Exhibit 10.1

 

 

 

UBS Financial Services Inc.

UBS

 

1200 Harbor Boulevard

 

 

Weehawken, NJ 07086

 

 

 

 

 

James M. Pierce

 

 

Co-Head

 

 

Wealth Management Advisor Group US

 

 

 

 

 

James D. Price

 

 

Co-Head

CITI TRENDS, INC.

 

Wealth Management Advisor Group US

102 FAHM STREET

 

 

SAVANNAH GA 31401-2392

 

www.ubs.com

 

 

 

 

 

October 8, 2008

 

 

 

 

 

Branch Telephone Number

 

 

+1-312-525-4500

 

 

 

 

 

Account Number: CP 73472

 

We are pleased to offer you a way to liquidate certain of your auction rate
securities (ARS). UBS has designed a solution that gives you the option to hold
your ARS or sell the securities back to UBS. This solution is available for ARS
that were held in a UBS account on February 13, 2008, and that are not
successfully clearing at auction (Eligible ARS).

 

UBS is offering you “Auction Rate Securities Rights” (Rights) to sell Eligible
ARS at par value to UBS at any time during a two-year time period. These Rights
are nontransferable securities registered with the U.S. Securities and Exchange
Commission (SEC). This is a limited time offer that will expire on November 14,
2008. Accepting this offer may impact your legal rights. Not accepting this
offer may have repercussions on outstanding loans secured by Eligible ARS. As a
result, it is important that you review the prospectus carefully.

 

The key features and terms of the offer are summarized below. For complete
details, please see the enclosed prospectus.

 

·        UBS is offering you nontransferable Rights to sell Eligible ARS, held
in the UBS account identified above, at par value to UBS at any time during the
period of June 30, 2010, through July 2, 2012.

 

·         You may instruct your UBS Financial Advisor to exercise these Rights
at any time during this time period;

·         If you do not exercise your Rights, the Eligible ARS will continue to
accrue interest or dividends as determined by the auction process;

·         If you do not exercise your Rights before July 2, 2012, they will
expire and UBS will have no further obligation to buy your Eligible ARS.

 

·        Clients who accept this offer give UBS the discretion to purchase or
sell their Eligible ARS at any time after accepting the firm’s offer and without
other prior notice.

 

·         UBS will purchase tax-exempt Auction Preferred Stock (a specific type
of ARS also known as APS) at any time after clients accept the firm’s Rights
offer;

·         UBS will only exercise its discretion to purchase or sell Eligible ARS
for the purpose of restructurings, dispositions or other solutions that will
provide clients with par value for their Eligible ARS;

·         In purchasing Eligible ARS or selling Eligible ARS on behalf of
clients, including tax-exempt APS, UBS will act in its capacity as broker-dealer
and will execute these transactions on a principal basis regardless of the type
of client accounts in which the Eligible ARS are held. Please see pages 27-28 in
the enclosed prospectus for more information;

·         UBS will pay clients par value for their Eligible ARS within one day
of settlement of the transaction;

·         Eligible ARS are subject to issuer redemptions at any time.

 

UBS AG has filed a registration statement (including a prospectus) with the SEC
for the offering to which this communication relates. Before you make an
investment decision, you should read the prospectus in that registration
statement and other documents that UBS has filed with the SEC for more complete
information about UBS and this offering. You may get these documents for free by
visiting EDGAR on the SEC Web site at www.sec.gov or by calling UBS’s ARS Client
Service Center at +1-800-253-1974.

 

UBS Financial Services Inc. and UBS International Inc. are subsidiaries of UBS
AG.

 

1C-ARSO

 

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UBS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
UBS Financial Services Inc.

 

·        Clients who accept this offer release UBS and its employees/agents from
all claims except claims for consequential damages directly or indirectly
relating to its marketing and sale of ARS and expressly agree not to seek any
damages or costs (punitive damages, attorney fees, etc.) other than
consequential damages. Clients also will not serve as a class representative or
receive benefits under any class action settlement or investor fund.

 

·        UBS will provide clients who accept the offer “no net cost” loans up to
the par value of Eligible ARS until June 30, 2010. Please see pages 36-39 in the
enclosed prospectus for more information.

 

·        UBS will reimburse all clients who participated in prior UBS ARS loan
programs after February 13, 2008, for the difference between the cost of the
loan and the applicable interest paid on the Eligible ARS.

 

THIS OFFER EXPIRES ON NOVEMBER 14, 2008. Please complete, sign and date the
enclosed form and return it in the postage-paid envelope if you wish to accept
this offer. We must receive your signed acceptance form no later than
November 14, 2008.

 

You may receive multiple letters from us depending on the type of ARS you own or
if you have ARS in multiple accounts. Please note you must return a form for
each letter you receive to accept all available offers relating to your ARS
holdings. Please read each response form carefully as the terms may vary.

 

A list of your Eligible ARS in the account identified on the first page of this
letter is attached. Additional information about your Eligible ARS, including
the most recent interest rates and dividend yields, is available at
www.ubs.com/auctionratesecurities.

 

If you have any questions about your Eligible ARS or this offer, please contact
your UBS Financial Advisor or Branch Manager at the telephone number listed at
the top of this letter. Please note that UBS Financial Advisors and Branch
Managers cannot provide legal or tax advice regarding this offer. Instructions
to exercise your Rights should be directed to your UBS Financial Advisor or
Branch Manager.

 

We regret any hardship that the failure of the ARS markets may have caused you.
We hope that the offer described above and discussed in detail in the prospectus
provides resolution for you regarding this matter. We look forward to continuing
our relationship with you and to serving your future investment needs.

 

Thank you for your business and for maintaining your relationship with UBS.

 

Sincerely,

 

 

 

 

 

/s/ James M. Pierce

 

/s/ James D. Price

James M. Pierce

James D. Price

 

UBS Financial Services Inc. serves as the clearing firm for UBS International
Inc. Accordingly, the information and terms contained in this letter and the
accompanying materials are directed to clients of both UBS Financial Services
Inc and UBS International Inc.

 

--------------------------------------------------------------------------------

 

Current rate and dividend information

 

To allow you to view the current interest rates and/or dividends your holdings
are earning, we have created an online tool available at
www.ubs.com/auctionratesecurities.

 

Simply enter the nine-digit CUSIP number(s) shown below to obtain the most
current information about your securities.

 

Percentages displayed in the descriptions below are as of September 30, 2008.

 

CUSIP

 

Description

 

CUSIP

 

Description

 

CUSIP

 

Description

155488BV0

 

CENTRAL TEXAS HGHR ED AU

 

429825AT9

 

NEW JERSEY HGR ED STU-LN

 

462590FR6

 

IOWA STUD LN LIQ SER A

 

 

SER 2002A REV AMT B/E/R/

 

 

 

SER C REV MBIA AMT BE/R/

 

 

 

REV AMBAC AMT B/E /R/

 

 

VARIABLE RATE

 

 

 

VARIABLE RATE

 

 

 

VARIABLE RATE

 

 

RATE 12.000% MATURES 12/01/36

 

 

 

RATE 08.540% MATURES 06/01/37

 

 

 

RATE 08.540% MATURES 12/01/38

 

 

 

 

 

 

 

 

 

 

 

462590GA2

 

IA STDT LN LIQ 35DAY ARC

 

462590GB0

 

IOWA STUD LN LIQ ARC

 

49130NAV1

 

KENTUCKY HIGHER ED STUD

 

 

AMBAC SR C-II AMT BE/R/

 

 

 

(WED) 06 SER 1 AMT BE/R/

 

 

 

LN ARC REV AMT B/E /R/

 

 

VARIABLE RATE

 

 

 

VARIABLE RATE

 

 

 

VARIABLE RATE

 

 

RATE 08.540% MATURES 12/01/40

 

 

 

RATE 08.540% MATURES 12/01/30

 

 

 

RATE 08.540% MATURES 06/01/34

 

 

 

 

 

 

 

 

 

 

 

49130NAX7

 

KENTUCKY HIGHER ED STUD

 

49130NBK4

 

KENTUCKY HGHR ED STUD LN

 

57563REE5

 

MA ED FIN AU ISS 2002 RV

 

 

REV ARC A AMT B/E /R/

 

 

 

A1 35D T/E ARC AMT BE/R/

 

 

 

ISSUE SER D AMBAC BE/R/

 

 

VARIABLE RATE

 

 

 

VARIABLE RATE

 

 

 

VARIABLE RATE

 

 

RATE 12.000% MATURES 06/01/34

 

 

 

RATE 12.000% MATURES 06/01/36

 

 

 

RATE 08.540% MATURES 01/01/37

 

 

 

 

 

 

 

 

 

 

 

57563REZ8

 

MASS EDL FING AUTH ED LN

 

594520KC 1

 

MICHIGAN HGR ED STU-LOAN

 

594520KL1

 

MICHIGAN HIGHER ED STUD

 

 

RV SER A REV AMBAC /R/

 

 

 

RFDG RV XVIIL AMT BER/R/

 

 

 

LN AU RF AMT BE/R/

 

 

VARIABLE RATE

 

 

 

VARIABLE RATE

 

 

 

VARIABLE RATE

 

 

RATE 10.028% MATURES 01/01/38

 

 

 

RATE 08.540% MATURES 03/01/39

 

 

 

RATE 06.878% MATURES 03/01/40

 

 

 

 

 

 

 

 

 

 

 

594520KM9

 

MICHIGAN HIGHER ED S/L

 

606072DF0

 

MISSOURI HIGHER ED LN AU

 

644614HH5

 

NEW HAMPSHIRE HLTH & EDU

 

 

AU RF XVII RV AMT B/E/R/

 

 

 

S/L RV AMT B AMBAC BE/R/

 

 

 

35 DAY A-2 RV AMT B/E/R/

 

 

VARIABLE RATE

 

 

 

VARIABLE RATE

 

 

 

VARIABLE RATE

 

 

RATE 08.540% MATURES 03/01/40

 

 

 

RATE 10.203% MATURES 02/15/25

 

 

 

RATE 12.000% MATURES 12/01/38

 

 

 

 

 

 

 

 

 

 

 

709163CX5

 

PA ST H/E ASST AGY REV

 

813659AM1

 

HAWAII SECOND MKT SERV

 

917546ES8

 

UTAH ST BRD OF REGT

 

 

S/L ARCS P2 AMT B/E /R/

 

 

 

T/E 35 DAY ARC AMT BE/R/

 

 

 

SER G REV AMT B/E /R/

 

 

VARIABLE RATE

 

 

 

VARIABLE RATE

 

 

 

VARIABLE RATE

 

 

RATE 14.000% MATURES 03/01/22

 

 

 

RATE 06.615% MATURES 03/01/40

 

 

 

RATE 08.540% MATURES 05/01/33

 

 

 

 

 

 

 

 

 

 

 

917546FV0

 

UTAH ST BRD OF REGT

 

917546FX6

 

UTAH ST BRD OF REGT ARC

 

92428CDW1

 

VERMONT ST STUD ASST CRP

 

 

SER Y-1-C REV AMT B/E/R/

 

 

 

CL V SER T REV AMT BE/R/

 

 

 

SER 2000R REV AMBAC /R/

 

 

VARIABLE RATE

 

 

 

VARIABLE RATE

 

 

 

VARIABLE RATE

 

 

RATE 13.738% MATURES 11/01/37

 

 

 

RATE 13.738% MATURES 05/01/10

 

 

 

RATE 13.300% MATURES 12/15/34

 

 

 

1C-ARSO

 

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UBS

 

UBS Financial Services Inc.

 

Please complete and sign this form.

We must receive it by November 14, 2008.

 

Acceptance of UBS's offer relating to auction rate securities

 

By signing below and returning this form, I accept UBS’s offer of Rights
relating to my Eligible ARS in the account listed below. I understand and
acknowledge the following:

 

·        All Eligible ARS must remain in my UBS account listed below until I
exercise my Rights to sell my Eligible ARS to UBS or they are redeemed by the
issuer or purchased or sold on my behalf by UBS;

·        I will instruct my UBS Financial Advisor or Branch Manager if and when
I want to exercise my Rights and sell my Eligible ARS to UBS during the period
of June 30, 2010, through July 2, 2012;

·        The acceptance of UBS’s offer constitutes consent (to the extent
legally required) for UBS, acting as principal, to purchase my Eligible ARS or
to sell them on my behalf at any time in its sole discretion and without other
prior notice to me, from the date that I accept this offer through July 2, 2012;

·        If UBS purchases, sells or otherwise disposes of my Eligible ARS, it
will deposit the par value in my account within one business day of settlement
of the transaction;

·        I release UBS and its employees/agents from all claims except claims
for consequential damages directly or indirectly relating to its marketing and
sale of ARS and expressly agree that I will not seek any damages or costs
(punitive damages, attorney fees, etc.) other than consequential damages. I also
will not serve as a class representative or receive benefits under any class
action settlement or investor fund;

·        If the account named below is in the name of a corporation,
partnership, trust or other entity, I represent and warrant that I have the
power and authority to accept this offer on behalf of that entity.

 

 

 

Please complete and sign this form.

 

 

We must receive it by November 14, 2008.

 

 

 

 

 

 

Mail

UBS Financial Services Inc.

CITI TRENDS, INC.

 

 

ATTN: ARS Group

104 COLEMAN BLVD.

 

 

1000 Harbor Boulevard

SAVANNAH GA 31408

 

 

Weehawken, NJ 07086

 

 

 

 

 

 

Fax

+1-201-442-7766

 

Account Number: CP 73472

 

Account owner signature

 

/s/ Bruce D. Smith, CFO

 

Date

 

10/21/08

 

 

 

 

 

 

 

Additional party signature

 

 

 

Date

 

 

 

 

 

 

 

 

 

Daytime telephone number

 

912-443-2075

 

 

 

 

 

If you have questions, please contact your UBS Financial Advisor or Branch
Manager at +1-312-525-4500. Clients outside the U.S. may call +1-201-352-0105
collect.

 

We kindly request that you do not include comments or questions on this form as
it could delay processing of your instructions.

 

UBS AG has filed a registration statement (including a prospectus) with the SEC
for the offering to which this communication relates. Before you make an
investment decision, you should read the prospectus in that registration
statement and other documents that UBS has filed with the SEC for more complete
information about UBS and this offering. You may get these documents for free by
visiting EDGAR on the SEC Web site at www.sec.gov or by calling UBS’s ARS Client
Service Center at +1-800-253-1974.

 

UBS Financial Services Inc. serves as the clearing firm for UBS International
Inc. Accordingly, the information and terms contained in this letter and the
accompanying materials are directed to clients of both UBS Financial Services
Inc and UBS International Inc.

 

©2008 UBS Financial Services Inc. All rights reserved. Member SIPC.

 

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