Coupon Payment Dates
Coupons will be payable in arrears in twelve equal monthly
installments on the Coupon Payment Dates listed below (unless earlier
called):
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February 27, 2015 |
August 31, 2015 |
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March 31, 2015 |
September 30, 2015 |
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April 30, 2015* |
October 30, 2015* |
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May 29, 2015 |
November 30, 2015 |
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June 30, 2015 |
December 31, 2015 |
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July 31, 2015* |
January 29, 2016* (the Maturity Date) |
* Corresponding Call Settlement Dates for the applicable quarterly
Observation Dates
Each Coupon Payment Date is subject to postponement in the event of a
market disruption event and as described under "General Terms of
Notes Postponement of a Payment Date" in the accompanying product
supplement no. UBS-1a-I. Each Coupon Payment will be payable to the
holders of record of the Notes at the close of business on the date
that is one business day prior to the applicable Coupon Payment Date.
What Are the Tax Consequences of the Notes?
You should review carefully the section entitled "Material U.S.
Federal Income Tax Consequences" in the accompanying product
supplement no. UBS-
1a-I. The following discussion, when read in combination with that
section, constitutes the full opinion of our special tax counsel,
Davis Polk & Wardwell LLP, regarding the material U.S. federal income
tax consequences of owning and disposing of Notes.
Based on current market conditions, in the opinion of our special tax
counsel it is reasonable to treat the Notes as units each comprising
a Put Option and a debt component for U.S. federal income tax
purposes. We will determine the portion of each Coupon Payment that
we will allocate to interest on the debt component and to Put
Premium, respectively, and will provide that allocation in the
pricing supplement for the Notes. By purchasing the Notes, you agree
to treat the Notes for U.S. federal income tax purposes consistently
with the treatment and allocation as described above. We will follow
this approach in determining our information reporting
responsibilities, if any. If the Notes had priced on
January 27, 2015 and assuming the Coupon Rates provided below, for
each Note offering, we would have allocated as interest on the debt
component and as Put Premium the following amounts:
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Underlying Stock |
Coupon Rate per Annum |
Interest on Debt Component per Annum |
Put Premium Component per Annum |
Common stock of Delta Air Lines, Inc. |
6.50% per annum |
0.66% per annum
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5.84% per annum
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Ordinary shares of Jazz Pharmaceuticals Public Limited Company |
7.90% per annum |
0.66% per annum
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7.24% per annum
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Common stock of salesforce.com, inc. |
6.70% per annum |
0.66% per annum
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6.04% per annum
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The actual Coupon Rate and allocation that we will determine for each
Note offering will be finalized on the Trade Date and provided in the
pricing supplement, may differ from the applicable hypothetical Coupon Rate and
allocation, and will depend upon a variety of factors, including
actual market conditions and our borrowing costs for debt instruments
of comparable maturities on the Trade Date. Assuming the treatment
and allocation described above are respected, (a) interest on the
debt component will be taxed as ordinary income, while the Put
Premium will not be taken into account prior to maturity, sale or
automatic call, and (b) assuming that you are an initial purchaser of
Notes purchasing the Notes at the Issue Price for cash, (i) if at
maturity or upon automatic call the Notes are settled in cash, you
will recognize short-term capital gain in an amount equal to the
total Put Premium received and (ii) if at maturity you receive the
Underlying Stock, you generally will not recognize gain or loss with
respect to the Put Premium or the Underlying Stock received; instead,
the total Put Premium will reduce your basis in the Underlying Stock.
There are, however, other reasonable treatments that the IRS or a
court may adopt for the Notes, in which case the timing and character
of your income or loss could be materially and adversely affected. In
addition, in 2007 Treasury and the IRS released a notice requesting
comments on the U.S. federal income tax treatment of "prepaid forward
contracts" and similar instruments. The notice focuses on a number of
issues, the most relevant of which for investors in the Notes are the
character of income or loss (including whether the Put Premium might
be currently included as ordinary income) and the degree, if any, to
which income realized by non-U.S. investors should be subject to
withholding tax. While it is not clear whether the Notes would be
viewed as similar to the typical prepaid forward contract described
in the notice, it is possible that any Treasury regulations or other
guidance promulgated after consideration of these issues could
materially and adversely affect the tax consequences of an investment
in the Notes, possibly with retroactive effect.
Withholding under legislation commonly referred to as "FATCA" will
apply to amounts treated as interest or other "fixed or determinable
annual or periodical" income for U.S. federal income tax purposes
paid with respect to the Notes.
You should consult your tax adviser regarding all aspects of the U.S.
federal income tax consequences of an investment in the Notes,
including possible alternative treatments, the issues presented by
the notice and the potential application of the withholding
requirements under FATCA to the Notes. Purchasers who are not initial
purchasers of Notes at the Issue Price should also consult their tax
advisers with respect to the tax consequences of an investment in the
Notes, including possible alternative treatments, as well as the
allocation of the purchase price of the Notes between the debt
component and the Put Option.