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

  



 

















 


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

  



 

















 




	
  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.