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Coupon Payment Dates

Coupons will be payable in arrears in twelve equal monthly

installments on the Coupon Payment Dates listed below:

July 19, 2012

January 22, 2013

August 20, 2012

February 19, 2013

September 19, 2012

March 19, 2013

October 19, 2012

April 19, 2013

November 19, 2012

May 20, 2013

December 19, 2012

June 20, 2013

Any payment on your Notes that would otherwise be due on a Coupon

Payment Date that is not a business day will instead be payable on

the next day that is a business day, with the same effect as if paid

on the original due 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-1-I. Subject to the discussion in that section,

and based on current market conditions, in the opinion of our special

tax counsel, Davis Polk & Wardwell LLP, 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. Of each Coupon Payment for each

Note offering, we have allocated as interest on the debt component

and as Put Premium the following amounts:

Underlying Stock

Coupon Rate

per Annum

Interest on Debt Component

per Annum

Premium Component

per Annum

Common stock of Valero Energy Corporation

10.68%

1.15%

9.53%

Common stock of MGM Resorts International

10.70%

1.15%

9.55%

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.

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 or sale, and (b) assuming that you are an initial

holder of Notes purchasing the Notes at the Initial Price for

cash, (i) if at maturity 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 Internal

Revenue Service (the "IRS") or a court may adopt for the Notes, in

which case the timing and character of your income or loss could be

significantly 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. 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. The notice focuses on a number of issues, the

most relevant of which for holders of 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. Holders should be subject to withholding tax.

Both U.S. and Non-U.S. Holders should consult their tax advisers

regarding all aspects of the U.S. federal income tax consequences of

an investment in the Notes, including possible alternative treatments

and the issues presented by this notice. Purchasers who are not

initial purchasers of Notes at the Initial 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.

Non-U.S. Holders - Additional Tax Consideration

Non-U.S. Holders should note that recently proposed Treasury

regulations, if finalized in their current form, could impose a

withholding tax at a rate of 30% (subject to reduction under an

applicable income tax treaty) on amounts attributable to U.S.-source

dividends (including, potentially, adjustments to account for

extraordinary dividends) that are paid or "deemed paid" after

December 31, 2012 under certain financial instruments, if certain

other conditions are met. While significant aspects of the

application of these proposed regulations to the Notes are uncertain,

if these proposed regulations were finalized in their current form,

we (or other withholding agents) might determine that withholding is

required with respect to Notes held by a Non-U.S. Holder or that the

Non-U.S. Holder must provide information to establish that

withholding is not required. Non-U.S. Holders should consult their

tax advisers regarding the potential application of these proposed

regulations. If withholding is so required, we will not be required

to pay any additional amounts with respect to amounts so withheld.

The discussion in the preceding paragraphs, when read in combination

with the section entitled "Material U.S. Federal Income Tax

Consequences" in the accompanying product supplement, constitutes the

full opinion of Davis Polk & Wardwell LLP regarding the material U.S.

federal income tax consequences of owning and disposing of Notes.