date:
|
$46.00 (less than Initial Level, Notes NOT called)
|
|
Closing Level at Second Observation Date:
|
$44.50 (less than Initial Level, Notes NOT called)
|
|
Closing Level at Third Observation Date:
|
$45.00 (less than Initial Level, Notes NOT called)
|
|
Closing Level at Final Valuation Date:
|
$46.00 (equal to or greater than Conversion Level)
|
|
Payment at Maturity:
|
$1,015.00
|
|
Coupons Previously Paid:
|
$ 45.00
|
|
Total:
|
$1,060.00
|
|
Total Return on the Notes:
|
6.00%
|
Because
the Notes are not subject to an automatic call and the final level of the underlying asset is equal to or greater than the
conversion level, at maturity UBS will pay you a total of $1,015.00 per Note in cash, reflecting your principal amount plus
the coupon for the corresponding coupon payment date. When added to the coupon payments of $45.00 received in respect of
the prior coupon payment dates, UBS will have paid you a total of $1,060.00 per Note for a 6.00% total return on the
Notes.
Example
4 — Notes are NOT subject to an automatic call and the Final Level is less than the Conversion Level.
|
Closing Level at First Observation Date:
|
$48.00 (less than Initial Level, Notes NOT called)
|
|
Closing Level at Second Observation Date:
|
$46.00 (less than Initial Level, Notes NOT called)
|
|
Closing Level at Third Observation Date:
|
$44.50 (less than Initial Level, Notes NOT called)
|
|
Closing Level at Final Valuation Date and Maturity Date:
|
$18.00 (less than Conversion Level)
|
Payment
at Maturity:
Share Delivery Amount:
|
$400.00* = $18.00 x 22.2222 shares
|
|
Coupon
Paid at Maturity:
|
+ $ 15.00
|
|
Total
Payment at Maturity:
|
$415.00
|
|
Coupons Previously Paid:
|
+ $ 45.00
|
|
Total:
|
$460.00
|
|
Total
Return on the Notes:
|
-54.00%
|
Because the Notes are
not subject to an automatic call and the final level of the underlying asset is less than the conversion level, at maturity UBS
will deliver the share delivery amount of 22 shares of the underlying asset, and an amount in cash equal to the product of the
fractional share and the final level plus the coupon for the final coupon payment date. When added to the coupon payments of $45.00
received in respect of the prior coupon payment dates, the value of the share delivery amount and coupons received from UBS would
be worth a total of $460.00 per Note for a loss on the Notes of 54.00% as of the final valuation date. The value of the shares
when received at maturity, and the total return on the Notes at that time, will depend on the closing level of the underlying asset
on the maturity date.
|
|
*
|
Represents
the approximate cash value of the share delivery amount on the final valuation date. Because the
Notes are physically settled, the actual value received and the total return on the Notes
at maturity will depend on the level of the underlying asset on the maturity date.
|
Investors
should note that, in the event that the final level is less than the conversion level, any decline in the level of the underlying
asset during the period between the final valuation date and the maturity date will cause your return on the Notes to be less
than the return you would have received had we instead paid you an amount in cash equal to the share delivery amount.
Investing
in the Notes involves significant risks. In exchange for receiving a coupon on the Notes, you are accepting the risk of receiving,
at maturity, a number of shares of the underlying asset converted at the conversion level, which is expected to be worth less
than your principal amount and, in extreme situations, you could lose all of your initial investment.
Any
payment or delivery 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.
Hypothetical
Return at Maturity
The table below illustrates
the payment at maturity if the Notes are not subject to an automatic call and based on the assumptions above (the actual terms
for the Notes will be determined on the strike date; amounts may have been rounded for ease of reference).
|
Underlying Asset
|
The Hypothetical Final Level is
Equal to or Greater Than the
Hypothetical Conversion Level
|
The Hypothetical Final Level
is Less Than the Hypothetical
Conversion Level
|
|
Hypothetical Final Level
|
Underlying Asset Level Return
|
Total Return on the Underlying Asset at Maturity(1 )
|
Total Payment at Maturity + Coupon
Payments
|
Total Return on the Notes at Maturity
|
Total Payment at Maturity + Coupon Payments(2)
|
Total Return on the Notes as of the Final Valuation Date
|
|
$70.00
|
40.00%
|
41.00%
|
$1,060.00
|
6.00%
|
n/a
|
n/a
|
|
$67.50
|
35.00%
|
36.00%
|
$1,060.00
|
6.00%
|
n/a
|
n/a
|
|
$65.00
|
30.00%
|
31.00%
|
$1,060.00
|
6.00%
|
n/a
|
n/a
|
|
$62.50
|
25.00%
|
26.00%
|
$1,060.00
|
6.00%
|
n/a
|
n/a
|
|
$60.00
|
20.00%
|
21.00%
|
$1,060.00
|
6.00%
|
n/a
|
n/a
|
|
$57.50
|
15.00%
|
16.00%
|
$1,060.00
|
6.00%
|
n/a
|
n/a
|
|
$55.00
|
10.00%
|
11.00%
|
$1,060.00
|
6.00%
|
n/a
|
n/a
|
|
$52.50
|
5.00%
|
6.00%
|
$1,060.00
|
6.00%
|
n/a
|
n/a
|
|
$50.00
|
0.00%
|
1.00%
|
$1,060.00
|
6.00%
|
n/a
|
n/a
|
|
$47.50
|
-5.00%
|
-4.00%
|
$1,060.00
|
6.00%
|
n/a
|
n/a
|
|
$45.00
|
-10.00%
|
-9.00%
|
$1,060.00
|
6.00%
|
n/a
|
n/a
|
|
$42.50
|
-15.00%
|
-14.00%
|
n/a
|
n/a
|
$1,004.44
|
0.44%
|
|
$40.00
|
-20.00%
|
-19.00%
|
n/a
|
n/a
|
$948.89
|
-5.11%
|
|
$37.50
|
-25.00%
|
-24.00%
|
n/a
|
n/a
|
$893.33
|
-10.67%
|
|
$35.00
|
-30.00%
|
-29.00%
|
n/a
|
n/a
|
$837.78
|
-16.22%
|
|
$30.00
|
-40.00%
|
-39.00%
|
n/a
|
n/a
|
$726.67
|
-27.33%
|
|
$25.00
|
-50.00%
|
-49.00%
|
n/a
|
n/a
|
$615.56
|
-38.44%
|
|
$20.00
|
-60.00%
|
-59.00%
|
n/a
|
n/a
|
$504.44
|
-49.56%
|
|
$15.00
|
-70.00%
|
-69.00%
|
n/a
|
n/a
|
$393.33
|
-60.67%
|
|
$10.00
|
-80.00%
|
-79.00%
|
n/a
|
n/a
|
$282.22
|
-71.78%
|
|
$5.00
|
-90.00%
|
-89.00%
|
n/a
|
n/a
|
$171.11
|
-82.89%
|
|
$0.00
|
-100.00%
|
-99.00%
|
n/a
|
n/a
|
$60.00
|
-94.00%
|
|
|
(1)
|
The
total return on the underlying asset at maturity includes a hypothetical 1% cash dividend
payment.
|
|
|
(2)
|
Payment consists of the share delivery amount plus hypothetical
coupon payments of 6.00% per annum. If you receive the share delivery amount at maturity, any fractional share included in
the share delivery amount will be paid in cash at an amount equal to the product of the fractional share and the final level.
The actual value received and the total return on the Notes at maturity will depend on the level of the underlying asset on
the maturity date.
|
Information about the Underlying Asset
All disclosures contained in this document regarding the underlying asset
for the Notes are derived from publicly available information. UBS has not conducted any independent review or due diligence of
any publicly available information with respect to the underlying asset. You should make your own investigation into the underlying
asset.
Included below is a brief description of
the underlying asset issuer. This information has been obtained from publicly available sources. Set forth below is a graph that
illustrates the performance of the underlying asset for the specified period. We obtained the historical performance information
set forth below from the Bloomberg Professional® service (“Bloomberg”) without independent verification.
You should not take the historical levels of the underlying asset as an indication of future performance.
The underlying asset is registered under the Securities Act of 1933, the
Exchange Act 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 the 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.
Zoom Video Communications, Inc.
According to publicly available information,
Zoom Video Communications, Inc. (“Zoom”) provides communications software and services. Information filed by Zoom with
the SEC can be located by reference to its SEC file number: 001- 38865, or its CIK Code: 0001585521. Zoom’s common stock
is listed on the Nasdaq Global Select Market under the ticker symbol “ZM” and commenced trading on April 18, 2019.
Accordingly, the common stock of Zoom has limited historical performance and an investment with a return based on the performance
of the common stock of Zoom may be more risky than a comparable investment with a return based on the performance a common stock
with a more established record of performance.
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 Zoom’s common stock from April 18, 2019 through June 5, 2020, based on daily closing levels on its primary exchange, as
reported by Bloomberg. We obtained the closing levels from Bloomberg, without independent verification. The closing levels may
be adjusted by Bloomberg for corporate actions such as stock splits, public offerings, mergers and acquisitions, spin-offs, extraordinary
dividends, delistings and bankruptcy. UBS has not undertaken an independent review or due diligence of any publicly available information
obtained from Bloomberg. Zoom’s closing level on June 5, 2020 was $207.60 (the “hypothetical initial level”).
The dotted line represents the hypothetical conversion level of $103.80, which is equal to 50.00% of the hypothetical initial level.
The actual conversion level will be based on the closing level of Zoom’s common stock on the strike date. Past performance
of the underlying asset is not indicative of the future performance of the underlying asset during the term of the Notes.
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 Investment Units Containing a
Debt Instrument and a Put Option Contract", 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 Consequences. The U.S. federal income tax consequences
of your investment in the Notes are complex and uncertain. By purchasing a Note, you and UBS hereby agree (in the absence of a
statutory or regulatory change or an administrative determination or judicial ruling to the contrary) to characterize a Note for
all tax purposes as an investment unit consisting of a non-contingent debt instrument and a put option contract in respect of the
underlying asset. The terms of the Notes require (in the absence of a
statutory or regulatory change or an administrative determination or judicial ruling to the contrary)
that you treat your Notes for U.S. federal income tax purposes as consisting of two components:
Debt component —
We intend
to treat the debt component as having a term of one year or less, so that the amounts treated as interest on the debt component
would be subject to the general rules governing interest payments on short-term notes and would be required to be accrued by accrual-basis
taxpayers (and cash-basis taxpayers who elect to accrue interest currently) on either the straight-line method, or, if elected,
the constant yield method, compounded daily. Cash-basis taxpayers who do not elect to accrue interest currently would include interest
in income upon receipt of such interest.
Put option component —
The put option component would generally not be taxed until the taxable disposition of the Notes. At such time, the put option
component either would be taxed as a short-term capital gain if the principal amount is repaid in cash or would reduce the basis
of any shares of the underlying asset if you receive the share delivery amount (unless such receipt of shares is treated as a
taxable settlement of the Notes, in which case the put option component will be included in the amount realized when determining
gain or loss on such taxable settlement, as described below).
With
respect to coupon payments you receive, you agree to treat such payments as consisting of interest on the debt component and a
payment with respect to the put option as follows:
|
Coupon Rate
|
Interest on Debt
Component
|
Put Option
Component
|
|
11.50% per annum
|
[•]% per annum
|
[•]% per annum
|
This discussion does not address the U.S. federal income tax consequences to you of holding or disposing of
any shares of the underlying asset that you may receive in connection with your investment in the Notes. If you receive the share
delivery amount, certain adverse U.S. federal income (and other) tax consequences might apply to you. In general, your holding
period in shares of the underlying asset received in connection with your investment in the Notes will begin the day after you
beneficially receive such shares. The IRS may treat the receipt of shares at maturity as a taxable settlement of the Notes followed
by a purchase of the shares of the underlying asset pursuant to the original terms of the Notes. If the receipt of shares of the
underlying asset is so treated, (i) you should recognize capital gain or loss equal to the fair market value of the shares received
at such time plus the cash you receive in lieu of a fractional share and the cash previously received (and not included in income)
in respect of the put option component, if any, and the amount you paid for your Note, and (ii) you should take a basis in such
shares in an amount equal to their fair market value at such time. You should refer to information filed with the SEC or another
governmental authority by the underlying asset issuer and consult your tax advisor regarding possible tax consequences to you of
acquiring, holding or otherwise disposing of the underlying asset.
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”, including the section "— Securities Treated as Investment Units Containing
a Debt Instrument and a Put Option Contract", in the accompanying product supplement unless and until such time as some other
treatment is more appropriate.
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 as described above. However, in light of the uncertainty
as to the U.S. federal income tax treatment, it is possible that your Notes could be treated as a single contingent payment debt
instrument, or pursuant to some other characterization, such that the timing and character of your income from the Notes could
differ materially and adversely from the treatment described above.
Because of this uncertainty, we urge you to consult your tax advisor as to the tax consequences of your investment in the Notes
and to read the discussion in “Material U.S. Federal Income Tax Consequences”, including the section "— Securities
Treated as Investment Units Containing a Debt Instrument and a Put Option Contract", in the accompanying product supplement
for a more detailed description of the tax treatment of your Notes.
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 the appropriate tax treatment of holders of certain types of structured notes. Legislation
has also been proposed in Congress that would require the holders of certain prepaid forward contracts to accrue income during
the term of the transaction. It is not clear whether the Notice applies to instruments such as the Notes. Furthermore, it is not
possible to determine what guidance or legislation will ultimately result, if any, and whether such guidance or legislation will
affect the tax treatment of the Notes.
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. If you are a
non U.S. holder, subject to Section 871(m) of the Code and “FATCA,” discussed below, you should generally not be subject
to U.S. withholding tax with respect to payments on your Notes or to generally applicable information reporting and backup withholding
requirements with respect to payments on your Notes if you comply with certain certification and identification requirements as
to your non U.S. status (by providing us (and/or the applicable withholding agent) with a fully completed and validly executed
applicable IRS Form W-8). Subject to Section 897 of the Code and 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.
If the Notes are physically settled by
delivery to you of a number of shares of the underlying asset equal to the share delivery amount, you may suffer adverse U.S. federal
income tax consequences if you hold such shares of the underlying asset. You may be subject to U.S. withholding tax on U.S.-source
dividends in respect of such underlying asset that you hold. Other adverse tax consequences are possible. You should carefully
review the potential tax consequences to “non-U.S. holders” that are set forth in the prospectus for the underlying
asset issuer filed with the SEC or another governmental authority and consult your tax advisor regarding possible tax consequences
to you of acquiring, holding or otherwise disposing of the underlying asset.
Section 897. We will not attempt
to ascertain whether the underlying asset issuer would be treated as a “United States real property holding corporation”
(“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. If the underlying asset issuer or 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 the 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 or 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 the 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 the 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 you enter,
or have entered, into certain other transactions in respect of the underlying asset or the Notes. If you enter, or have entered,
into other transactions in respect of the 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 own advisor 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 proposed in Congress that, if it had been enacted, would have required accrual of income on certain prepaid forward contracts prior to maturity.
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 put option component of 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 situation,
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 will agree to sell to UBS Securities LLC and UBS Securities
LLC will agree 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 will agree to resell all of the Notes to UBS Financial Services Inc. at a discount from the issue price
to the public equal to the underwriting discount indicated on the cover hereof.
Conflicts of Interest —
Each of UBS Securities LLC and UBS Financial Services Inc. 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. Neither UBS Securities LLC nor UBS Financial Services Inc. is permitted to sell Notes
in the 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 2 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” herein.
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.
You should rely only on the information
incorporated by reference or provided in this document, the accompanying product supplement or the accompanying prospectus. We
have not authorized anyone to provide you with different information. We are not making an offer of these Notes in any state where
the offer is not permitted. You should not assume that the information in this document is accurate as of any date other than the
date on the front of the document.
TABLE OF CONTENTS
Preliminary Pricing Supplement
|
Investment
Description
|
i
|
|
Features
|
i
|
|
Key
Dates
|
i
|
|
Note
Offerings
|
i
|
|
Additional
Information about UBS and the Notes
|
ii
|
|
Investor
Suitability
|
1
|
|
Preliminary
Terms
|
2
|
|
Investment
Timeline
|
3
|
|
Observation
Dates and Coupon Payment Dates
|
4
|
|
Key
Risks
|
5
|
|
Hypothetical
Examples of How the Notes Might Perform and Return Table
|
10
|
|
Information
about the Underlying Asset
|
13
|
|
What
Are the Tax Consequences of the Notes?
|
15
|
|
Supplemental
Plan of Distribution (Conflicts of Interest); Secondary Markets (if any)
|
18
|
Product Supplement
|
Product
Supplement Summary
|
PS-1
|
|
Specific Terms of Each Security Will Be Described in the Applicable Supplements
|
PS-1
|
|
The Securities are Part of a Series
|
PS-1
|
|
Denomination
|
PS-2
|
|
Coupons
|
PS-2
|
|
Early Redemption
|
PS-3
|
|
Payment at Maturity for the Securities
|
PS-3
|
|
Defined Terms Relating to Payment on the Securities
|
PS-4
|
|
Valuation Dates
|
PS-5
|
|
Valuation Periods
|
PS-6
|
|
Payment Dates
|
PS-6
|
|
Closing Level
|
PS-7
|
|
Intraday Level
|
PS-7
|
|
What are the Tax Consequences of the Securities?
|
PS-8
|
|
Risk Factors
|
PS-9
|
|
General Terms of the Securities
|
PS-29
|
|
Use
of Proceeds and Hedging
|
PS-52
|
|
Material U.S. Federal Income Tax Consequences
|
PS-53
|
|
Certain
ERISA Considerations
|
PS-75
|
|
Supplemental Plan of Distribution (Conflicts of Interest)
|
PS-76
|
Prospectus
|
Introduction
|
1
|
|
Cautionary
Note Regarding Forward-Looking Statements
|
3
|
|
Incorporation
of Information About UBS AG
|
5
|
|
Where
You Can Find More Information
|
6
|
|
Presentation
of Financial Information
|
7
|
|
Limitations on Enforcement of U.S. Laws Against UBS, Its Management and Others
|
7
|
|
UBS
|
8
|
|
Swiss
Regulatory Powers
|
11
|
|
Use
of Proceeds
|
12
|
|
Description
of Debt Securities We May Offer
|
13
|
|
Description
of Warrants We May Offer
|
33
|
|
Legal
Ownership and Book-Entry Issuance
|
48
|
|
Considerations
Relating to Indexed Securities
|
53
|
|
Considerations Relating to Securities Denominated or Payable in or Linked to a Non-U.S. Dollar Currency
|
56
|
|
U.S. Tax Considerations
|
59
|
|
Tax
Considerations Under the Laws of Switzerland
|
70
|
|
Benefit
Plan Investor Considerations
|
72
|
|
Plan
of Distribution
|
74
|
|
Conflicts
of Interest
|
75
|
|
Validity
of the Securities
|
76
|
|
Experts
|
76
|
|
|
$•
UBS AG
Airbag Autocallable Yield Notes
due June 11, 2021
|
Preliminary Pricing Supplement dated June 8, 2020
(To
Product Supplement dated October 31, 2018
and Prospectus dated October 31, 2018)
|
UBS
Investment Bank
UBS Financial Services Inc.
Microsectors Energy 3x L... (AMEX:WTIU)
Historical Stock Chart
From Oct 2024 to Nov 2024
Microsectors Energy 3x L... (AMEX:WTIU)
Historical Stock Chart
From Nov 2023 to Nov 2024
