UBS AG and UBS Warburg Co-Investment 2001 GP Limited - ss. 74(1)

May 4, 2001

Ruling

Headnote

Trades in interests of a limited partnership formed by a Swiss bank to certain senior employees of Canadian subsidiarynot subject to prospectus and dealer registration requirements of the Legislation, subject to certain conditions. Firsttrades in interests shall be a distribution unless certain conditions are met. General partner, Swiss bank and its affiliatesand agents providing investment advice to limited partnership not subject to the advisor registration requirements of theLegislation, subject to certain conditions.

Statutes Cited

Securities Act, R.S.O. 1990, c.S.5, as am., ss. 25, 53, 74(1).

Other Statutes Cited

United States Investment Company Act of 1940, as amended.

United States Securities Act of 1933, as amended.

IN THE MATTER OF

THE SECURITIES ACT

R.S.O. 1990, CHAPTER S.5, AS AMENDED (the "Act")

AND

IN THE MATTER OF

UBS AG AND UBS WARBURG CO-INVESTMENT 2001 LIMITED PARTNERSHIP

RULING

WHEREAS the Ontario Securities Commission (the "Commission") has received an application from UBS AGand UBS Warburg Co-Investment 2001 GP Limited (the "General Partner") for a ruling under subsection 74(1) of the Actthat:

(i) The requirement contained in section 25 of the Act to be registered to trade in a security (the"Registration Requirement") and the requirement in section 53 of the Act to file and obtain a receiptfor a preliminary prospectus and a prospectus (the "Prospectus Requirement"); and

(ii) the requirement contained in section 25 of the Act to be registered as an adviser under the Act wheresuch a person or company engages in or holds himself, herself or itself out as engaging in thebusiness of advising others as to the investing in or the buying and selling of securities (the "AdviserRegistration Requirement"),

shall not apply to certain trades made in connection with the UBS Warburg Co-Investment Plan (the "Plan"), subject tocertain conditions.

AND WHEREAS upon considering the application and recommendation of staff of the Commission;

AND WHEREAS UBS AG and the General Partner have represented to the Commission that:

1. UBS AG is a Swiss bank headquartered in Switzerland. It is not a reporting issuer in Ontario.

2. UBS Warburg is a business group of UBS AG. It operates worldwide through branches and subsidiaries of UBSAG.

3. In Canada, UBS Warburg operates through UBS Bunting Warburg Inc. ("Warburg Canada").

4. Warburg Canada is a corporation existing under the laws of the Province of Ontario. Its head office is locatedin Toronto, Ontario. It is not a reporting issuer in Ontario. It is registered as a broker/investment dealer underthe Act.

5. As an incentive to senior employees of USB Warburg ("Eligible Investors"), all of whom are at the Director,Managing Director or Executive Director level, USB AG proposes to establish the Plan which will allowparticipants to indirectly participate in private equity investment opportunities, which will be made by UBSWarburg Co-Investment 2001 Limited Partnership (the "Underlying Partnership"), a Cayman Islands limitedpartnership.

6. Depending on their residency, Eligible Investors will participate in the Plan by acquiring an interest in theUnderlying Partnership directly, or by acquiring an interest in a feeder vehicle, which will in turn acquire aninterest in the Underlying Partnership.

7. The Eligible Investors resident in Ontario, of which there are currently two (the "Canadian Eligible Investors"),will participate in the Plan by acquiring interests in a feeder vehicle, UBS Warburg Co-Investment 2001 (No.4) Limited Partnership (the "Feeder Vehicle"), one of several such feeder vehicles (collectively, the "FeederVehicles"). From time to time Canadian Eligible Investors who are resident in Ontario but whose nationality isnot Canadian, may participate in the Plan by acquiring an interest directly in the Underlying Partnership oranother Feeder Vehicle. Interests in the Plan acquired directly in the Underlying Partnership or through theFeeder Vehicles are referred to herein as "Interests".

8. The Interests will not be transferable except with the consent of the General Partner which will not generallybe given other than upon death or upon sale to the General Partner.

9. The Feeder Vehicle in which Canadian Eligible Investors will generally invest, will be Cayman Islands limitedpartnerships or limited companies. Neither the Underlying Partnership nor the Feeder Vehicle will becomereporting issuers in Ontario and will not be registrants under the Act.

10. The Interests will not be registered under the Securities Act of 1933, as amended, and the Plan and UBS AGare applying to the United States Securities and Exchange Commission to be exempt from the InvestmentCompany Act of 1940, as amended.

11. The General Partner of the Underlying Partnership is a Cayman Islands limited company, which is a wholly-owned subsidiary of UBS AG. The General Partner is a newly formed entity with no other operations, will notbecome a reporting issuer in Ontario and will not be a registrant under the Act.

12. UBS AG will be the investment manager of the General Partner (the "Investment Manager"), determining theinvestment strategies of the Feeder Vehicles and the Underlying Partnership, including the acquisition anddisposition of Underlying Partnership investments.

13. In acting as Investment Manager, UBS AG may obtain advice from one or more investment advisers, which mayor may not be affiliates of UBS AG. Investment advisers who are not affiliates of UBS AG will act as agents toUBS AG.

14. Under the Plan, the Underlying Partnership will invest approximately US$400 million in underlying investments,to be financed by way of debt or preferred equity from UBS AG (US$300 million) and by subscriptions fromEligible Investors worldwide (US$100 million).

15. The Underlying Partnership may invest in any industry, in equity or debt, and directly or indirectly through otherinvestment vehicles. In seeking to achieve its investment objectives, it is expected that a substantial portionof the Underlying Partnership's assets will be invested in private equity investments, underlying private equityfunds and private equity funds of funds.

16. The minimum subscription by an Eligible Investor shall be US$5,000 in the case of a Director, US$10,000 inthe case of an Executive Director and US$20,000 in the case of a Managing Director. The maximumsubscription by Eligible Investors shall, subject to the discretion of UBS AG, be US$50,000 in the case of aDirector, US$100,000 in the case of an Executive Director and US$200,000 in the case of a Managing Director.All of the current Canadian Eligible Investors are Managing Directors.

17. Each Canadian Eligible Investor will, as a condition to participating in the Plan (unless prohibited by law), berequired to open a US dollar denominated brokerage account (the "Brokerage Account") with PaineWebber("PW"). Each such Brokerage Account will be restricted to holding cash. No securities will be bought, sold orheld in such Brokerage Accounts. PW is a indirect wholly-owned subsidiary of UBS AG and is registered asan international dealer under the Act. An Eligible Investor's subscription under the Plan will take place over timeby way of drawdowns from the Eligible Investor's Brokerage Account.

18. Drawdowns will generally be made from each Brokerage Account on a three month basis to financeinvestments which have been made by the Underlying Partnership during the previous three month period,together with any ongoing fees and expenses.

19. A private placement memorandum (the "Offering Memorandum") has been prepared in connection with theoffering, containing disclosure on the Plan, the Feeder Vehicles, the Interests, the Underlying Partnership, theGeneral Partner and the Investment Manager. The Offering Memorandum will be provided to Eligible Investors,including Canadian Eligible Investors.

20. During the term of the Plan, which is currently expected to be 12 years (subject to a three year extension at thediscretion of the General Partner), UBS AG will provide periodic reports to Eligible Investors, including CanadianEligible Investors, on the Underlying Partnership and applicable Feeder Vehicles. The reports will providedetails on the Underlying Partnership's investment activities, together with the Investment Manager's unauditedestimate of the value of the investments held by the Underlying Partnership. Eligible Investors, includingCanadian Eligible Investors will also receive audited financial statements and relevant tax information in respectof applicable Feeder Vehicles and the Underlying Partnership.

21. Canadian Eligible Investors will participate in the Plan on a voluntary basis and are not being induced topurchase Interests by expectation of employment or continued employment with Warburg Canada, or any ofits affiliates.

AND WHEREAS upon the Commission being satisfied that to do so would not be prejudicial to the publicinterest;

IT IS RULED that:

1. The Registration Requirement and Prospectus Requirement shall not apply to a trade in Interestsmade by the Underlying Partnership, the Feeder Vehicles or PW to a Canadian Eligible Investor,provided that:

(a) the Canadian Eligible Investor is not induced to purchase Interests by expectation ofemployment or continued employment and acquires the Interests voluntarily; and

(b) a copy of the Offering Memorandum is provided to the Canadian Eligible Investor and filedwith the Commission.

2. The first trade in Interests acquired pursuant to this Ruling or by any person or company referred toin this paragraph in Ontario shall be deemed to be a distribution, unless such first trade is made to anyof the following:

(a) the General Partner or an Eligible Investor;

(b) an affiliate of the General Partner;

(d) a corporation controlled by an Eligible Investor and/or any member of his or her immediatefamily where the Eligible Investor is an officer or director of the corporation and where all theshares are owned at all times by any combination of the Eligible Investor, members of his orher immediate family, the children of any of them or the offspring of such children;

(e) a trust where all of the beneficiaries are any combination of the Eligible Investor, membersof his or her immediate family, the children of any of them or the offspring of such childrenand at least one of the trustees is the Eligible Investor;

(f) a registered retirement savings plan and/or personal holding company of the EligibleInvestor; or

(g) a person or company acquiring Interests by operation of law.

3. The Adviser Registration Requirement under the Act shall not apply to the General Partner, theInvestment Manager, any affiliate of the Investment Manager or any agent of the Investment Managerfor the purposes of providing investment advice to the Underlying Partnership and Feeder Vehicles,provided that:

(a) the Canadian Eligible Investors are the only persons to whom Interests are distributed inCanada;

(b) where the General Partner, the Investment Manager, any affiliate of the Investment Manageror any agent of the Investment Manager act as advisers to the Underlying Partnership orFeeder Vehicles in respect of securities of Canadian issuers, such advice will be incidentalto their acting as an adviser to the Underlying Partnership or Feeder Vehicles in respect ofsecurities of foreign issuers; and

(c) before any Interests are sold to the Canadian Eligible Investors, each Canadian EligibleInvestor shall be notified that the Underlying Partnership will be advised by advisers who arenot registered in Canada to act as an adviser.

May 4, 2001.

"Howard I. Wetston" "Robert W. Davis"