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                                                                    Exhibit 4.23

                                                            $-



                           [FORM OF] SUBORDINATED NOTE

                                UBS AG,
                acting through its Cayman Islands branch


                         -% PERPETUAL SUBORDINATED NOTE

            UBS AG, a bank organized under the laws of Switzerland (the "Bank"),
acting through its Cayman Islands branch (the "Cayman Islands branch"), for
value received, hereby promises to pay to UBS PREFERRED FUNDING COMPANY LLC VII,
a Delaware limited liability company (the "Company"), principal and interest on
the principal amount of this Subordinated Note (this "Subordinated Note"), under
the terms and conditions described hereunder.

            Section 1. Definitions. The following terms are used herein with the
meanings assigned to them below:

                  "Administrative Action" means any judicial decision, official
      administrative pronouncement, published or private ruling, regulatory
      procedure, notice or announcement (including any notice or announcement of
      intent to adopt such procedures or regulations) by any legislative body,
      court, governmental authority or regulatory body having appropriate
      jurisdiction.

                  "Bank" means UBS AG, a bank organized under the laws of
      Switzerland, acting through its Cayman Islands branch.

                  A "Bankruptcy Event" shall be deemed to occur if (i) at any
      time the Bank's unconsolidated unsubordinated liabilities exceed its
      unconsolidated total assets (valued at the higher of their going-concern
      and their liquidation value), as calculated based on the most recent
      unconsolidated interim balance sheet of the Bank and the unsubordinated
      creditors of the Bank do not agree to subordinate their claims to the
      extent that such liabilities exceed such assets; or (ii) the Swiss Federal
      Banking Commission exercises the broad discretion granted to it under the
      Swiss Banking Law before the occurrence of such an excess as described in
      (i), above, by withdrawing the banking license of the affected bank, which
      has then been required to go into liquidation pursuant to Article 23
      quinquies of the Swiss Banking Law.
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                  "Business Day" means a day on which (i) the Trans-European
      Automated Real-Time Gross Settlement Express Transfer System ("TARGET") is
      operating, (ii) banks are open for business and carrying out transactions
      in U.S. dollars in London, [insert applicable location] and Wilmington,
      Delaware, U.S.A.

                  "Calculation Agent" means the London branch of UBS AG.

                  "Capital Event" means the determination by the Bank after
      consultation with the Swiss Federal Banking Commission that the Company
      Preferred Securities cannot be included in calculating the Tier 1 capital
      of the Bank on a consolidated basis.

                  "Cayman Islands branch" means the branch of the Bank located
      in the Cayman Islands.

                  ["Change in Tax Law" means the receipt by the Bank of an
      opinion of a nationally recognized law firm or other tax advisor (which
      may be an accounting firm) in Switzerland, the United States or the Cayman
      Islands, as appropriate, experienced in such matters to the effect that an
      event of the type described in clause (A), (B) or (C) of the definition of
      "Tax Event" has occurred or will occur as a result of (i) any amendment
      to, clarification of, or change (including any announced prospective
      change) in, the laws or treaties (or any regulations under any laws or
      treaties) of the United States, Switzerland or the Cayman Islands or any
      political subdivision or taxing authority of or in the United States,
      Switzerland or the Cayman Islands affecting taxation or (ii) any
      Administrative Action or any amendment to, clarification of, or change in
      the official position or Bank interpretation of any Administrative Action
      or any interpretation or pronouncement that provides for a position with
      respect to any Administrative Action that differs from the previously
      generally accepted position, in each case, by any legislative body, court,
      governmental authority or regulatory body, regardless of the manner in
      which such amendment, clarification, change, interpretation or
      pronouncement is made known, which amendment, clarification, change or
      Administrative Action is effective or which interpretation or
      pronouncement is announced on or after the date of issuance of the Company
      Preferred Securities.]

                  "Company" means UBS Preferred Funding Company LLC VII, a
      Delaware limited liability company.

                  "Company Agreement" means the Amended and Restated Limited
      Liability Company Agreement of the Company, as amended and restated as of
      the Issue Date of the Company Preferred Securities.

                  "Company Common Securities" means the securities of the


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      Company representing the common limited liability company interests
      in the Company.

                  "Company Preferred Securities" means the -% Noncumulative
      Company Preferred Securities, aggregate liquidation preference $-, offered
      by the Company pursuant to a Prospectus dated ____ __, 200- together with
      any subsequent offering by the Company of -% Noncumulative Company
      Preferred Securities, each representing preferred limited liability
      company interests in the Company.

                  "Dividend Payment Date" means, with respect to dividends on
      the Company Preferred Securities, the date on which such dividends are
      payable under the Company Agreement.

                  "Determination Date" for an Interest Period means the day that
      is two London Banking Days preceding the first day of that Interest
      Period.

                  "Eligible Investments" means, pursuant to the Investment
      Policies, the assets or investments which the Company may hold and consist
      of (i) the Subordinated Notes and (ii) other securities issued by the Bank
      acting through a branch, agency or other office located outside of the
      United States or by a non-U.S. branch of a non-U.S. subsidiary of the
      Bank.

                  "Interest Payment Date" means, with respect to the
      Subordinated Notes, each date on which interest is payable, as specified
      in Section 3(a).

                  "Interest Period" has the meaning ascribed thereto in Section
      3.

                  "Investment Company Act Event" means the receipt by the Bank
      of an opinion of a nationally recognized law firm in the United States
      experienced in such matters to the effect that there is more than an
      insubstantial risk that the Company or the Trust is an "investment
      company" within the meaning of the 1940 Act.

                  "Investment Policies" means the investment policies of the
      Company as set forth in Annex F of the Company Agreement.

                  "Issue Date" means the date of initial issuance of the Company
      Preferred Securities and the Trust Preferred Securities.

                  "London Banking Day" means a day on which dealings in
      deposits in U.S. dollars are transacted in the London interbank
      market.

                  "1940 Act" means the Investment Company Act of 1940,
      as amended.


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                  ["Subordinated Note Make Whole Amount" as applied to a
      redemption of this Subordinated Note means the greater of (i) 100% of the
      principal amount of this Subordinated Note and (ii) as determined by a
      Quotation Agent (as defined below), the sum of the present value of the
      principal amount of this Subordinated Note together with the present
      values of scheduled payments of interest accrued from the date of
      redemption to the Dividend Payment Date in ____ 20- (the "Remaining
      Life"), in each case discounted to the date of redemption on a semi-annual
      basis (assuming a 360-day year consisting of twelve 30-day months) at the
      Adjusted Treasury Rate.]

            For purposes of determining the Subordinated Note Make
Whole Amount:

                        ["Adjusted Treasury Rate" means, with respect to any
            redemption date, the Treasury Rate plus .[75]%.]

                  ["Comparable Treasury Issue" means, with respect to any
      Redemption Date, the United States Treasury security selected by the
      Quotation Agent as having a maturity comparable to the Remaining Life that
      would be utilized, at the time of selection and in accordance with
      customary financial practice, in pricing new issues of corporate debt
      securities of comparable maturity to the Remaining Life. If no United
      States Treasury security has a maturity that is within a period from three
      months before to three months after the Interest Payment Date and Dividend
      Payment Date in ____ 20-, the two most closely corresponding United States
      Treasury securities shall be used as the Comparable Treasury Issue, and
      the Treasury Rate shall be interpolated or extrapolated on a straight-line
      basis, rounding to the nearest month using such securities.]

                        ["Comparable Treasury Price" means (A) the average of
            five Reference Treasury Dealer Quotations for such Redemption Date,
            after excluding the highest and lowest of such Reference Treasury
            Dealer Quotations, or (B) if the Calculation Agent obtains fewer
            than five such Reference Treasury Dealer Quotations, the average of
            all such Quotations.]

                        ["Quotation Agent" means UBS Warburg LLC and its
            successors, except that if UBS Warburg LLC shall cease to be a
            primary U.S. Government securities dealer in New York City (a
            "Primary Treasury Dealer"), the Corporation will designate another
            Primary Treasury Dealer.]

                        ["Reference Treasury Dealer" means (i) the Quotation
            Agent and (ii) any other Primary Treasury Dealer selected by the
            Quotation Agent after consultation with the Company.]

                        ["Reference Treasury Dealer Quotations" means, with
            respect to each Reference Treasury Dealer and any Redemption Date,
            the

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            average, as determined by the Calculation Agent, of the bid and
            asked prices for the Comparable Treasury Issue (expressed in each
            case as a percentage of its principal amount) quoted in writing to
            the Calculation Agent by such Reference Treasury Dealer at 5:00
            p.m., New York City time, on the third Business Day preceding such
            Redemption Date.]

                        ["Treasury Rate" means (i) the yield, under the heading
            which represents the average for the week immediately prior to the
            redemption date, appearing in the most recently published
            statistical release designated "H.15(519)" or any successor
            publication which is published weekly by the Federal Reserve and
            which establishes yields on actively traded United States Treasury
            securities adjusted to constant maturity under the caption "Treasury
            Constant Maturities," for the maturity corresponding to the
            Remaining Life (or if no maturity is within three months before or
            after the Remaining Life, yields for the two published maturities
            most closely corresponding to the Remaining Life will be determined
            and the Treasury Rate will be interpolated or extrapolated from such
            yields on a straight-line basis, rounding to the nearest month) or
            (ii) if such release (or any successor release) is not published
            during the week preceding the calculation date or does not contain
            such yields, the rate per annum equal to the semi-annual equivalent
            yield to maturity of the Comparable Treasury Issue, calculated using
            a price for the Comparable Treasury Issue (expressed as a percentage
            of its principal amount) equal to the Comparable Treasury Price for
            such Redemption Date. The Treasury Rate will be calculated on the
            third Business Day preceding the Redemption Date.]

                  "Subordinated Notes" means the o% Perpetual Subordinated Notes
      issued by the Cayman Islands branch under the Subordinated Notes Purchase
      Agreement, including this Subordinated Note.

                  "Subordinated Notes Purchase Agreement" means the Subordinated
      Notes Purchase Agreement, dated ____ __, 200- between the Bank, acting
      through the Cayman Islands branch, and the Company.

                  "Swiss Federal Banking Commission" means the Swiss Federal
      Banking Commission and, if any successor governmental authority succeeds
      to the bank regulatory functions of the Swiss Federal Banking Commission
      in Switzerland, such successor governmental authority; provided, however,
      that if the Bank becomes domiciled in a jurisdiction other than
      Switzerland, then each reference herein to the Swiss Federal Banking
      Commission shall be deemed to instead refer to the governmental authority
      having primary regulatory authority with respect to the Bank's capital
      adequacy in such other jurisdiction.

                  "Tax Event" means the receipt by the Bank of an opinion of a


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      nationally recognized law firm or other tax advisor (which may be an
      accounting firm) in Switzerland or the United States, as appropriate,
      experienced in such matters to the effect that, as a result of (i) any
      amendment to, clarification of, or change (including any announced
      prospective change) in, the laws or treaties (or any regulations under any
      laws or treaties) of the United States, Switzerland or the Cayman Islands
      or any political subdivision or taxing authority of or in the United
      States, Switzerland or the Cayman Islands affecting taxation or (ii) any
      Administrative Action or any amendment to, clarification of, or change in
      the official position or the interpretation of any Administrative Action
      or any interpretation or pronouncement that provides for a position with
      respect to any Administrative Action that differs from the theretofore
      generally accepted position, in each case, by any legislative body, court,
      governmental authority or regulatory body, irrespective of the manner in
      which such amendment, clarification, change, interpretation or
      pronouncement is made known, which amendment, clarification, change or
      Administrative Action is effective or which interpretation, pronouncement
      or decision is announced on or after the date of issuance of the Company
      Preferred Securities, there is more than an insubstantial risk that (A)
      the Company or the Trust is or will be subject to more than a de minimis
      amount of additional taxes, duties or other governmental charges, (B) the
      Bank is or will be required to pay any additional amounts in respect of
      any taxes, duties or other governmental charges with respect to payments
      of interest or principal on the Subordinated Notes and with respect to any
      payments on the Trust Preferred Securities, (C) the Company is or will be
      required to pay any additional amounts in respect of any taxes, duties or
      other governmental charges with respect to payments of dividends on the
      Company Preferred Securities or the Trust is or will be required to pay
      any additional amounts in respect of any taxes, duties or other
      governmental charges with respect to distributions on the Trust Preferred
      Securities, or (D) the treatment of any of the Company's items of income,
      gain, loss, deduction or expense, or the treatment of any item of income,
      gain, loss, deduction or expense of the Bank related to the Subordinated
      Notes or its ownership of the Company, in each case as reflected on the
      tax returns (including estimated returns) filed (or to be filed) by the
      Company or the Bank, will not be respected by a taxing authority, as a
      result of which the Company or the Bank is or will be subject to more than
      a de minimis amount of additional taxes, duties or other governmental
      charges or civil liabilities, the effect of which cannot be avoided by the
      Company or the Bank taking reasonable measures available to it without any
      adverse effect on or material cost to the Bank or the Company (as
      determined by the Bank in its sole discretion).

                  ["Telerate Page 3750" means the display designated as "Page
      3750" on the Bridge/Telerate Service (or such other page as may replace
      Page 3750) or such other service or services as may be nominated by the
      British Bankers' Association as the information vendor for the purpose of
      displaying London interbank offered rates for U.S. dollar deposits.]


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                  "Trust" means UBS Preferred Funding Trust VII, a Delaware
      statutory trust.

                  "Trust Preferred Securities" means the o% Noncumulative Trust
      Preferred Securities, aggregate liquidation amount $o, offered by the
      Trust together with any subsequent offering by the Trust of o%
      Noncumulative Trust Preferred Securities, in each case representing an
      equal number of Company Preferred Securities.

                  "UBS AG Senior Liabilities" has the meaning set forth in
      Section 6(a).

                  "U.S. dollars," "dollars," "U.S.$" and "$" mean the
      currency of the United States of America.

            Section 2. Form of Subordinated Notes. This Subordinated Note is one
of a duly authorized issue of the Subordinated Notes of the Bank in the
aggregate principal amount of $o designated as its o% Perpetual Subordinated
Notes and purchased pursuant to the Subordinated Notes Purchase Agreement. The
Subordinated Notes are represented by a single definitive note in registered
form.

            Section 3. Payments of Interest.

            (a) Interest on the Subordinated Notes is payable from the date of
initial issuance as follows (or, if any such day is not a Business Day, the next
Business Day, but without any additional interest or other payment in respect of
such delay) (each an "Interest Payment Date" and the period from and including
an Interest Payment Date, or the date of initial issuance, as applicable, to but
not including the next Interest Payment Date, an "Interest Period"): [

                  (i) for each Interest Period through the Interest Period
      ending on the Interest Payment Date in ____ 20-, semi-annually in arrears
      on ____ __ and ________ __ of each year at a fixed rate per annum on the
      principal amount of this Subordinated Note equal to -% (calculated on the
      basis of a 360-day year consisting of twelve 30-day months); and

                  (ii) for each Interest Period ending after ____ 20-, quarterly
      in arrears on the first business day on or after ____ __, ____ __, _______
      __ and ____ __ of each year at a floating rate per annum on the principal
      amount of this Subordinated Note equal to -% above three-month LIBOR
      (calculated on the


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      basis of the actual number of days elapsed in a 360-day year).

            LIBOR, with respect to a Determination Date, means the rate
(expressed as a percentage per annum) for deposits in U.S. dollars for a
three-month period commencing on the second London Banking Day immediately
following that Determination Date that appears on Telerate Page 3750 as of 11:00
a.m. (London time) on that Determination Date. If such rate does not appear on
Telerate Page 3750, LIBOR will be determined on the basis of the rates which
deposits in U.S. dollars for a three-month period commencing on the second
London Banking Day immediately following that Determination Date and in a
principal amount of not less than [$1,000,000] that is representative for a
single transaction in such market at such time, are offered to prime banks in
the London interbank market by four major banks in the London interbank market
selected by the Calculation Agent, after consultation with the Company, at
approximately 11:00 a.m., London time, on that Determination Date.]

            [for each Interest Period at a fixed rate per annum on the principal
amount of this Subordinated Notes equal to - (calculated on the basis of a
360-day year consisting of twelve 30-day months).]

            The Calculation Agent will request the principal London office of
each of such banks to provide a quotation of its rate. If at least two such
quotations are provided, LIBOR with respect to that Determination will be the
arithmetic mean of such quotations. If fewer than two quotations are provided,
LIBOR in respect of that Determination Date will be the arithmetic mean of the
rates quoted by three major money center banks in New York City selected by the
Calculation Agent, after consultation with the Company, at approximately 11:00
a.m., New York City time, on that Determination Date for loans in U.S. dollars
to leading European banks for a three-month period commencing on the second
London Banking Day immediately following that Determination Date and in a
principal amount of not less than [$1,000,000]. However, if the banks selected
by the Calculation Agent to provide quotations are not quoting as mentioned in
this paragraph, LIBOR for the applicable period will be the same as LIBOR as
determined on the previous Determination Date.

            All percentages resulting from any calculations on this Subordinated
Note will be rounded, if necessary, to the nearest one hundred-thousandth of a
percentage point, with five one-millionths of a percentage point rounded upward
(e.g., 9.876545% (or .09876545) being rounded to 9.87655% (or .0987655)), and
all dollar amounts used in or resulting from such calculation will be rounded to
the nearest cent (with one-half cent being rounded upward).

            (b) Interest due on an Interest Payment Date is deferrable at the
option of the Cayman Islands branch to the extent that, pursuant to the Company
Agreement, dividends on the Company Preferred Securities due on the
corresponding Dividend

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Payment Date would constitute Nondefinitive Dividends (as defined in the Company
Agreement). Interest deferred in this manner will not itself bear interest.

            Section 4. Redemption. The Subordinated Notes are redeemable with
the consent of the Swiss Federal Banking Commission and at the option of the
Cayman Islands branch:

                  (a) on the Interest Payment Date in ____ 20- or any Interest
      Payment Date occurring after that date, in whole or in part, at a
      redemption price equal to 100% of their principal amount plus interest
      accrued but unpaid to the date fixed for redemption; and

                  (b) prior to the Interest Payment Date in ____ 20-, in whole
      but not in part, if a Tax Event resulting from a Change in Tax Law (and
      relating to an event described in clauses (A), (B) or (C) of the
      definition of "Tax Event") occurs at a redemption price equal to 100% of
      their principal amount plus interest accrued but unpaid to the date fixed
      for redemption, or

                  (c) prior to the Interest Payment Date in ____ 20-, in whole
      but not in part, if a Tax Event not resulting from a Change in Tax Law
      relating to an event described in clauses (A), (B) or (C) of the
      definition of "Tax Event", an Investment Company Act Event or a Capital
      Event occurs at a redemption equal to interest accrued but unpaid to the
      date fixed for redemption plus the Subordinated Note Make Whole Amount.

            Section 5. Additional Amounts. If the Cayman Islands branch is
required to withhold any taxes, duties or other governmental changes with
respect to any payment in respect of this Subordinated Note, the Cayman Islands
branch will pay such additional amounts as shall be required so that the amount
received by the Company under this Subordinated Note is not less than the amount
that would have been received in the absence of any such additional taxes,
duties or other governmental charges.

            Section 6. Subordination.

            (a) This Subordinated Note constitutes a general and unsecured
obligation of the Bank and, in liquidation of the Bank, will rank, both as to
payment and in liquidation:

                 (i) subordinate and junior to all deposits and other
      liabilities of the Bank (including those in respect of bonds, notes and
      debentures that do not expressly rank pari passu with the obligations of
      the Bank under the Subordinated

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      Notes; and

                 (ii) senior to the ordinary shares and any other securities of
      the Bank expressed to rank junior to the most senior preference shares of
      the Bank (if any) from time to time outstanding.

The foregoing liabilities that rank senior to this Subordinated Note are
collectively called "UBS AG Senior Liabilities".

            (b) Payments under the Subordinated Notes (other than payments upon
a winding-up or dissolution, by bankruptcy or otherwise, in Switzerland of the
Bank) are conditional upon the Bank (i) not being in default in the payment of
UBS AG Senior Liabilities, (ii) being able to pay its debts as they fall due and
(iii) having consolidated gross assets in excess of consolidated gross
liabilities (other than liabilities to persons who are not senior creditors) at
the time of payment. A report as to the insolvency of the Bank by two persons,
each being a managing director, director or other authorized officer or agent of
the Bank or employees of the independent accountants of the Bank will, in the
absence of manifest error be treated and accepted by the Bank, the holders of
Company Preferred Securities and all other interested parties as correct and
sufficient evidence thereof.

            Section 7. Failure of Payment. If the Bank fails to make a payment
when due of an installment of interest on this Subordinated Note, the Company
shall be entitled to seek to enforce payment only of the defaulted installment
of interest but not in respect of any failure to pay interest due under this
Subordinated Note that was deferred because the dividends on the Company
Preferred Securities on the corresponding Dividend Payment Date would have
constituted Nondefinitive Dividends (as defined in the Company Agreement). The
Company may, in its discretion, proceed to protect and enforce its rights by
such appropriate judicial proceedings as the Company shall deem most effectual
to protect and enforce any such rights, whether for the specific performance of
any covenant or agreement in the Subordinated Notes Purchase Agreement or in aid
of the exercise of any power granted therein, or to enforce any other proper
remedy. Except with respect to a failure of payment of principal, the principal
amount of this Subordinated Note shall not be subject to acceleration or become
due and payable, whether upon notice or otherwise, upon the failure of the Bank
to make a payment when due of an installment of interest or a winding-up of the
Bank.

            If a Bankruptcy Event or a Capital Event occurs, then this
Subordinated Note shall be canceled and the Bank's obligations hereunder
(including, without limitation, its obligations to pay principal and interest,
including interest not paid on any Interest Payment date as specified in Section
3(b) shall be forgiven.


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            If the Bank is liquidated and upon commencement of the related
liquidation proceedings the Subordinated Notes are still outstanding, then the
Subordinated Notes or other Eligible Investments shall be distributed by the
Company to the Bank, as holder of the Company Common Securities.

            Section 8. Forgiveness of Debt. If a Bankruptcy Event or a Capital
Event occurs, then this Subordinated Note or successor Eligible Investments then
held by the Company shall be canceled and the Bank's obligations thereunder
(including, without limitation, its obligations to pay principal and interest,
including any interest deferred in accordance with Section 3(b)) shall be
forgiven.

            Section 9. Transfer of the Subordinated Note. This Subordinated Note
may not be sold and may not be divided into denominations of less than
[$1,000][25].

            Section 10. GOVERNING LAW. THIS SUBORDINATED NOTE SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, UNITED
STATES OF AMERICA.

            Section 11. Submission to Jurisdiction. The Bank irrevocably
consents and agrees, that any legal action, suit or proceeding against it with
respect to its obligations, liabilities or any other matter arising out of or in
connection with this Agreement may be brought in the courts of the State of New
York or the courts of the United States of America located in New York City and
until amounts due and to become due under this Subordinated Note have been paid,
hereby irrevocably consents and submits to the non-exclusive jurisdiction of
each such court in personam, generally and unconditionally with respect to any
such action, suit or proceeding for itself and in respect of its properties,
assets and revenues. Service of process upon the branch in any such action, suit
or proceeding shall be deemed in every respect service of process upon the Bank.
The Bank hereby irrevocably and unconditionally waives, to the fullest extent
permitted by law, any objection which it may now or hereafter have to the laying
of venue of any of the aforesaid action, suits or proceedings brought in the
United States Federal courts located in New York City or the courts of the State
of New York and hereby further irrevocably and unconditionally waive and agree
not to plead or claim in any such court that any such action, suit or proceeding
brought in any such court has been brought in an inconvenient forum. The
provisions of this Section 11 shall survive any termination of this Subordinated
Note, in whole or in part.

            Section 12. Modification and Amendment. This Subordinated Note may
be modified or amended only by the written agreement of the Cayman Islands
branch and the Company.


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      IN WITNESS WHEREOF, the Bank has caused this instrument to be duly
executed.

Dated:  ____ __, 200-



                                    UBS AG,
                                    acting through its Cayman Islands
                                    branch

                                    By: ________________________________
                                        Name:
                                        Title:


                                    By: ________________________________
                                        Name:
                                        Title: